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Foreword

Entrepreneurship is defined as a mindset, a way of viewing the world, a way ofthinking, and a way of acting. Interestingly, the more we try to understand thismindset—those personal characteristics, mental models, beliefs and tendencies—the more elusive it becomes. Over the last two decades, there have been numer-ous studies and many theories about what it takes to be a successful entrepreneur.Some suggest that just like in the movie Top Gun, there are only a handful of ex-ceptionally talented people who can make it as an entrepreneur. Others concludethat in order to be successful as an entrepreneur, business ownership must run inthe family, that you have to be raised by an entrepreneur. Still other theories pos-tulate that a person must be born with this entrepreneurial mindset. None ofthese theories really hold water.

A better place to start is by clearly understanding the nature of the entrepre-neurial process and the realities of starting and managing a business. From this un-derstanding, we can begin to identify the personal characteristics and behaviorsthat can help a person be effective in an entrepreneurial environment. Fortunately,there seems to be a consensus among the stakeholders of entrepreneurship—theentrepreneurs, investors, venture capitalists, and business advisors—about therealities of entrepreneurship. Words like dynamic, chaotic, unpredictable, risky, ex-citing, fluid, ambiguous, and intuitive are often used to describe the nature of theentrepreneurial process. These stakeholders also conclude that given these reali-ties, the success of an entrepreneurial venture greatly depends on the skills, attri-butes and behavior of the founder, the lead entrepreneur, the individual person. Itis the person who decides that he or she wants to be an entrepreneur. It is the per-son who identifies and evaluates the opportunity. It is the person who puts together

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Objectivity: A Guiding Principle of Entrepreneurship

Prepared and written by Elizabeth Thornton, Babson College and Boston University

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Part 1 Foreword

2a team of people to leverage the opportunity and manages the venture day-to-day.Therefore, the stakeholders have determined that given the realities of the entrepre-neurial process, to be a successful entrepreneur, the person should possess the followingcore attributes:

● Passion ● Perseverance and commitment● Ability to handle uncertainty ● Sound judgment and right action

As the entrepreneurial process is centered on the entrepreneur, it is important torecognize that the entrepreneur is a person, first, dealing with the realities of everydayliving. Underlying these core attributes for handling the reality of entrepreneurship isan ability or lack thereof to effectively deal with the realities of life. Can a person beunsuccessful in life yet successful as an entrepreneur? To embark on the dynamic andunpredictable path of entrepreneurship, the person must be grounded in the guidingprinciple for intelligent living, or what one could call the principle of objectivity. Theguiding principle of objectivity provides the foundation for managing the realities oflife as well as the entrepreneurial process. The premise of this module is to introducethe principle of objectivity as a fundamental requirement for successful entrepreneurs.We will illustrate how objectivity provides the framework for entrepreneurs to consis-tently overcome challenges, deal with uncertainty, make good decisions, and ulti-mately increase their chances for success.

To do this, we will start with a basic definition of objectivity. We will immediatelyrecognize that as human beings, we rarely relate to the people in our lives or the cir-cumstances of our lives objectively. Rather, our default position is subjectivity. We willanalyze several extreme cases of subjectivity to illustrate how familiar we are with ourtendency to be subjective and how costly it can be. In the next section, we will intro-duce a framework for increasing objectivity in our lives that can be applied to our re-lationships, our jobs, and our businesses. We will then apply this framework to one ofthe most challenging activities in life, entrepreneurship, and will empower entrepre-neurs with the framework, knowledge, and tools they need to be successful.

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The Principle of Objectivity

The dictionary has three meanings for the word objectivity:

1. The state or quality of being objective; 2. External reality; and 3. A judgment based on observable phenomena and uninfluenced by emotions or

personal prejudices.

Objectivity means recognizing “what is” without subjectivity. Objectivity is not pro-jecting our own interpretation of a fact, or “what is,” based on our experiences, back-ground, culture, fears, and the various colors through which we see the world. To beobjective is to recognize “what is.” Objectivity empowers us to live intelligently. Ob-jectivity allows us to discern what is appropriate, what is right and proper, and to actu-ally do it, every day, every time. Objectivity empowers us to intelligently handleconflict, stress, and feelings of fear, shame, and guilt. Mastering the power of objectiv-ity allows us to live our lives intelligently and successfully.

The challenge is that as human beings, as people, we are all subjective about the waywe deal with our lives, the way we deal with “what is,” the way we deal with reality.

Cases of SubjectivityThe following situations illustrate how easy it is to be subjective.

Case #1—The boss and the nod

Does this simple situation sound at all familiar? Put yourself in Jim’s shoes:

Jim has been in his new job for six months. He has always been conscientious andhardworking. He is considered to be “on the fast track.” Every morning around 7:45A.M., Scott, Jim’s boss, passes by Jim’s desk with a warm and boisterous “Good morn-ing, Jim.” But one day, Scott walks by Jim’s desk and just nods. What is Jim to think?How should he respond?

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Jim responds like this:

1. Scott is angry with me for something that I did that I’m not aware of, and as aresult he will probably cut my bonus in half this year. This means that I won’t be able to buy my little boy the new toy he wants or my wife the new coat sheneeds. This is a disaster because they’re already mad at me for spending toomuch time at the office. Jim panics, runs into Scott’s office, and asks, “Are you mad at me? What did I do wrong?”

Or, Jim responds this way:

2. Scott has been told by his boss that he has to reduce headcount. I’ve only beenwith the company for six months. I’m the employee in the department with theleast tenure, so Scott has no choice but to fire me. He didn’t say hello because hefeels bad about it. I’m about to lose my job, which means not only no toy for my son and no coat for my wife, but now I’ll lose my family because they’ll leave me if I can no longer support them. So now Jim is dangling off the cliff ofsubjectivity and runs into Scott’s office and asks, “Are there going to be layoffssoon? Am I on the list?”

Sound extreme? Maybe. Now step into the shoes of a student at a tough university.

Case #2—The student and class participation

Susan is a student at a university. Class participation is 30 percent of her grade. Susanhas been shy ever since grade school, when she froze while reciting the EmancipationProclamation. Now she hates speaking up in class and is horrified when the professoreven looks in her direction. One day around mid semester, Professor Simmons raises theissue of class participation and reports that a few students are not doing well in this area.

What is going through Susan’s mind at this time? What will she do?

1. Oh no! I’ll have to get an A on everything else I do to offset the F I’m surelygoing to get for class participation. Okay, well, let me get out my calculator andfigure that out. A 4.0 times 70% + 0 times 30% is 2.8, best case. That’s less thana B and this is a four-credit course. That’s going to bring my grade point averagedown and I might not be able to get into grad school. It’s so competitive outthere. I won’t be able to get a job and I’ll end up living with my parents for therest of my life. Oh no!

It can get even worse for Susan, she could be thinking:

2. I know I should go and talk to Professor Simmons but if I do, she will make meparticipate. Right now, every time Professor Simmons looks at me, I put myhead down to avoid eye contact at all costs. But now she is going to cold call onme. I won’t be prepared. I’ll stutter. I’ll sound like a total idiot and everyone willlaugh at me. Even if I do speak up, I’ll still get an F because what I say will beworthless. Rumors will fly around school about how stupid I am and I’ll end uphaving to transfer! Oh no!

Unfortunately, both of these subjective responses are very real in academia today.

Here is an example of how we can be subjective in our relationships. Imagine you arethis person:

Case #3—The couple

Patricia and Sam have been dating for 4 months. Things are wonderful; they have somuch in common. A match made in heaven. Every morning around 8:00 A.M., on hisway to work, Sam calls Patricia to wish her a good day and to tell her that he loves her.

Part 2 The Principle of Objectivity

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“Have a good day sweetheart, I love you” is the morning sign-off. One morning Samdoesn’t call Patricia on the way to work. It is 9:00 A.M., Patricia is at work and, naturally,she is quite concerned that she has not heard from Sam. She is worried that somethingawful has happened to him, such as a car accident or something even worse. Finally,around 9:30 A.M., Sam calls Patricia and apologizes for not calling her earlier. He seemsa little distant. He wishes her a good day and says that he will call her later.

If you are Patricia, you really have two ways to think about this situation:

1. Sam did not say “I love you” so obviously he is seeing someone else. While I’msitting here wondering whether he is on the side of the road hurt somewhere, hewas got to work late because he was out late with someone new. I do think hecared for me, but he probably fell in love unexpectedly with this person and isnow afraid of hurting my feelings. He knows how much I care for him so hewon’t want to tell me at work because he knows that I’ll be too upset. I think I’llcall him back, let him off the hook and tell him that I think we should startseeing other people.

Here is a more objective response to the situation:

2. There must be something going on with Sam. I trust him, he trusts me, and weboth trust our relationship. I just hope everything is okay. I am sure he will callme when he is able to talk and I hope that I can help him in some way.

How would you react in this situation?

Case #4—The entrepreneur and the international supplier

Cathy is an entrepreneur who is very excited about a new opportunity to import anexcellent product from a country that has just restored its trade relationship with theUnited States. She knows that as a woman business owner, her biggest risk will be the re-lationship with the foreign supplier, as it is not accustomed to doing business withwomen, in its own country or abroad. The stakes are high. Cathy has committed every-thing she has to the venture, she is all in. Both governments appear interested in the ven-ture being successful. Cathy has proven the product’s appeal in the U.S. market, andinvestors are interested. One day, at the official launch of the product at the U.S.Embassy for that country, the ambassador pulls Cathy aside and says, “Old habits andways of doing business still prevail. Watch out, this is a new era for this country; the sup-plier may not honor your relationship in spite of your legal distribution agreement.”

Clearly understanding the risk of the relationship with the supplier of the prod-uct, Cathy’s thought process is as follows:

“Our company is responsible for navigating U.S. Customs and the FDA labelingprocess for the supplier to gain access to the U.S. market. We are 75 percent of U.S.sales so far, poised with commitments from new distribution channels. The supplierwould never hurt their number one distributor. That makes no sense!” Cathy con-tinued her effort to expand distribution in the United States in spite of the warning.

Was this a subjective or objective analysis of the facts at that time? What would you have done?

Case # 5—The Corporate CEO

Stephan Connor is the CEO of a large technology company called Personal Tech-nologies, Inc. (PTI), which sells integrated personal technology products. PTI hasbeen experiencing rapid growth over the last 5 years, with 60% market share and a75% increase in stock price. The PTI product line is highly differentiated and is sup-ported by strong brand awareness. A new technology has emerged in the marketplacethat makes the technology upon which the PTI product is based obsolete. This new

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6technology is creating a stronger value proposition for the customer at a slightlyhigher price than the PTI product. The CEO has to decide whether to invest in thisnew technology or to stay the course. The CEO’s response is:

1. No one is going to spend more money on that functionality, and it will be ahassle for the customers to switch over all their stored data to the new product.Moreover, it will cost PTI too much money to invest in the new, unproventechnology. Let’s wait and see what happens. Our brand is strong. We can affordto wait.

How many corporate executives in this situation do you think respond this way?

Many of us can relate to these five case scenarios of subjectivity. We have allwatched ourselves take a subjective rollercoaster ride in our minds in response to peo-ple, situations, or events. The question is not whether we are going to take the ride.We most certainly will because that is the nature of the mind. (We will address thislater.) The question is: how can we become more objective so that we can get off thesubjective rollercoaster before it costs us more than we are willing to pay?

Let us assume that given a choice, none of us want to take the ride on the subjec-tivity rollercoaster if the cost is potentially our job, our grades, our relationship, or ourbusiness. Let us further assume that given a choice, we would prefer to learn ways to in-crease our objectivity so that we can have freedom in our relationships, both personaland professional, and make sound business judgments as an entrepreneur or corporateexecutive.

To become more objective is possible with knowledge, understanding, and effort.Increasing our objectivity is not difficult, it simply requires the following:

● An understanding of subjectivity and how we relate to the world● An acceptance and appreciation for how the mind works● A framework for increasing objectivity● A minimum knowledge about the reality of living ● Tips and tools on how to apply this information

In this next section, we will introduce a simple framework for objectivity that can helpus respond to things as they are. In addition, we will review the minimum knowledgethat we need to be more objective, knowledge that we all intuitively understand butoften forget and rarely apply in our daily lives.

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A Framework for Objectivity

Understanding How We Relate to the WorldAre we ever totally objective? The fact is, we are all totally objective every day. It is thenature of the subject-object relationship. You are the subject (“I”) and everything elseis the object, (“Other” or “not-I”). As the subject, you relate to the object through ob-jective means of knowledge, which are your five senses: sight, hearing, taste, smell,and touch. For example, you are walking along a path and you come across a beautifulbed of roses. You see the roses; sight takes place. You have no choice in the matter. Ifthere is a flower and your eyes are open and working properly, you will see the roses.At that moment you are totally objective. We are all completely objective when we ex-perience through our senses “what is.” However, after our initial objective experienceof “what is,” things tend to get a little murky. After seeing the object, our immediateresponse to the object or situation becomes subjective, conditioned by the mind withits formidable modes of operating. The good news is that with minimum knowledge,effort, and a bit of courage, the mind can be managed and a more objective life is pos-sible. The key drivers of our subjective response to “what is” include:

Mental Models—These are our deep-rooted ideas and beliefs about the way theworld works and the way things ought to be. We began constructing this view of real-ity out of all the sensory input from our objective means of knowledge; sight, hearing,taste, smell, and touch. As children, we see, hear, taste, smell, and touch, and we beginconnecting all of those sensations in our minds to form patterns that define for us oursense of reality and the way the world works. We view everything in our lives based onthese mental models whether they are right or wrong. Our mental models are furtherconstructed by things we have been taught as a child, i.e., right from wrong, good andbad. Other notions we have merely adopted from what we have seen on TV, or theycould just be a part of the fabric of our society, such as our political, economic, and so-cial structures. Interestingly, we rarely question these assumptions and conclusions,and as an adult, we assume them to be true. All of these notions, beliefs, or mentalmodels directly influence the way we interpret “what is.” The most fascinating is thatevery new sensory input or experience is not interpreted as new; we try our best toforce it into a pre-existing, known, and comfortable mental model. We find it disori-enting when we try building new mental models; to do so requires effort and courage. C

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Fears—Fear is everything we are afraid of. Fear is common to us all. The most com-mon fears are fear of failure, fear of success, fear of loss, fear of death, and fear of painand suffering. The challenge is that deep-rooted fears color our interpretation of“what is.” If we fear something, the sensations received through our objective meansof knowledge (sight, hearing, taste, smell, and touch) will be filtered through thesefears by the mind. Our actions then become a reaction to a fear and not a response to“what is.”

Habits and Tendencies—These are our habitual behaviors and actions, which are aresponse to our mental models and our fears. For example, some of us who feel threat-ened stay and fight while others run in the other direction at top speed. “Fight orflight” is a habitual tendency in response to fear. Just as our mental models have beenconstructed from the sensory input we received as young children, our minds have in-stantly patterned habitual responses and tendencies to support those mental models.

Thoughts—There is a constant stream of thoughts going through our minds everyminute of every day. Have you noticed? If you stop and watch this stream of thoughtsyou will notice that one of the recurring themes is one of self-judgment. Did youknow that there is a symbiotic relationship between the thoughts that pop up in ourminds and the mental models that we have created? For example, if your mentalmodel is that women are dishonest in relationships, and then every time you meetsomeone new and try to have a relationship, the stream of thoughts in your head willbe something like, “she can’t be trusted,” “she just lied to you,” “she will dump you, sodump her first.” Many good relationships are doomed because of such mental models.Wouldn’t it be wonderful if we could be objective to our mental models and relate toand appreciate the other person for who he or she actually is? The reality is our men-tal models drive our thoughts, and our thoughts modify our mental models. What acycle it is!

This is what we do:

We experience through our senses a fact whether it is an object, a person, an action, or asituation. In an instant, we project our own fears, mental models, and background ontothat fact. The result is that we see something other than what it is, a misperception, orsometimes one object is mistaken for another, or the value of an object or circumstance isexaggerated, seen for more than what it is. Everyone has this problem.

A Framework for Increasing ObjectivityTo be objective requires a focused effort. Because of the complexity of the mind and thedeep-rooted nature of all those drivers of subjectivity, the approach to becoming moreobjective is non-additive, nonlinear and iterative, containing the following components:

● Discerning what is, without judgment, without projection, without subjectivity● Identifying the mental model that may be dictating our reaction to “what is”● Responding with right action to “what is” based on an objective recognition of

the facts

If we go back to our cases of extreme subjectivity, we can apply this objectivity frame-work and determine an appropriate response to the reality of each situation.

Part 3 A Framework for Objectivity

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Case #1—The boss and the nod

Objective Recognition of the Fact The boss did not say hello as usual, only nodded.

Mental Model As a child, many of us thought that we were responsible foror Tendency our parents’ behavior. We thought that their behavior was

directly related to something that we did. Unchallenged,adults often assume that they are responsible for others’behavior when often it has nothing to do with them.

Fear Fear of not being able to support the family and guiltover time spent with work.

Objective Response Do nothing. It may have nothing to do with you.

Epilogue: Scott was not feeling well and was focused on resting behind his desk,period. When Jim came into his office, Scott looked at him in disappointment. Therelationship changed from that day on, because Scott now perceived Jim to be inse-cure and impetuous.

Case #2—Student and class participation

Objective Recognition Class participation counts 30% of the grade and I of the Fact know I am not participating because I am afraid.

Mental Model Many of us tend to avoid difficult situations and try to avoidor Tendency confrontation at all costs. The student in this case just

wanted it to go away. Susan assumed the worst possiblescenario and avoided confronting the reality all together.

Fear Fear of failure and being embarrassed.

Objective Response Be proactive and meet with Professor Simmons. Susanshould be open and honest about her discomfort withclass participation and express her desire to improve.

Epilogue: In the second case, Susan became overly stressed. She showed signs of fa-tigue and was more distracted in class. Finally, Susan started skipping class. Fortu-nately, Professor Simmons was sensitive to these issues and contacted Susan to set upa meeting. Susan had no choice but to meet with the professor. Professor Simmonsand Susan had an open discussion about the issue, and together they worked out aprocess to help Susan feel more comfortable and participate more, without cold call-ing. Susan ended up with a 2.8 for class participation and a 3.5 for the class.

Case #3—The couple

Objective Recognition of the Fact Sam called late and didn’t say “I love you.”

Mental Model Patricia had been hurt before in relationships. She or Tendency believes that men can’t be monogamous.Fear Fear of being rejected.

Objective Response Trust Sam. Give him the benefit of the doubt. There aremany reasons why he may not have responded as usual.Give him time to communicate. Base your response on hisbehavior over the past 4 months, not just one morning.

Epilogue: In the third case, Sam was late to work because of a flat tire and he was dis-gusted with himself because he knew the tire was bald. He had procrastinated for

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Part 3 A Framework for Objectivity

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10months and did not get new tires and was just angry with himself. He called into workto tell his boss he would be delayed but he didn’t want to tell his new girlfriend, withwhom he was so open and honest, about how dumb he was. This is the reason hewaited to call. Even then he was feeling silly and embarrassed, so he didn’t stay on thephone long and he forgot to say, “I love you.” Later that day, he called Patricia andtold her about his morning.

Case #4—The entrepreneur and the international supplier

Objective Recognition Cathy received a warning from the ambassador, of the Fact a credible person with more knowledge and

understanding of the business climate.

Mental Model Cathy was influenced by her view of business and the or Tendency way business should be. She could not accept that the

supplier did not value her performance, since her companyrepresented 75% of sales in the United States.

Fear Fear of failure and being embarrassed.

Objective Response Minimize losses, do not invest in the growth of thecompany, and develop an exit strategy.

Epilogue: The international supplier did not want to do business with Cathy. Nomatter how hard she worked or how much revenue she generated for the supplier, thesupplier wanted to do business with someone else. The supplier found a way to termi-nate the relationship with Cathy’s company, as the ambassador predicted, and thebusiness failed. Cathy lost one million dollars. Unfortunately, this type of subjectiveresponse is one of the main reasons why global businesses fail. American companiestend to subjectively assume that the foreign company with which they are doing busi-ness operates with the same mental model and beliefs. Often this is not the case.Many global entrepreneurs have difficulty accepting this reality.

Case #5—The corporate executive

Objective Recognition A competitor comes out with a new technology that of the Fact appears to be a stronger value proposition for the

customer at a higher price.

Mental Model Consumers won’t pay more for the new functionality. or Tendency Since things are going well, and the board and stockholders

were happy with performance over the last 5 years, the executive was fearful of reducing earnings in aninvestment in an uncertain technology.

Fear Fear of investing in unknown. Fear of losing money.

Objective Response Leverage relationships with existing customers andconduct focus groups to determine the willingness to payand the willingness to switch to the new technology and atwhat price. Task the PTI technology group to investigatethe actual cost of acquiring or developing the newtechnology. Task the CFO to conduct an competitoranalysis to determine the financial strength and operatingresources of the lead competitor.

Epilogue: PTI lost market share and ultimately failed. The consumer did see the value inthe functionality provided by the new technology, and the competitor made it very easyfor them to switch. Stephan, the CEO, had a subjective view about consumer adoption of

a new technology but did not conduct an objective analysis of the facts before making hisdecision. Unfortunately, this subjective response to objective competitive facts can beseen in many business failures. For example, Kenneth Olsen, founder of minicomputermaker DEC, opined in 1977, “there is no reason for any individual to have a computer intheir home.” Because of that strong belief, Olsen did not commit internal resources to in-vestigate the change in market conditions. Thus, he failed to realize that electronic hob-byists were making their own home-grown personal computers between 1975 and 1981,and that many start-ups like Apple Computer and mid-sized firms like Radio Shack andCommodore were manufacturing easy-to-use personal computers. We all know whathappened to DEC as a result of this subjective response to “what is.”

Applying the FrameworkThe key to becoming more objective is in the second component of the framework.This is recognizing our mental models, fears, and tendencies, and anything that maybe coloring our response to “what is.” To be objective requires that each of us recog-nize and accept our mental constructs and tendencies and be open to the possibilitythat we may be wrong about what we believe. For example, if Stephan Connor of PTIhad accepted the possibility that his mental model could be wrong, he would havetasked internal resources to conduct an in-depth industry analysis to objectively eval-uate the company’s competitive position. In the case of the international entrepreneur,Cathy could have accepted the possibility that her mental model about business waswrong in this case and tested the relationship with her supplier before raising and in-vesting more resources. To be objective also requires us to recognize our tendenciesand habitual responses. It is helpful if we try to understand the basis for the responseand then determine the effectiveness or appropriateness of that tendency or responsein a given situation. A simple example of this is the tendency to postpone or procrasti-nate. Many of us have this tendency. Some say it is human nature. We like to take careof things that are easy and pleasant and postpone or even avoid altogether that whichis difficult, painful, or troublesome. Where does this tendency come from? Perhaps itis because as students, we were told when taking an exam that we should attempt theeasy questions first. As a result, it seems everyone has this trait to some degree—thetendency to do the easy things first and the tough things last. Being objective meansthat when we find in ourselves a tendency or a habitual response we should reversethat tendency or response. In the case of procrastination, we should deal with thetough things first. In the case of Cathy, the international entrepreneur, her tendencywas to keep charging full steam ahead without pause in the face of uncertainty. Forher, reversing the tendency would have meant that she pause and get more informa-tion before moving forward. If she had done this, her loss would have been minimized.

This is what we should try to do to become more objective:

Stop! Give yourself the time and the mental space before you react or respond to a“fact,” so that you can recognize a tendency born of a mental model that may becoloring your response to “what is,” and then reverse the tendency.

The Minimum KnowledgeThe framework is a tool to increase objectivity, but without a basic understanding of therealities of life, applying the framework will yield less than optimal results. It is like try-ing to build an airplane without understanding aerodynamics. Or more relevantly, it islike trying to start a business without understanding the entrepreneurial process. Thekey is integrating the framework with a basic understanding about the realities of life.

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Objectivity: A Guiding Principle of Entrepreneurship

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Armed with this framework, what is the minimum knowledge we need to be moreobjective in our jobs, in school, in our businesses, and in our relationships? In this sec-tion, we will review this minimum knowledge; realities that we intuitively understand,realities that can be verified through experience yet are often taken for granted or dis-counted altogether. We will also provide practical tips on how to begin living intelli-gently with the guiding principle of objectivity.

Reality #1—There will always be situations that are not conducive.

This is really about Murphy’s Law. We all know that “What can go wrong, will gowrong.” The possibility of something going wrong is much greater than the possibil-ity of it going right. If there is such a thing as plane crashes, they will happen; if thereis such a thing as stock market crashes, they will happen. Unfavorable situations willkeep arising and we have to face them and deal with them. Unfortunately, when prob-lems occur, many of us tend to disown the problem or, worse yet, engage in “wishfulthinking,” that is, wishing the problem will go away or that it will be all right. The re-ality is that it won’t be all right unless we take objective and appropriate action.

Objectivity Tip: To effectively handle the day-to-day problems that arise, the first stepis to accept that there is a problem. Acceptance of the facts of “what is” is a precondi-tion to right action. Non-acceptance is an ideal condition for an emotional, subjectivereaction, and we have already learned what a subjective reaction can cost. Further-more, non-acceptance does not alter the fact that there is a problem; it just creates achain of further emotional reactions that make the problem worse. If you are objectivein your perception of a situation, you can then respond to it in an appropriate manner.The key is to accept a problem as it occurs.

Reality #2—Every effort is a calculated risk.

We all set goals for ourselves. It is our nature to have desires and aspirations, but weshould also be aware and accept that there are no guarantees that we will succeed. Suc-cess is not given; it does not come as a rule. Every time we expect a result of an effortwe base our expectations upon certain data. Unfortunately, dealing in a world of un-certainties, this knowledge often proves to be inadequate. Thus, there is speculationinvolved in every expectation. Our tendency is to assume that a certain result is given.We think that some things will naturally follow a probability curve and, in fact, somethings do. But the reality is that every intelligent effort involves a calculated risk, andonly two possible results can be expected from every effort: success to varying degrees,and failure to varying degrees.

Objectivity Tip: You should always be prepared for failure in your effort because you ac-cept that success is not guaranteed. Being objective means that you accept that yourknowledge is limited and that there are factors beyond your control. Living with theguiding principle of objectivity means that you put forth your best effort and acceptthe result.

Reality #3—Everything is connected, interrelated.

Everything is connected and interrelated. From the food we eat to the car we drive,there are many interrelated people and processes involved. We all know this butsomehow we go about our daily lives acting as though everything is disconnected. Thetruth is that there are universal laws and principles over which we have no control andthat dictate how things interact and connect to each other. We know that when wedrop a ball, it will fall. We know that if we touch fire, we will burn. We also know thatthere is an order to things. There is a physical order that governs the way our bodiesfunction. There is an astronomical order that governs the way the planets revolve.There is a psychological order, a sociological order, and so on. Every order is con-nected to and interrelated with all the other orders, and you are a part of that order.

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In addition to these immutable laws, there are also universal values that we allseem to know and understand. For example, we know that we don’t like to be lied toor cheated. We know that we don’t want to be physically or emotionally harmed. Thisis the nature of reality. There is so much about this reality over which we have no con-trol. To be objective is to recognize these facts and to try to live in harmony with thisreality, this interrelated macrocosm of universal laws, principles, and values.

Objectivity Tip: Living your life in harmony with the unchangeable laws of the universejust makes sense. We know that instead of swimming against the current, it is more in-telligent to swim with the current. Therefore, to live a life of reality means living ac-cording to universal principles of truth, integrity, and compassion, and with anunderstanding and appreciation for your own individual connection to it all.

Reality #4—We cannot control the results of our actions.

If there are only two possible results to every effort, what dictates the results and thevarying degrees of success or failure? It can be mind-boggling. Sometimes we have theknowledge and the power, yet things still don’t work out and we fail miserably. A morefavorable twist is when we don’t have the knowledge or the power, yet things work outperfectly with the highest degree of success. So what is this unknown factor? Some callit luck, some call it karma, and some call it grace. Whatever you call it; this is the reality.

Objectivity Tip: Being objective means understanding and accepting the fact that youhave no control over the results of your action. To be objective is to recognize thatthere is something other than your own effort that makes the difference between suc-cess and failure. In recognizing a power other than yourself, you recognize your limi-tations and you are objective. You are objective when you can accept the indisputablefact that you can control only your choice of actions and the action itself; beyond thatyou have no control. You never know what will happen moment to moment. You canonly do your absolute best in the present moment and let go of all your anxiety aboutthe way things will turn out. All of your anxiety never changes the result anyway!

Try thinking of it this way:

It is a lot like driving a car in the night in a rural area with no street lights. Theheadlights of the car light up only a few yards and you travel many miles. On the way,you encounter different situations. You act according to the situation. You deal withwhat is in front of you with the understanding that all you can do in the moment isyour best with the resources you have. The result you cannot predict. Objectivity isunderstanding that you do not need to see the end result to live your life, to take action,or to move forward.

Now we understand:

1. How subjective we all are.2. How a guiding principle of objectivity can help us manage our day-to-day lives.3. The framework, knowledge, and tools we need to live our lives more objectively.

Specifically, we have seen how our subjectivity can play out in our lives. We havelearned how being guided by the principle of objectivity can improve our relation-ships, minimize job frustration, and minimize business loss. In the next section, wewill apply this guiding principle of objectivity to the realities of entrepreneurship. Wewill focus on the start-up stage of entrepreneurship because this is when the venture ismost vulnerable and when things are most uncertain. With start-up business failurerates as high as 80%, effectively applying the principle of objectivity in the early stagesof business growth can make the difference between success and failure.

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Objectivity and Entrepreneurship

Entrepreneurs have a difficult time being objective about their business. Driven bytheir unyielding passion, many entrepreneurs have a great deal at stake when theystart a business. Many entrepreneurs start businesses because they “don’t want to workfor anyone else;” they want to row their own boat. They want to work hard for them-selves and create something of value from nothing. When they get started, they likewearing all the hats. They are the visionary with the vision; they are the salespersonwho makes all the sales. They are the bookkeeper and the accountant. They are cus-tomer service. They are the person responsible for delivering the product or service tothe customer and also collecting the money from the customer. They are faced withthe reality that there is no more paycheck coming in, and now they are, in many cases,singularly responsible for their ability to “eat.” And we all know we all have to eat! Ifthey have a family there is an added level of personal investment; their family’s liveli-hood depends on how well they do as an entrepreneur.

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The Entrepreneurial ProcessGrounded in the Guiding Principle of Objectivity

TheEntrepreneur

Objectivity

Objectivity

Mental Models

Tendencies

Thoughts

Fears Skills

Strengths

Weaknesses

Objectivity Objectivity

The Team

Resources

TheOpportunity

Vision

© 2007 Elizabeth R. Thornton

Minimum Knowledge

The Customer

The Industry

Financial, Human, Material

Employees, Partners, Advisors

ReturnProfit

PurposePassion

Value to stakeholders:

Customers, Employees.Investors, Community

With all this going on, is it really possible for an entrepreneur to be objective? Giventhe high failure rate of small businesses and the dynamic and uncertain nature of entre-preneurship, can an entrepreneur afford not to approach the venture with some level ofobjectivity? Along with passion, perseverance, and commitment, an entrepreneur will in-crease his or her chances of success by mastering the guiding principle of objectivity.

In this next section, we will apply our principle of objectivity to starting the ven-ture based on a new model for the entrepreneurial process grounded in the guidingprinciple of objectivity.

(1) The EntrepreneurAs stated earlier, the entrepreneurial process is initially centered on the entrepreneurand how well that entrepreneur can manage the dynamic, uncertain, risky, and chaoticnature of entrepreneurship. Based on what we have learned about dealing with “whatis,” it is clear that a venture has a greater probability of success if its founder, the en-trepreneur, has mastered some degree of objectivity. It is critical that the entrepreneurlearn to be objective about him- or herself, the opportunity, and his or her ability as aleader to manage the growth of the venture. By applying our objectivity framework tothe entrepreneurial process, we can identify some tactical steps an entrepreneur cantake to help increase the probability of success by being more objective.

Recognizing Our Mental Models, Fears, and TendenciesIn addition to the belief systems, fears, and mental constructs that drive our subjectiveresponse to “what is,” entrepreneurs have an added layer of subjective notions to siftthrough. We call them entrepreneurial myths, and there are many of them. Entrepre-neurs must evaluate these myths, or sets of false beliefs, and make sure their day-to-day decisions are not clouded by these subjective notions. Following are a few mythsabout entrepreneurship that can easily derail an entrepreneur along with an objectiveway of looking at each of these myths.

Myth #1—If an entrepreneur is talented, success will happen in a year or two.

Objective Reality: In most cases, it can take over five years for a business to be success-ful. Instead of planning to work hard for a year or two, an entrepreneur should planfor a sustained commitment over five years, with the understanding that it could takelonger and that there is always the possibility that the venture will fail.

Myth #2—Entrepreneurs want the whole show to themselves.

Objective Reality: Nothing happens in a vacuum. Even as a sole proprietor, an entrepre-neur depends on many people to support the venture, such as the host of the website,customers, or the mail carrier that delivers the customer’s payment. Everything is inter-related and no one does anything alone. Research also indicates that entrepreneurs havea greater probability of creating wealth if, instead of acting alone, they build a team withall the requisite skills and experience to successfully leverage the opportunity.

Myth #3—Entrepreneurs are motivated solely by the quest for money.

Objective Reality: Most entrepreneurs are successful because they love what they do.They have a passion for their business. Entrepreneurship is too hard and too risky foranyone to sustain the required level of effort unless he or she loves the work. In addi-tion, the love and passion of the entrepreneur is contagious—it can help attract cus-tomers, investors, and employees!

The Minimum Knowledge Applied to EntrepreneurshipNow that we have applied the key component of the objectivity framework, that is,recognizing some of the drivers of subjectivity in the entrepreneurial process, it is

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important that we review the minimum knowledge, the realities of life, in the contextof managing the realities of the entrepreneurial process.

Reality #1—There will always be situations that are not conducive.

This is all about dealing with uncertainty for an entrepreneur. When the entrepreneurstarts the venture, he or she has no idea how the target customer will respond or howcompetitors will respond. The entrepreneur has to assume that if something can gowrong it will go wrong. So if there is rivalry within the industry based on price, theremay be price wars. If the industry is characterized by constant technological advancesthat “leapfrog” old products within six months, the entrepreneur’s product maybecome obsolete. Accepting the reality of Murphy’s Law helps the entrepreneur todevelop strong problem-solving skills. Empowered with this knowledge, the entrepre-neur is not surprised or shaken when a problem occurs. The entrepreneur anticipatesa potential problem because that is the nature of entrepreneurship. Being able toquickly and objectively identify a problem, accept that the problem exists, understandits impact on the business, and then execute the best possible solution to that problem,given existing resources, is critical. This is what we mean by sound judgment and rightaction.

Reality #2—Every effort is a calculated risk.

Given that all of our efforts are calculated risks, a successful entrepreneur should beable to handle any result and keep moving forward. Success to varying degrees andfailure to varying degrees are the two possible outcomes for every effort. A successfulentrepreneur must start the venture with a readiness to accept this fact in order toprepare for the uncertainty of entrepreneurship. Many times an entrepreneur will be-come depressed when something doesn’t go as planned. To be objective, the entrepre-neur must ask, “Was the failure totally unexpected?” The entrepreneur should haveexpected it if he or she accepts the reality that every effort is a calculated risk. The en-trepreneur should take it in stride, get over it, and move on! This is what perseveranceand determination is all about. An entrepreneur cannot afford to become sad or de-pressed and lose whatever effectiveness, efficiency, and courage he or she may havebecause of something that is outside of his or her control. Knowing that every effort isa calculated risk allows the entrepreneur to take himself personally out of the equa-tion. Guided by this principle of objectivity, an entrepreneur must believe that “it isokay to fail” and that a failed effort or even a failed business does not mean that theentrepreneur, the individual, is a failure. Perseverance and commitment in the face ofuncertainty and potential failure is a key characteristic of a successful entrepreneur.

Reality #3—Everything is connected, interrelated.

For an entrepreneur to be successful, he or she must be aligned with the reality of uni-versal values and principles. An entrepreneur should treat customers well, not only be-cause it will bring in more business but because it is the way the entrepreneur wants tobe treated as a customer. Entrepreneurs should be kind and supportive to their em-ployees because it is the right thing to do, in addition to being the smart thing to do.Being objective, being in harmony with universal laws and principles, means creatinga vision for yourself and your company that is grounded in a passion or purpose, a be-lief that the business will positively influence people’s lives. Billionaire entrepreneurssuch as Bill Gates of Microsoft and Michael Dell continue working even after theyhave achieved financial success because they strongly believe that their product orservice makes a difference in people lives. Passion is often described as the numberone characteristic of successful entrepreneurs, and it has its basis in the reality thateverything is connected. Starting, managing, and harvesting a venture grounded inthis understanding of universal values and principles will increase the probability ofsuccess.

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Reality #4—We cannot control the results of our actions.

The objective entrepreneur understands and accepts that he or she has control overtwo things: (1) the choice of action and (2) the chosen action. The entrepreneur haslittle control over what will happen after that. The entrepreneur works for success,knowing that there is a possibility of something going wrong. The entrepreneur mustapproach the venture with the drive and commitments to do his or her best, not know-ing what the results will be. The only way to effectively deal with this uncertainty isthe acceptance and resolve that since results cannot be controlled, the entrepreneurshould singularly focus attention and effort on sound judgment and right action in themoment. With limited knowledge, the entrepreneur must trust his or her instinctsand be prepared to execute. Meg Whitman, the savvy entrepreneur who leads eBay,makes her best decisions in the moment, knowing that the price of inaction is greaterthan the price of making a mistake. With this mindset, an entrepreneur can approacheach stage of the business planning process with objectivity.

(2) The VisionThe most successful entrepreneurs start the entrepreneurial process with a clear vision.That vision is often based in a passion to do something good for other people. To be ob-jective and to maximize success, the entrepreneur must clearly define his or her vision forthe company and how the company will create a positive impact for all of the stakehold-ers: customers, employees, investors, and the community. To construct a vision for a newbusiness venture, the entrepreneur may start with what he or she is passionate about.Sometimes the vision comes from feelings of frustration, sadness, or even anger about anunmet need in society. Based on the objective understanding of universal laws and princi-ples, a business founded on the principle of helping others has a higher probability of suc-cess than one founded on greed and ego. Entrepreneurs must spend some time on this.They will quickly see that getting clarity around this will help them to attract the rightpeople with the right resources to successfully launch the venture.

Being grounded in objectivity and having a clear vision of what is to be accom-plished, the entrepreneur must now turn his or her attention to the business oppor-tunity. In the next section, we will focus on opportunity identification and evaluationand will provide an objective approach to identifying and evaluating business ideas.

(3) Opportunity Identification and EvaluationMany people have good ideas for a business. Ideas can be exciting, and the entrepre-neur can get carried away. The challenge is that not all ideas are viable business op-portunities. Most start-up business counselors will say that many businesses failbecause there was never a real opportunity to begin with. The business fails becausethe entrepreneur did not engage in an objective, unemotional, fact-based analysis todetermine the feasibility of the opportunity. Applying the principle of objectivity tothe opportunity evaluation process will help entrepreneurs focus on ideas that havepotential.

The Customer—Businesses win in the marketplace because of customer focus.Clearly, the first place to start when evaluating an opportunity is with the customer. Itis critical to identify the primary customer for your product or service. The customeror market demand is a critical factor in determining the viability of an opportunity.The main questions entrepreneurs must answer when analyzing market demand are:

● Does the product or service satisfy a significant unmet need in the marketplace? ● Is the primary target audience identifiable?

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● Is the customer reachable?● Is the customer willing to pay a premium price for the product or service you are

offering?

An objective approach: Entrepreneurs must look beyond their own experience and the ex-perience of people they know. Just because friends and family say they like the productor service doesn’t mean it is a good idea. Many entrepreneurs start a venture with only avague idea of the market appeal for their product or service. Even when entrepreneursspend hours in the library conducting an in-depth industry and market analysis, theymust validate these assumptions in the marketplace with potential customers, not justwith friends and family. Entrepreneurs must invest in qualitative and quantitative re-search methodology to prove that there is a sizable market segment, a primary target au-dience, in which the “pain point” or need for the product is significant. There are manyfree online survey tools available such as Survey Monkey. The entrepreneur must vali-date that the target audience is willing to pay a premium for the product or service be-cause it is unlike all other available solutions to that need or “pain point.”

The Industry—For many, understanding the industry, marketplace, and the compet-itive landscape is daunting. Entrepreneurs often say, “I have no competition, there isnothing out there like my product or service.” This is never the case. Some venturecapitalists will throw an entrepreneur out of the office if they hear those words. To beobjective, not influenced by passion and wishful thinking, an entrepreneur must un-derstand that there is always some form of competition. It could be rivalry from a di-rect competitor or just inertia, people doing it one way and being resistant to change.The entrepreneur must conduct an in-depth industry analysis to understand how theindustry is operating so that he or she can determine how to effectively compete formarket share. Below is a list of some but not all of the questions the entrepreneur mustbe able to answer:

● How large is the market and what is the potential for capturing market share?● Is it an emerging industry or is the industry declining? ● What is the year-over-year growth rate in the industry? ● What trends are influencing the industry and what do they portend?● Is the industry concentrated with a few players holding a large percentage of

market share, or is the industry fragmented with a lot of companies each holdinga small percentage of market share?

● What are the substitute products? ● What is the nature of the competition between the existing players in the industry?● Is there significant variability in profitability within the industry?● On what basis do the competitors compete?● What are the competitive strategies of the leading firms in the industry? ● Are there proprietary barriers to entry in the industry?

An objective approach: It is a little easier to be objective about analyzing the economicand strategic characteristics of an industry. The facts are more clearly laid out. It is thesubjective interpretation of these facts where entrepreneurs can get into trouble. Forexample, if the industry is growing by 10 percent year over year, an entrepreneur can-not assume that it will continue to grow at that rate. Moreover, if the 10 percentgrowth is the industry average, the entrepreneur must determine if there are compa-nies within the industry that are growing above or below that industry average andwhat may account for the variability. The entrepreneur must continually dig deeper tounderstand what trends are driving the growth rate. The entrepreneur must make anobjective assessment as to whether the trends may continue or what could cause a shiftin that trend. While making this assessment, the entrepreneur realizes that he or shehas limited knowledge and that the assessment could be wrong. Interpreting data andforecasting trends in an effort to reduce uncertainty is an entrepreneurial activity thatrequires the most objectivity. Typically, when faced with making this type of assess-

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ment, the entrepreneur goes one of two ways. Some entrepreneurs, because of theirbackground and life experience, will be pessimistic and see the glass as half empty. Thepessimist thinks the absolute worst and plans accordingly. On the other hand, an opti-mist, who always sees the class as half full, will plan for the best-case scenario. Whichof these entrepreneurs is correct? Is either one being objective?

Objectivity means looking at the glass without the judgment of full or empty. Ob-jectivity means looking at the glass in terms of its function to contain a volume of liq-uid only. Rather than the optimistic or pessimistic views, to be objective meanslooking at the market conditions as neither good nor bad, but just as they are. By look-ing at the market conditions and their potential impact without labeling them as goodor bad, the entrepreneurs can approach the marketplace more effectively. An entre-preneur can use the chart in Table 1, based on Michael Porter’s Five Forces model, toassess the market without placing value judgments on “what is.” Knowing that there isimperfect information, the objective entrepreneur analyzes the potential variables anddevelops a risk assessment for each, thereby formulating a viable plan based in reality.

Profit Potential—Once we assess the fit between customer need and product/serviceand determine the attractiveness of the industry, the entrepreneur must evaluate theprofit potential of the opportunity. The entrepreneur must focus now on the econom-ics of the business in order to determine the overall viability of the venture. This is an-other area where objectivity is tough but essential. It means the difference betweenstarting a venture that is doomed to fail and starting a venture that has a chance of suc-ceeding. It really is that critical. Entrepreneurs must sit down in front of a spreadsheetand start mapping out the business model. The entrepreneur must determine how

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Table 1. Objective Assessment of Industry Economic Characteristics

Economic Characteristics Strategic Implications

Size of Market Large market means that it may be possible to achievesignificant sales by capturing a small percentage ofshare, 5% or less, without threatening competitors. Toachieve sales of $1 million in a $100 million marketrequires only 1% of the market.

Market Growth Rate Fast growth, for example, an annual growth rate of 30% to 59%, attracts new entrants into the market. Slow growth causes increased rivalry among competitors and forces weak competitors out.

Supply and Demand If supply exceeds demand, surpluses push prices andprofit margins down. If demand exceeds supply,shortages pull prices and profit up.

Industry Profitability High-profit industries attract new entrants, i.e., morecompetitors. Low-profit industry conditions encourageexit and potentially increases rivalry.

Barriers to Entry If barriers are high, threat of entry is low, therebyprotecting positions and profits of existing firms. Lowbarriers make existing firms vulnerable.

Changes in Technology/Innovation Rapid changes in technology can increase investmentrisk in obsolescing equipment. Rapid innovation shortens product lifecycle, having a leapfrog effect.

Product Characteristics Big-ticket items cause buyers to shop around for price.Low-priced standardized items give buyers manysubstitution options.

Capital Requirements The larger the requirement, the higher the risk, in termsof investment decisions and timing. The higher therequirement, the higher the barriers to entry/exit.

much money is needed to get started, how and when the business will generate rev-enues, and how much money is needed to sustain operations through breakeven.Many entrepreneurs think that they can start a business and within one or two monthsbegin generating revenue. This is rarely the case. Evaluating an opportunity and com-pleting a business plan alone can take months! And once the entrepreneur decides tostart the business, establishes the legal structure, prints business cards, and launches areasonably professional website, it is already month two. Money has gone out, but nomoney has come in. By month three, perhaps the entrepreneur has spoken to a fewpotential customers and has attended many early morning networking events. Moremoney has gone out. By month four, only a few prospects have returned the entrepre-neur’s calls and still no money is coming in. Is the entrepreneur eating? This can go onfor many months. When evaluating the opportunity, the entrepreneur must answerthe following questions:

● Does the venture require high capital investment?● How much money do I need to get started?● Can I achieve breakeven within two years?● Is my gross margin revenue—cost of goods sold > 40%?● Is this a profitable business?

An objective approach: Most entrepreneurs assume the best when developing their proforma financial statements. Even their so-called worse case scenarios are often over-inflated. Many venture capitalists, in fact, discount revenue projections by 50 percent andincrease cost by 50 percent when evaluating a business model because they know that en-trepreneurs have difficulty being objective. The following are tools to help entrepreneursbecome more objective when thinking about the economics of the business.

1. Pricing—Entrepreneurs must be objective when it comes to pricing theirproduct or service. It is not enough to compare the prices of competitors. It isnot enough to use a mathematical model to determine what is needed to breakeven. The entrepreneur must determine how much the primary target audienceis willing to pay for the product or service based on its unique value proposition.How can the entrepreneur determine customers’ willingness to pay for theproduct other than asking friends and family? What about a customer survey?Sometimes even surveys may not be objective enough because there is always agap between what people say they will pay for a product and what they willactually pay for a product at the point of purchase. This can be frustrating. Insome cases, the only way to really test the pricing of the product is to do a mini-market test. The entrepreneur can begin marketing the product or service to asmall segment of the target population and see how they respond.

2. Start-up costs—Detail everything! Many entrepreneurs assume that it will costonly a few thousand dollars to launch a simple business. Entrepreneurs tend tounderestimate what it will actually cost. So instead of estimating, entrepreneursshould be objective by getting quotes from vendors for all the services andproducts that are required to start the venture. As the consumer of businessservices, the entrepreneur must also evaluate the price-performance tradeoff forevery start-up expense. For example, an entrepreneur can pay $5,000 for awebsite or the entrepreneur can find a friend of a friend and get a good enoughwebsite for only $1,000. An entrepreneur must be frugal and discerning aboutstart-up costs. The reality is that the average business start-up costs are $10,000.

3. Working capital—This is critical. The entrepreneur must understand howmuch money is needed to sustain the business through breakeven. As we havelearned, objectivity means dealing with “what is.” When estimating workingcapital needs, the entrepreneur does not know how long it will take to generaterevenue. It is difficult to get objective data about the average length of time tobreakeven for start-up companies. There are so many factors that can drive

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profitability in the early stages of a venture, such as the strength of relationshipswith potential customers, the sales cycle, the strength of the value proposition,etc. Sometimes, the best an entrepreneur can do is to assume that on average, heor she may need cash to cover all operating expenses for 9 to 12 months or morebefore the business can sustain itself.

4. Cash flow—Many entrepreneurs tend to think that booking the revenue andcollecting the revenue happens in the same month, whereas it rarely does.Entrepreneurs must assume that if they sell a product on day one, by the timethe order is processed, shipped, invoiced, and paid by the customer, it may be 60days later, best case! In a service business, when you sign a contract to deliver aservice, by the time you begin performing the work on the contract, bill theclient for the first month’s work, and receive payment from the client, you arealso looking at 60 days minimum. To be objective means understanding andmanaging this sales cycle.

The Entrepreneurial TeamThe entrepreneurial team is another critical component of the entrepreneurialprocess. The first thing the entrepreneur must do to understand what type of team isneeded for the venture is to conduct an objective personal assessment. The entrepre-neur must be clear about his or her skills, knowledge, and personal strengths andweaknesses. This is hard for a lot of entrepreneurs. Not only do they often overesti-mate their skills and over-inflate their strengths, they often think that no one can do itbetter than they can. Because of these subjective notions, entrepreneurs often fail todevelop the team that can help the venture succeed. The entrepreneur quickly be-comes overwhelmed and crumbles under the pressure of wearing all the hats. The ob-jective entrepreneur resists these beliefs and tendencies and asks the following initialset of questions:

● Do I have the requisite knowledge and experience to start this business? ● What contacts do I have in the industry?● What is my reputation in the industry—am I known, am I respected?● Do I know people who will support this venture and perhaps become its first

clients?

In addition to assessing current knowledge and skills, the entrepreneur must also eval-uate other behavioral characteristics that are known to contribute to the success of an entrepreneur. There are quite a few self-assessment scales out there such as:Entrepreneurial Mindset, Tolerance for Ambiguity, Locus of Control, and Kirton Adaptation-Innovation Inventory.

Once the entrepreneur completes an objective personal assessment, it is impor-tant to begin the process of building a team. A critical component of entrepreneurialsuccess is attracting a top-notch team of partners, advisors, and employees. Venturecapitalist always say that an A team is more valuable than an A idea. Venture capitalistswould rather fund an A team with a B idea than an A idea with a B team. Based on ourframework for objectivity, how can an entrepreneur objectively approach this crucialtask of attracting the best team?

Functional RequirementsThe entrepreneur must first understand what the business requires. During the start-upstage of the business, the focus is on acquiring resources and setting up initial opera-tions. The goal of the entrepreneur is to establish an infrastructure that will allow thecompany to identify, reach, and satisfy the unmet needs of a targeted customer base witha differentiated product or service. The entrepreneur should focus on defining the valuechain, the specific activities that are required to make the customer willing to pay for thecompany’s product or service. An entrepreneur can initially focus on primary activities,

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those that directly generate a product or service, and those that support the sales andsupport of a product and services. The entrepreneur may use a simple grid to help ob-jectively determine the ideal entrepreneurial team. In Step 1, the entrepreneur will iden-tify the critical functional areas required during the start-up stage of the business. InStep 2, the entrepreneur will identify the skills and experiences required to performthese functions. In Steps 3 and 4, the entrepreneur must review the personal assessmentand determine if he or she has the skills required or if there is a gap that needs to befilled. For example, if the business is on the cutting edge of commercializing an emerg-ing technology, a preliminary screen may include the following:

Step 1 Step 2 Step 3 Step 4Functional Area Skills Needed Entrepreneur’s Skills Gap

In what areas do What skills do Do I have Acquire this skill?I focus? I need? these skills?Research and 15+ years experience Some YesDevelopment in industrySales and Marketing Proven track record in Some Yes

business development, entering new markets

Legal Intellectual property, None Yespatent protection

Financing Raising capital None Yes

In addition to the entrepreneurial team assessment grid, the entrepreneur must alsoconsider building a team that has complementary entrepreneurial characteristics. Pas-sion, perseverance and determination, and the ability to deal with uncertainty are allcharacteristics that the founder should look for in the entrepreneurial team. Clearly,the members of the team must also be grounded in the principle of objectivity.

LeadershipAs an integral part of the entrepreneurial team, the founder must be an effectiveleader. In order to attract a top-notch team, the founder must demonstrate leadershipcapability, passion, and commitment to the business. An entrepreneurial leader is onewho has a clear vision of what is to be accomplished and a viable plan for how to ac-complish it. The founder must also have the capacity to make decisions objectivelyand demonstrate good judgment. To have this type of focus and clarity, a person mustbe secure and confident. The founding entrepreneur must be a person who has an ex-cellent self-image grounded in objectivity. The entrepreneur must know his or herlimitations, strengths, and unique capabilities. The entrepreneur must demonstratehonesty and integrity, and must earn the trust and respect of those in the organization.How well an entrepreneur can lead and how closely his employees will follow is di-rectly related to this trust and respect. Whatever the leader accepts as a means, what-ever he upholds as authority, and whatever he considers valuable, people around himwill also follow that value. This is the essence of leadership.

The founder of the business must also know how to manage people. For many,this is the most difficult aspect of starting and running a business. To be objective inmanaging people, the entrepreneur must first understand that people work for thecompany not so much out of love for the founder but for themselves. People will workfor a company as long as they do not have a better prospect. When an opportunitycomes along, each employee has the freedom to pursue it. Thus, the entrepreneurmust find ways to attract and retain their employees. The entrepreneur must under-stand that each person has to be won over, so to speak, and to do that requires skill.

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Table 2

An objective approach: What is it that wins over the person who is working for you?What is it that is needed over and above the salary, benefits, and equity you may offerthe person? What is it that makes the person work for you with passion, commit-ment, and a certain sense of service? The answer is care. Caring for employees ismaking sure your employees feel understood. Caring means relating to your employ-ees, equally. You interact with them, understanding that they are no different thanyou, that there is no separation between you and them, other than the roles you play in the company. Entrepreneurs need a winning team, a team that works well to-gether, whose members trust and respect each other, a team that can get the jobdone!

How does an entrepreneur create a winning team? You create a winning team onlywhen there is no sense of inferiority or superiority. A winning team is a team made upof equal people with precisely defined roles and responsibilities, all committed to thesame vision, who are fairly compensated and rewarded. Can you operate in such amanner that the person working for you doesn’t develop the anxiety associated with anormal boss–subordinate relationship? Can you talk to that person without creating inhim or her the self-consciousness that “Oh no, I am talking to the boss?” If you can dothat, then you are a great leader, the people who work with you will give their best,and your venture has a greater chance of succeeding.

(4) Resources“Bootstrapping” is the buzzword for starting a venture. An entrepreneur must begrounded in objectivity if he or she is to start a new venture with the least amount ofcash. Many entrepreneurs will run out and lease office space even though working outof their home office would suffice. Others may try to manufacture their product whenoutsourcing makes better sense. The key to making these resource decisions is priori-tizing the goals for the organization during the start-up stage of the venture, and de-termining with every resource decision whether the acquisition of that resource willhelp achieve that goal. For example, as we stated before, the goal in the start-up stageof the venture is to acquire resources and establish an operational structure to effec-tively identify, reach, and satisfy a target customer with a differentiated product orservice. To be objective about resources, the entrepreneur can develop a checklist ofall the potential resource decisions and explore all the ways of acquiring each resource.In order to do this, the entrepreneur must be objective and give up all notions of howa business should look, how much money the business should have, and all wishfulthinking that more money will come. See Table 2.

Customer Share/Barter/Resource Impact Buy Lease Outsource

Website yes barterOffice yes yesLegal support yes yesComputers yes yesSupply yes outsourceDistribution yes outsourceLicensing and Patent yes yesTelecommunications yes yes

Objectivity: A Guiding Principle of Entrepreneurship

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ConclusionThis module has covered a lot of ground. We have defined a guiding principle of ob-jectivity that, if applied in our daily lives, will bring us freedom in relationships, suc-cess at work or at school, and increased profitability and sustainability in business. Itreally is that compelling. Here is a brief recap of the key components that will help usapply this guiding principle.

The Definitions of ObjectivityObjectivity is recognizing “what is” without subjectivity. Objectivity empowers us tomake sound judgments and good decisions. Guided by the principle of objectivity, onecan live an intelligent and successful life.

The Framework for ObjectivityRecognizing and understanding the drivers of our subjective response to “what is” isthe first step toward living an objective life. These drivers of subjectivity are centeredin the mind. They are our mental models, fears, habit, tendencies, and thoughts thatall work together to color the way we see the world and cause us to respond subjec-tively to people, situations, and events. In addition to understanding how the mindworks, to be objective requires an understanding of the immutable realities of life.

● There will always be situations that are not conducive● Every effort is a calculated risk● Everything is connected and interrelated● We cannot control the results of our actions

Once we recognize these drivers of subjectivity, then with practice, and with a strongfoundation in the realities of life, one can begin to realize the benefits of relating tothe world objectively. It doesn’t matter who we are or what we do, the guiding princi-ple of objectivity can increase success and happiness in everyone’s life.

For the entrepreneur embarking upon a journey fraught with obstacles, the appli-cation of the principle is critical. As we have seen, mastering the principle of objectiv-ity can make the difference between sound business judgments that increase marketshare and subjective reactions that result in failure. Integrating the principle of objec-tivity with the entrepreneurial mindset creates a powerful model for the entrepreneurto increase productivity, profitability, and sustainability.

One final note: An interesting paradox is that while mastering the principle ofobjectivity, one must be objective and accept that it will undoubtedly take some time, but with focused effort it can be mastered, and success in business and in life will be thereward. In the meantime, if you are confronted with a situation in which you knowthat you cannot be objective, ask someone you trust to help you see the situation clearlyand help you to discern the appropriate action. That is, being objective, livingintelligently!

Part 4 Objectivity and Entrepreneurship

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