Entrepreneurial ideas emerge just like in the game of “Trivial Pursuit”. If you want to win, you need to be smart and have a great memory!

Entrepreneurial ideas emerge in ways just like words in the game of “Scrabble”. You can either come up with entire words yourself, but often you build on the words already created by others. Just like in Scrabble, it is not even required for entrepreneurs to have the biggest contribution in the idea for them to capture most of the value!

Entrepreneurial ideas emerge just like in the game of “Chess”. If you want to win, you must carefully analyze potential competitor moves and choose a strategy that destroys the competition. Just like in Chess, entrepreneurs never collaborate with their competitors!

The birth of entrepreneurial ideas is just like the game of “Poker”. Everybody gets cards in a random way. The role of entrepreneurs is to keep their assets secret, and bluff their way to success. Keep your ideas to yourself, and fake it until you make it!

“I think understanding one’s strengths and weaknesses allows one to get an understanding of how I can start responding to certain needs and trends, or whether I require to seek partnerships to cover some resource or knowledge gaps.”

The problem with many failing entrepreneurs is that they stop planning too early and engage in action too quickly. Just having a plan is not enough. Entrepreneurship requires you to take planning seriously, and to give it some time before jumping into action.

Since business plans do not survive first contact with customers, the first rule of entrepreneurship is to postpone contact with customers as long as possible, so as to not jeopardise the execution of the business plan.

Given that entrepreneurship is a search process that may require you to change direction, or pivot, you should never consider your business plan as the plan that you have to write and then execute rigorously. Rather, the business plan is continuously rewritten by the actions you undertake to understand the present and imagine the future, including from interactions with customers.

Having a business plan is no guarantee for success in entrepreneurship.

If the movie director is not giving you lemons, there is nothing you can do. The lemonade principle says that you have to wait for lemons so that you can make lemonade.

If the movie director is not part of your personal network, then you should not trust him. He is probably just trying to get rid of you so he can steal your idea.

The lemonade principle says that you have to squeeze out every opportunity until you are absolutely sure that there is no value in it. When you have lemons, to get lemonade you have to squeeze them really hard. So the lemonade principle suggests that you should not listen too much to this one film director, and that you should continue to trust your gut and develop the idea as you had initially planned.

If the movie director is giving you not only the existence of a need, but also a willingness to pay, you may have identified an underserved market. The lemonade principle suggests that this is a surprise that you should capitalize on and see if there is more interest in the idea, whether you have the skills and knowledge to develop it, and whether you have an interest in taking it further too.

Contact people in their network that are knowledgeable about the potential market, or that are potential customers. Get their advice, network contacts or any other insight that can help to understand or test the real world market potential.

Get a deep dive in reports from McKinsey, Statista and other consulting or market research firms and try to understand market predictions and competitor analysis. Draft up a business plan. In order to avoid that the idea gets stolen, they keep the idea to themselves and do not discuss it with anyone. Contact venture capitalists that you share your business plan with, after they have signed a “non-disclosure agreement” that they will not be sharing your idea with other people.

Rather than analyzing the market opportunity, trying to develop a quick prototype that you can use to test the market potential with potential customers. In an idea world, you would be able to even finance the product development process with a consulting contract from a potential customer.

Spending 2 days interviewing and consulting potential customers and partners on their perspectives on an idea and seeing under which conditions these stakeholders would be willing or interested in sponsoring the project or committing to buying it.

 “I think failure is just a way of thinking. If you want to have an omelet, you have to break eggs. No pain, no gain. The key is perseverance. Whatever happens, you just have to continue working on your idea until you succeed. Listen to any entrepreneur on Youtube and you will hear that it is only by persevering that they succeeded. Accepting failure is the philosophy of the loser.”

 “When I start a new venture, I always make sure that I know how much money and time I am willing to lose. Since any new venture can potentially fail, you have to know when you have reached your limits and when that happens, you have to be able to stop. As an entrepreneur, I know I will do everything that I can to make the idea succeed, but you have to be smart about managing your risks too. I have seen a good friend continue to invest money in his venture, when the market was clearly not responding favorable to his idea. He ignored everyone’s advice to stop and just kept going. Now he is financially ruined, divorced from his wife and no longer on speaking terms with his family.”

“Before I begin any venture, I first come up with a number of ideas. I then estimate both costs and revenues for each venture idea, and I then select the idea that has the highest profitability using the “Net Present Value” methodology. Managing the risk of failure is about doing a proper preparation and analysis.”

“I think entrepreneurship is a matter of instinct. There is no way to explain it, but you just know when an idea is going to work. In order to manage the risk of failure, you have to learn how to trust your instinct. Almost any successful entrepreneur I know shares this ability to sort of predict the future and somehow avoid failure along the way.” 

The fridge is an analogy for an entrepreneur’s resources, aspirations AND contacts. This means that an entrepreneur’s fridge is not just filled with her own resources, but also with those that she can access through her network. It also means that “opportunities” tend to be those ideas that the entrepreneur can connect with what is in her fridge.

The fridge principle is opposed to causal management approaches which resemble “cooking by cookbook”. In known and certain situations, one can first analyze the desired result (the dish), make a planning of the necessary resources (the ingredients), go raise the money (buy the ingredients) and then execute the plan (cook the dish). In unknown situations, experienced entrepreneurs have learned that such an approach is too risky, and they learn that achieving results with less risk is much easier when starting with one’s resources first.

When experienced entrepreneurs are facing a situation of uncertainty, the first thing they focus is on is to “open their fridge, and see what they can cook”. Since the situation is new, the entrepreneur starts from the resources that she already has at hand and imagines what can be done.

The fridge principle suggests that entrepreneurship takes time. When an idea doesn’t work at first, you have to “put it in the fridge” and wait until the right time comes along. What experienced entrepreneurs have learned better than novice entrepreneurs, is to use careful market studies to predict when “windows of opportunity” will open and so when it is the best time to launch a venture.

If search requires trial-and-error, then every error is in fact a decrease in efficiency of using resources to achieve a particular result. Error, however, is then a necessary investment to become effective.

If you would be able to have 100% resource efficiency in search processes (you engage in a particular action and you get the desired outcome), then you are either just lucky, or there was no reason to search or explore in the first place. If you know how to do something with 100% efficiency, you must have known how effort leads to results, and so you were in execution mode, not search mode.

The Lean Startup is not efficient, because it is not professional. If you don’t make perfect products, how could you ever have any outcome that can lead to success?

It is precisely because of this inability to predict results of search processes in a particular time frame, or with set resources, that intrapreneurs and innovators struggle discussing with CEOs and CFOs of companies that are in exploitation mode. When engaging in search processes, one must be aware that the efficiency of this search process is not the right metric to measure success.