Understanding behavioral economics is a key element in helping us to make good decisions – so this is a short blog to let people know about the free course that is about to begin:
A beginners guide to irrational behavior by Dan Ariely.
I have read a few of his books and seen a number of his lectures. Not only does he know a lot about behavior economics and why we act and decide the way we do – he also conveys it in an entertaining and amusing fashion. I am really looking forward to the course.
The course is hosted by Coursera, an organisation offering free courses who have linked up with 33 other institutions – pretty impressive ones at that …. the likes of Stanford, Princeton, IE and Michigan.
I cannot vouch for he quality of all the courses, but have done one course on systems modelling (Michigan) and can only say it is excellent. You do not need to pay a cent or even buy the professors book. Content is delivered in videos between 5 and 15 minutes long – so it is easy to fit the occasional study period between tasks. It also only takes about 8 hours a week that even the busiest people should be able to manage, given you can listen to the videos whenever you feel like it.
The course starts on the 25th March, so sign up now! Click on the link to find out more and sign up at:
Saras Sarasvathy, a professor at Darden School (University of West Virginia), undertook some research to see if entrepreneurs thought, acted and decided differently. Her conclusion was that this is the case. At its most basic level, she says that rather than set a goal and work out how to get there, entrepreneurs start with the means at their disposal, collaborate with others and go on a journey to see where they end up. Her work has attracted much attention and is taught in many entrepreneurial courses the world over. The process is portrayed below (you may need to click on the picture for a clear view):
I have read her research papers and various other materials, but the best explanation of her process I have come across is displayed in this video from the University of Gallen:
The 10 myths of entrepreneurship
So, through trial and error, together with discussion with stakeholders and customers, and a clear understanding of the means at your disposal, you develop a new product or business even if your original goals need to shift substantially in the process.
At Genesis we have a view on Saras thinking – although it may go a little against the crowd at the moment. Although I am not certain how academically robust was her research, intuitively there are some great ideas embedded in the theory. Base your business on your own means (including competences), spend more time experimenting and market testing (than in-office analysis), share your ideas and get inputs, … these are all good. They also dovetail nicely with other entrepreneurial thinking such as that of Alex Osterwalder (Business Model Generation) and Steve Blank (The Start-Up Owners Manual). These concepts are particularly useful when dealing with “fuzzy” markets where you have really new products or are developing a new market or market niche.
Where do we think this could be dangerous? Taken to its extreme, we believe the process could lead to laziness and sloppy thinking if it is used totally outside causal thinking. We accept that a new start-up is not the same as a microcosm of a large enterprise, but there are some excellent analytical tools and strategic thinking that can play an important role in the entrepreneurial process. From the humble SWOT through Porters competitive strategy and on to Christensen’s disruptive technology – all could guide the process (depending on the venture) and could also help to reduce risks of ending up in the wrong place and/or with the wrong product.
Furthermore, one of the things that we believe is a characteristic of great entrepreneurs is to persevere and continue far beyond the point when other more “sensible” people have thrown in the towel. That attitude does not sit well alongside the idea that goals can be changed whenever things seem to be going against them.
Our conclusion, Saras has begun an interesting “movement” and there are many important principles that should be used in the “0 to 60mph” phase of the start-up. But do not throw the baby out with the bathwater – recognize that causal thinking, modelling and other scientific business principals can enhance the effectuation process.
We are about to launch a new company: Mashauri Limited aimed at helping entrepreneurs through the process from start-up to stable business where we have cobbled together a mixture of the types of thinking discussed above. We have produced a process that we believe will really enhance the entrepreneurial journey and greatly increase the chances of success. If you are an entrepreneur in the early stages of start-up and would be interested in trialling the product, contact me at firstname.lastname@example.org to discuss it.