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One of the few certainties in venturing is that the business plan that
you prepare for your venture will not describe what actually happens as
you start and run it. Despite all the care taken in planning, projecting,
and preparing to start a business, there are a sufficient number of "unplannable"
events that occur to ensure that your plans will not come to fruition
exactly as you have laid them out.
This raises the question: But isn't there something that I can do to minimize
this problem? The answer is: Yes--build flexibility into your venture.
But as anyone knows who has, for example, tried to plan a "flexible
vacation": with flexibility comes added complexity. Flexible
plans can require much more effort to prepare than do the arbitrary, linear
"to do" lists that we often mistake for flexible plans.
It helps, therefore, to understand first, the nature of the "unplannable
events" that create the need for flexibility, and second, what steps
can be taken that deal effectively with each type of event--while minimizing
the added complexity. How can you keep your venture flexible, with
minimal added complexity?
Unplannable Events
Two types of unplannable events make our business plans unpredictable.
The first set of events, we can classify under the heading: Uncertain
Events. When we think of uncertainty, we think of "not knowing,"
but what we really mean is "not knowing for sure." We
may know that an event will eventually occur, but we may not know when.
For example, on a production line we may know that every so often a defective
product will be produced, but not which one or exactly when. Or,
in the case of driving we may know that at some point in our life we will
be probably involved in an accident, but we don't know the details of
its occurrence in advance. Where there is a known event, but we
are not sure of the timing (when) or the magnitude (how much), we refer
to this as uncertainty.
However, "not knowing for sure" is different from "not
knowing at all." The second set of events that make our business
plans unpredictable fall under the heading: Ambiguous Events. Events
that have ambiguity surrounding their occurrence are those that cannot
be anticipated, or that have very unclear consequences when they do occur.
For example, it was not at all clear when the "horseless carriage"
appeared, that it would totally replace the horse and buggy; or that the
1973 conflict between Arab states and Israel would lead from oil embargo,
to massive OPEC price hikes, and eventually to serious economic consequences
throughout the world. Where there is an unknown event, or where
known events may have unlikely consequences, we refer to this as ambiguity.
The ability to adapt to changes in circumstances we call flexibility.
Accordingly, the two questions that should be asked about a venture regarding
flexibility are:
A.Is
uncertainty minimized?
B.Is
ambiguity reduced?
Since venture positioning is not a static exercise, the relaxation of
"certainty constants" in strategic assumptions requires that
entrepreneurs must deal also with uncertainty and ambiguity--hence the
need for flexibility. Where the shape of the probability curve is
known (Ghemawat, 1991), uncertainties may be managed through statistical
procedures and plans, with the range of flexibility required somewhat
restricted.
Where there is disagreement upon the shape of the probability curve(s),
ambiguity markedly increases the requirements for strategic flexibility
(Ghemawat, 1991). The structural response (type of organizational
relationships undertaken or used) to uncertainty and ambiguity (equivocality)
has been reported by Galbraith (1977), and by Daft and Lengel (1986).
Where uncertainty is low, routine seems to suffice. Where uncertainty
is high and ambiguity is high unscheduled meetings and group problem solving
are indicated.
Even more importantly, the flexibility that comes through the proper management
of uncertainty and ambiguity must yield adaptive responses in an uncertain
and ambiguous world. Without such variations, changing environmental
conditions which once supported the venture will become its enemy. "Selection
FOR" will be replaced by "selection AGAINST." Without
flexibility, inertial organizations become the dinosaurs of evolutionary
economic history. Entrepreneurs who concentrate only upon building
from a unique initial product or vision will find that products and ideas
soon go out of date. It is only through the flexibility that comes
with a commitment to consider the ADAPTIVE ORGANIZATION as their ULTIMATE
CREATION, (Collins & Porras, 1995) that entrepreneurs build sufficient
flexibility into their ventures.
Another way to look at "staying flexible" is to draw a mental
line between this step in your New Venture Template™ analysis, and
steps "A" through "E" (a feedback loop, if you will).
Periodically reexamining the currency and validity of your answers to
A: Innovativeness, B: Value, C: Persistence Over Time, D: Scarcity, and
E: Non-Appropriability is another way for you to become aware of the adaptations
that you will need to make for your venture to survive and prosper over
the long term.
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