'Being an entrepreneur is the art of getting things done'
Entrepreneurship is often the art of making second best choices
August 30, 2013 / 15:16 IST
Manish Sabharwal
Shakespeare understood that the very strength of individuals was often their weakness; Hamlet’s all things considered mind was also the source of his fatal hesitancy (To be or not to be). But to paraphrase economist Albert Hirschman, the mission of every entrepreneur is to ‘prove Hamlet wrong’. Courage, Hirschman believed, required the willingness ‘to always be on guard against oneself’. His point was about avoiding analysis paralysis; it is often more important to move forward by making decisions rather than wait for perfect information or perfect options.Diminishing ReturnsSome people postpone decision-making for more analysis/ information/ research/ consultation/ options. And there are situations where delaying reveals more information, makes the decision irrelevant or allows more options to emerge. But in many situations there are diminishing returns in waiting for the ideal option or carrying out more analysis.The theory of bounded rationality developed by Nobel Prize winner Herbert Simon in 1955 believes that people have limited endowment of intangibles such as time, information and brain power. But Simon argued that individuals, despite their bounded rationality, tend to make choices that are good enough. Real human beings don’t and shouldn’t try to always maximise outcomes even within the scope of their constraints.From the perspective of behavioral economics, human beings will happily settle for what is good, not necessary what is best. Thinking about everything is impossible, so ‘satisficing’ -- selecting a choice that is good enough within the constraints of time and place -- is not wrong or irrational. Simon built his theory for individuals but it has interesting implications for entrepreneurs.
Getting Things DoneBeing an entrepreneur is the art of getting things done. And getting things done is about making decisions. However, many decisions have fuzzy answers -- hiring the right person, crafting a marketing campaign, buying a company, taking an investor, raising debt or equity, and offering customers credit. Decisions like these have many possible options and the possibility of infinite analysis. Indeed‚ many of us know companies where the need for consensus creates a culture of committee in which “anybody can say no, but nobody can say yes”. This culture thrives on unending requests for information or options.As an entrepreneur who wished somebody had physically stopped us when we made one of our acquisitions a few years ago, I value detailed analysis much more than I did a few years ago. But I also recognise that much of our company’s growth has been driven by decisions made by taking the best available choice rather than waiting for a better -- or the mythical best -- option to emerge. Like our choice of investors, key hiring, engaging with public policy, keeping IT in-house, and much else.Momentum Is EverythingWaiting may improve outcomes, but may kill momentum. And during the early stages of a company and industry, momentum is everything. In fact, making a decision reveals information that can be used for the next round of decisions. Life is cumulative. The best strategy is strategic incrementalism; make decisions that give information but allow for flexibility. But alas‚ this is not always a viable strategy; you can’t cross a chasm in two jumps!Skeptics often position second best decision-making as compromise or jugaad. Both are wrong. The compromise camp does not realise that done is better than perfect. And the jugaad camp does not realize that jugaad implies cutting corners but second best choices are about pragmatism; playing with the hand you have been dealt with.Of course entrepreneurs live by the Olympic credo of Citius (faster), Altius (higher) and Fortius (stronger). But their significant genius is that they are not trying to be right‚ but successful.Manish Sabharwal is Chairman, Teamlease ServicesRelated Posts The past vs the future: Manish Sabharwal
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