The Inner Game of Entrepreneurship

There are a few qualities that I believe will help you become a better entrepreneur. While they are not directly related to the notion of a star-principle business, you will still find it useful to develop these qualities and nurture these attitudes.

1. Accept Randomness
Good stuff happens. Bad stuff happens. It is very hard for you to understand the causes for the stuff that happens in your life. Correlation is not causation. It's simpler if you accept that you control very little of life.

2. Resist Increases in Entropy
The degree of disorder in most systems (be it your desk, business, health etc.) increases with time. Your health begins to break down. Buildings and civilizations crumble. Businesses deteriorate towards chaos and ultimately failure.
Just because you accept randomness, does not mean that you should accept the increasing disorder in your life or in the systems that you build (be it a business, your work and living space, your family life etc.) You should act to resist this increasing disorder which seems to be inherent in nature. This means that you eat a healthy diet, get regular health check ups (so that you can nip problems in the bud), monitor your debt and finances aggressively, make sure the morale in your business is high, ensure that customer service does not suffer, introduce quality systems wherever possible etc.


3. Expose Yourself to Positive Black Swans
Some years ago, two consultants did some work for Google when it was still a struggling start-up. One of the consultants insisted on getting paid in cash upfront. The other consultant (out of kindness) agreed to take a share in the business in lieu of cash. When Google became an outrageous success the second consultant was able to retire. The first consultant (who had got paid a couple of thousand dollars in cash) continues to put in 60 hour weeks.
Following are some examples of positive black swans:
- A chance meeting with a financier who finances your business dream at very favorable terms
- A chance meeting with a publisher who offers to publish your book
- Bumping into an inventor who needs help marketing his invention which will change the world
- Getting a share of a star business
So this is more of an attitude and a mindset that looks for opportunities with finite and measurable costs and risks but potentially large payoffs.
For example, between working on sending an invoice or contract (known payoff), versus working on filing a patent (potentially large payoff with known downside and cost), you should spend your time on filing the patent. Between attending a party versus working on your accounts, you should be attending the party (where you may bump into somebody who can change your life.)

4. Focus on and Cultivate the Vital Few
There's too much of noise. Too much information. Too many choices. Too many options. Too much advice. Too many friends. Too much data. If you give equal attention to all, you will get nowhere. The smart ones are those who focus on the vital few (vital few relationships, vital few variables in a problem, vital few activities) and execute ferociously. Do fewer things. Have fewer friends. Have fewer relationships. But focus on depth.

5. Hold Intentions
I believe it was John Lennon who said that "Life is what happens when you are making plans." What this means is that most of your plans will never unfold as you originally expected them to. There will be changes and surprises. This does not mean that you don't make plans or keep goals. You keep goals and make detailed plans but recalibrate as you go along.

6. Avoid Acting Unless Absolutely Necessary
There is such a thing as negative returns on your actions.
This advice may sound contrary to what most people (especially corporate executives working 80 hours a week in order to prove themselves worthy of promotions) will tell you.
"Too much time is spent in analyzing, wishing and complaining. Learn to take action. Sometimes it can take you in the wrong direction. But that is better than not doing anything at all. Sometimes, the path ahead becomes clear after you've taken a few steps on the road. It's almost impossible to think through all of the results of your actions. So get started and don't get stuck in analysis paralysis. But this also means that you don't wait for all of the facts before moving. Once you've formed a thesis and applied a fair amount of rigorous thinking, you should move forward even if you don't have a few pieces of the puzzle in place."

But there are two problems with this kind of thinking:
a) Every action you take may take you farther away from your positioning statement and reduce or obfuscate your company's differentiation. For example, let's say you're running a not-so-successful full service airline company. You decide that your company should get into the low cost airline space and build another Southwest Airlines clone. And you act on this idea. Worse still, you name your company as a variation of your current company name (by appending "Lite" to your company name.) What you've done is reduced your company's differentiation and confused your customers.
Or let's say that you do something less radical. Let's say you get your company executives to blog. With that seemingly simple activity, you've reduced your differentiation (at least to a very small degree.)

b) Every new initiative may create the amount of work that your people do exponentially over time. For example, let's say that you begin a new policy of having a Wednesday status meeting. Now, you've created a tremendous amount of work in the long run. Your people will need to maintain agendas and minutes of the meetings. They will need to drag themselves to the meetings while also working through their current projects. And they will need to sit through the 'speeches' of their peers and other people in the company. They will also need to take revenge and prepare their reports. Perhaps you could have asked them all to send emails to each other or post on a project management site?

So what's my advice on this?
Spend time on developing understanding (do research, perform competitor analysis, industry seminars, participate in training programs.) Ruminate on the data by taking time off from work. Develop a perspective or point of view. Thinking about what you need to do to increase differentiation. Go wild with your imagination and come up with ideas. But challenge every one of those ideas and search for disconfirming evidence to prove that the ideas are not workable. Remember that you're searching for that one good idea or breakthrough thought. Make thought experiments. Build 'what-if' scenarios. Debate. But don't take action until you've really thought through the implications and are absolutely sure that the rewards are worth it and that the differentiation of your company is preserved.

7. Change Your Game Not Yourself
It's very hard to change who you are. Your original nature only grows. So if you're an angry young man, it's more likely that you will become an angry old man. If you're a late-riser, it's unlikely that you will become an early riser even if you read all the self-help books in the world. If you're a free spender and don't know how to control your finances when you're 20, it's unlikely that you will figure it out when you are 60. The best you can do is to observe yourself intently and become aware of your original nature. Understand your strengths, weaknesses, motivations and drivers. Then change the game that you're playing to one that suits you. For example, if you're the kind of person who needs regular does of stress and adrenaline, maybe you should consider a career as an options trader. If you're the kind of person who cannot get up before 12 in the afternoon, maybe you should think of starting a night-club! This also means that you surround yourself with the right kind of people. If you hate to do accounts and taxes and sending invoices, maybe you should have a full-time accountant.

8. Move From Fear to Peace
Deep in your brain is your center of fear called the amygdala. This part of your brain helped your ancestors survive lions and tigers in the jungles 10,000 years ago. It releases stress hormones and provokes the flight or fight response. However, you don't need to have this flight or fight response for your day to day life. Having this part of your brain turned on increases your stress and decreases your ability to come up with creative solutions to the challenges that you face. So figure out a way to move from fear to peace. This may be meditation or music or walking through the woods or ruminating on park benches. Figure out what works for you and actively work to move from a sense of fear to a sense of peace since you need this state of mind to solve problems. But in the rare event that you get into a situation that needs a flight or fight response (say a bar-room brawl) by all means raise your fist, punch your opponent and make a run for it. Don't try to move into a sense of peace or you will leave pieces of your nose on the floor :)

9. Bounce Through Multiple Failures and Disappointments
Michael Jordan missed thousands of shots in his career. But what separated him from others was his ability to not get scarred from his misses and failures. You would see him miss a shot and then ask for the ball the next minute with no loss off confidence or faith in himself. As an entrepreneur you can fail a hundred times and then bounce back on your next attempt. All you need is one success. So keep trying. Figure out what works for you to handle your disappointments and shrug off your failures. This could be prayer, or music or a sense of humor that allows you to laugh at your bust-ups. Then get back and take another shot without any loss of faith or confidence.

10. Take Things Lightly
Most of life is a mystery. Even to the so-called enlightened souls. So take things lightly. Don't take yourself too seriously. Don't take your knowledge too seriously. And don't get stuck in good or bad generalizations.