Action Trumps Analysis: The Role of Entrepreneurial Learning in Today's World

The global financial and economic crisis of last fall made it clear that many of the traditional ways of doing business are no longer relevant. The operating models taught at business schools were predicated on three key assumptions that simply are not valid today-easy access to credit, cheap availability of energy, and an abundant supply of skilled labor at low cost. And it is equally clear that the societal costs of focusing on maximizing profits without regard to how those profits are being generated are unacceptable.

The challenges of pursuing sustainable growth have never been greater-and business school curricula must be realigned with the realities of today's world. Students need to learn how to think and act in the face of uncertainty. They need to operate in an environment where the assumptions they are working under change at a rapid pace-and where the metrics for addressing sustainability issues are often unclear or unknown.

The role of entrepreneurial learning in today's world stands out: students must be prepared to be resourceful in making and identifying opportunities wherever they might exist, and to mobilize resources quickly to create value from these opportunities. Solutions to our social and environmental, as well as economic, problems will come from translating entrepreneurial ideas in action.

The curricula of most business schools today place great emphasis on the scientific method and causal logic-honing the skills of students to recognize problems, find the right analytical tools for analysis, perform the analyses correctly, and draw the appropriate conclusions. This is a logic that depends on a set of relatively fixed assumptions and the ability to predict (and control) the results of actions taken. And historically the model of creating economic and social value simply presumed that the two could only be related sequentially; that is, we have taught our students to focus on wealth creation now so that they can "give back" later. It's a model that has resulted in pursuing growth and sustainability as separate goals-and has led us to the trouble we're in today.

Most entrepreneurs-whether in for-profit or not-for-profit activity, in business start-ups or large corporations-do not follow the clear, neat, straightforward process of this logic to get their ventures or projects underway. And, though the logic behind this alternative has been described and documented for decades, it is hardly found at all in business school curricula. Most simply put, action can create ideas and analysis-doing can drive knowing.

Babson College faculty are working on building a curriculum, known as Entrepreneurial Thought and Action, that is based on how entrepreneurs actually behave. The teaching method reflects how entrepreneurs look at the structure of the marketplace, how they think about the world, and how they act:

First, entrepreneurs start with what they have. This principle suggests means-driven (as opposed to goals-driven) action. The emphasis here is on creating something new with existing means, rather than discovering new ways to achieve given goals.

We have found that entrepreneurs do not always start with an idea, convince others of the value of their idea, and then try to accumulate the resources to translate that idea into reality. Nor is it always possible for an entrepreneur to engage in rigorous, predictive analysis in a world where uncertainty is a constant. Sometimes an entrepreneur only needs to get started by asking these questions: "Who am I" "What do I know?" "Who do I know?" "What do I want?" The means at hand will determine the next steps.

Second, entrepreneurs commit in advance to what they are willing to lose rather than invest in calculations about expected return to the project. The popular notion of the entrepreneur as risk-taker who puts everything at stake to realize his or her vision is usually not the case. Most ask themselves what they are willing to lose in money, time, opportunity costs, and reputation. This is a concept that economists call affordable loss. It enables entrepreneurs to better assess what they want to do next.

Third, entrepreneurs negotiate with any and all stakeholders who are willing to make actual commitments to their project, without worrying about opportunity costs or carrying out elaborate competitive analyses. Furthermore, it is who comes on board that determines the goals of the enterprise, not vice versa.

Again, this contrasts sharply with the approach of rational analysis which, in effect, says: Select an idea, figure out exactly the resources you will need, look for people who have the necessary skills sets, and attract them to your venture. In the real (rather than theoretical) world, would-be entrepreneurs reach out to whom they know.

Fourth, entrepreneurs expect (and enjoy) the unexpected. In fact, entrepreneurs acknowledge and appropriate contingencies by leveraging surprises rather than trying to avoid them, overcome them, or adapt to them. Predictions miss uncertainty: the more uncertainty there is in the marketplace, the more reliant entrepreneurs are on themselves. In fact, all of our research confirms that entrepreneurs flourish because of the unexpected. Rather than find opportunities, uncertainty enables them to make opportunities.

Of course, a curriculum and method of teaching based on entrepreneurial thought and action does not abandon causal logic. To the contrary, causal logic and analytics are important for scaling an opportunity once it has been recognized and for evaluating the outcomes derived from action. In teaching entrepreneurial thought and action, we train "ambidextrous" practitioners-entrepreneurs who are able to display the understanding and behavior associated with each approach at the appropriate time.

As I have already emphasized, this methodology applies to today's social and environmental, as well as business, problems and opportunities. It also applies to the great global challenges of our time. Muhammad Yunus did not imagine the Grameen Bank and conceive of a business plan to develop a bank with assets of billions of dollars. He thought, "How do I empower a group of women to change their lives? What are the steps I need to take, and who do I need to involve to help me do that?" By getting started with what he had at the time, he ultimately founded an entirely new industry-microfinance-and, in the process, transformed the lives of millions of people in his and other countries.

This is not just the purview of MBAs. This is a method of thought and action that can be taught and can be learned through a variety of organizations and by people of different educational levels and experience in economies of greatly different scale and sophistication.

To sum up, whether it is in a new venture, an existing venture, or addressing seemingly intractable social and environmental problems, in an uncertain environment, action trumps analysis. "Underneath all of the world's problems, are a raft of entrepreneurial opportunities," as Peter Drucker noted. Simply stated, the best way to have an impact is to act.