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Whether you are an aspiring student entrepreneur or a serial innovator, understanding the importance of managing your venture's information is essential to success. From the Irrational Labs' Behavioral Economics Bootcamp, I learned firsthand how cognitive biases can impede our search for new information. Innovators can optimize information gathering and analysis by implementing best practices like dual search strategies, knowledge self-assessments, and cognitive bias mitigation.
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In this updated Innovate and Thrive post titled " The Role of Information Search in Opportunity Discovery," check out the many strategies to manage information to support new venture realization.
Introduction
It was late one evening when entrepreneur Sarah came across a piece of information that unexpectedly sparked a business idea. While reading an article unrelated to her work, she stumbled upon statistics about the growing pet obesity epidemic. As a dog owner herself, this data immediately resonated with Sarah. She wondered if there could be an opportunity to help pet owners tackle this issue.
Sarah began actively searching for more information about the pet obesity landscape. She came across scientific reports about health risks, surveys about exercise habits, and interviews with veterinarians. But with so many data sources, Sarah soon felt overwhelmed. Though she was gathering abundant information, seeing the opportunity clearly through the clutter was a struggle.
Sarah's experience highlights the information overload many entrepreneurs face during the opportunity discovery process. From recognizing a potential idea to assessing its viability, founders must navigate a complex data landscape. This information comes from industry experts, customer conversations, online articles, and market research reports. For innovators like Sarah, managing this influx of data is crucial to capitalizing on promising opportunities. However, without the proper knowledge management practices, the abundance of information can quickly become a bottleneck rather than a resource.
In this article, we'll explore strategies entrepreneurs can use to optimize their information search, including:
- Leveraging active and passive search approaches
- Understanding common cognitive biases that restrict a search
- Developing methods to offset those biases
- Utilizing knowledge of self-assessments and search journals
- Organizing information into meaningful categories
Innovators like Sarah can turn data overload into an advantage by implementing best practices around information search. Let's dive in!
Information Search
The first area focuses on how one actively and sometimes passively searches for information. An active search is purposeful and goal-driven. The entrepreneur seeks information on a potential opportunity to assess its viability for further exploration. Passive search is more opportunistic and leads to a chance discovery of an opportunity. One encounters data by chance, often while engaged in unrelated activities. Research shows that entrepreneurs apply both approaches, though individual motivation and cognitive styles may influence actual search behavior. I suggest innovators approach information search using both methods in tandem, thus optimizing the search activity. This optimization may enhance information gathering, supporting the entrepreneur's understanding of the opportunity.
Recognizing that these two search approaches exist and may work in tandem is the first step to optimizing this dual information search method. Whether an entrepreneur starts research with a specific opportunity in mind or remains attentive to serendipitous discovery, it is essential to navigate both search strategies. In the first incidence, the entrepreneur searches for information about an opportunity they want to explore. During this exploration, it is common to accidentally discover information that may be directly relevant or tangential to some degree. Sometimes, you find information that you did not know you needed. For this reason, entrepreneurs need to recognize the importance of information discovered passively and ensure they capture it. More on this later.
Entrepreneurs should develop their ability to "actively" scan for accidental information, being aware of the possibility of finding helpful information when not purposely focusing on a specific search goal. As it turns out, passively discovering information can significantly impact the entrepreneur's discovery process. From experience, the information may reinforce the current assumptions surrounding the opportunity, problem, or solution. Accidental information can lead the entrepreneur in new directions, creating pivots in conception or solution strategies. At times, the nature and location of the information can lead to new directions. The existence of the information can be unexpected, leading to new search paths.
Within the venture realization process, entrepreneurs search for information surrounding an opportunity from various sources. The entrepreneur must find answers to the critical questions about a potential venture idea. Data collection can come from a variety of sources. See the table below. In one sense, the more sources consulted, the more valid the results. However, one can overdo it; the available data can become overwhelming. This availability of information is both an advantage and a challenge.
One of the significant challenges is dealing with an unlimited amount of unstructured information. Even when the goals are well specified, the vast amount of data, the multitude of sources, and the variety of information-seeking methods add to the challenge. For example, entrepreneurs gather information from primary sources such as potential customers, industry specialists, domain experts, and ecosystem stakeholders during the earliest opportunity identification stage. Concurrently, they search online for information about the problem, current solutions, critical market trends, relevant environmental and social issues, etc.
Dealing with this information overload can hinder the entrepreneur's ability to see the opportunity clearly and future venture performance. I have noticed that information overload can significantly stress founders and harm their self-efficacy.
Cognitive Bias and Information Search
Like all of us, entrepreneurs apply cognitive shortcuts to deal with information overload. As with many cognition or behavior, there is a fine line between minimal use and overuse. These mental shortcuts, called heuristics, facilitate our ability to make judgments. When applied appropriately, it can help entrepreneurs to make timely decisions. However, there are times when these heuristics lead to errors in judgment. This outcome is prevalent when the shortcut limits necessary information search. This limitation challenges the entrepreneur's capacity to identify and optimize market opportunities.
There are several ways that cognitive biases influence the judgments and decisions of entrepreneurs. First, many entrepreneurs apply the availability heuristic and focus on familiar areas starting at the earliest opportunity identification stage. When searching for new opportunities, entrepreneurs tend to limit themselves to information sources with which they are knowledgeable, usually because of prior experience and knowledge. Finally, many founders look to start new businesses in industries and technologies that they know from past career paths. Information seems readily accessible for this reason.
As with anyone, entrepreneurs also have mental models or schemas about how things work. An entrepreneur's existing mental models about a market or innovation may limit the active search for new information. Selective perception can get in the way of seeing market conditions outside one's mental model. Additionally, these selective perceptions make it difficult for entrepreneurs to look outside the box for new ways of framing a problem or solution.
Some researchers suggest that entrepreneurs apply pattern recognition to market conditions more than non-entrepreneurs. However, the reasons or the process is unclear. What is clear is that "connecting the dots" across diverse information is an essential cognitive skill for any innovator. Many innovations occur because an individual or team has recognized a relationship between mixed pieces of information, added to their existing mental models, and applied this new understanding to guide future action. One cognitive bias that stands in the way of this recognition is called functional fixedness. Those who fall prey to this bias tend to see things working in a specific way and cannot imagine them working differently. This thinking limits searching for information that may open up new possibilities in how an object or a person functions.
Entrepreneurs' capacity to frame and reframe customer problems is an essential cognitive effort. An initial conceptualization of the problem in conjunction with reframing activities can shake up mental models of how things work. Entrepreneurs must actively search for unexpected events and counterfactual information in reframing.
In every new class, I highlight confirmation bias's role in the entrepreneurial journey. The reason is that we all tend to look favorably upon information that coincides with our beliefs. Conversely, we discount information that is inconsistent with said beliefs. In the early stages of opportunity identification and information search, this cognitive bias can be devastating, leading entrepreneurs down the wrong path. One of the main reasons for this condition is that most entrepreneurs fall in love with their first solution. Sometimes referred to as the endowment effect, entrepreneurs become attached to their solutions. This pre-supposition of a solution influences every aspect of early information search, from source selection to customer interviews and survey design. The outcome is predictable if you enter a customer interview with your preferred solution implicitly or explicitly referenced during the session. Unfortunately, the customer will validate your solution, confirming your early assumption.
Strategies to Offset Cognitive Biases
There are many strategies that entrepreneurs and innovators can apply to limit the effects of biased thinking during information searches. Here are a few methods to consider:
Embrace cognitive awareness - One of the most important strategies is recognizing your susceptibility to biases and how they influence your thinking. Make a conscious effort to be mindful of biases like confirmation bias or selective perception when evaluating information.
Seek outside perspectives - Assemble a diverse group of advisors and collaborators who can challenge your assumptions and provide fresh perspectives. Getting others' input can counteract biases like availability heuristic or functional fixedness.
Appoint a "devil's advocate" - Designate someone on your team to play this contrarian role. Their job is to question prevailing viewpoints, encourage exploring alternatives, and push back against narrow thinking. This role can mitigate the impact of biases like the framing effect or egocentric empathy during opportunity analysis.
While techniques like slowing down judgments, defining objective measures, and structured design thinking are also helpful, prioritizing cognitive awareness, outside perspectives, and contrarian input can provide immediate benefits for entrepreneurs.
Search Strategies for New Opportunities
Recognize the fact that entrepreneurs sometimes start with a customer problem in mind. Alternatively, they may be scanning broadly for new venture ideas. In either case, the entrepreneur focuses on a few opportunities that may result in a successful business.
Once the entrepreneur has honed into a specific opportunity, there are several strategies to optimize the information necessary to assess whether it is the right venture for all involved. Here are a few actions to consider.
Knowledge self-assessment. One of the first things to do is to assess your current knowledge regarding the customer, marketplace, and problem-solution space. For example, how much do you know about the customer's recent experience? How have you acquired this knowledge? What sources are most prominent? Through several such questions, entrepreneurs can evaluate and identify gaps in their knowledge and decide on actions to enhance their understanding of the market. An integral aspect of these plans is adding new information sources to the opportunity screening process.
Conducting an honest self-inventory will reveal gaps and weaknesses in your knowledge. For example, maybe you lack connections to industry experts who can advise you. Or perhaps you need to spend more time embedded with your target users to gain firsthand empathy.
Pre-screen categorization. There are many pre-screening areas that entrepreneurs need to review to determine whether an opportunity is worth the effort and resources. I break these down to the customer, marketplace, industry, and entrepreneurial ecosystem at a high level. Then, consider creating separate file folders or notebooks for specific pre-screening categories.
Start with a notebook that contains any information associated with your target customer. This early information should include any references to customer pain points, solutions tried, and demographics. Customer information comes from many sources, and you should remain alert to all possibilities. For example, watch for customer comments on social media, question forums, and product reviews. Actively searching these sources and capturing the information in one place helps build a meaningful early profile of your customer.
Another information category should focus on any individual or organization working to solve the customer's problem or provide a solution to the market. Usually, I suggest creating two types, one for problem solvers and the other for solution providers. First, define problem solvers as anyone actively working to solve a problem. If the problem is essential, people are constantly working to understand it deeply. Next, identify domain experts and thought leaders in the area. Start collecting information about their work. Read their books and articles. Follow them on social media. Eventually, there is a high probability that you will want to interview them about their work.
The exact process applies to solution providers. You want to identify all possible solutions, both current and emerging. What solution choices do customers currently have in the marketplace? Do not limit your search to direct competitors or solution providers. Doing so creates a situation where your thoughts on a solution restrict your search for other possible solutions. Activity search for every possible approach to solving the problem. For example, I find many entrepreneurs have a bias toward digital solutions. Make sure to look for non-digital solutions as well. You may want to emphasize these indirect solutions over the ones that coincide with your favored approach.
Keep a search journal. Early in your information search activity, you may find it helpful to note what actions optimize your search. What keywords are driving the best search results? Which sources provide the most information on each of your main search categories? For example, you should track which keywords offer the most relevant information. With this knowledge, you can apply these keywords in future search activities. I suggest that founders use the appropriate keywords to set up "Google Alerts" for specific topics. Google Alerts is a free tool that monitors the web for results that match a user's search term. As you hone in on the topics and associated keywords, you can set up a Google Alert to send you email updates on any new content recently generated and published on the web. This content comes from websites, social media, scientific reports, blogs, etc. I suggest you set up alerts for new content from domain experts, influencers, solution providers, and industry experts.
Documenting your search activities can help optimize information gathering over time. Here are some tips:
Organize chronologically - Structure your journal entries in chronological order. This outline allows you to see how your search evolves.
Note source & keywords - Record the source (website, report, interview, etc.) and keywords used for each entry. This documentation helps identify high-yield sources and search terms.
Track influence - As you gather information, note how it influences your thinking. Does it confirm or refute assumptions? Does it open up new directions? Tracking influence reveals impact.
Categorize insights - Tag journal entries with relevant categories like "customer," "market trends," and "competitive intelligence." These labels facilitate finding the most valuable nuggets later.
Review periodically - Set time aside to review your journal and reflect on learnings. Identify search adjustments and knowledge gaps to address.
To support venture knowledge management, I have created a methodology called SCORE. SCORE stands for Search, Capture, Organize, Recognize, and Expand. You can think of them as stages you go through as you gather and organize essential information. In this article, I will explain how entrepreneurs and innovators search for information in the early discovery stages of venture realization and optimize their knowledge for innovative outcomes. Future posts will explore the other components of venture knowledge management. You can check out Evernote's Brittany Naylor Blog Post and interview with me on Knowledge Management and the SCORE™ Method as part of the Evernote Expert Program.
Conclusion
As we've explored, effectively managing the influx of information is crucial for entrepreneurs to capitalize on promising opportunities. Innovators can optimize information gathering and analysis by implementing best practices like dual search strategies, knowledge self-assessments, and cognitive bias mitigation. These methods lead to more precise insights, better decision-making, and enhanced venture outcomes. Moving forward, dedicate weekly time to review your search activities using a journal. Analyze what's working well and where your approach needs refinement. Seek out new sources and perspectives. And leverage insights to drive your next steps. With consistent practice, you can master information search and gain an advantage in opportunity discovery. The essential call to action is for entrepreneurs to maintain a weekly search journal to evaluate and refine their approach.
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