Big Committees; Central Planning=Risk Aversion

Great entrepreneurial ecosystems are powered at their endpoints.  There is autonomy and no seeking of approval.  There isn’t a check back.  There is a lot of bucking the system, because there isn’t a system.  Great entrepreneurial ecosystems attract doers that don’t need permission to do.

Great entrepreneurial companies are like that too.  If you look at the way Ritz-Carlton does business, it’s a decentralized hierarchy with the end nodes empowered to act in order to serve customers.

Venture capital firms are not like that.  Once a pitch for an idea comes in, there is a systematic way to go through a process to vet the idea. However, VC firms need to be very open and tolerant of new ideas.  Otherwise, they miss.  So, their feelers into the idea world go far and wide.  Investing in crazy ideas that would be really cool if they worked is a hallmark of a great VC firm that will either fail spectacularly or make LPs a lot of money.

If you want to kill innovation, the thing to do is centralize and streamline.  That doesn’t allow room for the crazy ones.  The wild hares are tossed out.  People in the centralized hierarchy will even go to great lengths to besmirch reputations of outliers.   See the research Ron Burt did on brokerage and closure.

In entrepreneurship, it’s the crazy ones that jump the line because they don’t understand lines.

If you see big committees with a lot of people, it’s either a charity or someone somewhere is trying to avert risk.  If you see “experts” used a lot, it is a manifestation of risk aversion. You see, when you go solo, you take the responsibility on your shoulders.  You get the accolades, but you get the failure too.

In entrepreneurship, failure happens.

When there are big committees and something fails, who do you blame?  Who gets the finger pointed at them?  Even the chair of the committee can deflect a lot of the failure.  There will be excuses, even well reasoned logical excuses.

Brad Feld said it best.  Entrepreneurial ecosystems are entrepreneur led.  They are not led by politicians, or financiers.

“Just do stuff. It’s kind of that simple. It’s literally entrepreneurs just starting to do things. If you’re in a city where there’s no clear startup community, the goal is not raise a bunch of money to fund a nonprofit, the goal is not get your government involved. The goal is start finding the other entrepreneurial leaders who are committed to being in your city over the next 20 years. Then, as a group, get very focused on knowing each other, working together, being inclusive of anyone else who wants to engage, doing things that help recruit people to that geography, and doing selfish stuff for your company that also drives your startup community.”

In entrepreneurship the onus for success or failure is pretty singular.  It’s on the shoulders of the core team.  Great teams are comfortable with that responsibility.  Instead of being averse to risk, they run to it.