I take a rather novel approach to entrepreneurship. Instead of the "business success tips" approach to venturing, I take the failure-elimination approach. And it is for this reason that I shall briefly explain the difference.
The difference is in the method. In a free enterprise economy, the market acts as the engine of an ecological system where "fit" organizations survive, and where the "unfit" do not.
For years, scholars and entrepreneurs have searched for a checklist that, if followed, will ensure that a venture survives and prospers. As of this writing however, no master list has been found. Yet some ventures still succeed, while others fail. This phenomenon suggests that there may be systematic differences between the ventures that the market "selects for," and those ventures that the market "selects against."
The New Venture TemplateTM technology identifies these systematic differences, to show you how you can dramatically enhance the probability that your (or your client's) venture will succeed. The approach it takes is thus unusual in one key respect: This technology does NOT offer a success checklist. Rather, it will help you attack the known causes of venture failure and dramatically improve the probability of the venture's success and reaching private equity.
Here an analogy is helpful. Let us compare the approach I take to extending business life to the approach that medicine has taken toward the extension of human life. We'll compare venture success to medical success.
Over the centuries there have been two basic approaches to medicine. The first and earliest, was a blend of pseudoscience, magic, and mystical philosophy - today referred to as alchemy. It attempted to find the elixir of life, a single substance that would cure disease, and lengthen life. The second and more recent (though less romantic) approach was based upon the scientific method, and consisted of systematically isolating the causes of human mortality, and working to eliminate them one-by one.
Alchemy failed completely, and medicine to date has only partially succeeded. But today we continue to rely upon the medical model, because it yields quantifiable results. In countries where modern medicine is practiced, for example, infant mortality is very low and individual life spans are significantly extended. In areas where modern medicine is not practiced, the mortality rate for new human beings is remarkably similar to the mortality rate of new ventures--far too high!
In my observation, two things are known about starting a new business. First, at least 50 percent of new ventures fail within a short time of their founding. Second, almost every would-be entrepreneur believes it won't happen to them. Achieving success in a business venture can therefore be approached in two ways. The first way is to change the "odds" of success. This approach examines the 50 percent plus failure rate, rejects this failure rate as too high, and seeks ways to reduce it. The second way is to trust only in luck--to flip the new venture coin so to speak. This method assumes that action is key, that venturers will be equal to the setbacks, and that the outcome is mostly uncontrollable anyway.
My approach is not about taking either the first road or the second. It is actually about taking both. It is about insuring your success as a venturer by tilting the "odds" in your favor, so that when luck makes its play, the probability that your venture will be "selected for" will be maximized. The big idea, therefore, advocates the scientific model, tempered by luck. It advocates the notion that new venture success occurs because of venture failure prevention. Of course, if you wish to trust to luck only--READ NO FURTHER. This could ruin your "fun".
But if you wish to systematically build a business venture that has a fighting chance of survival and prosperity in the ecology of the free market system, then READ ON! Yours will be an experience where the wisdom of the masters of new venture success will be transferred to you using the early failure diagnosis and prevention method. You have the opportunity to avoid a huge part of the "unproductive" waste and trauma that comes with the failure of a venture.
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Dr. Ronald K. Mitchell is a specialist in entrepreneurial cognition, global entrepreneurship, and venture management. He developed the Entrepreneur Assessment which won the acclaimed Heizer Award for this groundbreaking research. Find out more at http://entrepreneur.venturecapital.org/
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