The three pieces of entrepreneurship: opportunity recognition, opportunity assessment, and opportunity realization
In today’s world, especially living in the San Francisco Bay area, everyone has his or her stereotype of what an entrepreneur is. Are they someone who wears a hoodie? Someone who eats pizza and plays video games at work at 3 am? Or someone else who neglects all for her garage laboratory? They might be entrepreneurs, but at the real heart of entrepreneurship are three things: the ability to identify or recognize opportunity, the ability to review or assess opportunity, and last but not least, the ability to successfully execute and realize opportunity. While these tasks seem straightforward on paper, the skills you need for each one are very different, and it is difficult to be good at all of them. To be a successful entrepreneur, you need to excel at all three, all at the same time.
The people who typically excel at opportunity recognition are the right-brain creative type people. These people are clever and look at the same situations that everyone else does, but envision something different. They see new angles, new possibilities, and new ways to do things. Scientists, especially those in the heavily analytical fields, often struggle with this phase. Being a scientist, we strive for reproducibility and have the mindset that if A + B = C today, then A + B = C tomorrow. People who excel at opportunity recognition often look at a situation and say, what if tomorrow, A + B = D? Then what? Opportunity recognizers truly think outside the box, stretch the limits, and are combinatorial in non-traditional ways.
While the opportunity recognition phase is crucial when beginning a new enterprise, it is important to seek new opportunities throughout the entire lifetime of any enterprise. To stay ahead and on top of the market, companies must constantly recognize opportunity as they continue to grow and evolve. Steve Jobs is the quintessential opportunity recognizer of our era; his iterations of Apple have successfully capitalized on opportunity after opportunity. Facebook also excels in opportunity recognition. As Facebook usage increased, advertisers wanted a piece of the action, thus the ability to “Like” “Pages” was born.
The opportunity review phase is where scientists generally stand out in the entrepreneurship process. The opportunity review is when the analytical assessment of the opportunity that was recognized occurs. During this stage, an entrepreneur must assess potential strategies and business models as well as conduct market and economic analyses in order to establish an answer to the question: Can I bring this idea to market in an economically successful way?
Next, it is time to construct a business plan, a concept any MBA student knows all too well! A good business plan will answer several key questions: What is the market for my good or service? What does the market need and/or want? Who are my competitors? How will I create and sustain a competitive advantage? Is my product or service distinct and unique? If you are a “me too” enterprise, meaning that you are simply imitating another business’s product or service, then you will only be able to do as well as the firm your imitating, never better. To be better, you must differentiate yourself in some way such as differentiation by price, value, features and benefits, guarantee, location, retail availability, or specialization.
Other questions to consider during the assessment phase: What are the intellectual property implications of your core idea? Do you plan to trademark, copyright, or have proprietary information? Are you going to be able to get the start-up capital to trademark or copyright without divulging the uniqueness of the company?
What is the model that builds in sufficient revenue compared to cost? How will you pay back investors, on top of all ongoing costs, supporting employees, maintaining raw materials and all of your other expenses? How impressive do your income statements and balance sheets look? How would you price this technology, idea, or product?
The 2007 book by Heath and Heath titled Made to Stick: Why Some Ideas Survive and Others Die talks about the difference between things you hear once and never forget and things you hear over and over, but fail to remember. For example, we all remember hearing “you can see the Great Wall of China from outer space,” but the best part is – it’s not true! No matter how many times this has been put to rest, it has never left the public consciousness (the Great Wall of China is about as wide as a highway; you cannot see highways from outer space). So how do you make your company that memorable? According to Made to Stick, you need to have a “sticky” tagline that is simple, unexpected, concrete, credible, emotional, and told as a story.
Just like opportunity recognition, the opportunity assessment process never actually ends in a business. A plan is necessary, for sure, but an entrepreneur must be nimble in the face of market changes and forces. Perhaps the most difficult challenge of a start-up company or a budding scientist is to make the correct decision between staying the course with the plan and determining when it is most beneficial to detour from the plan based on reactionary forces. As an entrepreneur, this is the largest struggle I personally face.
The opportunity realization is what I call the “Get it Done” phase. During this phase, it is time to take advantage of the situation and execute all of the great ideas and projections ascertained from the two prior phases. In my experience, many scientists struggle with this phase. This phase is tough and unpredictable. It is a combination of doing things by the book and also dealing with inimitable people and unique situations. Now it is time to build a team, raise money, develop a marketing strategy and a sales approach, implement your sticky idea. From a scientist’s point of view, this can feel a lot like publishing a peer-reviewed manuscript.
Implementing the plan is often not as simple as it seems. You are suddenly faced with a whole new set of questions: is your business scalable? does your team work well together?
A great book published in 2010 that explores the realization side of the business is Stuart Diamond’s Getting More: How to Negotiate to Achieve Your Goals in the Real World. Getting More takes the premise that there are pretty standard ways of dealing with common life and business issues. If you change how you approach these common situations by changing your behavior, can you change the behavior of the people around you? Can you train yourself to be a tougher negotiator, to get more out of every situation? When is it more efficacious to be nice? To be tough? How tough is too tough? This book is a definite must-read for any aspiring entrepreneur.
In theory, everything that makes a good scientist should make a good entrepreneur. However, as a current graduate student, I feel that we are not often taught how to become applied scientists or even made aware of different aspects of our professional lives that could be used toward entrepreneurship. Just like delivering any paper, patent or scientific discovery, being an entrepreneur means having several ideas, exploring the most “sticky” ones, and finally implementing the winning initiative with full force.
Reprinted with permission from the American Women in Science (AWIS) Fall 2012 Magazine.