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Entrepreneurship

What Business Owners Can Learn From J. K. Rowling

American Express’s Open Forum blog uses J.K. Rowling as guide for five invaluable tips for entrepreneurs. This is a great list that all business owners and startups should keep in mind:

Tip 1: Don’t rush to roll out your product

Tip 2: When a great idea grabs you, grab back

Tip 3: Persevere, persevere and persevere

Tip 4: Don’t let anyone sidetrack you from your goal

Tip 5: Each of us has a unique contribution to make to the world

Narrow your target market and differentiate your business for success

Specialization is key to small-business success, writes Rhonda Abrams in USA Today, who advocates choosing a specific customer niche to narrow your target market and make the most of your resources. She gives six ways to narrow your market by segments that include geography, industry, demographics work specialty, unique knowledge and style.

To me the two most important items are work specialty and unique knowledge. As it becomes increasingly easier to source specialists from around the world at ever diminishing costs, it is important for businesses to strongly differentiate the products and services. The more unique or specialized the skill or service, the greater opportunity to maximize revenue and build pricing power.

Tips on Starting a New Business Courtesy of "Mad Men"

Season four of the hit TV series "Mad Men" sees the opening of a startup ad agency. Rhonda Abrams in USA Today offers up some great points on what the founders of Sterling, Cooper, Draper, and Pryce—and new business owners like them—did well, and where they need to improve.

Here are a few key takeaways all new entrepreneurs should remember:

  • Pull together a team. You can’t do it all. They can't. You can't. Find people who balance your weaknesses.
  • Take chances.  Come up with fresh approaches and new thinking to differentiate company.
  • To quote John Wooden, “be quick but don’t hurry.” You have to make quick decisions. When opportunity arises to start the new agency, the principals didn't dawdle. They pulled the trigger and worked nonstop day and night to make sure they got the launch right.
  • Be flexible. They understood that they might have to expand or shrink staff quickly to meet their needs.
  • Be frugal. While they did a mixed job on this aspect of the launch, they didn’t spend the money on an expensive conference table. Remember, frugal is the new cool. Especially among startups.

Why MBA’s Are More Suited For Suits (Or At Least Business Casual)

Research conducted at the University of Virginia's Darden Graduate School indicates that "entrepreneurial thinking" differs significantly from how MBAs think. Unlike MBAs, who start out with a goal, entrepreneurs use "effectual reasoning," which lets goals emerge over time as they imagine ways to bootstrap, prototype and market their products and services.

According to the research, MBA’s employ “causal reasoning,” focusing on how much you expect to gain; effectual reasoning is about how much you can afford to lose. Causal reasoning revolves around competitive analysis and zero-sum logic; effectual reasoning embraces networks and partnerships. Causal reasoning "urges the exploitation of pre-existing knowledge"; effectual reasoning stresses the inevitability of surprises and the leveraging of options.

Information about the research was posted to a Harvard Business Blog by Bill Taylor.

As you might guess, the article has elicited quite a few comments from MBA’s denouncing the research. Apparently they feel like they are being thrown under the "hyper-analytical & framework driven" bus. Having worked with quite a few MBA’s over the years, I can tell you that there is a lot of merit to the research. MBA’s typically view the world they see, not the one they can imagine. It is more about the allocation of resources rather than dreaming , taking chances, melding disparate concepts into a whole, and believing in mutuality.

A lot of creative people and entrepreneurs attain MBA’s and become very successful entrepreneurs. However, I think they are the exception, not the rule. I also would argue that they are entrepreneurs who got an MBA rather than an MBA who became an entrepreneur.

Most people who seek an MBA desire the prestige, upward career mobility and benefits afforded the bearer, not the opportunity to create or build something new. Those inclined to build something new, take chances, and bet the bank on an idea are not your typical MBA candidates.