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An entrepreneur's plan: Trash the plans and dive right in

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Photo illustration/Kelly Redinger/Design Pics/Newscom

(Read caption) Instead of doing extensive planning and market research, many entrepreneurs opt to start doing business and learn as they go.

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In the airport on the way back from this conference, I picked up a copy of the current issue of Inc. magazine for the cover story on "How Great Entrepreneurs Think." The article relates the results of a study by UVA Darden School professor Saras Sarsvathy of 45 top entrepreneurs. All were presented with a case study of a hypothetical start-up and then quizzed about how they would run it. Interestingly, she later conducted the same exercise with managers at large corporations. The differences in thinking and decision-making style are instructive:

Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible.

So, for example, when one entrepreneur was asked about what market research would be needed, he replied:

"I don't believe in market research. Somebody once told me that the only thing you need is a customer. Instead of asking all the questions, I'd try and make some sales. I'd learn a lot, you know: which people, what were the obstacles, what were the questions, which prices work better."

Here's another quote along similar lines:

"I always live by the motto of 'Ready, fire, aim.' I think if you spend too much time doing 'Ready, aim, aim, aim,' you're never going to see all the good things that would happen if you actually started doing it. I think business plans are interesting, but they have no real meaning, because you can't put in all the positive things that will occur...."

Generalizing from these kinds of attitudes, Sarasvathy concludes that entrepreneurs

do not believe in predictions of any kind. "If you give them data that has to do with the future, they just dismiss it," she says. "They don't believe the future is predictable ... or they don't want to be in a space that is very predictable."

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