Abstract
As sensor networks company Kinexon pivoted its business model from tracking devices for sports players to tracking distances to prevent COVID-19, the tweak in its strategy proved to be the difference between a nearly certain organizational death to thriving in an unprecedented pandemic. Strategy is the key to success for all entrepreneurial ventures, and is undoubtedly critical for the survival of start-ups. The book ‘Entrepreneurial Strategy’ by Shepherd and Patzelt – although not exhaustive in its coverage of all related topics – deals well with concepts central to entrepreneurial strategy for new ventures. The authors largely build on their own recent research (e.g., the lean start up framework by Shepherd and Gruber, 2020) to curate five critical themes within the domain of entrepreneurial strategy for new ventures, namely, opportunity identification, opportunity construction, lean framework for starting a new venture, managing new ventures and scaling new ventures. The topics address key elements of entrepreneurial strategy which a new venture is likely to encounter in the course of its journey.
Arguably, the future of entrepreneurial ventures is predicated upon the opportunities which attract the limited attention of entrepreneurs. Entrepreneurial attention in turn depends on the cognition mechanism of entrepreneurs. In chapter 1, the authors extend the entrepreneurial cognition literature by deconstructing the mechanism that determines the entrepreneurs’ opportunity beliefs and actions. The authors highlight the trade-offs between adopting the ‘top-down’ approach whereby entrepreneurs leverage their existing knowledge structures and experience versus the ‘bottom-up’ approach. The authors present a holistic model to guide transient as well as sustained entrepreneurial attention to better utilize both ‘top-down’ as well as ‘bottom-up’ approaches of forming opportunity beliefs and consequent actions. Since the concepts discussed in the chapter are fairly advanced, it might serve uninitiated readers well to familiarize themselves with an earlier work by Shepherd and Patzelt (2018) which demystifies entrepreneurial cognition (Oberoi and Gupta, 2021).
As social learning is fundamental to recognizing and pursuing potential opportunities, Chapter 2 probes how entrepreneurial teams interact and engage with stakeholders, such as potential consumers, investors and mentors for opportunity development. These potential stakeholders, collectively referred to as ‘communities of inquiry’ (Shepherd, Sattari, & Patzelt, 2020), comprise interested parties who promote social learning to develop a potential opportunity. They help challenge the veracity of the beliefs that entrepreneurial teams form during opportunity identification. This chapter draws a parallel between the composition of successful versus unsuccessful entrepreneurial teams and brings home its impact on new venture progress by presenting a social model of opportunity development.
Chapter 3 traces and acknowledges the contribution of scholars (e.g. Steve Blank, Alexander Osterwalder, Eric Ries, Marc Gruber and Sharon Tal) in the evolution of the lean start-up concept. It builds on recent research on the lean start-up framework to offer a fresh perspective into the process of new venture creation (Shepherd and Gruber, 2020). The authors drill deep into the building blocks of the lean start-up framework to advance scholarly understanding of start-up formation and answer many puzzles. For example, although validated learning – the process of demonstrating empirically that a team has discovered valuable truths about a start-up’s prospects – ensures that the entrepreneur forms and tests her hypothesis, it does not address how entrepreneurs deal with challenges (e.g. confirmatory bias) in interpreting the results. Another intriguing insight brought forth in the chapter is the potential of business models to act as instruments of entrepreneurial narrative around how the start-up creates value.
Moving along further in the entrepreneurial journey, chapter 4 talks about how entrepreneurs tread through the process of co-creating, organizing and performing new ventures by explaining the most essential categories for managing new ventures through an overarching framework. All these stages of the new venture-management are influenced by and in turn influence the external environment which is responsible for the processes of co-creating, organizing and performing through imprinting founding teams and setting the boundaries, and accessing resources and institutional frameworks.
There is an ongoing debate among entrepreneurship scholars whether starting a venture and scaling a venture requires different skills, experience and knowledge. Shepherd and Patzelt provide an interesting twist to this conversation by positing that scaling is ‘spreading excellence’ in an existing venture as it grows. Chapter 5 expounds the importance of factors that contribute to successful scaling and also elaborates the inter-relationships between knowledge transfer and scaling.
Rather than covering a wide range of topics in entrepreneurial strategy for start-ups, the book highlights new insights (e.g. around the importance of social learning for entrepreneurs). While taking note of dominant themes such as prior knowledge in opportunity identification (Venkataraman, 1997), the book expands the focus of conversations in entrepreneurship scholarship to address some pertinent gaps in entrepreneurial strategy for new ventures. Relevant industry examples are provided and engaging, and complement the theoretical arguments presented by the authors. Overall, the book is grounded in contemporary research which pushes the knowledge frontiers to the entrepreneurial journey of start-ups. It makes an excellent read for budding as well as veteran social sciences researchers and has some elements which may be of interest to practitioners as well (e.g. in relation to the building blocks of lean start-ups).