New Project? Don’t Analyze—Act

Take a page from the playbook of those who are experts in navigating extreme uncertainty while minimizing risk: serial entrepreneurs.

We and others in the academic and consulting communities have spent years studying these leaders and the logic they use to create new products, services, and business models in situations where the old methods of analyzing, forecasting, modeling, planning, and allocating don’t work.

Some of the most surprising research comes from Saras D. Sarasvathy, an associate professor of business administration at the University of Virginia’s Darden School of Business, whose in-depth study of 27 serial entrepreneurs revealed a number of common behaviors. Instead of starting with a predetermined goal, these entrepreneurs allow opportunities to emerge; instead of focusing on optimal returns, they spend more time considering their acceptable loss; and instead of searching for perfect solutions, they look for good-enough ones.

The point is that successful entrepreneurs don’t just “think different.” They translate that thinking into immediate action, often eschewing or ignoring analysis. Rather than predict the future, they try to create it. We have seen this firsthand in clients and former students who have launched businesses in a variety of industries. And look at Starbucks CEO Howard Schultz: Coffee sales had been steadily declining for two decades before he came up with the café concept that would grow into a multibillion-dollar business.

This logic shouldn’t be limited to entrepreneurs working outside the bounds of traditional organizations. (After all, Schultz first tested his café idea when Starbucks was a small retailer of coffee beans, teas, and spices, and he was its director of marketing.) We believe that any manager can—and should—follow the same process when confronting the unknown, because it is an extremely low-risk way to launch new projects. It also involves only a few simple steps:

Act: Take a smart step toward a goal.

They added another “volunteer”: their colleague Jessica Buttimer, who was not only a marketing specialist but also another young mother and a health enthusiast. And they began to test prototype products with a small group of consumers in California’s Bay Area, where Clorox is based, again using their existing budget and simply keeping their bosses informed. The company learned a lot from this low-risk research: Most users rated the products as highly effective, and all were excited to see the Clorox brand on a green line. It didn’t change their opinion of the company’s other offerings—they already knew those contained chemicals—but it did change their views on the efficacy of natural products: If Clorox was behind an environmentally friendly brand, it must work. Cook and Sengelmann now had early results on which to build.

Build Momentum

When it comes to learning from and building on our actions, serial entrepreneurs do a better job than the rest of us in four ways: First, they move quickly in the face of positive results. If one step works, they immediately execute the next using the rules we’ve laid out.

Second, they embrace even negative results. They are grateful for surprises, obstacles, and disappointments because unwelcome news often provides the impetus to make a product, service, or business better, or it points to an entirely different opportunity—before too many resources are invested.

Third, they understand when and how to use prediction, even as they’re learning by acting. As your initiative progresses and requires more organizational resources, you’ll need to forecast where you can forecast, plan where you can plan, and model where you can model—but using the evidence you have created (and hopefully are still creating) through your smart action steps. This new way of thinking should augment, not replace, the way you currently solve problems.

Fourth, entrepreneurs know when to cut their losses and walk away. They recognize when their idea is impossible to execute, that they’re incapable of executing it, or that the risks involved in pursuing it exceed their acceptable loss.

Fortunately, in Cook and Sengelmann’s case, the smart steps paid off handsomely. They continued to act their way into the future while simultaneously planning Clorox’s classic big-product launch. Another “volunteer” supplied connections at the Sierra Club to secure the San Francisco–based environmental group’s seal of approval for the new line. Sample products and packaging were placed on store shelves. Low-cost, grassroots, social media–driven marketing initiatives were tried. The result was Green Works, now a $60 million brand for Clorox.

We’ve heard similar success stories from managers in other traditional organizations. One example cited by Harvard Business School professor Rosabeth Moss Kanter is the triumph of a group of tech enthusiasts at cookware retailer Williams-Sonoma, who countered their CEO’s lack of interest in e-commerce by launching a low-risk pilot site that has since grown into an industry-leading web presence.

Another, smaller-scale case study comes from a Whole Foods Market buyer we know whose interest in nutrition prompted him to pitch to his manager the idea of an in-store bar for vitamin-enhanced smoothies. He now personally staffs it once a week, and it’s a big sales driver for the store. Each of us has also had recent firsthand experience with entrepreneurial action at work. Here’s one quick example from Len: Instead of spending significant time and money to research whether Babson should create a West Coast outpost, his dean simply opened up admissions and discovered enough demand to start one six months later.

This anecdotal evidence suggests that the act-learn-build strategy can and should be espoused not only by entrepreneurs but also by employees working within traditional organizations. It takes just one smart step to get started.

The authors note that a more detailed look at the Clorox venture is found in The New Entrepreneurial Leader: Developing Leaders Who Shape Social & Economic Opportunity, by Danna Greenberg, Kate McKone-Sweet, and H. James Wilson (Berrett-Koehler, 2011).

By  from: Leonard A. Schlesinger, Charles F. Kiefer, and Paul B. Brown, from: http://hbr.org/2012/03/new-project-dont-analyze-act/ar/1?cm_sp=most_widget-_-hbr_articles-_-New%20Project%3F%20Don’t%20Analyze%E2%80%94Act

Leonard A. Schlesinger is the president of Babson College. Charles F. Kiefer is the president of Innovation Associates. Paul B. Brown is a longtime contributor to the New York Times. They are the authors of Just Start: Take Action, Embrace Uncertainty, Create the Future (Harvard Business Review Press, March 2012).