Musings on Entrepreneurship and Innovation
Wednesday, March 23, 2005Entrepreneurship and the Tyranny of the Discontinuous Mind
The ancient Greeks cast a long shadow.
Plato's forms and the philosophy of Essentialism permeate our thought. For example, some insist that one is either an entrepreneur, or one isn't. Such reasoning implies that entrepreneurs are either born with "the essence of being an entrepreneur" or somehow acquire such essence. One has "it", or one does not.
My experience and study leads me to reject such discontinuous thinking. As the biologist Richard Dawkins says bluntly, "There is no such thing as essence."
In Disciplined Entrepreneurship, Donald Sull asserts, "The critical task of entrepreneurship lies in effectively managing the uncertainty inherent in trying something new." In other words, an entrepreneur is someone who manages - more or less effectively - the process of what George Gendron (the former editor-in-chief of Inc. magazine and Entrepreneur in Residence at Clark University) calls the "art of the new."
Twenty years at Inc. has led me to the conclusion that (1) there is a process that successful founders follow in creating a new venture, (2) that the discrete steps of this process can be identified, and (3) that the process utilizes a set of skills that can be developed. In short, as Peter Drucker wrote in Innovation and Entrepreneurship, entrepreneurship is a discipline that can be taught.
All of us, in some way, shape, or form, engage in the art of the new at some point in our lives. We are all entrepreneurs. That's not to say, however, that we are all equally skilled or effective. Nor am I suggesting that we all play on the same entrepreneurial stage. It seems quite clear that some combination of aptitude, personality, intelligence, vision, and diligence means that some are more entrepreneurial than others. In regard to successful entrepreneurial outcomes, opportunity, timing, and good luck play their parts, too. As Henry Ford once testified:
Had I worked fifty or ten or even five years before, I would have failed. So it is with every new thing.
There is a continuous distribution of entrepreneurial capability. It's wrong to ascribe entrepreneurial "essence" to those who happen to have achieved business success. We are better served by striving to understand how to help people become more effective entrepreneurs. We can start by examining our habits of thought and language.
Related: Serial Entrepreneurs and Logical Fallacies, Why Wait for Genius?, The Source of Entrepreneurial Genius
Group Size and Organizational Design
In his highly regarded book, The Modern Firm, John Roberts asserts that managers "must be organization designers." Surely, an essential element of organizational design is group size.
Famously, the so-called Dunbar Number predicts a mean group size of approximately 80 to 150 for humans. In the era of the modern, hierarchical business organization, effective coordination has extended to group sizes orders of magnitude larger.
However, in an accelerating and increasingly unpredictable business environment, hierarchies are being augmented, and in some instances replaced, by alliances and ad hoc collaborations that transcend organizational boundaries and their internal rules of engagement. The question of cooperation can't be taken for granted. Consequently, the question of the effect of group size on cooperation is more than academic; it's highly pragmatic.
In his Life with Alacrity weblog, Christopher Allen has made a series of interesting posts on the topic of group size. In his most recent essay, Allen reiterated his hypothesis "that there is a dip in satisfaction level of groups at around the size of 15." He goes on to note, "My personal belief was that this dip was caused by not enough 'attention' being given to everyone and that group gatherings of this size risk becoming too noise, too boring, too long, or some combination thereof. Yet groups of this size are not large enough to allow for different perspectives (i.e., insufficient requisite variety) or for other group processes to come into play."
Allen admits that his hypothesis is largely based on anecdotal evidence. However, he recently came across a supportive simulation based on game theory that suggests that, in the absence of a formalized structure, cooperation can break down precipitously in group sizes between 8 and 16.
This is a very interesting result. To explain it in different terms, if you have a system that depends on sharing some commons and there are no process or trust metrics, a group as small as 16 may find themselves not cooperating very effectively.
The idea of commons can be as simple as how much speaking time participants in a meeting share. The time that each participant uses during the meeting can be considered the shared "commons". If there are no enforced rules, with a group size of 16 there will inevitably be someone who will abuse the time and speak more than their share.
Curiously enough, the basic unit of that most famous of hierarchical organizations - the army - is the squad, which typically consists of between 7 and 15 persons. Such frontline units are tasked with adapting to highly ambiguous, dynamic environments. Theory and observation suggest that managers who rely on the collaborative efforts of others in analogously dynamic and ambigous situations may be well served to avoid designing groups of much larger than 7 to 12, too.