How do entrepreneurs think? You probably think that entrepreneurs are unique – and they are. But one of the most important traits among entrepreneurs is how they reason and approach problems. Successful entrepreneurs have a lot in common. Beyond what entrepreneurs actually do, exists a mindset that makes them persevere against all odds.
Developing an entrepreneurial mindset is all about altering your perspective about problems. It’s about the process of diagnosing issues to find root problems and creating viable solutions and alternatives.
No two entrepreneurs are the same, but how they reason and approach obstacles in their industries and their perception about problems and solutions are similar.
Apart from their use of effectual reasoning, here are some other factors that I believe makes entrepreneurs entrepreneurial and identifies the mindset that helps explain how they think:
1. Entrepreneurs think by actions
The entrepreneurial mindset craves action, so much so that they twist the age old maxim to read “Ready, Fire, Aim”. Action for the entrepreneur tests their hypotheses and so provides them with special market intelligence regardless of the outcome.
They are more interested in establishing a ‘proof of concept’ via active iterations and pivots than they are in developing the perfect theoretical plan. This ‘Bird in Hand’ entrepreneurial principle starts actions with available means, before the perfect opportunity has fully emerged.
2. Entrepreneurs think in possibilities
Entrepreneurial thinking is not constrained by the reality of the present. Entrepreneurs see the reality of possibilities that are not yet evident to others. As HBS professor Howard Stevenson explains: “Entrepreneurs pursue opportunities without regard to resources currently controlled”. Entrepreneurs don’t need all the resources in place before pursuing an opportunity … just the important ones.
3. Entrepreneurs can think in ambiguity
For the vast majority of people, ambiguity means confusion, disorganization and debilitation. Not so for the entrepreneur who can still function effectively and move forward decisively in the world of conflicting views, uncertain outcomes and unresolved issues that exists as they craft and hone their opportunity from the evolving mass of possibilities.
The Lemonade entrepreneurial principle actually embraces surprises that arise from this uncertainty and will adjust goals on the fly rather than be held by previous ones.
4. Entrepreneurial thinking embraces risk
While many money makers implement risk avoidance strategies to create wealth, the entrepreneur knows that opportunities are more likely to exist for them by embracing and managing risk rather than simply avoiding it. It is in these risky areas that the established players avoid, that contains the gold nugget opportunities.
Entrepreneurs have developed a whole host of risk management treatments to help them in this regard like lean startups, customer development process, beta launches, iterations and pivots, ‘under the radar’, affordable loss experimentation, ‘under the radar’ launches, embedded entrepreneurship and beachhead strategies.
The Affordable Loss Principle drives entrepreneurial action based on the acceptable downside, more than it does on the attractiveness of the predicted upside.
5. Entrepreneurs think in patterns
Entrepreneurs are always looking for cause and effect patterns in the world around them. Patterns help the entrepreneur to not only understand the world they live in but it also helps them predict the future and to see opportunities that most people miss.
These patterns may be the ability to see the logical extension of a change or the creative-disruptive force of something new or the cross pollination ability of an innovation into new fields. Entrepreneurs also know how to apply the concepts and patterns from existing worlds to explain innovations in worlds as yet unseen.
6. Entrepreneurs think incessantly
There is no off button in the entrepreneur’s mind. They are incessantly curious, opportunistic and optimistic. They train their minds to problem-solve every issue that crosses their path. Every person they meet is a potential resource, in every problem they encounter they seek a solution and in every change they look for the new opportunity potential.
7. Entrepreneurs think internally
Rather than let others and external factors determine the value of outcomes, the entrepreneur uses their internal locus of control to direct their destiny, to work for their achievements, to delay gratification and to plan with an eye for long-term benefits.
Entrepreneurs never think of themselves as victims. Everything they do has a personal development focus, even when doing unappreciated work for others.
8. Entrepreneurs think of value-add
Rather than singularly employ a ‘business-savvy’ focus of extracting benefit by exploiting a market/customer weakness, entrepreneurs focus primarily on creating new value for others (by increased benefit or reduced cost) and then finding a way of securing a slice of that increased value for themselves.
This Crazy-Quilt entrepreneurial principle seeks partnerships with committed people and organizations willing to jointly create the future and are least concerned with traditional competitive analyses and strategic planning approaches.
9. Entrepreneurs think of making meaning
Entrepreneurs have an inherent desire to make a difference and to make their world a better place. So, for the entrepreneur, making money becomes a means to that end and not an end in itself. As Richard Branson says: “Above all, you want to create something you are proud of….
I can honestly say that I have never gone into any business purely to make money … I’ve had to create companies that I believe in 100%. These are companies I feel will make a genuine difference.”