In the same way that there are product development curves, product absorption curves, and revenue curves – perhaps an entrepreneur’s most important curve is the expectation curve. This is the journey of expectations that the entrepreneur creates! Expectations are what bind the entrepreneurs’ constituencies and keeps everyone “in the game”.
What is the most effective expectation curve for you?
Prediction and performance
Creating an expectation curve is no small feat. And it is always a work in progress. Entrepreneurs are under a constant pressure to perform and predict. In other words entrepreneurs are asked to live up to expectations (that they have created – to build social proof that their business actually works. And it is these expectations that drive decisions [1]
The entrepreneur’s journey is filled with ups and downs. And in fact – the reality is that entrepreneurs often know neither what to predict nor what to expect.
The “ups” – the thrill of forming the company, building a team, seeing team members succeed, achieving industry visibility, product launch, product adoption, securing financing, the first paying customer, the first partners, building revenue, successfully exiting.
The “downs” – not having everyone (shareholders, directors, management, employees, and professionals) on the same page – directed towards the same goal, financial stress when funding runs out or is not available, missed deadlines, customer rejection, partner non-performance, product failure, changing industry dynamics, unfair competition, organizational issues, failing to successfully or perhaps timely exit.
Entrepreneurs are asked to be cheerleaders – to create the contagion that builds belief. They are asked to be “objective and realists” when it comes to getting to market, customer adoption, amount of capital required, and when they will hit strategic milestones.
The reality is that entrepreneurs don’t know everything. In fact they don’t and can’t know most things. They cannot predict those conditions that they do not control. In uncertain (and often new) markets they are going to make mistakes. The only constant in an entrepreneur’s world is change and uncertainty.
Intellectual honesty
So how do entrepreneurs create a steady flow of currency? How do they metaphorically keep everyone in the game? How do they draw the expectation curve? Do they take their constituencies along for the ups and downs of the journey – a veritable roller coaster – or do they create a curve that is perhaps more measured – evening out the inevitable highs and lows?
I believe that the best answer is by being honest – intellectually, with themselves, and with others. They have to keep a balance between enthusiasm and realism – applied at exactly the right time in precisely the right measure.
This sometimes means keeping a stiff commitment to the mission in the face of adversity. This often means telling constituents what they may not want to hear – telling employees, shareholders, and directors that they are in for a long hard road.
This also means that they have to be clear in mission – steady in objectives, enthusiastic in opportunity. We can agree that entrepreneurs should never make promises that they cannot in good faith keep.
Obviously enthusiasm and passion must provide the emotional energy. But understanding and admission of what can go wrong, what has gone wrong, and what will go wrong will go a long way towards setting the right expectations – and keeping the currency flowing.
[1] There are many solid works on decision making – how decisions are made, what influences the process, our biases, and how we can build self awareness to make the best decisions. My favorite “go to” work is Thinking Fast, Thinking Slow by Daniel Kahneman. The Business of Belief by Tom Asacker also provides valuable insights.
