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Saras Sarasvathy on How Good Business Goes Bad
Question: What are some typical entrepreneur pitfalls?
Saras Sarasvathy: A lot of the time the early stage founding partnership is kind of like the courtship period leading to a marriage and nobody really wants to write a pre-nup and so a lot of the founding partners either don’t bother to sit down and think through how they will divide the pie, whether it is in terms of returns or in terms of responsibilities, or in terms of difficult decisions that might come down the road. So they just, you know, they are in this wonderful mood and they want to go, you know, if there are three of them it’s like the three musketeers, you know, “One for all and all for one.” So they go into equal partnerships. And, professional advisers that I have talked to, you know, lawyers and accountants who deal with early stage enterprises tell me that, that’s one of the reasons a lot of ventures go down the drain, not because the market was not there, not because there wasn’t enough money or the idea wasn’t good but because the partners just could not get along after awhile. And they also tell me that it happens more often when the companies are actually growing and doing well. When the two different partners or the three different partners have different views of how they want to grow it or what to do next and at that point in time because they have an equal partnership and they didn’t bother towrite down provisions on how to make decisions, the decision doesn’t get made or the partnership has to be dissolved and people have to start all over again and it becomes very difficult. So I would guess that that is definitely one of the mistakes a lot of novice entrepreneurs make.
The other one is this idea, this I can speak to with a little bit of authority and that is this idea that you can predict the future. So, you invest lots and lots of time and effort and money in writing a business plan or doing enormous market research and you analyze and analyze and analyze or you do some kind of statistical survey and you think that is how the world is going to go and then you put all your money because it requires that much money to make it. So this idea that the future is predictable and that there is this perfect plan that you can write a priory and then implement, I think that is a real dangerous way to think about it. And just because of the way we have been teaching entrepreneurship around the world now because people take their cues from the US for the most part on what they teach in their business school classroom, it’s become almost a de facto way of thinking about entrepreneurship: business plan competitions, and so people spend enormous amount of time and effort in writing business plans for business plan competitions and I’m not sure that is the best way to build an entrepreneurial economy especially as the expert entrepreneurs would say, “If you really start believing your own numbers and you think you can actually deliver on this particular plan that you wrote then you are in real trouble.” So I think that would definitely be a huge pitfall for a lot of novice entrepreneurs. In fact, some of the experienced entrepreneurs actually talked about trying to do that and failing and learning the hard way that the future is not really as predictable as they thought and that is because of that world view in a way. Because in a world in which a lot of people act and believe that their action matters, there will be more uncertainty. In fact, the future actually becomes less predictable and people actually start acting in innovative ways. So it works both ways. It is unpredictable because people are doing creative things but also your trying to predict it becomes useless because that way a great venture will be more creative and more active in the way you do things.
Recorded on: May 19, 2009
The professor illuminates the shadowy pitfalls of business.
- Modern antibiotics can effectively treat bubonic plague, which spreads mainly by fleas.
Bacteria under microscope
needpix.com<p>Today, bubonic plague can be treated effectively with antibiotics.</p><p style="margin-left: 20px;">"Unlike in the 14th century, we now have an understanding of how this disease is transmitted," Dr. Shanthi Kappagoda, an infectious disease physician at Stanford Health Care, told <a href="https://www.healthline.com/health-news/seriously-dont-worry-about-the-plague#Heres-how-the-plague-spreads" target="_blank">Healthline</a>. "We know how to prevent it — avoid handling sick or dead animals in areas where there is transmission. We are also able to treat patients who are infected with effective antibiotics, and can give antibiotics to people who may have been exposed to the bacteria [and] prevent them [from] getting sick."</p>
This plague patient is displaying a swollen, ruptured inguinal lymph node, or buboe.
Centers for Disease Control and Prevention<p>Still, hundreds of people develop bubonic plague every year. In the U.S., a handful of cases occur annually, particularly in New Mexico, Arizona and Colorado, <a href="https://www.cdc.gov/plague/faq/index.html" target="_blank">where habitats allow the bacteria to spread more easily among wild rodent populations</a>. But these cases are very rare, mainly because you need to be in close contact with rodents in order to get infected. And though plague can spread from human to human, this <a href="https://www.healthline.com/health-news/seriously-dont-worry-about-the-plague#Heres-how-the-plague-spreads" target="_blank">only occurs with pneumonic plague</a>, and transmission is also rare.</p>
A new swine flu in China<p>Last week, researchers in China also reported another public health concern: a new virus that has "all the essential hallmarks" of a pandemic virus.<br></p><p>In a paper published in the <a href="https://www.pnas.org/content/early/2020/06/23/1921186117" target="_blank">Proceedings of the National Academy of Sciences</a>, researchers say the virus was discovered in pigs in China, and it descended from the H1N1 virus, commonly called "swine flu." That virus was able to transmit from human to human, and it killed an estimated 151,700 to 575,400 people worldwide from 2009 to 2010, according to the Centers for Disease Control and Prevention.</p>There's no evidence showing that the new virus can spread from person to person. But the researchers did find that 10 percent of swine workers had been infected by the virus, called G4 reassortant EA H1N1. This level of infectivity raises concerns, because it "greatly enhances the opportunity for virus adaptation in humans and raises concerns for the possible generation of pandemic viruses," the researchers wrote.
The word "learning" opens up space for more people, places, and ideas.
The coronavirus pandemic has brought out the perception of selfishness among many.
- Selfish behavior has been analyzed by philosophers and psychologists for centuries.
- New research shows people may be wired for altruistic behavior and get more benefits from it.
- Times of crisis tend to increase self-centered acts.