A defining characteristic of entrepreneurship is opportunity recognition. The successful entrepreneur is constantly alert, looking for new ideas, trends, and opportunities to do things better or differently. But how much is art versus science?
Though there is a natural flow to this that sometimes clicks on its own, there is also a process that can help entrepreneurs recognize, assess, and exploit opportunities. This begins with awakening to possibility, and it helps to adopt what has been called a "beginner's mind."
Peter Guber, Chairman of Mandalay Entertainment, recounts the story of Gorillas in the Mist, the acclaimed 1988 movie that depicted Dian Fossey researching African mountain gorillas. According to Guber, the film was almost shelved when it turned into a "logistical nightmare." The plan was to film using more than 200 animals at an altitude of 11,000 feet in Rwanda, then on the verge of a revolution. The production plan required that the gorillas do what was scripted--essentially, to "act." If they couldn't pull that off, they would have to go to plan B: "dwarfs in gorilla suits on a soundstage."
In an emergency meeting, as Guber recalls, "A young intern asked, 'What if we let the gorillas write the story?' Everyone laughed and wondered what she was doing in a meeting with experienced filmmakers." She later explained, "What if you sent a really good cinematographer into the jungle with a ton of film to shoot the gorillas? Then you could write a story around what the gorillas did on film." According to Guber, "It was a brilliant idea. And we did exactly as she suggested." Beginner's mind. The result: They shot the film for half of the original budget and grossed $61 million worldwide. (Here is a Fast Company article that tells the story in more detail.)
A beginner's mind is helpful in recognizing opportunities, but it's only part of the equation. When opportunities arise, the picture is often muddled. Typically, entrepreneurs are faced with several options and forced to make quick decisions in a context of uncertainty. Some entrepreneurs face the problem of too many ideas.
According to entrepreneur Jared Polis, who has started more than a dozen companies (including ProFlowers.com and BlueMountain.com), "it starts with an idea, but [that's] the easy part. I have many more ideas than you can execute. Then it has to get narrowed to ideas that I'm interested in enough to pursue and then I study a lot about them." When considering an online flower start-up, he researched the industry, visited growers, ordered flowers from various providers, and much more. For another start-up, he estimates that he put in more than 1,000 hours of research via books, journals, conversations, etc. "I wouldn't spend a thousand hours if it wasn't going to work out," he continues. He can usually cast aside ideas that aren't gelling after only 10-20 hours. For promising ideas, after the initial research phase he works on the "proof of concept" stage without overhead. Only at certain thresholds will he bring in outside capital and recruit management.
Many entrepreneurs make gut-driven or even emotional decisions about whether and how to proceed. That has its place, but entrepreneurs are wise to evaluate an opportunity based on its objective potential, weighing it against other options (the opportunity cost) and then, like Polis, deciding whether it is worth further exploration.
The opportunity assessment process is like a large funnel in which ideas are pulled into the consideration cone. Some are interesting enough to warrant additional exploration, a few are analyzed in detail, and only one makes the cut.
Entrepreneurs should develop their own process for assessing opportunities. (Of the 55 entrepreneurs we interviewed for our book, some relied entirely on their gut, while others were much more methodical.)
In the end, entrepreneurs must recognize (or create) opportunities and choose, proactively and purposefully, which ones to seize. Many entrepreneurs develop a helpful gut instinct after years in the trenches, and that can be a hugely valuable asset. But those who operate without a system and criteria for making these inevitable choices are likely to regret it.