What is the entrepreneurial mindset, and why it is so important?

What is an entrepreneurial mindset? 

Entrepreneurship is neither a science nor an art; it is a practice- Peter Drucker. Mindset is a set of assumptions, methods, values or norms that influence someone’s way of thinking and behaviour. A new venture, e.g. startup, needs such an entrepreneurial mindset to create and deliver unique values to customers, and these values can differentiate one venture from others, describing the philosophy of business on how to make a new product that customers want. Way of thinking can be grouped into experimental and managerial methods, where the experimental thinking focuses on validated learning while the managerial way aims at setting and executing a plan to deliver. Indeed, the experimental approach reinforces the entrepreneurship mindset, and entrepreneurs apply this way to test assumptions in the marketplace. However, managers think differently while running their businesses by setting plans and follow up execution to deliver on time regardless of any changing of circumstances. For example, an entrepreneur sets assumptions about a new product and test it in the marketplace, but the manager sets a product-development plan and follows up execution to deliver it before the deadline. 

An entrepreneur applies the experimental approach 

The experimental approach involves supporting, refuting or validating a hypothesis in the marketplace, and it demonstrates what outcome occurs when a particular factor is changed. It uses the cause-and-effect method to validate learning. Entrepreneurs, while exercising this approach, constantly test assumptions on a business concept or making a new product. According to this approach, entrepreneurs discover opportunities by observing and understanding challenges and bringing stakeholders, i.e. team, partners or investors, to create businesses that develop unique values. They also discover and validate learning through iterated building, measuring and learning processes in the marketplace. For example, entrepreneurs test a problem and create a solution by using the validated learning method. Besides, entrepreneurs test assumptions with potential customers in the marketplace and decide on the best business concept or model forward. For example, the entrepreneur perceives a new business as a value creator and innovator, but manager acts differently as an administrator and controller of the processes. 

A manager applies the predictive approach 

The predictive approach sets and executes plans, based on pre-arranged assumptions and resources, to reach targets. This approach presupposes that assumptions are constant, and reaching the goal is merely a matter of time and resources. Managers practise predictive approach by studying opportunities and quantifying resources required to reach milestones, and they also follow up on a business plan and measure results. Besides, they mainly focus on delivering the project before the deadline.

An entrepreneur creates value and takes the risk

Entrepreneurs demonstrate specific attributes and skills while creating new businesses, like being visionary, creative thinking and innovative, risk-taker, problem solver, communication and pitching and powerful observation. Besides, they demonstrate outstanding ability in customer-driven thinking, network building, and financial thinking. But, what differentiates an entrepreneur from other people are two key attributes, namely creating values and taking high risk, as entrepreneurs strive to create and test values while working in conditions of extreme uncertainty. Entrepreneurs, in their journey to create ventures, go through different stages of creating and testing assumptions, including concept development, product-market fit and growing. In every stage, the entrepreneur exercises skills of validated learning to create values that customers want. 

Entrepreneurship is about innovation 

Innovation is practical creativity, and how to make new ideas useful; it is the practice of seeing what others do not see; seeing what does not yet exist- Max Mckeown. Innovation requires a robust culture that motivates people to create ideas, think differently and solve problems in creative ways. Innovation is successful if only it brings value to the business or customer. According to Altshuler’s Innovation Pyramid, only 0.05% of ideas are usually real innovations. Innovation comes in the shape of incremental or disruptive, and it mainly focuses on better satisfying customer needs. Disruptive or transformational innovation takes place when a technology-product holder grows weaker over time, and this weakened technology encourages another smaller domain player in the market to copy and develop a new product that will supersede the existing technology. Disruptive innovation brings to the market a new product or new customers or a cheaper product or all of these. There are many tools to innovate solutions, including design thinking, lean start-up, business model canvas, growth hacker, value-driven and many more. The design-thinking approach is at the heart of innovating a new business idea, and it focuses on observing and analysing customer segment to generate a workable idea. It consists of empathizing, defining, ideation, prototyping and testing a new business idea. The lean-start-up method provides the basis for mapping and creating unique values, while the business model-Canvas describes how a business creates, delivers and captures value. The common attributes among all of these tools are putting customers at the centre of thinking and developing unique values to solve pressing issues.

Final note

This article is extracted from my new book- Mastering Enterprise Skills for Potential Entrepreneurs, which can be found on www.amazon.co.uk. If you want to receive more information about the book and our activities, you can register in our newsletter by using this link.

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Prepared by Munther Al Dawood

Enterprise Expert

Grow Enterprise

http://www.growenterprise.co.uk

maldawood@growenterprise.co.uk

Reading, UK

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