Effectual Entrepreneurship - Stuart Read, Saras Sarasvathy, Nick Dew, Robert Wiltbank

Partial Excerpts (antilibrary)

Effectual Entrepreneurship

Open this updated bestseller. Inside you’ll find everything you need, including:

If you want to learn about entrepreneurship in a way that emphasizes action, this new edition is vital reading

Copyright

First published 2011

Second edition 2017

1 Roadmaps, myths, and the Bahamas

Practically Speaking Murky Brew

consider the insight that created today’s fabulously successful Starbucks. Unfortunately, the alternatives suggested by the mythical journey do not help much

when Howard Schultz joined Starbucks in 1982 as head of marketing he was unable to talk the founders into offering drinks, so built his own coffee bar and called it Il Giornale (merged with Starbucks in 1987).

In its original form, Il Giornale struggled. Customers did not like nonstop opera music. They wanted chairs. Some asked for flavored coffee

So the story of Starbucks, like the story of many enterprises, is full of stakeholder (e.g. investors, customers, employees and strategic partners) input and entrepreneurial action

two elements of the real entrepreneurial journey

First, it explains why you didn’t think of Starbucks

Second, it informs you about what you should do. If opportunities are created, as opposed to found, then taking action is more important than doing research

Practically Speaking From Bags to Riches

By some combination of wanting to engage deeply with the culture of Cambodia, create economic opportunity and social progress in the region and meet the man of her dreams, Debbie Watkins turned her respite to resolution. Over beer one evening with her future husband, Marc Lansu, the pair imagined a venture that could animate Watkins’ aspirations, and thus Carpe Diem, a non-profit tour operator providing small group excursions in Cambodia, was born.

The organization employs more than 20 people today

But this story is not about Carpe Diem Travel. Carpe Diem is only a waypoint on the journey of an entrepreneur who, during her travels, could not help but continue to see problems and opportunities everywhere around her

Handling waste in the developing world is hardly a systemic activity; most often, individual entrepreneurs extract whatever value they can from the refuse of others

And so Watkins’ next venture was born. She formed Funky Junk (www.funkyjunkrecycled.com ) in 2009 to weave those plastic bags into something of value

job is not to wait in the shower for the moment of divine intervention but rather to get out in the world and create something. The process of creating does not happen in isolation; instead, it is a function of interacting with others

2 Good ideas are everywhere

Many people who want to start a venture say they haven’t yet because they don’t have a good idea. The fact is that good ideas are cheap and plentiful. It’s what you do with them that matters.

Good ideas are everywhere

IN THIS CHAPTER: ■ Ideas are a dime a dozen ■ The idea-to-venture formula ■ Takeaway: Everybody has a good idea

there is only one way to determine whether a given idea is a good business opportunity—go ahead and give it a try. Implement it creatively with very low levels of investment and either find real customers who are willing to buy the product or service at a reasonable price, or locate partners willing to commit resources to the venture early on—or, ideally, both.

Understandably, most first-time entrepreneurs, especially those who have good job-market prospects, worry a lot about finding the “right” opportunity. Hence, the angst about waiting for an idea that is “good.”

As you think about these questions, consider Medtronic. In 1949, inspired by the impact of electricity on life, as depicted in the 1931 movie Frankenstein, Earl Bakken founded the medical devices firm. But it was a long time until he conceived the cardiac pacemaker, the company’s first breakthrough product. Bakken spent his first eight years working as a medical equipment repair technician. In 1957, after years of interactions with doctors and the medical industry, he began developing the pacemaker. Even then, the device was much more a collection of knowledge from his repair work than a flash of visionary genius

Ideas are a Dime a Dozen

entrepreneurs not only change the idea they started with, but also that change is positively associated with financial success. The study reported that startups that pivot once or twice raise 2.5 times more money, have 3.6 times better user growth and are 52% less likely to scale prematurely than startups that pivot more than two times or not at all

Practically Speaking Turning a Hobby into a Business

When John Vence sent his son Michael off to college, he equipped the young man with a loft bed to maximize tight space in the campus dormitory. Word of mouth soon spread, and Vence was delivering loft beds hundreds of miles from his home in Horseheads, New York. Demand got so great that Vence investigated what was necessary to ship his beds nationally and turned the hobby into a full-time business. Today, College Bed Lofts employs 18 people

What we see in the stories of all these firms is the relative importance of the entrepreneur and the action over the idea.

Practically Speaking Turning a Disability into a Business

Ever been on a blind date? Most people say it’s simultaneously scary and exciting, and it’s always memorable. Which is also what people say about Axel Rudolph’s unsicht-Bar. unsicht-Bar is a small Cologne eatery run by the blind where patrons enjoy wine, cuisine, and conversation in the pitch dark.

eliminating the sense of sight intensifies the rest of the senses so that unsicht-Bar’s simple fare (the chef seasons with only salt, pepper, garlic, onions and herbs) comes alive in a way you might never have tasted before

unsicht-Bar’s popularity has led Rudolph to open additional locations in Hamburg and Berlin

Blindness is generally considered a liability—a handicap. Rudolph inverts it. unsicht-Bar makes blindness a point of differentiation and a basis for advantage

Inversions like this are everywhere. Take Post-it Notes. Who would have thought you could develop a blockbuster product from a glue that wasn’t very sticky?

Practically Speaking Trash to Cash

Kevin DeWhitt would tell you, from the trash. In 2004, he and his wife founded Agilyx Corporation (originally Plas2Fuel) with the idea of taking plastic waste and turning it into something better than money—crude oil. From a chemical engineering perspective, it makes perfect sense.

In practice, the science turned out to be difficult, and the business even more difficult

partner with a customer willing to make an angel investment and at the same time assist in the development of an operational prototype. By creating with its customer, Agilyx built a working system that could be demonstrated to potential new customers, provide real-time environmental data to regulators, and give the team ideas for optimizing the system for full commercial deployment.

Having proven the concept, Agilyx now has to figure out how to scale the business up to be able to handle this enormous quantity of fuel.

Practically Speaking Everyone is Doing it

ask how entrepreneurs make psychology work for them

Generating more energy and using energy more efficiently have become central issues of our time.

Dan Yates and Alex Laskey founded Opower in 2007 to help their public utility customers reduce consumer peak-power usage, build fewer power plants and better utilize existing facilities. Opower is effective. About 85% of its clients’ residential customers cut home power consumption by about 3.5%. But where did such a good idea come from?

Subsequent meter readings found that recipients of the “everyone’s doing it” notice reduced their energy consumption by 10%, while no other group reduced their energy use by more than 3%.

Yates and Laskey combined this information with other means they already had

Seeing the foundation for Opower illustrates how the firm is more of a natural synthesis of the founders’ means than it is an unexpected flash of inspiration.

Total energy reduction from Opower’s activities with just their existing utility customers is equivalent to one-third of the US’ entire solar energy generation. No hydrogen fuel cells needed. No cold fusion. Just comparison data on your monthly electricity bill. The firm issued an IPO in April 2014 and is currently worth about a half a billion dollars.

In this section, we outline the kinds of transformations an idea goes through on its way to becoming something valuable