The Reflective Entrepreneur

Dimo Dimov

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351855129
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

In a world where entrepreneurial success often seems deceptively accessible, it is not always clear what makes a person entrepreneurial. In this book, Dimo Dimov offers a reflective insight into the entrepreneurial journey, striking up a conversation about entrepreneurship in order to challenge and untangle existing preconceptions.

A discussion of challenges and tensions such as idea versus opportunity, genius versus lunatic, and skill versus luck forms the foundation of the book, while the second part offers actions and considerations which can help the reader to seek opportunities in a fractious environment. The final part of the text focuses on the collective spirit in entrepreneurship, arising from the interplay between participation and outcomes.

The author brings a succinct diversity to the field, making this book essential reading for undergraduate and postgraduate students on entrepreneurship courses, as well as scholars, researchers, and practitioners looking for a new perspective on entrepreneurship.

Part I
Tensions of the entrepreneurial journey

DOI: 10.4324/9781315228105-1

The evolution of business and indeed of life is a story of branching out, of pushing outward. We are fascinated by the next big thing, the branch that opens up new value, the new venture that brings great returns or changes the way we live. Whereas in life this is a natural process, driven by random mutations and an inherent instinct to survive and procreate, in business this is not a natural process, but one fed by decisions of what to do and where to invest resources. Thus, ultimate outcomes can be traced to specific, forward-looking prior decisions. And, naturally, there is a tendency to explain these decisions as somehow prescient or optimal, in order to derive some rules for such decisions to be made again in the future, in other circumstances.

The very notion of optimality, however, requires an outward boundary within which to exercise judgment of what the best course of action is for what we want. The present represents such a boundary in that it can vindicate or discredit prior actions and choices. At the same, for present actions and choices such boundary is to be sought – but not found – in the future.

There is an asymmetry between what we do and what happens. This is because in reasoning what to do, we have to set boundaries within which to exercise reason. Without them, reasoning is impossible – indeed thinking about everything is not possible because the question ‘what else?’ never ends. We have to stop somewhere and acknowledge leaving other things unspecified. What actually happens, however, arises from events outside of our control, at least some of which would fall outside of the boundaries set for reasoning. It is these surprises, whether positive or negative, that mark and define the entrepreneurial journey.

Branching-out structures are very interesting. If you trace them backwards, no matter from which end point you start, you will always run back to the beginning. If you trace them forwards, however, you start from the beginning, but cannot really know which end point you will reach – it is down to deciding which fork to take at each junction.

The knowledge asymmetry between present and future represents a tension that cannot be resolved. This is the case because without acting now the future outcome – whatever it might be – will not come about or will come about differently. But if one seeks to justify action by reference to future outcomes, such justification is possible only for outcomes that fall squarely within the current boundaries of reason.

This fundamental tension reveals itself in three different ways, depending on the viewpoint into the entrepreneurial journey, that is, its content, its person, and its process. One viewpoint is that of the prospective entrepreneur, of you and me looking ahead inspired by an idea. The tension there is between idea and opportunity. Another viewpoint is that of an external observer – whether a friend, a potential investor, or potential partner – looking at us as prospective entrepreneurs, to make sense of our optimism and aspirations. The tension there is between genius and lunatic. Yet another viewpoint is to make sense of the journey as a whole and to draw lessons from the way it has unfolded. This is captured by the tension between skill and luck.

The following three chapters focus on each of these tensions. In the fourth chapter, I draw implications from these tensions by returning to the question of judgment, highlighting its limitations and tensions as a guide for entrepreneurial action.

1 Idea vs. opportunity

DOI: 10.4324/9781315228105-2

People come up with ideas but, as entrepreneurs, they pursue opportunities. They pitch ideas to others, and these can be shot down as not being good opportunities; or they can generate excitement as great opportunities. Ideas and opportunities thus seem to be the same thing – images of a future – yet they feel different. Every opportunity originates or can be described as an idea, but not every idea can be deemed an opportunity. If we come up with an idea, we immediately start wondering if it is an opportunity.

At a first glance, the dividing line between the two is some positive judgment, a sense that the imagined future is desirable and attainable. But in the likely face of divided opinions, whose judgment matters here? We may be filled with optimism, with a sense of confidence, yet others may be more sceptical or outright dismissive. When one judgment is pinned against another, which one is right cannot be determined by … yet another judgment. Each judgment is underpinned by a set of beliefs about the future and none of these can be ruled out as wrong. Frustratingly, both may be right.

With the fallibility of opinion as a dividing line between idea and opportunity, the line can be drawn by the undertaking of some action in the name of the idea, that is, stepping forward towards the imagined future. The best marker of our positive judgment is whether we are ready to do something about our idea. Simply talking about it does not change it; it remains an idea, its possibility remains intact. But doing something about the idea does: it affirms our confidence in it and puts its possibility to the test. Thus, the very action in the name of the idea turns the idea into opportunity at least momentarily. This action brings in new information that can be used to update the idea and, in turn, if new action is undertaken, the pursuit of opportunity continues. An opportunity is thus kept alive through the repeated cycle of ideas and actions. An idea is static, an opportunity dynamic.

This poses an interesting puzzle. On the one hand, opportunities are ideas that are acted upon. Indeed, if an idea is not acted upon, whether it is to be considered an opportunity or not can be the subject of infinite speculation and debate. On the other hand, to act upon an idea seems to require a judgment that the idea is an opportunity in the first place. Hence the chicken-and-egg question: which comes first, the opportunity or the action?

This is a fundamental tension of the entrepreneurial journey, one that keeps the journey going towards revealing whether an idea is an opportunity. The tension can be resolved in one of two ways. One either abandons the pursuit of the idea, in which case the idea ceases to be an opportunity contender. Or one can reach a state in which the idea can be considered realized, in which case it is clearly an opportunity. Because this process hinges upon an evolving judgment that is often made quickly, it is helpful to unpack its elements.

The content of an idea and the nature of an opportunity

Idea and opportunity both refer to some form of business venture, whether undertaken as an independent start-up, as a separate initiative within an established firm, or in the name of pursuing a wider social goal. For something to be a business venture, it needs to have three elements: (1) a product or a service; (2) customers, users, or consumers of that product; and (3) an infrastructure that sources, creates, and distributes the product or service. In this sense, the business venture is a system – a social structure – of interconnected elements, namely people and some productive assets, as shown in Figure 1.1.

The individual elements alone are not sufficient to define the structure; it is the relationships among them that do so. Indeed, the very terms we use to describe the structure are relational in nature, that is, defined only in reference to something else. Thus, a particular individual becomes a customer only when related to a particular product or service; or an employee only when contracted within the infrastructure that produces the product or service. Similarly, something becomes a product or service only when related to a particular customer or a production infrastructure.

The notion of structure is essential here as it highlights the fact that it needs to be put together, meaning its elements gathered and weaved into the particular relationships. Consider the analogy of a building: it is a physical structure in which its individual elements (bricks, concrete, glass, etc.) are put together as to form functional relationships that comprise the entire structure: foundation, walls, windows, roof. In the same manner, the entrepreneur creates the venture by establishing the functional relationships that comprise production and consumption.

Figure 1.1 Elements of opportunity.

The analogy stretches further. Before it is built, a building exists only as a blueprint – an idea in the mind of the architect or formally drawn. This blueprint takes materials that are taken for granted and imagines or draws the functional relationships that can be created among them. Similarly, before a venture is put together, it exists only as an idea in the mind of the entrepreneur that imagines relationships among people and productive assets.

Therefore, idea and opportunity represent two different viewpoints of the venture in question: (1) from the present, as an imagined future, and (2) from the future, as a realized future. The actions undertaken by the entrepreneur intend to move the venture along a continuum from 100 per cent blueprint to 100 per cent actualized, with all the gradations in between. Initiating or continuing the movement rests on two judgments. The first is a question of possibility, that is whether the future can be transformed from imagined to realized. Is the product/service even possible to make or deliver? And, if yes, will someone buy it? The second is a question of profitability, that is whether the realized future will be financially viable. Indeed, the expectation of profit is the essence of entrepreneurship. Will the basic economic transaction of the venture be profitable? In other words, will the price paid for the product/service be higher than the costs associated with producing it? And (how fast) will the money to be invested into the production infrastructure be recuperated?

To move from the imagination to the realization of an idea requires resources. At the very least, these resources include the time and effort of the entrepreneur, but can also include the time and effort of others, in-kind contributions of services or equipment, and financial resource that can be used to acquire equipment or services. Because the deployment of resources means foregoing all of their alternative uses (and associated benefits), the decision to deploy them involves making a sacrifice of sorts. Without this sacrifice, there is no realization of the idea. But with the sacrifice, the realization is not certain nevertheless, as evident in the looming questions of possibility and profitability. There is thus inherent tension in trading the certainty of current value for the uncertainty of higher future value. This tension cannot be resolved, but only accepted and...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Dedication
• Contents
• List of figures
• List of tables
• Preface
• Acknowledgements
• Part I Tensions of the entrepreneurial journey
• Part II The journey from the inside
• Part III The journey from the outside
• Conclusion
• Bibliography
• Index