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Melbourne Business School News How to think like an entrepreneur and steer clear of the success trap

How to think like an entrepreneur and steer clear of the success trap

Basking in your own success is a trap, writes change expert Neil Middleton, who says leaders can learn a lot from entrepreneurs.

Melbourne Business School Senior Learning Consultant Neil Middleton

COVID-19 has forced everyone out of their comfort zone into new territory. Individuals, teams and whole organisations have had to give up familiar ways and enter largely unexplored and mysterious terrain, where they face unfamiliar challenges.

For business leaders, this may be a good thing. Becoming too comfortable with the familiar can blind you to what's evolving around you and make you less willing or able to adapt. It's called a "success trap", where a self-referential feedback loop reinforces narrowly-focused beliefs and behaviours.

The new landscape is full of opportunities for leaders who can embrace the mindset of an entrepreneur, distinguished by courage, curiosity and the ability to learn quickly.

All leaders need these traits to respond successfully to changing conditions. I have identified five practical steps – summed up by the acronym, ASSIST (accept, scan and sense, interpret, select, and test) – that leaders can take to begin thinking like entrepreneurs.

1. Accept

Before COVID, disruption came in small ripples and waves which you could afford to ignore, deny or absorb, since the change involved was not very obvious or pressing. But now major change is unavoidable and requires urgent action.

Accepting large-scale change can be difficult if you're structurally invested in your current products, processes, capabilities or clients, or emotionally invested in your identity as a 'success'. Even when faced with decline, it's hard to let go of success in the face of an unknown or uncertain future.

In their British Journal of Management paper about success traps, Catherine Wang and her co-authors wrote: "When firms have successfully adapted to the environment, they tend to perceive this as a rationale for current organisational logic, norms and practices, and hence become less open to learning from new knowledge and less prepared to adapt when the environment changes."

Accepting that the world keeps changing, and that you and your organisation need to change with it, is the first step in staying relevant and fit-for-purpose.

2. Scan and sense

To become aware of change, you need to constantly scan and make sense of what's happening around you. As you absorb new information, your thinking will develop to accurately reflect the new conditions.

Start by reaching out broadly to gather new information, and to identify threats and possibilities. Try to scan with fresh eyes and an open mind, unclouded by your previous experiences. What once seemed impossible, unworkable or undesirable could now be the opposite.

While scanning, be aware that you are likely to encounter imperfect or incomplete information, as well as vast amounts of information that make it difficult to separate signal from noise.

These two problems can be addressed by taking a collaborative approach. Make scanning and sensing a team pursuit – and preferably, one which includes people beyond your usual circle of contacts.

Strive to gather a diversity of perspectives during this phase. The broader the range of opinions you are able to canvas, the better.

3. Interpret

The goal of this step is to come up with a list of potential options for responding to the current situation.

You should start by asking two broad questions to assess market demand: "What is needed?" and "what are people looking for?"

In answering these questions, be alert to the fact that your own biases could influence the conclusions. Listening to different perspectives and opinions – including dissenting and challenging views – will minimise potential bias and help you stay open to new possibilities.

Next, review the capability of your organisation by asking specific questions, such as:

  • What skills, knowledge and experience do you have within the organisation?
  • What technical, financial or other capabilities do you have?
  • How could you use those existing resources and capabilities differently?
  • What new capabilities are within closest reach?

Finally, try to match the two lists together by seeing where you may be able to meet demand in new ways with the resources and capabilities you have available or close by. This will help you identify a list of opportunities that could be worth pursuing.

4. Select

The outcome of the interpret step will be a set of potential options for action. This step is about weighing them up.

When considering each option, ask yourself whether there is demand for the new product or service, whether it can be implemented with your current capabilities and resources, and whether it is financially viable. Will it provide sufficient returns within a reasonable timeframe?

The act of prioritising and choosing between options raises a new challenge. Because the information you have is almost certainly imperfect, it's also impossible to select a 'perfect' option. Consequently, 'good enough' must trump perfection.

The best way forward is to choose a best hypothesis or 'educated guess' about which option will work. To find out if it is correct, it must be tested – which is the next step.

5. Test

Start testing by building prototypes. This is a simple way to share your ideas with customers or other stakeholders and get feedback from them. Your prototype could be a sketch, a mock-up, a video or a more tangible example of your idea.

Prototypes should be low-cost and quick to create so that you can run 'safe fail' tests. These are small-scale experiments that approach issues from different angles. The intention is to see what happens, learn from it and iterate. If they fail, you can survive the consequences, learn and recover.

Don't try to test your whole idea or solution in one go, as that bears too much risk and potentially too much cost. Select pieces or parts of your idea that you can trial at little or no cost, but that will give you valuable and relevant data to act on.

As you observe the impact of your testing, refine and control your progress by choosing to either:

  • Cultivate the processes or behaviours that have helped produce benefits in each iteration, by repeating and building on them
  • Cull ideas that aren't useful by intervening quickly to stop or reduce them, and allowing them to fail in small, contained and tolerable ways

The challenge is to create simple experiments that are bold enough to deliver meaningful and useful data, but with manageable risk. Your testing must be practical, actionable and stick to time and budgetary limits.

The information provided by your testing should turn uncertainty into opportunity, and lay the groundwork for continuous innovation. You are now thinking like an entrepreneur.

ASSIST in action – the Stagekings story

If my arguments don't convince you of the value of entrepreneurial thinking, perhaps the story of Stagekings will.

Founded in Sydney in 2015 by Tabitha and Jeremy Fleming, Stagekings quickly achieved success building custom stages and structures for major events around Australia, including the 2018 Commonwealth Games.

In March 2020, when the COVID-19 lockdown began, Stagekings were packing up their giant cricket balls set for the T-20 World Cup and building a large Formula 1 Grand Prix set in Melbourne, as well as a truss structure for Channel 9's Ninja Warrior show.

Within 48 hours, their entire 2020 schedule had been cancelled.

Tabitha and Jeremy immediately began brainstorming and thinking about what people would need to work remotely. Armed with specialised cutting machines, a well-equipped warehouse and highly capable team, they started producing work-from-home desks that are simple in form and easy to put together.

In just 14 weeks, they went from selling one product to more than 40 different items all around Australia, and had transformed their business entirely. This is what quick adaptation looks like in action.

Neil Middleton is a Senior Learning Consultant who delivers on our Custom Solutions and Executive Coaching programs.

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