NEW VENTURE PERFORMANCE Two Toolboxes for Starting New Ventures（一）.pdfVIP

UVA-ENT NEW VENTURE PERFORMANCE Two Toolboxes for Starting New Ventures There are at least two ways of building new ventures. Most textbooks and newspapers suggest the following way: • Do market research and competitive analyses to figure out target market segments • Develop marketing strategies, calculate cost/price margins, and make financial projections • Make a business plan, raise resources, hire a team and build your venture. Expert entrepreneurs, on the other hand, appear to disagree with this approach. They prefer instead to do the following: • Begin with who you are, what you know and whom you know and begin DOING the doable with as little resources invested as possible • In particular, begin interacting with a wide variety of potential stakeholders and negotiating actual commitments • Let the actual commitments reshape the specific goals of the venture • Repeat the process until the chain of stakeholders and commitments converges to a viable new venture The former is called causal or predictive, since it depends on accurate predictions and clear goals. The latter is effectual or non-predictive and it is extremely stakeholder-dependent and means-driven. It is very tempting to jump to the conclusion that the latter is the better way since it is overwhelmingly preferred by expert entrepreneurs. But it might be more useful to think through the pros and cons of each for the performance of new ventures. This technical note was prepared by Saras D. Sarasvathy, associate professor of business administration. It was written as a basis for class discussion rather than to illustrate effec