Making the Entrepreneurial Call


I read an interesting summary of some academic research that suggests it’s not always best to be ahead of the crowd in launching a new business or product line. The deciding factor, according to the researchers, is the learning environment.

According to the research findings, in a hostile learning environment, entrepreneurs gain relatively little benefit by watching others. For example, if the relevant knowledge is protected intellectual property, studying the market before entering wouldn’t yield much advantage. In these situations, the trade-off favors entering early. But in less hostile learning environments, where entrepreneurs gain valuable information likely to increase their success just by watching other companies, companies benefit from waiting and learning lessons from earlier players.

“If you enter early, you are more of a pioneer. You can have a competitive advantage, by locking in key customers, suppliers or intellectual property," says researcher Moren Levesque. “If you cannot do any of this, then it may not be a good strategy, because there is always a cost to being a pioneer.”

But deciding when to enter a market solely on the advantages of learning is not enough. Entrepreneurs also need to launch before an opportunity closes. 

I strongly agree with that last statement. Yes, the learning opportunities are a factor, but just one of many. You have to respect the entrepreneurs who are making the critical decisions each day.

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