Entrepreneurial Insight: See What You’ve Been Missing
Lucrative Innovation Opportunities Are Hidden In Plain Sight
Traditionally, senior managers and strategic planners scan the business environment periodically for opportunities and threats — a process commonly referred to as a competitive intelligence (CI) investigation. The SWOT framework is one of the preferred tools used to frame these opportunities and threats within the context of industry dynamics, trends, and other environmental factors. By means of passive or third-party analysis, opportunities and threats are identified and then prioritized based on how they will strengthen or weaken competitive advantage relative to other organizations that compete in the same product/service categories.
Prioritized opportunities and threats then become inputs into the strategy formulation process. Programs are created to exploit opportunities and counter measures are initiated to eliminate or mitigate competitive threats. Once a strategy is formulated, the organization spends a vast majority of its time executing the strategy as operationalized via its strategic plan. This is planned growth — steady, predictable, and optimal.
It is expected that the business environment will not change dramatically during the planning horizon. This process worked reasonably well back in the day because the business environment was relatively stable and predictable. Things just didn’t change that much from year to year. Even when they did, change could be managed via probability and risk assessment because change was continuous in nature rather than discontinuous. Companies had the luxury of foresight because the past was a reasonable predictor of the future.
However, today the business environment is both complex and fast moving, which is obvious to most business people. What is less obvious, however, is that the interaction of business complexity with the speed of business has created a lot more business uncertainty. Business growth under conditions of high uncertainty is quite a different thing indeed.
Due to frequent discontinuous change, companies have less foresight. Yet, despite a much higher level of uncertainty, many organizations still use competitive intelligence (CI) as the primary input into the formulation of growth strategies. It is assumed that most of the opportunities and threats have been identified via CI investigations. The problem with this is that the traditional CI approach is —
- Conducted by a limited number of people (senior managers, strategic planners and sometimes consulting firms) who have limited exposure to the day to day business realities.
- Based on passive or third-party analysis of business realities.
- CI frames opportunities and threats from a category-based competition perspective.
- Assumes the company itself is the primary focus and that achieving sustainable competitive advantage (as a company) is the only way to achieve superior business performance.
Unlike yesterday’s stable and predictable environment, today’s complex and fast-moving business world obscures many opportunities and threats from traditional passive analysis tools like SWOT. Why? Under conditions of high uncertainty opportunities and threats must be discovered via experience-based learning, something that only happens by interacting with customers, non customers, employees, business partners, and others on a day-to-day basis. This interaction stimulates strategic conversations about potential demand creation and demand destruction via hypothesis generation, iterative experimentation, and the evaluation of feedbacks. Sound familiar? This is the basic structure of the scientific method.
What ultimately results from this process is double-loop learning, which generates opportunistic knowledge. The focus of this discovery approach is on the customer’s job to be done and job solutions that can satisfy customers’ important and unsatisfied needs better than competing solutions. Ultimately, companies prosper to the extent that they can attract sufficient customer demand for their offerings vis-à-vis competitive offerings.
Demand creation is now a primary driver of sustainable business growth. Demand creation opportunities can seldom be identified by passive analysis methods. A different approach is required.
Discovering the best growth opportunities and perilous threats requires Entrepreneurial Insight — a product of opportunistic knowledge. Entrepreneurial Insight involves the situational awareness of and interaction with the day-to-day business realities that can signal the potential for demand creation (opportunities) or demand destruction (threats).
The Entrepreneurial Insight Generator is a structured ideation tool that helps the workforce recognize the dynamics within the business environment (customer-provider realities) that can signal the potential for demand creation or demand destruction. Customer-provider realities are organized into six specific areas —
- Job Success Outcomes
- Job Constraints
- Competing Job Solutions
- Untapped Resources
- Unsatisfactory Trade-Offs
- Job contexts
Signals are situations involving two or more of these areas that can potentially enable demand creation or demand destruction. These potential opportunities and threats are then prioritized based on a number of criteria to determine the ones that should be further investigated. Because customer-provider realities are constantly changing, entrepreneurial insight needs to be a continual process.
The Entrepreneurial Insight Generator helps the workforce develop an entrepreneurial mindset — a way of thinking opportunistically about customer-provider realities relative to demand creation. Perceiving customer-provider realities with an entrepreneurial mindset “connects the dots” or translates the these realities into entrepreneurial insight. Without entrepreneurial insight, many opportunities and threats remain hidden in plain sight. Out of sight, out of mind.
A few people cannot generate sufficient entrepreneurial insight coverage. Entrepreneurial insight distributed among the entire workforce is better because they are the ones on the front lines of the business interacting with customers, partners, and service providers. They are the ones that are immersed in the day-to-day business realities. The entrepreneurial mindset is critical because it enables the workforce to understand the implications of what they are observing and experiencing with respect to demand creation and destruction potentials.
Like a radar detection grid, entrepreneurial insight distributed over a broad spectrum of the workforce will produce a stream of lucrative opportunities and some perilous threats. Management must then decide what opportunities to exploit and what threats require a response. All opportunities can be exploited and all threats resolved by either enhancing the value of existing offerings or by innovating new offerings that customers want. These are the two demand creation disciplines, each with a different aim involving different strategies and methodologies.
The business environment is constantly changing. Things are happening all the time. Organizations can ill afford to miss lucrative opportunities and perilous threats that can change their growth trajectory for the better or for the worse. The solution is to monitor the business environment at all times for demand creation signals, discover the best ones and then quickly exploit them to generate profitable revenue streams. Entrepreneurial insight simply cannot be the responsibility of a few people. The organization must have a keen situational awareness of things happening in the business environment. The only way to get sufficient coverage is to empower a broad spectrum of the workforce with the capability of entrepreneurial insight.