The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty

Using lessons drawn from leading entrepreneurs and entrepreneurial companies, The Entrepreneurial Mindset presents a set of practices for capitalizing on uncertainty and rapid change. Like McGrath and MacMillan's bestselling Harvard Business Review articles, such as "Discovery-Driven Planning," the book provides simple but powerful ways to stop acting by the old rules and start thinking with the discipline of habitual entrepreneurs.

The Entrepreneurial Mindset will show you how to:
* Eliminate paralyzing uncertainty by creating an entrepreneurial frame that shapes a shared understanding of what is to be accomplished and what would be worthwhile
* Create a richly stocked opportunity register in which you mobilize great ideas for redesigning existing products, finding new sources of differentiation, resegmenting existing markets, reconfiguring market spaces, and seizing the huge upside potential of breakthroughs
* Build a dynamic portfolio of businesses and options that continuously move your organization toward the future
* Execute dynamically your ideas so that you can move fast, with confidence and without undue risk
* Develop your own way of leading with an entrepreneurial mindset to create a vibrant entrepreneurial climate within your organization

The Entrepreneurial Mindset is about succeeding in an unpredictable world. It will help everyone from independent entrepreneurs to managers of large corporations develop insights that others overlook and act on them to build the truly entrepreneurial organizations of the future.

For one thing, it is not about entrepreneurs. In fact, the cast of characters is dominated by managers in relatively large organizations. Nor is it about the kinds of coalition-building activities that Gifford Pinchot described in Intrapreneuring (although the topic of political obstacles is addressed). What it is about is strategic innovation. It is a detailed description of an elaborate and exhaustive process for rationally generating (and choosing among) strategic alternatives in the face of uncertainty. This is not a process that the authors have observed while studying entrepreneurs. It is, rather, a description of the tools the authors have developed to work with management teams in established firms to discern original responses to business challenges. Said another way, the book has to do with the process of discovering new things to do - things for which there are no precedents and about which there is very limited data/information - in established businesses.

In some respects, this book constitutes a synthesis (and an impressive one) of themes that have been at work in the strategy literature in recent years. The majority of these themes reflect concerns about how to respond to a business environment in which products rapidly become commodities and (therefore) in which new options are much more strategic hypotheses to be investigated than they are plans to be formalized and funded. Much of the authors' attention is devoted to unearthing new hypotheses from the available data and sorting through them to settle on future courses of action.

The Entrepreneurial Mindset, while easy to read, is not a light narrative by any means. It is, at base, a technical book about a specific approach to strategy development and implementation. It views strategy first as a creative activity and then as a resource allocation problem that terminates in resource allocation decisions first to classes of opportunities and then to specific projects. The search for options ("opportunities" in their terms) occurs at the product/market segment level, not at the business level. Areas considered in search of novel approaches include product features, delivering more value at specific stages of the so-called Consumption Chain, market resegmentation, and radical redesign of the value chain.

There are a few cases in which the authors' actual practice around a task or topic does not become clear until 20 pages or so after their initial presentation of it. Thus, it is hard to derive full value from this material without taking detailed notes and without giving it a second read. (The authors themselves seem to anticipate the need for a twice-through reading, advising us on several occasions that it is OK to skip the next section if this is the first time you've read the book.)

There are none of the traditional "soft" tools of strategy to be found here - no mission statements, value disciplines, driving forces, or what have you. While the book does deal with "Building Breakthrough Competences" in Chapter 8, the approach presented revolves around identifying how to excel on one or more core performance metrics rather than with respect to specific sorts of skills and activity groupings that Hamel & Prahalad adherents have grown used to. Therefore, people whose primary interest is in enunciating over-all themes and affecting corporate culture will not find wisdom on their principal needs here.

As mentioned above, the book incorporates the insights of other researchers - carefully documented in an extensive (and useful) bibliography. Happily, some of the most intriguing of MacMillan's own published ideas have found a place in the process. Other "connections" include:

Pascal, Managing on the Edge - Honda's Five Why's; Wheelwright & Clark, Revolutionizing Product Development - "Types" of development plans; Slywotsky, Profit Patterns - Business model redesign as a strategic response; Porter, "What is Strategy?" in On Competition - Model redesign and unique activities; Brown and Eisenhardt, Competing on the Edge - The idea of "probes."

The list could go on.

Finally, the strategy professional will be pleased with the checklists and questions (called "quizzes") that the authors provide. Some of the very best of these, in my opinion, are:

Sample Questions on Buyer Behavior (pp. 51-52); Is There Potential For Radical Reconfiguration of the Current Business Model? (p. 96); Assessing Market Uncertainty (p. 174); Assessing Technical Uncertainty (p.175); Sources of Competitive Insulation (p.190-191).

In addition, there are many templates to for "mapping" strategies that are quite useful. The notion of "leading indicators" of project progress is a marvelous idea - reminiscent of the principles that Norton and Kaplan have enunciated in their various writings on leading and lagging performance metrics and the Balanced Scorecard.

As a strategy professional, I must admit to one basic reservation about the process described in this book. I cannot imagine how to get a group of busy managers to take the time to do all of these steps in this quantity of detail. There is no doubt in my mind that The Entrepreneurial Mindset presents an ideal way of going about strategy development and selection at the business level. In fairness, the authors point out many cases in which one should modify the process to reflect local custom. Even then - in the absence of some extreme strategic crisis - maintaining interest in and motivation around so exhaustive and elaborate a process rates to be a huge challenge.

The bottom line - It's a relatively technical book aimed at those responsible for strategy development at any level. It does a wonderful job of laying out the details of an exciting process through project implementation. It's a "must read" book because it integrates many current ideas and techniques so well. It's a two-read book. (Actually, I'm on my third time through at the moment.) But it's well worth it.

Bob Nickels 01/15/01


A great book for launching new products/services   April 5, 2001
Peter Hupalo (MN United States)
33 out of 34 found this review helpful

I love this book! I agree that this is one of the best books I've read on entrepreneurship. It's also true that nearly all the examples and case studies in the book revolve around larger companies. The focus is upon launching new products without risking the corporate piggy bank, moving your company into new areas where your company doesn't have much experience and knowledge, managing people's creativity and your company's opportunities.

McGrath and MacMillan suggest entrepreneurs view their endeavors as a portfolio of options. Entrepreneurs create "opportunity portfolios." Each option is pursued or abandoned as conditions warrant and resources allow. Habitual entrepreneurs ruthlessly weed out unprofitable endeavors and are willing to move in new directions. They should also map out their projects to be sure they aren't trying to do too much.

McGrath and MacMillan tell us that the goal is to learn as you go and effectively convert assumptions to knowledge at low cost. For example, via Stepping-Stone Options, McGrath and MacMillan write: "You start with small, exploratory forays into less challenging market niches and use the experiences gained there as steppingstones to build competencies in increasingly challenging and attractive market arenas that you discover as you go."

"The Entrepreneurial Mindset" gives the example of The Kyocera Company, which entered the industrial ceramics business by focusing upon lower-end, niche-based, ceramic products, such as ceramic scissor blades. Using the knowledge of ceramics acquired making scissor blades, the company successfully moved into more profitable ceramic markets, such as semiconductor-chip substrates. This moving-ahead-as-you-learn-and-learn-as-you-move-ahead is a key to becoming a successful entrepreneur.

The authors highly recommend the use of key ratios to benchmark company performance. They give a great example with G.E. Financial Services (another ultra-small start-up :)). Something must happen to improve your ratios. McGrath and MacMillan define this "something" as "entrepreneurial insight." Entrepreneurial insight is the crucial ingredient behind entrepreneurial success. Entrepreneurial insight is seeing something about an industry or a market that others miss or fail to understand and finding a way to convert that knowledge into a powerful market position.

The authors astutely observe that while it is relatively easy to reverse-engineer a product, products bundled with services are much more difficult for competitors to replicate. McGrath and MacMillan strongly emphasize carefully examining the features of your own products and services.

McGrath and MacMillan describe the process of "attribute mapping," which divides a product's features into the customer's perception of the desirability of the feature. Attributes could range from "nonnegotiables" (features expected by the customers) through "differentiators" (features that positively differentiate your product from the competition) and "exciters" (features customers find positively delightful) to "tolerables" (features not really liked, but not hated either) and "enragers" (features customers absolutely hate, fear, or despise).

Enragers must be eliminated, while exciters to drive customer purchasing should be sought. McGrath and MacMillan point out that there is no definite correlation between the expense of creating a feature and the customer's perception of its value. They write, "Exciters are often technically simple, relatively low-cost advances that greatly add to the offering's convenience or ease of use." And, many features that are quite costly often go unappreciated by the customer. I found this section about "attribute mapping" useful.

Learning how consumers contemplate, select, use, and dispose of a company's products is another major focus of "The Entrepreneurial Mindset." Via such "consumption chain analysis," entrepreneurs can find ways to positively differentiate their products from the competition. Great ideas here.

I found some of the lists and worksheets a bit tedious (but useful). And, some of the writing was a bit formal and the book slows down in some places. For example, when discussing "stratification mapping." Yawn. Why stratify? Why not just break your company's revenue and profits down by endeavor or product? I see no value in lumping the different sources of revenue together to create a "strata," i.e. a lumpy mess in my view. In that section, the authors formally write that Pfizer's Viagra creates "a highly attractive structure of demand." Say what? Couldn't they just write, "There are a lot of people who might want to buy it." ?

If you want to understand how other entrepreneurs think and how companies achieve market superiority, you will definitely want to read "The Entrepreneurial Mindset." There is a lot to be learned from this excellent book.

Peter Hupalo, Author of "Thinking Like An Entrepreneur."


Essential Reading   February 14, 2002
Sean Nevins (Philadelphia, PA United States)
17 out of 19 found this review helpful

Bottom line first: Buy this book. Not only can you immediately implement the tools described, but it will also serve as an excellent reference tool. It is well worth the time invested to read it. Consider it an option on your career with limitless upside.

The Entrepreneurial Mindset illustrates the process for rationally generating, choosing among, executing, and monitoring strategic opportunities in the face of uncertainty. Starting from the premise that no market is so mature that you cannot further differentiate your offerings, the authors offer action-oriented, simple tools that help to assess opportunities for launching new products and entering new markets. And those tools aren't just simple, they're also smart and unconventional, providing insight into the minds of habitual entrepreneurs who have honed their skill in creating value time and again.

McGrath and MacMillan publish the checklists, questions, quizzes, and models it took them years to develop while working with management teams in established firms to discern original responses to business challenges. You can start applying the principles and tools in each chapter immediately, getting some good quick hits even before finishing the book. For example, Chapter 11 alone contains 8 tools for developing leading indicators of the business to help tell if a project is heading in the right direction, long before the results become available. Chapter 10 is a gem too. It is based on one of Harvard Business Review's most popular articles, "Discovery Driven Planning" (written by the authors of this book), which was then developed into a course at Wharton's Executive Education Programs for several years.

Anyone who reads and implements the principles, strategies, and tools outlined in this book is sure create value, regardless of their corporate title, and it is a must-read for any strategy professional or executive manager. If you think your industry or business is too mature to benefit from this book, consider one of McGrath and MacMillan's many case studies that are fresh and actually worth studying: Blyth Industries boosted sales from $3 million in 1982 to nearly $500 million in 1996 by exploiting a mature industry. How mature? More than 5,000 years old: Blyth Industries sells candles.

Creating and nurturing an Entrepreneurial Mindset is a lot of fun and carries a lot of rewards, both professionally and personally. To quote the authors at the end of their first chapter: "If nobody knows what the future will hold, your vision of how to navigate it is as good as anyone's. The future may well belong to you."

-Sean Nevins, The Zermatt Group


Actionable advice for entrepreneurship   October 11, 2002
David Wachs (Chicago, IL United States)
13 out of 14 found this review helpful

MacMillan and McGrath put together one of the most actionable management books I have read in years. Each chapter is replete with how-to information: frameworks, tools and methodologies to implement their strategies and build-out new ventures.

The first 7 chapters provide tools to identify and define opportunities. Chapter 2, for example, details exactly how to set up a database to capture new business opportunities, with fields that describe the product/service and forces that affect its success, such as competition and company position. Chapters 3 through 6 provide usable frameworks which will fill your database with opportunities. The frameworks cover everything from redesigning products and services and redifferentiating for customers to resegmenting and restructuring markets and creating new competencies. The rest of the book covers execution: developing and timing entry strategies, managing uncertainty through discovery driven planning, and creating an entrepreneurial culture.

As a consultant, I have been able to use many of MacMillan's and McGrath's frameworks with my clients. Specifically, chapter 8's opportunity options frameworks have been invaluable to categorize new venture opportunities for our clients in the high-tech and financial services industries, and have aided in determining "go" and "no-go" decisions for further investment. Additionally, as I am an aspiring entreprenuer, I personally use their tools for opportunity assessment to inventory and rate my own business ideas.

I highly recommend The Entrepreneurial Mindset to corporate venturers and entrepreneurs alike. While the book covers a lot of ground, it is able to do so in an easy to read fashion. The tools and frameworks throughout the book keep the reader engaged and turn the theoretical into the applicable. The Entreprenuerial Mindset is an essential desk reference for new venturing and a highly worthwhile read.


Best business book I have have ever read!!   June 24, 2003
JAA (Atlanta, GA USA)
6 out of 6 found this review helpful

If you are looking for structure in building/discovering new opportunities for a new or existing product or want to help in validating your current product offerings, this is the book for you. The insight it brings in helping you gain a better grasp of not only your products and services but also your business is invaluable. I highly recommend this book to anyone that wants to establish a well thought out strategy to ensure future success and open their eyes to new possibilites.

Out of all the business book that I have read in getting my MBA and working in the real world, this one is the best. Great Job!!