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Musings And Dialogue On Entrepreneurs And Decision Making (Part 3)

The following backdrop and questions apply to this part of the series of musings and open discussion on entrepreneurs and decision-making (Part 1 here and Part 2 here. Note that there will likely be a total of six parts for this series with a recap summary at the end.):

Some researchers talk about humans trading off exploration (testing the environment) against exploitation (using resources once they’re identified). For example, see link about small children’s learning behavior here. Do you think entrepreneurs are more focused on exploration or on exploitation? How does this compare to other jobs?

My off-the-cuff thinking on these questions are that entrepreneurs tend to be stronger than other workers in terms of exploration mainly because exploratory skills align with the creativity skills that entrepreneurs often have. Whether entrepreneurs focus on exploration versus exploitation, however, has to do more with what type of business is being pursued than something specific to the entrepreneur's disposition or decision-making style relative to non-entrepreneurs. For example, if the entrepreneurial business is something relatively unexplored (e.g., introducing a household device that can interface with your computer for printing paper that can be folded into edible food), then the entrepreneur needs to tap into exploration skills. On the other, an entrepreneurial business that is a copycat business (e.g., introducing a lowest-cost mobile phone provider in a new geography like Canada), well then the entrepreneur needs to focus more on exploitation (with potentially small customizations or market studies in the local market).

What are your thoughts and experiences?

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Musings And Dialogue On Entrepreneurs And Decision Making (Part 2)

The following backdrop and questions apply to this part of the series of musings and open discussion on entrepreneurs and decision-making (Part 1 was here):

In many corporate environments, employees are very aware that time is money. For example, consultants become very accustomed to thinking about an hour of their time having a very specific dollar value, and that becomes a salient opportunity cost when they decide whether to spend time working on a task. Do you think entrepreneurs are as aware of the dollar value of time? Is this a good thing or a bad thing? Do you think it could explain some of your observed differences in decisiveness?

My thinking on these questions are that consultants tend to be more aware of their opportunity cost of labor than others, if only because bill rates are usually widely known in terms of $/hr internally within the firm and often with the client. From this perspective, however, I don't really see much of distinction between entrepreneurs and those salaried within a traditional company. I think it is atypical for entrepreneurs and those working within a traditional, non-consulting company to think in terms of either hourly opportunity cost or activity-based cost. In my experience, these latter groups are more focused on goals. I think employing the hourly opportunity cost concept to entrepreneurs and those working in companies could potentially be beneficial, but I have not seen a lot of this outside a manufacturing context.

What are your thoughts and experiences?

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Musings And Dialogue On Entrepreneurs And Decision Making (Part 1)

A bit of a new angle on this blog, this post is related to the early-stages of a research effort by my wife (who is a professor of marketing at UCLA's business school) with respect to entrepreneurs and decision-making. Though I am no scholar in the area of entrepreneurial decision-making, I understand that the area of overconfidence in entrepreneurs is a well-studied and documented bias, but that there may be other biases and decision-making characteristics of entrepreneurs that could be better understood.

The basic idea is that if you can better understand biases and faults in decision-making processes of entrepreneurs that one can improve the decision-making of entrepreneurs through training.

With that as backdrop, I'd welcome perspectives on a series of questions that I'll be posting here.

The first questions are, "How much of being a (successful) entrepreneur is innate personal characteristics (things like risk taking or creativity), and how much is a learned ability to manage behaviors (like ability to be decisive or to manage time well)?"

Here's my off-the-cuff perspective (as a person that does not consider himself an entrepreneur but a person closely involved with entrepreneurial ventures and approaches):

  • Nature – There's some things that entrepreneurs are born with. These things include dispositional characteristics like being a risk-taker, having a need for independence, having drive for success, being creative, having strong intuition, having persistence, and having stamina.
  • Nuture – There's some things that entrepreneurs can learn. These things include learning how to better communicate, how to network effectively, how to make decisions, and how to recognize proxy markets and adapt learnings. Potentially nuturable areas are learning empathy, sales, and trade skills relevant to intellectual property development (e.g., engineering, software design).

What are your thoughts and experiences?

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Mini-Brand Audit of Guitar Hero By Activision (Independent Research)

Listed below is a pre-release, draft copy of a brand audit on the Guitar Hero brand by Activision. I performed this mini-brand audit as a self-funded, independent party, and I created this document for reasons related to business development, marketing, and teaching purposes (brand management & consulting).

The purpose of a brand audit is to provide a company with a starting point for managing brand architecture, brand identity, and brand-building activities. Brand audits are often refreshed every one to two years and may be done by either internal staff of the company or external consultants.

Although I am a stickler for crafting problem statements, I did not explicitly articulate the problem statement assosciated with this audit (which is something I typically recommend in a consulting deliverable). That said, the general notion of an audit performed by an external 3rd party is to provide a wholistic, and independent view of strategy and tacics. I believe this document accomplishes that goal within the described limits stated in the document.

For the coming weeks, I would appreciate input and feedback from folks. I would also appreciate help in spreading the word as I am not a mainstream media channel. 🙂

Again, there are few angles I am thinking about in terms of releasing this note in the public domain:

  • business development purposes for consulting
  • general marketing & personal brand development
  • instruction and teaching purposes

I plan to finalize version 1.0 of the document and re-release around September 1, 2009 before key milestones are reached by Activision and competitors.

Thanks for your interest. Please help to spread the word!

Draft copy of brand audit here (PDF file replaced by update below).

Update (8/30/09): Version 1.0 of Guitar Hero brand audit here (PDF file).

Update (9/4/09): Guitar Hero and related subbrand logos get a bit of a refresh (see here and here). The changes are consistent with the strategies outlined in the audit.

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Interview On The Ethics Of Consulting

I was recently asked to do an interview at the consultant website, "Think Like A Consultant" on ethics & consulting. The full interview is posted here.

One question particularly of note was "What are the best ways to handle a client who appears to have unethical practices?" For that question, I responded as follows:

Fortunately, I have not been posed with many situations that are obviously troublesome. One area that comes to mind, however, is when a client asks a consultant to perform competitive intelligence, especially when soliciting for primary market information. Let’s say that a client has asked you to masquerade as customer and try to obtain information on a competitor (e.g., on pricing). Some company codes of ethics would strictly disallow this, as would many people’s personal ethical value system.

What I would try to do in these circumstances is to rework the problem statement and methods with the client. For example, perhaps the problem statement may be more about getting higher confidence in prospective pricing levels that the client is looking to put in the market as opposed to getting the exact pricing levels from the competitor. With the problem statement refined, you may find opportunities to solve the client’s problem in a more palatable way, such as through running focus groups with customers or industry distributors, conducting benchmarking studies, and other approaches.

Articulating and rearticulating problem statements are something fundamental to consulting and something which I've addressed before. For example, see here.

In any case, I'd be interested in feedback on the interview from folks. It is my third or fourth serious post in the blogpshere related to ethics, and I don't expect it to be my last.

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What The Entrepreneur And The MBA Taught One Another

Two topics that I frequently see discussed in online forums, blogs, and articles are entrepreneurship and MBA degrees. In such venues, perspectives and responses are often very polarized, and it would not be unusual to see different camps characterizing the relationship of entrepreneurship to MBA training as either highly relevant or highly irrelevant to one another.

Rather than taking an argumentative approach to distill relevancy, one of my former colleagues (Paul Brown, an entrepreneur & founder, PhD degree) and I share a few things below that we specifically learned from one another (with Steve playing the role of non-entrepreneur, MBA degree). The context is during an enterprise software startup that went from Seed financing to Series A corporate venture capital to Deloitte Rising Star to sale/merger over a period of five or so years.

Some key things Paul got or learned from Steve (my notes taken from discussion and correspondence with Paul):

  • Level of professionalism added – Having an MBA-trained person on the team changed professionalism not so much in demeanor but in the total approach to business. The MBA perspectives complemented a very technical, software R&D organization that sold highly technical products.
  • Concrete methods and processes added – As opposed to piling receipts in the corner of the room and calling the pile "our accounting books", having an MBA on the team introduced discipline and methods in finance, sales, competitive intelligence & benchmarking, Board meetings, etc.
  • Business literacy added - Perhaps an understated item but by adding an MBA competency to the team it helped to make a difference in key company situations as to whether we were taken seriously or not by others (e.g., partners, investors, customers).

Key lessons that Steve learned from Paul:

  • Business experimentation is part of the entrepreneurial spirit and approach – Although I may have paid lip service to this in the past, I recalibrated myself away somewhat from business role models where managers are expected to "know the right answer" a priori. When you are paving new ground as in an entrepreneurial venture, there is tremendous value in conducting safe tests (such as floating an idea with another entrepreneur or an industry veteran, presenting a new pricing plan to a niche distributor).
  • There is value in tapering the need to make hasty decisions – Something that has always stuck with me for many years was something that I remember reading about the Harvard Business School training method. Students were pressed to make decisions and calls based on information (however limited) in a case study. In reality, this type of mentality is reinforced in many business school and business settings. The mentality is that one will always have incomplete information whether in a managerial, case study, etc. setting, and one needs to make decisions as a manager. Boom, boom, boom, done. Although I have not fully formulated my thoughts in this area, what I believe I learned from Paul was that the entrepreneur may benefit not from procrastination but by delaying critical decisions as long as there is time to either gather additional information, see activities play out, or let management team emotions clear. (I know – my idea is a bit convoluted in its current form, but I am onto something and will revisit).
  • If you want to appreciate entrepreneurship truly, you must witness someone with total willpower, drive, and endurance – I don't think I need to say more here, other than Paul has these characteristics.

Paul, thanks for the lessons!

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Some Of My Scattered Notes On Pro-bono Consulting Via Taproot Foundation

For those interested in nonprofit and pro-bono consulting, I have started to dip my toes in with the Taproot Foundation to do a greater good for the community. The economy is tough, and I should put myself to good use. Have not started any projects yet, but I am going through director training. I have some scattered thoughts and notes here and here, and these thoughts and perspectives are mainly in the context of a person who has spent most time in commercial consulting.

As a digression, I encourage those that follow this blog to do so via email subscription or RSS feed. The updates on this blog are somewhat infrequent, primarily because I try to include limited scope & more substantive information here pertaining to management, consulting, and leadership. 

If you want more frequent information on a broader range of business topics, you can consider seeing my teaching thoughts and multimedia exhibits for my marketing course at my marketing posterous site. If you'd like to view diverse links (sometimes 1-6 per day) on business, social media, entrepreneurship, consulting, and random interests, you can see my Twitter page or look at the rolling list on the homepage of my main blog.

I plan to have two upcoming posts that I have not really seen discussed elsewhere, one on ethics in consulting and one on something to the effect of what an entrepreneur and an MBA taught one another. Either the links or complete postings for those will be provided on this blog.

Thanks for your readership!

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Collecting My Favorite Multimedia Clips and Exhibits For Marketing Course

Starting to collect my favorite videos and photos on my new posterous site (marketing section at http://steveshu.posterous.com/tag/marketing) for teaching business school classes (e.g., marketing, brand management). Folks may find some of the videos and photos entertaining.

I am still trying to find the best way to organize the videos in the context of what part of the marketing or brand management framework is being covered. I may also find a better way to include more detailed marketing notes on each video or photo. In any case, please feel free to send me links of your favorite videos. I may extend the posterous site to include organizational behavior topics, depending on my fall teaching load.

As background, I am using my posterous site as a scratchpad space separate from this blog and Twitter streams.

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