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Entrepreneurs Always Challenge The Status Quo – In Business, Politics, Regulation and Institutions.

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Entrepreneurs refuse to accept the status quo. Their function is to create new economic value for their customers, and thereby to profit for themselves, both financially and psychically. They do this by introducing new products and services to the marketplace, designing and implementing new processes, adding value to others’ inventions by turning them into market-wide innovations, and offering new pleasures and satisfactions and solutions that no-one knew of or imagined.

The pursuit of new is a refusal to accept the status quo. That includes any and all existing market conditions and structures, any monopolistic incumbent firms, any regulatory barriers, any capital shortages, any “it can’t be done” pessimism.

We think of entrepreneurs in economic terms, market movers dealing in goods and services, taking dollars and cents in exchange. But the entrepreneurial mindset and the entrepreneurial process can be applied in many more contexts where the status quo requires a challenge and change is called for. Functional entrepreneurship is a process that can be described as a series of steps:

  • Development of entrepreneurial belief. An entrepreneur develops and continually adapts and polishes a belief about the status quo that no-one else holds. The belief is that the status quo is inadequate, wrong, or susceptible to improvement. For whom? For customers – i.e. not for the entrepreneur herself but for others. The status quo is under-serving others, and the entrepreneur is determined to fix that error. The entrepreneur, of course, expects to get something back in return, which could be psychic fulfillment (a sense of purpose and meaning from being the status quo buster) as well as profit (which is the financial signal to the entrepreneur to keep going). It all starts with dissatisfaction and the belief in the possibility of eliminating it.
  • Alignment with customers: As the entrepreneur develops the belief, she or he continuously aligns with (potential) customers. Am I getting this right? Does what I believe align with your preferences? If I change things in the way I am thinking, will you endorse the change? You are the customer, and you are my guide. You have the final decision.
  • Implementation: Given supportive feedback from customers (“the market”), the entrepreneur moves ahead with the new initiative – designing, building, and marketing it. It’s offered to the market as a value proposition (“I think you might like this – here’s why”). The market (i.e. customers) responds yes, no or conditionally (“I’d like it better if………). The entrepreneur receives the feedback, reshapes the value proposition and re-offers it until the customer confirms “Yes! That’s it!”

This mindset and the BAI process – Belief, Alignment, Implementation – can be applied not only in business but in any context or setting where there is dissatisfaction with the status quo on which an entrepreneur can build a belief and a customer can express a preference. As a result, we can imagine a wide range of fields in which the entrepreneurial mindset can be applied to society’s benefit.

Institutional Entrepreneurship

Many of the institutions in our society have reached all time lows of disrespect. Representative democracy is being widely questioned, and the institution of Congress has a very low approval rating (18% job approval – and moving lower – according to Gallup Poll in mid 2020). Also in the Gallup Poll, half of Americans revealed “somewhat negative” or “very negative” ratings of the federal government. We are losing confidence in our money, and the Federal Reserve, the institution charged with preserving its integrity and value, yet does the opposite. Similarly, we re losing respect for educational institutions that prefer to indoctrinate our children rather than educate them.

In all these instances, there are entrepreneurs who have developed the belief that they can bring improvements to a corroded status quo. Even democracy can be innovated. Or, alternatively, we could re-think the entire founding of the US. Entrepreneurs are the ones who initiate these changes.

Regulatory Entrepreneurship

Regulation is the context in which entrepreneurs work. The more thoughtful entrepreneurs question whether the context is unchangeable, and they find innovative ways to make change. Uber and AirBnB are recent multi-billion dollar examples of what’s possible. Uber is what contracted automobile transportation looks like when entrepreneurs question the regulation that keeps the restrictive taxi monopoly in place. According to Josh Johnston Airbnb is just what hotels look like without hotel regulations. Entrepreneurs can out-think regulators.

Social entrepreneurship

Social entrepreneurship is a term that is often misused to mean entrepreneurial initiatives that are conducted without a profit motive, aiming for a higher target of good for society that entrepreneurial capitalism can’t achieve. The true case is that all entrepreneurship is for social good, because society is simply another word for entrepreneurs’ customers, and entrepreneurs want them to do well. Entrepreneurs offer society more and more good things, while trying to use less and less of society’s resources (i.e. lower costs), thereby freeing them up for other social uses.

A great example of profit-directed social entrepreneurship is the initiative called Entrepreneur Zones, the brainchild of Dale Caldwell of Fairleigh Dickinson University’s Rothman Institute of Innovation and Entrepreneurship. With Entrepreneur Zones, Dr. Caldwell aims to solve problems of urban poverty, family instability and academic underachievement by establishing an environment where local residents can start and grow businesses and make them thrive, in n environment of shared purpose, supportive investment, training, mentoring and relaxed regulation. The goal is to improve society by making a profit, generating jobs, and creating the social environment in which families can pay their bills and their kids can do well in school.

Cultural Entrepreneurship

In November 2020, Frank Newport of Gallup wrote A Letter to Elected Representatives, From the Average American, based on what average Americans had told Gallup in surveys. One of the statements is this: “I have lost faith in many of our culture’s institutions in recent years”. The term cultural institutions can include many things from religion to the healthcare system. Gallup reports that Congress has by far the lowest confidence of all institutions, of course, but confidence in many of our other institutions is redoing too. The next lowest after Congress is big business followed by the news media (TV and Newspapers), the criminal justice system, and organized labor, then banks and public schools.

We can see entrepreneurial improvements emerging for all these institutions. Home schooling and private schools; fintech replacing many bank functions; reformers trying to change the criminal justice system; internet news outlets offering alternatives to mainstream news media. Consumers get to choose which of these innovations they’ll support. Entrepreneurs will continue trying to secure that support through integrity, earning trust, and giving great service, which is where so many of our institutions fail.

Entrepreneurs and entrepreneurship are society’s resources for continuous improvement of the status quo.

What Are Your Permanent Assumptions? Can They Service The Accelerating Pace Of Change?

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If you were told in January what April would look like, you wouldn’t have believed it. If you were told in April that in May we’d face a nationwide protest so important it would crowd out almost all Covid-19 news, you wouldn’t have believed it.How do you analyze the world when everything feels broken?And how do you even begin to make sense of the future when things change so fast?

Humbly, is the answer.

But humility doesn’t mean clueless.

Some things are always changing and can’t be known. There can also be a handful of things you have unshakable faith in – your permanent assumptions.

Realizing it’s not inconsistent to have no view about the future path of some things but unwavering views about the path of others is how you stay humble without giving up. And the good news when the world is a dark cloud of uncertainty is that those permanent assumptions tend to be what matter most over time.

Amazon is successful because it predicted how the world would change. But it’s been really successful because it bet heavily on what wouldn’t change – a permanent assumption. Jeff Bezos said:

You can build a business strategy around the things that are stable in time. It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon, I just wish the prices were a little higher.” Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible.

So we know the energy we put into these things today will still be paying off dividends 10 years from now. When you have something you know is true, you can afford to put a lot of energy into it.

When you have something you know is true, you can afford to put a lot of energy into it. That’s why permanent assumptions are important.

I have no idea what’s going to happen next in the economy or society. But I have a handful of permanent assumptions I’ve put a lot of energy and faith into that guide almost everything I think about business and investing.

Here are nine.

1. More people wake up every morning wanting to solve problems than wake up looking to cause harm. But people who cause harm get more attention than people who solve problems. So slow progress amid a drumbeat of bad news is the normal state of affairs.

2. The world breaks about once a decade. There are so few exceptions it’s astounding. It can be economic, political, military, social, or a mix. But it breaks all time, in ways few see coming. The breaks aren’t as scary if you have a permanent assumption that they’ll keep happening and don’t preclude long-term growth.

3. Stories are more powerful than statistics. And most statistics are incomplete props to justify a story. Stories are easier to remember, easier to relate to, and emotionally persuasive.

4. Nothing too good or too bad stays that way forever, because great times plant the seeds of their own destruction through complacency and leverage, and bad times plant the seeds of their own turnaround through opportunity and panic-induced problem-solving.

5. Knowing there will be a reversion to the mean does not mean you know when things will revert. Unsustainable things can sustain for a long time, because of incentives and the power of storytelling that turns nonsense into influential action.

6. Incentives are the strongest force in the world. They cause good people to do bad things, which can make you overly cynical about how good people actually are.

7. A big group of people can get smarter and better informed over time. But they can’t, on average, become more patient, less greedy, or more level-headed during periods of upheaval. That will never change. And it highlights the idea that edges, when they exist, usually come from behaving better than average rather than being smarter than average.

8. History is mostly the study of unprecedented events, ironically used as a map of the future. Stuff evolves, paradigms shift. So what worked in the past may not work today or tomorrow. The most valuable part of history is studying how people behave when the world changes, because it’s the most consistent thing over time.

9. It’s easy to take advantage of people. It’s also easy to underestimate the power and influence of groups of people who have been taken advantage of for too long. The former is obvious, the latter surprises people in a life-changing way a few times per century.

I don’t think I’ll ever change my mind on those.

To Achieve Change, Take Tiny Steps Towards New Habits. And Celebrate Disproportionately.

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We don’t aspire to be a self-help site, but this piece from the Wall Street Journal made us happy and we thought we’d share it.

The new year is an ideal time to observe how people try to change their own behavior. Upsurges of enthusiasm in early January are generally followed by flagging commitment in February. Nearly everyone wants to make some kind of life change: eat better, lose weight, exercise more regularly, sleep and relax more. But the alarming levels of obesity, sleeplessness and stress seen in the world—and in my Stanford University behavior-research lab—show a painful gap between the changes people want and what they actually do.

For the most part, we tend to blame ourselves for not being willing to work hard enough to adopt new habits. But to be effective, change doesn’t have to be hard at all—and shouldn’t be. Tiny adjustments that come easily and make us happy are the ones that work best. It’s our approach to self-improvement that needs to change.

It turns out that there is a formula for any successful shift in behavior. This applies to everything from flossing your teeth to running a marathon. To instill a habit, the first thing you need is motivation: Pick a behavior that you want to do rather than one you merely feel obligated to do. Second, you need to be able to do it: Make the change simple and small at first. Third, you need a personal prompt: Identify a way to reliably trigger the behavior. Finally, you need to celebrate your new habit, so that your brain associates it with positive feelings.

My research team has tested this approach with more than 40,000 people over the past decade. For instance, an IT expert named Sukumar had been trying yearly since the age of 26, with no success, to lose the paunch that he was growing while sitting behind his desk. At age 43, he needed a different way to get started. So, at first, every time he brushed his teeth, he would do two push-ups, then hold a “plank’’ position for just five seconds. Rather than minimize these relatively incremental accomplishments, he celebrated them, which made him happier. Once his habit took root, it grew naturally. Now 51, he does 50 push-ups and a five-minute plank each day. He has lost the paunch, changed his self-image and enjoys his strenuous workouts.

When you start small, you can quickly move on to experiencing the rewards that motivate you to do more. I advise people to start with changes no bigger than Sukumar’s two push-ups and progress by small steps from there. Take a busy mom named Amy, who needed to manage distractions and stay focused on essential tasks. The habit she initially designed with our help was just to write one must-do task on a Post-it Note and stick it on her car dashboard, prompted by each day’s kindergarten drop-off. She didn’t even have to do the task itself at first; the initial habit was all about setting priorities. But she quickly felt successful and could move on to doing the single task and then others, and ultimately used the same principles to build a successful business.

It isn’t primarily repetition over a long period that creates habits; it’s the emotion that you attach to them from the start.

Such experiences tell us a lot about changing behavior. First, don’t think you have to create motivation. Choose habits that you already are eager to adopt. Second, go tiny. Why? Small is successful and sustainable because it is simpler. Next, design a prompt. We respond almost automatically to hundreds of behavior prompts each day that we barely notice (for instance, when you feel a few drops of rain on your arm, you open your umbrella); no behavior happens without some kind of prompt. Maybe you’ve been wanting to use the meditation app that you downloaded last week, but without a prompt, you forget to try. The best way to prompt a new habit is to anchor it to an existing routine in your life, whether it’s flushing the toilet, turning on the coffee pot in the morning or buckling your seat belt.

As you try each new habit, celebrate immediately. Cause yourself to feel good in that exact moment, whether it’s an inward “Good job!” or an outward fist pump. You deliberately reinforce the habit by tapping into the reward circuitry of your brain, causing it to recognize and encode the sequence of behaviors you just performed. The more intense the positive emotion, the faster your new behavior will become automatic. Think about all those times that you could have changed but didn’t, and here you are—changing. Isn’t that worth celebrating?

It isn’t primarily repetition over a long period that creates habits; it’s the emotion that you attach to them from the start. Data from the most recent 5,200 people to complete a five-day course of our program showed that more than half were able to instill habits in five days or less.

When people work together as a family, business or community to celebrate and create change, the effects can be even more transformative. One of my favorite projects was at a research hospital where the challenge was to tackle the problem of nurse burnout, a large and growing issue in health care. As we taught the course for four weeks via live online video, I was able to see each nurse on my screen. Some were in their pajamas at home, flopped on the couch, eating takeout food, wiped out. Others sat at desks staring into their computer cameras with faces full of fatigue.

I heard firsthand just how difficult it was for them to do basic things like drink enough water, eat regularly, and even get a full night’s sleep. So we worked together on creating healthy habits like “After I open my computer, I will take a sip of water,” or “After I answer the call light, I will take a deep breath.”

These super-small habits started to make a big difference. The nurses began changing together. They also started celebrating each other—a quick clap for a fellow nurse who took a drink of water, a “good for you!” after someone took a deep relaxing breath. Data showed statistically meaningful improvements related to their daily stress levels. In a follow-up survey three months later, the improvements were still in place, and more than three-quarters of the nurses reported that they had created other positive changes using the same methods.

It’s easy to underestimate the power of tiny change. But some of the most profound transformations start from small adjustments—from suffering to less suffering, from fear to hope, from feeling overwhelmed to being empowered. So set aside the conventional wisdom about self-improvement: There’s no need to work toward big, ambitious goals. By going tiny, you can discover for yourself the changes that will change everything.

Dr. Fogg is the founder and director of the Behavior Design Lab at Stanford University. This essay is adapted from his book “Tiny Habits: The Small Changes that Change Everything,” just published by Houghton Mifflin Harcourt.

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