Is entrepreneurship more like evolution or creationism?

The question came up, sort of, in the course of the past week as I was teaching a group of doctoral students from the life sciences and engineering about innovation and entrepreneurship. In the few years I have been teaching such programs, I’ve been struck by the differences in approaches between the pursuit of science and of new business ventures–and more directly–by the necessary orientations of those preparing for academic careers in science and those pursuing new business ventures.

On the one hand, new ventures evolve as genetic recombinations of old ones. But on the other hand, a great deal of each new idea is novel and untested. Most new ventures die young, adding nothing to the next generation (think of all the code written, then lost, when the bubble burst) but others, facing the same harsh conditions, ultimately thrive. Why? Are some ventures pre-ordained to succeed (they are better mousetraps) or is the process more random? What makes the difference?

Luck matters. And so species, like societies, rely on large numbers to continue the grand experiment of evolution. But entrepreneurs, like newborns, are samples of one. There is also adaptation. Entrepreneurs, unlike DNA-based life, have the ability to change on the fly. Customers not buying what you’re selling? Investors balking? Ask them what they do want, and give them that. And finally, there is perseverance. It takes a while before investors, customers, and others can grasp the potential of something that is radically different from what they already know. Quick (or change) too soon and you cede the market to others.

Anthropologist Ashley Montague once said: “Evolutionary scientist have proof without certainty; creationists have certainty without proof.” The entrepreneur must live with both mindsets: continually seeking the flaws in their ideas–to adapt–yet also believing in the eventual success of their venture.

Such a blind faith in their ultimate success is a prominent characteristic of so many entrepreneurs, but so too is their adherence to the core values of the scientific method. Edison experimented continually with the components and manufacturing of his electric light (and so many other experiments). Ford spent millions installing, moving, and ultimately scrapping the mass production machinery in this Model T assembly lines. But at the same time, these two men were known for their dog-headed commitment to their solutions. It was this certainty, without proof, that ultimately led Edison to fight Westinghouse’s competing AC electricity standard and led Ford to resist General Motors’ strategy of multiple car models and annual improvements.

In fact, it was very useful to teach the scientific method that underlies entrepreneurship. And, as usual, the Wikipedia has an excellent overview of the scientific method:

The essential elements of a scientific method are iterations and recursions of the following four steps:
Characterization (Quantification, observation and measurement)
Hypothesis (a theoretical, hypothetical explanation of the observations and measurements)
Prediction (logical deduction from the hypothesis)
Experiment (test of all of the above)

Further, it states: “The scientific method is not a recipe. It requires intelligence, imagination, and creativity.”

Characterization refers to a careful framing of the phenomenon or problem such that its critical properties and the relationships between them are made explicit and accessible for observation. Hypothesis describes the explanation of the preceding characterization in such a way as to test the validity of that characterization. Prediction refer to the predicted outcomes that should follow if the hypothesizes are true (or at least remains unrefuted). “Once a prediction is made, it can be tested in an experiment. If the test results contradict the prediction, then the hypothesis under test is incorrect or incomplete and requires either revision or abandonment. If the results confirm the prediction, then the hypothesis is more likely to be correct but might still be wrong and is subject to further testing.”

So what role does the scientist (as a mindset, not a profession) take in the entrepreneurial process? They are central to creating the value of a new venture. Consider the value of a new venture as roughly the product of its potential and its probability. Increasing its ultimate market (or technical) potential is nice, but increasing the probability of succeeding also increases its value. Here’s where the scientific method comes in. Divide the venture into its technical, market, and business uncertainties. State (characterize) the problems in each; generate hypothetical explanations; make predictions; and run experiments. This approach will never completely remove uncertainty, but it doesn’t have to. The value of any new venture increases with every non-trivial drop in the uncertainty that surrounds it.

The entrepreneur must, despite his or her blind faith in the inevitable success of their pursuits, remain a scientist–continually seeking a better understanding (and characterization) of the problems; understanding the assumptions they make (the hypotheses); acting on those assumptions; and treating those actions like the experiments in evolution that they are. That, and an undying faith that you will succeed.