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F. FLEXIBILITY
One of the few certainties in venturing is that the business plan that you prepare for your venture will not describe what actually happens as you start and run it. Despite all the care taken in planning, projecting, and preparing to start a business, there are a sufficient number of "unplannable" events that occur to ensure that your plans will not come to fruition exactly as you have laid them out.
This raises the question: But isn't there something that I can do to minimize this problem? The answer is: Yes--build flexibility into your venture.
But as anyone knows who has, for example, tried to plan a "flexible vacation": with flexibility comes added complexity. Flexible plans can require much more effort to prepare than do the arbitrary, linear "to do" lists that we often mistake for flexible plans. It helps, therefore, to understand first, the nature of the "unplannable events" that create the need for flexibility, and second, what steps can be taken that deal effectively with each type of event--while minimizing the added complexity. How can you keep your venture flexible, with minimal added complexity?
Unplannable Events
Two types of unplannable events make our business plans unpredictable. The first set of events, we can classify under the heading: Uncertain Events. When we think of uncertainty, we think of "not knowing," but what we really mean is "not knowing for sure." We may know that an event will eventually occur, but we may not know when. For example, on a production line we may know that every so often a defective product will be produced, but not which one or exactly when. Or, in the case of driving we may know that at some point in our life we will be probably involved in an accident, but we don't know the details of its occurrence in advance. Where there is a known event, but we are not sure of the timing (when) or the magnitude (how much), we refer to this as uncertainty.
However, "not knowing for sure" is different from "not knowing at all." The second set of events that make our business plans unpredictable fall under the heading: Ambiguous Events. Events that have ambiguity surrounding their occurrence are those that cannot be anticipated, or that have very unclear consequences when they do occur. For example, it was not at all clear when the "horseless carriage" appeared, that it would totally replace the horse and buggy; or that the 1973 conflict between Arab states and Israel would lead from oil embargo, to massive OPEC price hikes, and eventually to serious economic consequences throughout the world. Where there is an unknown event, or where known events may have unlikely consequences, we refer to this as ambiguity.
The ability to adapt to changes in circumstances we call flexibility. Accordingly, the two questions that should be asked about a venture regarding flexibility are:
Since venture positioning is not a static exercise, the relaxation of "certainty constants" in strategic assumptions requires that entrepreneurs must deal also with uncertainty and ambiguity--hence the need for flexibility. Where the shape of the probability curve is known (Ghemawat, 1991), uncertainties may be managed through statistical procedures and plans, with the range of flexibility required somewhat restricted.
Where there is disagreement upon the shape of the probability curve(s), ambiguity markedly increases the requirements for strategic flexibility (Ghemawat, 1991). The structural response (type of organizational relationships undertaken or used) to uncertainty and ambiguity (equivocality) has been reported by Galbraith (1977), and by Daft and Lengel (1986). Where uncertainty is low, routine seems to suffice. Where uncertainty is high and ambiguity is high unscheduled meetings and group problem solving are indicated.
Even more importantly, the flexibility that comes through the proper management of uncertainty and ambiguity must yield adaptive responses in an uncertain and ambiguous world. Without such variations, changing environmental conditions which once supported the venture will become its enemy. "Selection FOR" will be replaced by "selection AGAINST." Without flexibility, inertial organizations become the dinosaurs of evolutionary economic history. Entrepreneurs who concentrate only upon building from a unique initial product or vision will find that products and ideas soon go out of date. It is only through the flexibility that comes with a commitment to consider the ADAPTIVE ORGANIZATION as their ULTIMATE CREATION, (Collins & Porras, 1995) that entrepreneurs build sufficient flexibility into their ventures.
Another way to look at "staying flexible" is to draw a mental line between this step in your New Venture Template™ analysis, and steps "A" through "E" (a feedback loop, if you will). Periodically reexamining the currency and validity of your answers to A: Innovativeness, B: Value, C: Persistence Over Time, D: Scarcity, and E: Non-Appropriability is another way for you to become aware of the adaptations that you will need to make for your venture to survive and prosper over the long term.
