MBAs vs. Entrepreneurs: Who Has the Right Stuff for Tough Times? - Bill Taylor - HarvardBusiness.org
MBAs vs. Entrepreneurs: Who Has the Right Stuff for Tough Times?
2:39 PM Monday May 4, 2009
Excerpts:
... the fascinating research of Professor Saras Sarasvathy, who teaches entrepreneurship at the Darden Graduate School of Business at the University of Virginia. It's been a long time since I've encountered academic research as original, relevant, and fascinating as what Professor Sarasvathy has done, in a series of essays, white papers, and a book. Her work revolves around one big question: What makes entrepreneurs "entrepreneurial?" Specifically, is there such as thing as "entrepreneurial thinking" — and does it differ in important ways from, say, how MBAs think about problems and seize opportunities?>
The answer, Sarasvathy concludes, is an emphatic yes — and the differences boil down to the "causal" reasoning used by MBAs versus the "effectual" reasoning used by entrepreneurs.
Causal reasoning, she explains, "begins with a pre-determined goal and a given set of means, and seeks to identify the optimal — fastest, cheapest, most efficient, etc. — alternative to achieve that goal." This is the world of exhaustive business plans, microscopic ROI calculations, and portfolio diversification. >
Effectual reasoning, on the other hand, "does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with." This is the world of bootstrapping, rapid prototyping, and guerilla marketing.>
The more Sarasvathy explains the differences in the two styles of thinking, the more obvious it becomes which style matches the times. Causal reasoning is about how much you expect to gain; effectual reasoning is about how much you can afford to lose. Causal reasoning revolves around competitive analysis and zero-sum logic; effectual reasoning embraces networks and partnerships. Causal reasoning "urges the exploitation of pre-existing knowledge"; effectual reasoning stresses the inevitability of surprises and the leveraging of options.>
The difference in mindset, Sarasvathy concludes, boils down to a different take on the future. "Causal reasoning is based on the logic, To the extent that we can predict the future, we can control it," she writes. That's why MBAs and big companies spend so much time on focus groups, market research, and statistical models. "Effectual reasoning, however, is based on the logic, To the extent that we can control the future, we do not need to predict it." How do you control the future? By inventing it yourself — marshalling scarce resources, understanding that surprises are to be expected rather than avoided, reacting to them fast.>
Ultimately, she says, entrepreneurs begin with three simple sets of resources: "Who they are" — their values, skills, and tastes; "What they know" — their education, expertise, and experience; and "Whom they know" — their friends, allies, and networks. "Using these means, the entrepreneurs begin to imagine and implement possible effects that can be created with them...Plans are made and unmade and revised and recast through action and interactions with others on a daily basis." >
Read full article: http://blogs.harvardbusiness.org/taylor/2009/05/mbas_vs_entrepreneurs_who_has.html?cm_re=homepage-041409-_-lede-_-headline
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
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