[ Above Image: Library of Congress ]
Entrepreneurship, by definition, requires individuals to forge new paths into uncharted territory. How do entrepreneurs discern good ideas from bad and allocate their resources toward building companies that are more likely to succeed?
Origin stories of highly successful companies are a form of modern mythology, with the entrepreneur being a brilliant-instantly-successful-hero, whose ideas arrive fully formed. This inaccurate popular perception can be detrimental to would-be entrepreneurs since it hinders creativity, instead instilling a fear of failure.
In reality, experimentation is essential, providing valuable feedback at every stage of the startup process and increasing the likelihood of a successful venture. Entrepreneurs can mitigate some of the uncertainty by using a carefully designed series of experiments.
One key principle every entrepreneur needs to internalize is the willingness to embrace experimentation, and the sometimes accompanying failure, as a means of reaching success. Entrepreneurs and investors make choices, often with incomplete information, about which ideas to advance and which to abandon. An experimental mindset coupled with the ability to drop what isn’t working and embrace what is working are two of the most valuable assets an entrepreneur can possess.
Entrepreneurs base their ventures using the knowledge of what is likely to work. Typically, these decisions are made long before the startup has had a chance to compete in the marketplace. By setting up a variety of experiments to test an idea, entrepreneurs can determine which concepts have a greater likelihood of succeeding before investing. Experimentation also gives entrepreneurs and investors the ability to commercialize a project in stages, minimizing risk and increasing the probability of higher returns on investment.
During the courses I teach for Clemson’s MBA in Entrepreneurship and Innovation program, I encourage students to experiment early and often. The sooner an entrepreneur can determine if an idea is not going to work, the sooner he or she can move on to something else. Testing is built into every stage of the process. Students conduct interviews and market surveys, and use feedback to adjust, or at times dramatically alter, their initial concept. Information gathered from these experiments may indicate that their original hypotheses were unfounded, leading them in an entirely new direction. Whatever the outcome, experimentation provides uniquely valuable feedback.
Testing and experimentation have long been the norm for scientists, inventors and researchers. Thomas Edison famously said, “I have not failed. I have just found 10,000 ways that won’t work.” Entrepreneurs who adopt this mindset will gain valuable insights.
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Matthew Klein is the director of Spiro Institute for Entrepreneurial Leadership at Clemson University. He teaches lean startup methodologies in the Clemson MBA in Entrepreneurship and Innovation program. For more information please visit clemson.edu/mba
