Guest post by Steven K. Gold, M.D.:
Leadership is all about decision and action. As leaders, our goal is to make the best decisions
that lead to the most productive actions. As the world becomes less certain, even highly unpredictable, how do we go about optimizing our chances for success?
Fortunately, we have a group of experienced leaders who have been grappling with the challenges of uncertainty for many years: successful entrepreneurs.
For over 20 years, I have studied entrepreneurs. As an academic and as a thought leader, I have conducted studies of thousands of entrepreneurs of all kinds, on three continents. This has included embedding myself within various accelerator programs to observe the daily (and even moment-to-moment) decisions and actions of successful and unsuccessful entrepreneurs. This led to the idea of Smart Experiments.
Experiments are investments of a first set of available resources that produce a second (hopefully more valuable) set of resources. I use the term “resources” broadly, and they include human connections (networks), knowledge, experience, expertise, and ability to influence others, among many others. Resources are the foundation of experiments.
Experiments – like everything else in life – can be done poorly or well. Despite this, most of us have never been taught how to do an experiment in a way that predisposes to success. Expert entrepreneurs, on the other hand, have developed and mastered a particular process that I refer to as a Smart Experiment.
Smart Experiments are done in an ongoing cycle that includes four steps:
1) DESIGN. Entrepreneurs always look around to assess their available resources. What resources do I have – human connections, material, knowledge, experiences, expertise, finances, etc. – that I can combine in creative ways to design a possible experiment? Entrepreneurs make formal and informal lists (referred to as Opportunity Registers) of all of their possible experiments, based on the resources they have at hand. Expert entrepreneurs like having many opportunities, and options.
2) DECIDE. Given a long list of possible experiments, entrepreneurs categorize them. They do this continuously, and are always reassessing their resources in light of the results of ongoing experiments. Any possible experiment that has been Designed in Step 1 can be placed into one of four categories: a) do it now, b) do it later, c) find a partner, or d) forget about it. This prioritization determines what happens next.
3) DE-RISK. Before embarking on the “do it now” experiments, entrepreneurs de-risk their experiments. This means that they identify the most likely potential causes for failure, and prepare for them in advance of doing the experiment. This step recognizes that certain easily predictable and fixable issues can make a big difference, and they are addressed up front. This predisposes any given experiment to success.
4) DELIVER. Only then do entrepreneurs do the experiment, which almost always involves a series of small steps. Since every experiment is an investment of resources intended to secure (more valuable) resources, expert entrepreneurs harvest all of the value that results from any given experiment. They do not leave value on the table.
We can each choose to do our experiments poorly or well. Doing Smart Experiments – and helping others to do them properly – increases chances for successful outcomes. The best entrepreneurs encourage everyone around them to do Smart Experiments.
Here are a few take-away lessons for leaders:
First, Smart Experiments involve thought and action. Entrepreneurs rarely get stuck in “analysis paralysis” because they break down risky activities into less risky, small steps. Instead of jumping across a room, they take it a step at a time. By taking a step at a time they increase the likelihood that each step will go well, and they are much more likely to make it across the room – even if they encounter an obstacle. Obstacles (representing uncertainties) are easy to walk around, and much harder if you fly right into them. This is one way that expert entrepreneurs deal with uncertainty.
Second, the best entrepreneurs understand that succeeding and failing are two sides of the same coin. Smart Experiments, using prioritization and risk mitigation, mean that our failures become smaller. That said, failures do occur, and are expected to occur. If an entrepreneur is not failing at least a good portion of the time (remember, they are taking small steps and so these are relatively small failures – or learning adventures), this means the entrepreneur is probably not trying hard enough.
So why is it great to lead with Smart Experiments? First, understanding resources is the best way to understand the value you have to invest. The more you have to invest, the more you are likely to reap greater returns. Second, Smart Experiments prioritize those actions that make the most sense – to do now, do later, partner, or not do at all. Smaller steps that make up Smart Experiments are also easier to get started with, and to make successful. When things go awry, as they often do in uncertain environments, smaller steps lead to smaller failures, which protect resources. All of this predisposes to a higher probability of success, which has a dramatic compounding effect.
Leading with Smart Experiments means one more thing: prioritizing intelligent action over results. If people are empowered to do their best, to do their best experiments, then they are pursuing their potential. They will succeed much of the time, and fail at other times, both of which are indicators of effort. With this in mind, celebrate Smart Experiments. Teach Smart Experiments. Be a role model for Smart Experiments.
Steven K. Gold, M.D., is the author of HOW WE SUCCEED: Making Good Things Happen Through The Power Of Smart Experiments. He is Chairman of Gold Global Advisors, a firm that advises leaders and teams in the science of sustainable success. For more information, please visit https://www.stevenkgold.com/.
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