(2016-03-17) Pearson How Entrepreneurs Figure Out What They Want

Taylor Pearson on How Entrepreneurs Figure Out What They Want: Effectual Reasoning (which he later re-framed as Effective Entrepreneur)

When people have a Vague Goal “I want to earn a living helping people be healthier,” but lack a clearly defined goal, they fail to pursue any route.

Assuming you have some vague goal or sense of which direction you’d like to move like “earn a living helping people be healthier,” ask: “What do I have?”... If you start by assessing “what are the means that I have readily available”, then determine “what are the ends given those means”, the problem changes from how to know what you want, to imagining future possibilities given existing means.

Let’s walk through an example starting with the vague goal of having a business to help people be healthier.

What Dr. Sarasvathy discovered in her research of over thirty successful entrepreneurs (they ran companies ranging in size from $200 M to $6.5B) is that to think entrepreneurially is to look at the means before determining the ends.

Instead of starting the market research and making snack bars right away, you start with making an assessment of your available means:

  • Who are you
  • Who do you know
  • What do you know

At this point (after taking first round of actions), you evaluate your means again... Because you are evaluating your means before clearly defining a goal, you realize that you could achieve your vague goal of “earn a living helping people be healthier” in a way you hadn’t imagined before... Instead of starting your snack bar company, you now start a PPC consultancy targeting health food brands.

You can imagine a new clearly defined end – a supplement company for vegans... At one of the speaking engagement, a hedge fund manager approaches you to do productivity consulting for his hedge funds... You use that knowledge to sell your two existing companies... You become an angel investor.

Plan Your Life Ninety Days at a Time (Quarterly Review)

6 Steps of Effectual Reasoning

  1. Determine Vague Goal
  2. Identify Means
  3. Imagine Clearly Defined Ends... start imaging potential, clearly defined ends (Opportunities) that could lead you in the direction of your vague future goal.. I find that 90 days is a good time frame to pick a definite goal for.
  4. Prioritize: Work on one thing (Most Important Task) for 90 days, and then re-evaluate.
  5. Manage Risk: Are there any options you’re considering for which there is a true possibility of an irreversible, negative outcome? How can I manage or mitigate it?
  6. Ready, Fire, Aim: A key difference here is that when unexpected things happen, they are not obstacles between you and the defined end, they simply suggest a different imagined end.

In The End, Re-Evaluate Vague Goal. This is a cyclical process. It’s why I never plan more than ninety days at a time.

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