Entrepreneurship as Using Available Resources and Iterating on Feedback

Last week I had the opportunity to hear Saras Sarasvathy of UVA talk about her research on Effecutations. Generally, the idea is that people traditionally think of entrepreneurship as writing a business plan, building a financial model, raising money against that plan, and then executing the plan. Now, we know that’s not the case and books like the The Four Steps to the Epiphany and The Lean Startup advocate for a customer discovery process where feedback from potential customers drives the process from day one, and everything is an iterative process, not a big structured plan.

In a similar manner, Professor Sarasvathy lays out a process as follows:

• Who we are
  What we know
  Whom we know
  (Bird in hand – what can we use right now that we already have)
• What can we do?
  (Affordable loss – set an amount we’re willing to risk)
• Interact with other people
  (Talk to anyone that will listen about the idea)
• Effectual stakeholder commitments
  (Get a commitment from someone before doing anything e.g. get someone who will pay X if you provide a solution for Y)
• Repeat the process

The next time an entrepreneur says they’ve built a big business plan and need money to execute against it, share the effecutations process and explain that the most successful entrepreneurs start with a general direction and iterate based on feedback from potential stakeholders.

What else? What are some more thoughts on entrepreneurship as using your available resources and iterating on feedback?