For many people, entrepreneurship is about “living the dream.” Recently minted MBAs and middle managers in Dilbert-sized cubicles fantasize about striking out on their own, translating a vision into reality and reaping the rewards of their efforts. In recent years, senior executives at established corporations have caught the entrepreneurial bug, too. After cutting costs to the bone, many big companies now hope to drive top-line growth by seizing fleeting opportunities before upstarts and established rivals beat them to the punch.1
While the pursuit of opportunity promises outsized rewards to entrepreneurs and established enterprises, it also entails great uncertainty. Uncertainty lurks in every corner and comes in many flavors: known unknowns (what you know you don’t know); unknown unknowns (what you don’t know you don’t know); new information that is imperfect or incomplete; and conflicting signals.2 It’s not all bad news, though; uncertainty can have an upside as well: Technologies sometimes work better than anticipated or solve an even bigger problem than the targeted one, the market may be larger or grow faster than expected, or well-endowed rivals might be asleep at the wheel.
The critical task of entrepreneurship lies in effectively managing the uncertainty inherent in trying something new.3 Investors have many tools to manage their risk, but individual entrepreneurs and managers cannot wield these same mechanisms.... To read the complete article, login or sign-up using the form below.
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