Why Business Leaders Should Think Like A Venture Capitalist

The book, The Venture Mindset, is all about how to make smarter bets and achieve extraordinary growth. The authors, Ilya Strebulaev and Alex Dang, explain that if any company wants to win big in competitive times, they need to think differently. They need to think like a venture capitalist (VC).

“This book teaches you to spot new opportunities, nurture the right talent, foster a culture of innovation, and take calculated risks,” say Strebulaev and Dang.

In their book, the authors share nine distinct principles inspired by the unique way VC’s think:

Home Runs Matter, Strikeouts Don’t
Get Outside the Four Walls
Prepare Your Mind
Say No 100 Times
Bet on the Jockey
Agree to Disagree
Double Down or Quit
Make the Pie Bigger
Great Things Take Time

These nine principles drive VC’s unique behaviors that have flourished in an ecosystem of thousands of startups, some of which went on to disrupt or create entirely new industries, according to the authors.

They add that “some of the lessons offered by the Venture Mindset are easy to implement, with immediate results; others are less so. But each lesson offers a powerful opportunity to change how you think and act within your own organization.”

As you read the book, you will find a Mindset Check at the end of each chapter. Use these to answer questions about your organization and think about what you may need to do differently to achieve a Venture Mindset.

Some of the questions include:
Is your organization positioned for making many small bets with the understanding that many of those will fail?
How open are your culture and organization to unexpected ideas coming from outsiders?
Do you regularly interact directly with entrepreneurs, executives, and experts to deepen your insights on developments in your industry?
Are your meetings designed to promote debate and open to disagreements?

Some of my favorite takeaways from among the nine principles include:

Pick your battleground.
Don’t get too skeptical too early.
Reward boldness.
Look beyond short-term gains.
Ignore temporary swings.

The authors share these additional insights:

Question: Of the nine Venture Mindset principles, which one is typically the most challenging for a business leader and his/her organization to master, and why?

Dang & Strebulaev: We work a lot with large organizations, and the single principle that is hardest to integrate into strategic decision-making is the idea that home runs matter and strikeouts don't.

The risk of failure is often exaggerated, and established organizations easily ignore missed opportunities until the next Google or Amazon gets big enough to disrupt their business.

Too often, everything inside a large and established organization is designed against launching new, risky ventures, with senior executives avoiding them as minefields. This is what makes Silicon Valley tech companies so unique — they continue to invent, experiment, take risks, and serve as innovation factories. More importantly, every Fortune 500 company can do the same. However, this requires a mindset change.

Question: Are the nine principles to be learned sequentially?

Dang & Strebulaev: No, each principle itself significantly improves the ability of a decision-maker to find and fund innovative ideas. It's not all about luck; there is a method to the madness.

Everyone and every organization can improve by dialing up the risk-tolerance level but in a smart way. However, mastering all of the Venture Mindset principles is important.

Without a large funnel of ideas, the effort is futile. Without killing your darlings (or less successful ventures), the organization would spread itself too thin. Without long-term commitment, you may give up too early.

So, to truly benefit from the Venture Mindset, adopting all nine principles is important. However, a journey of a thousand miles begins with a single step. To rephrase one VCs. When is the best time to start? It was yesterday!

Question: How long does it take for a business leader and his/her organization to master the nine principles and fully transform their entity to one operating with the Venture Mindset?

Dang & Strebulaev: We've seen how leaders change their behavior right after learning about some of the principles. For example, the principle of getting outside of the four walls can be immediately implemented, allowing leaders to discover many new ideas right away. However, seeing the benefits of the prepared mind principle takes more time. We've noticed that both of us have also significantly changed our behaviors. We experiment more and test our ideas rather than debating endlessly about who is right.

Transforming an organization to become venture-minded takes time. It may take 2-3 years to make it a part of the DNA of the organization. The challenge? It's not just about the leaders; it's about the leadership team and key employees who often participate in our workshops and become a team of intrapreneurs, initiating the venture mindset movement.

Thank you to the book’s publisher for sending me an advance copy of the book.

Comments

A Playbook For Authentic Human Leadership

Julie Averill , the CIO behind lululemon’s rapid growth from $2 billion to $10 billion shares in her new book, Chief Impact Officer , a roadmap for executives and technology leaders navigating today's AI revolution and reveals why authentic human leadership is your competitive advantage. Prior to lululemon, she led omni-channel and digital transformations at Nordstrom and REI, navigating system failures, crises, and the complicated work of integrating technology with business strategy at scale. “Technology doesn’t transform companies. People do,” says Averill. “AI will amplify whatever leadership exists, strong or weak. The goal isn’t to build better workers. It’s to develop better humans who happen to do extraordinary work because you helped them become more capable, more confident, more fully themselves. That’s what this book is about.” In the highly personal Chief Impact Officer , Averill pulls back the curtain on what happens when you try to transform a compan...

How To Work With Difficult Coworkers

Nearly everyone I know has shared a story about a difficult person they’ve encountered in their workplace. Experiencing difficult individuals in the workplace is common. So common that author Amy Gallo identifies eight archetypes , each representing a common type of “difficult” person likely found in most workplaces. “We might lie awake at night worrying, withdraw from work, or react in ways we later regret—rolling our eyes in a meeting, snapping at colleagues, or staying silent when we should speak up,” says Gallo. "Too often we grin and bear it as if we have no choice. Or throw up our hands because one-size-fits-all solutions haven't worked. But you can only endure so much thoughtless, irrational, or malicious behavior—there's your sanity to consider, and your career,” adds Gallo. Fortunately, Gallo shares in her book, Getting Along , practical insights, tools, and techniques for how to get along with each type of difficult co-worker you’ll likely encounter....

The Fundamentals Of Market Engineering

“Most companies don’t fail because their product is substandard. They fail because the market doesn’t understand, care, or believe in what they’re selling,” explains Bruce Cleveland , author of the new book, Market Engineering . He adds that this dilemma is “because somewhere between the product development and the customer, the story got lost, the positioning drifted, or their category was defined by somebody else and the market went to another company.” That means, every year, startups and enterprises pour millions into building world-class products--only to watch them disappear into obscurity. In the book, Silicon Valley veteran Cleveland reveals the discipline behind market-dominating companies like Salesforce, Marketo, and C3 AI. Drawing on decades of experience as an operator, investor, and board member, Cleveland demonstrates how leaders can apply the same rigor to markets that they bring to products. You'll discover how to: Compel markets to come to you instead of c...

How To Do Great Work In A Fast-Changing World

Today brings the new book, Effective: How To Do Great Work In A Fast-Changing World , by Melissa Swift . “Effectiveness is where employer and employee interests come together—you want to be great at accomplishing the goals of your job, and your employer wants that too,” explains Swift. “It’s also a place where we can bring together different organizational and developmental thinking to help move people to action.” In the book, Swift, founder of Anthrome Insight , draws on current research and provocative interviews with business and academic leaders to help readers understand how to be amazing in a working world seemingly designed to make us feel incompetent. Each chapter in Effective delivers actionable approaches, enabling readers to improve their daily work life immediately with a paradigm-shifting framework for thriving rather than merely coping in modern professional environments. The book serves professionals at every level of seniority, from e...

How To Harness Your Experiential Intelligence

“Experiential Intelligence provides a new lens from which to view what makes you, you—and what makes your team and organization unique,” says Soren Kaplan , author of the book, Experiential Intelligence . Kaplan explains that over 100 years ago, we established IQ (Intelligence Quotient) to predict success. Then we explored Emotional Intelligence (EQ), the theory of multiple intelligences, and mindsets that broaden the definition of smarts. “Today, Experiential Intelligence ( XQ ) expands our understanding of what's needed to thrive in a disruptive world. While you can't change the past, your unique experiences and stories contain hidden strengths and untapped potential for the future,” explains Kaplan. Experiential Intelligence is the combination of mindsets, abilities, and know-how gained from your unique life experiences that empowers you to achieve your goals. It allows you to get in touch with the accumulated wisdom and talents you have gained over time through your ...

The Science Of Dream Teams

Why do some teams succeed while others stumble? Because hiring, developing and engaging talent requires careful decisions that are too easy to get wrong without data. In The Science of Dream Teams: How Talent Optimization Can Drive Engagement, Productivity, and Happiness , author Mike Zani introduces the science of “ talent optimization ,” a new discipline that’s a far more reliable way to manage your employees than your gut instincts. “ Proper talent optimization lifts morale, builds teams, and turbocharges productivity ,” explains Zani. With simple steps, Zani (a former US Olympic sailing team coach) shows how companies of any size can collect and analyze voluntary data about their employees to purposefully align a company’s business and talent strategies. The book explores how CEOs and management teams can collect and use data to: Build effective teams of highly sought-after professionals while optimizing costs. Create a company culture based on coaching versus ...

How To Lead With Deep Purpose

Having conducted extensive field research, Ranjay Gulati , author of the book, Deep Purpose , The Heart and Soul of High-Performance Companies , reveals the fatal mistakes leaders unwittingly make when attempting to implement a reason for being. “My interviews with well over 200 executives across 18 firms revealed the secrets of these companies—not the usual facile frameworks, but new ways of thinking about business that allow leaders and companies to operate with heightened passion, urgency, and clarity,” shares Gulati. “I call this, deep purpose .” Furthermore, Gulati explains that most leaders think of purpose functionally or instrumentally, regarding it as a tool they can wield. On the other hand, deep purpose leaders think of it as something more fundamental; an existential statement that expresses the firm’s very reason for being. These leaders project it faithfully out onto the world. “Rethinking the nature of purpose should prompt you in turn to re-imagine ...

Critical Questions To Ask New Hires

In Paul Falcone ’s book, 75 Ways For Managers To Hire, Develop And Keep Great Employees , he recommends asking new employees the following questions 30, 60 and 90 days after they were hired: 30-Day One-on-One Follow-Up Questions Why do you think we selected you as an employee? What do you like about the job and the organization so far? What’s been going well? What are the highlights of your experiences so far? Why? Tell me what you don’t understand about your job and about our organization now that you’ve had a month to roll up your sleeves and get your hands dirty. Have you faced any unforeseen surprises since joining us that you weren’t expecting? 60-Day One-on-One Follow-Up Questions Do you have enough, too much or too little time to do your work? Do you have access to the appropriate tools and resources? Do you feel you have been sufficiently trained in all aspects of your job to perform at a high level? How do you see your job relating to the organization’...

Five Essential Principles For Sustaining Growth Through Innovation

Even though many companies strive for innovation, most struggle to achieve meaningful change. The largest reason for this disconnect? Playing it safe. Leaders and organizations want to implement new ideas, but too often they are held back by the fear of failure, even though setbacks are intrinsic to the innovation process. In the new book, No Fear, No Failure , by Lorraine H. Marchand (with John Hanc), readers will learn how to overcome the status quo that stifles creative thinking and how to create a culture that encourages innovation. Marchand provides a framework for sustained growth built on the “ 5 Cs ”: Customer First Culture Collaboration Change Chance She draws on more than 120 interviews with leaders across industries, real-world case studies, and her firsthand experience and shares step-by-step, field-tested strategies, tactics, and tools that practitioners can use to embed creativity within organizational cultures. Marchand is a former Big Tech and Big Pharma ex...

How To Uncover Your Blindspots To Become A Better Leader

What you don't see about yourself can hold you back as a leader. That's typical for many leaders. What we don't see is what we can't see: we have blindspots . Your blindspots prevent you from achieving your greatest success. “It turns out that we're often not great judges of ourselves, even when we think we are. Sometimes we're simply unaware of a behavior or trait that's causing problems,” explains Martin Dubin , author of the new book, Blindspotting: How To See What’s Holding You Back As A Leader . “Bottom line: until we uncover these blindspots, we can't move forward. The good news is that you can learn to do your own blindspotting .” “Most of us understand the idea of blindspots in a general sense—areas we can’t see, to take the term most literally, or places we have gaps that we may not even realize, to be a little more abstract,” says Dubin. “But in the context of this book, I’m defining blindspots quite specifically: They are...

Eric Jacobson On Management And Leadership

Search This Blog