Saras Sarasvathy Explains the Entrepreneurial Method | Big Think

Saras Sarasvathy Explains the Entrepreneurial Method

New videos DAILY

Join Big Think Edge for exclusive videos

----------------------------------------------------------------------------------

The key skill is assessing the resources available.

----------------------------------------------------------------------------------

TRANSCRIPT:

Question: What method do entrepreneurs use?

Saras Sarasvathy: I presented the entrepreneurial worldview fully born, if you will. But in actual fact I had to understand that by looking at what entrepreneurs actually do in a micro level, if you will. So in my research, I talked to a whole bunch of, you could call them successful entrepreneurs, but success was only a part of their story. I call them expert entrepreneurs. These are people who had several years of founding experience, of multiple firms, often success and failures and they had learned to perform well overtime. So they had taken at least one company public so of course people see them as successful entrepreneurs. And, when you study how they think and I gave them a 17-page problem set of typical start-of-decisions that all entrepreneurs have to make in starting a company. So I got to see at the micro level the kinds of things that they do. Not just the whole world view of how they think but how they implement that world view in their practical day to day business problem solving if you will and I found the CDs of things that they do and I wrote about five of these, the five principles in my book but I suspect there are more. And I think, as I teach and I look at more histories of entrepreneurs and I talk to them I think there will be more. So I don’t want to talk about this, that there are only five principles, but I can give you some examples.

So, one of the things I always talk about to my students is about cooking. Now, I say there are at least two ways of cooking. One is to start with a dish that you want to make and when you have a great recipe, go get the ingredients and then you make the dish. The other way, the way most of us cook I think, is we stumble into the kitchen, open the refrigerator and find stuff and if you come into my house you would find brown powder that you might have to smell to know what it is because I’m making it in food. And so, you kind of look at what you have and then you try to make something with it. The interesting question here is what difference does it make whether you cook using a recipe and proper ingredients or whether you stumble into the kitchen and cook something. It depends on how good a cook you are, what you end up cooking. So, you can get away from the basic ideas that you need to understand about running a business, so you still need to know how to manage your cash flow and things like that; but, when you just stumble into the kitchen and cook, what happens is, assuming you know how to cook and you’re a good cook, you are much more likely to come up with a new dish that even you might not have actually planned to make. Whereas if you are cooking from a recipe would get that dish, right? You wouldn’t get some of the new dish and that’s the interesting part of it.

So it’s not really a question of this is better than that, it is just that the way entrepreneurs do it, they work with what they have and they look around and say, “What can I do with this?” And then, “What else can I do with it?” So it goes back to the idea of doing the doable and then pushing it. So they just look around at the resources that are available to them and by resources I don’t even mean money. A lot of the entrepreneurs I study started with things like who I am, what I know and whom I know. So they are looking at what kind of a person am I, what kinds of things turn me on, what kind of things that I just will not do because it goes against my values. So, they have a sense of self. They know what they know and very often they are very good at knowing what they don’t know. So they look at what they know and don’t know and they look at the people that they know and they start talking to the people almost immediately and they bring them on board very early on. So they work with what they have to create something new. So that’s a technique and there are lots of techniques connected with that that we can learn and teach. It’s very useful in the classroom.

The second thing that they are very good at doing is to think through in deciding what to do with what you have. They are not really thinking about where will I get the biggest bang from the buck, which one is likely to lead me to the most profit? Instead they constantly asked themselves, “Would I do this even if I know I’m going to lose what I am investing in it?”

Read the full transcript at