Rita Gunther McGrath [Archive.org URL]

One of the biggest differences between a core business and an entrepreneurial one is what colleagues and I have termed the difference in the Assumption:Knowledge ratio. Businesses with a low ratio – such as your core – can be managed conventionally. In such situations, the measure of a good plan is how close results came to expectations, and failure rates should be low. In a high-ratio situation, opposite disciplines apply. In an entrepreneurial situation, the measure of a good plan is not whether results and expectations aligned. Rather, the measure is how much was learned for as limited an investment as possible. Similarly, high failure rates are acceptable, provided that the cost of failure is kept very low. You can afford a lot of high-learning failures if they don’t cost very much.

Like this content? Why not share it?