The importance of trial and error in entrepreneurship

Posted on Posted in 2016 Business Opportunities For You, What's Trending Now

 

One of the biggest challenges for new entrepreneurs (and even many experienced entrepreneurs) is overcoming their fear of failure. Obviously no one wants to fail, no matter the stakes, but could there in fact be a right way to fail? One that lessens the fear and increases the learning?

Beneficial failure, the kind that teaches you along the way, requires a trial-and-error approach, where you make small, increasingly informed bets until you’ve learned enough to seize a larger opportunity. If you move forward with this mindset, and understand that failing early, cheaply, and often can actually mitigate risks when you’re ready to move on to bigger opportunities, you’re off to the races.

This kind of trial-and-error approach tackles the fear of failure head on, and makes much more sense than making big bets with your (and other people’s, if you have investors) time, money and reputation and simply hoping for the best.

 

The difference between playing the Lottery and playing Poker

It often seems that entrepreneurship is almost solely about entrepreneurial lottery winners — diving into the sexiest new industry, betting big, and finding billions of dollars and instant fame.

Playing the lottery is for suckers. Sure, occasionally there’s a big winner, but the odds are way against you, even before you start. There are alternative ways to make a wager, though. That’s why thinking about entrepreneurship as more of a poker game than a lottery may be a helpful way to reframe your approach to risks.

In poker, you don’t begin with a large, high-risk bet; you start with a small ante. If you get a poor hand, you fold and wait for another chance. Most importantly, over time, you learn to anticipate the moves of your competitors and see opportunities that you wouldn’t have before. Play long enough, and you’ll take home a big pot and minimize the risk for yourself.

 

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Poker is all about the skillful use of trial and error: betting more on better hands, folding when the odds are against you, and paying just enough to see the next card. This process of staging risks through trial and error is actually proven to be mathematically superior.

Play the game of entrepreneurship long enough, with enough attention to developing your skills and sizing up the competitors, and you’ll get a low-risk chance to capitalize on an extraordinary responsibility. You might lose a few small hands getting there, but it’s critical to think in terms of the long-game.

 

Failing Early, Cheaply and Often — with an end in mind

Whether you’re afraid of failure or not, there is a simple, systematic way to begin thinking about and implementing the trial-and-error approach. The refrain you should become familiar with is fail early, cheaply, and often.

• Early: You want to disprove bad ideas and opportunities as soon as possible. The longer you stretch out something that’s just not working, the more you run the risk of trying to confirm a wrong solution rather than figuring out the right one. Design and stage your trials so that you can easily recognize when to scrap one for the next. That way, the next time something fails, it will be for a different reason and one that gets you closer to the right answer. Take the biggest unknown risks early on; otherwise, you’ll put in a lot of work in only to find later that it might not be worth it after all.

• Cheaply: Don’t own when you can rent. Don’t rent when you can borrow. Don’t move to an office park if you can do it out of your garage. Trial and error is about staging and scaling. Start small. Start lean. Start cheap. And then adjust accordingly. Bet big only when the odds are way in your favor, like building a plant only after you have a loyal following of customers.

• Often: The faster and more often you fail, the faster you’ll find an answer – or find that there isn’t an answer, and you need to look elsewhere. Run multiple experiments. Test wacky ideas (they often turn out to be right!). Over time, with this mindset, you’ll learn to discover with 80 percent accuracy whether something’s working — with only 20 percent of the effort.

It’s important to remember, though, to do all of these things with the bigger picture outcome in mind. Without establishing goals at the outset, there is no focus to trial and error, and nothing to measure it against. And be sure to admit when you fail, both to yourself and your team. Don’t let ego get in the way of a great business.

 

 

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