Build (off that learning) and Act again.That cycle continues repeats until the entrepreneur succeeds, knows she is not going to, or decides there is another, more appealing opportunity to pursue.

The Acting/Learning/Building/and-Acting-again-to-learn-some-more cycle is what makes the way entrepreneurs think so different—and the way they think so important to the rest of us.

Their approach to dealing with an unknown future was the reason we decided to change our plans about what we were going to write.

What we realized, as we took a step back, is not only do most entrepreneurs view the unforeseeable world differently, but how they go about tackling problems successfully can be chronicled and explained. In other words, their methods are available to everyone.

Up until now, most studies of entrepreneurs have been problematic since they have tended to focus on entrepreneurial behavior, which is indeed idiosyncratic; no two entrepreneurs do things exactly the same way. But we shouldn’t have been looking only at their behavior. We should have been studying the thinking that leads to their behavior as well

That was a huge “aha” moment for two reasons.

First, in a world that is seemingly growing more unpredictable by the moment, you can neither think of everything—or even close to everything—nor map out the future with any real certainty. That means that Prediction alone is incomplete today and may well become even more limiting tomorrow. Instead of thinking your way into a new way of acting, which is at the heart of using Prediction, you need to act your way into creating the future you want. That’s what entrepreneurs do when faced with the unknowable—and it is an approach that will work for you as well.

Second, we came to understand that it will work everywhere!

A quick example will prove the point. Say you want to lose 30 pounds. You can think about losing the weight all you want, but if you keep your eating habits and exercise patterns exactly as they are, your weight will remain exactly where it is. Until you take action, nothing is going to change.

But what kind of action?

Well, in the Prediction world you would work out a plan. Maybe you would stop eating carbs, or follow the current hot diet.  You’d keep your eye on the prize—losing those 30 pounds. And history shows that you will probably fail. The level of commitment required (high) and time frame (long) are just too much for most of us.

Someone who employs CreAction would attack the problem differently. They’d begin by taking what we have come to think of as a “smart step” (action) in the direction they want to go. It would not necessarily be overly aggressive (“I am only going to eat 500 calories a day”) or focus on a big goal (“I am going to lose those 30 pounds in the next 60 days.”)That smart step probably would be a statement like: “I want to lose one pound this week.”

With that modest initial goal in mind, you are far more likely to eat a little bit less over the next seven days, and exercise a touch more. If at the end of the week you have found that you have indeed lost a pound (or perhaps more), you will say to yourself: “That wasn’t so bad. Let’s see if I can do it again next week.” And if you fail, you’d try adding something else. (“Hmmm. If I keep exercising and eating less and have just one glass of wine with dinner instead of two, maybe that will work.”)

And if that approach is successful you’ve learned something from your own experience, not just the diet book. So you build off your success and try it again the following week—and keep repeating it until you have achieved your goal. You have broken down a big problem (“How the heck am I ever going to lose 30 pounds?”) into a series of smart actions: losing a pound a week for 30 weeks.

Morris: For those who have not as yet read the book, please explain the relationship with Babson College and its Entrepreneurial Thought and Action programs.

Brown: We are extremely fortunate. Babson is always ranked first, whenever someone is compiling a list of the college and universities that are best at teaching entrepreneurship.  Our book draws on the reasoning of serial entrepreneurs—people who have started two or more companies successfully—and so we, through Len who is the president of Babson, we had access to the people who have spent their entire working lives studying these people.

Morris: What is insufficient – if not flat-out wrong – about the way many executives are prepared to think and act in response to uncertainty? How in fact should they think and act?

Brown: The basic problem boils down to this.  They try to treat an unpredictable situation as if it were predictable.

Morris: For those who have not as yet read Just Start, what is “predictive reasoning” and how best to master and then apply this skill?

Brown: Predictive reasoning is the way we all have been taught to think since before kindergarten. It is based on the assumption that the future is going to be pretty much like the past.

You know the steps for dealing with a predictable universe:

1. You (or your parents, teachers, or bosses) forecast how the future will be.
2. You construct a number of plans for achieving that future, picking the optimal one.
3. You amass all the necessary resources (education, money, etc.) necessary to achieve your plan.
4. And then you go out and make that plan a reality.

We have become so indoctrinated with this way of thinking by our education and our organizations that it is more or less the only way we approach anything.

But what is very smart approach in a knowable or predictable future is not smart at all when things can’t be predicted, and that fact is at the heart of the frustrations most of us feel.  Things simply aren’t as predictable as they once were.

Morris: What is “CreAction”?

Brown: It’s a word we made up combining creation and action.

CreAction boils down to this: The future may or may not be like the past, but you don’t have to spend a lot of time wondering how it will play out if you plan to shape (i.e. create) it.

Morris: One of the book’s core premises is that “action trumps everything.” Please explain.

Brown: Action, the cornerstone of CreAction, does indeed trump everything when the future can’t be known with much certainty.

If you are heading into an unknown frontier—and starting a new journey of any sort usually qualifies—the only way to really discover what is out there (are there potential customers; is the market big enough; will the community like the civic venture I helped create?) is to go and find out. Thinking and creating endless “what if” scenarios doesn’t help you. You can “what if” yourself to death. The only way to know for sure is to act, reflect on what you have learned, and act some more (to gain more learning.)

But before you do, double check to see that the future is as uncertain as you think; that there is, indeed, no way to predict what will happen. If there is a more than reasonable chance that the future is knowable (we will give two examples in a second so you can see exactly what we are talking about), you are often better off letting Prediction dominate—and that is a good thing.

Remember what we have said from the beginning. Prediction and CreAction frequently work in tandem and are equally valid on their own. By definition, that means there are certain situations where Prediction works better. You could take an egg out of the refrigerator, hold it out at arm’s length, and, to find out what will happen if you drop it, take action by letting go. But there is little reason for doing so (other than to entertain a three-year-old). The laws of gravity are well known. The fact that the egg will break could have been predicted with near certainty.

Similarly, you could go out and start a transportation company tomorrow and learn as you go along how many cars, trucks, motorcycles, and bicycles will be bought in a given year, and then sort those numbers by categories—coupes, convertibles, SUVs, etc.—and chart sales during economic good times and bad. But there is no reason to go through all that effort and risk. Those numbers are readily available and future transportation sales can be estimated with reasonable certainty.

Our point is simple: When the results of thinking would lead to actions that are predictable—“I wonder how many high-end sports cars I could sell in a year during an economic slump”—let predictive thinking dominate (supplementing it with CreAction as necessary). You can expect Prediction to give you a solid result, i.e., you know the uncooked egg will crack when it hits the floor, and you can come up with numbers that will project fairly accurately how many of a specific type of car you are likely to sell in a given period.

But in the face of unknowability—what is the market for motorized skateboards with training wheels, or a four-wheel type of Segway; things that don’t yet exist—you can’t do a lot of learning in advance. In this case, the fastest/easiest/most effective (and often only) way to get that learning is by acting.

Morris: Why is desire not only desirable but indeed “overwhelmingly important”?

Brown: On the surface, it seems there are four questions you might ask before starting any new venture:

•  Is it feasible? (i.e. is it within the realm of reality)

•  Can I do it? (i.e. feasible for me)

•  Is it worth doing? Will there be a market for what I want to sell; is there potential to turn a profit; will people appreciate what I am trying to do? In other words, does it make sense to put in all this effort?) And finally

•  Do I want to do it?

But it is this last question that is the one that really matters: Do you want to create it?

Why? Either the venture is something that you want, or it’s something that leads to something you want. If it is neither of these, there’s no reason to act or to answer the other three questions.

There is simply no way you are going to give it your full effort if your heart isn’t in it at least to some degree.

Once you want to do something, everything gets reframed. The negative emotional response to all the unknowns is reduced. The reality hasn’t changed. You still don’t know what is out there, but you’ll find a way around the problem, because you care about what you are trying to do.

Let’ say you work for a farm machinery manufacturer, and your boss gives you the assignment of figuring out how to sell the company’s products in Eastovia.

Here’s how our four questions play out:

Is it doable? You haven’t a clue how to set up a distribution and service network in an underdeveloped country or whether your equipment is suitable to their hilly terrain.

Can you do it? Maybe. Maybe not. You’ve never done anything like this before.

Is it worth doing? Who knows the size of the market and whether it will be profitable?

Do you want to do it? Well, no. It’s the boss’s idea.

Situation #2 is exactly the same, but you are the one who wants to sell farm equipment in Eastovia. You think there is a huge opportunity and you have a compelling desire to give it a try, in no small part because your wife’s family lives there.

What’s the likely result in both cases? It isn’t a hard question.

In the first situation, where desire is not part of the equation, you aren’t in any hurry to do anything because the situation is so uncertain and unknown. You will keep thinking about what you are up against and search for more data. After all, it’s better to study carefully and make sure all the bases are covered than to launch, have it not work out and then have everyone say “you didn’t think it through.” At  best you will take a lot of time and at worst you will put it at the very bottom of your “to do” pile, never taking any real action and hoping your boss never follows up, even though the opportunity might have been real.

But the presence of desire alters all of that. Because you want to do it, you are much more likely to take a first, small smart step toward solving the challenge. For example, the next time you and your wife are visiting her family, you stop in and see some local distributors and set up an exploratory meeting with the Minister of Agriculture’s staff. And as we see later (in Chapter 6), your passion for creating something new will make it far easier to get others to come along with you as either investors or employees.

Here’s one last reason that “want to” is so important. Nobody will be committed to what you’re doing if they don’t see your Desire, your belief in your idea, and your willingness to try to accomplish it.

So, before beginning anything new, ask yourself this: Is this something I really want to do.  If it isn’t you are likely to be happier and more productive spending your time on something else.

Morris: How best to determine an “acceptable loss”? Morris: To what extent (if any) does the process by which to determine an acceptable loss for an individual differ significantly from the process for an organization? Please explain.

Brown: Let me answer both questions at once. The most successful entrepreneurs don’t bet everything on one roll of the dice, as most people thing. They apply the basics of risk management that says: If you’re going to play in a game with uncertain outcomes then:

1.) Don’t pay/bet more than what you can expect as a return, and

2.) Don’t pay/bet more than you can afford to lose.

Both of those ideas, as we said, can be summed up with the phrase “Acceptable Loss,” a concept where you consider the potential downside of whatever risk you are about to take—such as starting a new company or some other venture that is going to consume a lot of your time, capital, or other assets—and put on the line no more than you would find acceptable to lose should things not turn out the way you want.

But the interesting thing about acceptable loss is in changes over time.  It is sort of like a stop-loss order in investing.

When successful entrepreneurs as they head off into the unknown they:

•  Take small steps toward what they think they desire
•  Pause to see what they have learned from taking that small step.
•  Build off what they have learned and then
•   Take another small step.

But notice what is going on, because the steps are small, so is what it puts at risk.

Here’s an example of what we are talking about.  A 40-something woman who has spent all her time working in corporate public relations departments decides it’s finally time to start her own firm.  The traditional approach would be to do a business plan; line up investors; find office space and open the doors on day one several hundred thousands of dollars in debt. Yikes.

Entrepreneurs take a different approach. They have an idea. (“I want start my own business; I think I will start a public relations firm”) and they get underway—not by quitting their day job but by calling around after hours and on weekends to see if all those people they think will become clients actually will.

After they have taken that small step—the calls really haven’t cost them anything other than a bit of time and some minutes out of their cell phone plan–they judge the market’s reaction. (“Gee, no one seems to be get overly excited about yet another PR firm.  But everyone tells me what they have liked about my work is how well I explain how they should communicate with their employees about what they are trying to do with the PR strategy. Maybe, I should forget about PR, which is about external communication, and concentrate on internal communication.”)

Building off that reaction.  They make some more phone calls and ask people “do you need help with your internal communication?”

In other words, entrepreneurs are not committed to the plan (starting a PR firm); they are committed to the goal (in this case, “starting a business of my own that would be fun and successful.”)

They continue taking small steps toward (the new) goal of starting an internal consulting firm until they have what they want; they open the door; decide they don’t want it (“yes, I probably could make a living doing internal consulting, but geesh [?]I think it is going to be boring, so I will pass”); or they want something else instead.

But at no point have they ever risked more than they could afford to loss.

That’s one wonderful thing about this approach. Here are two others.

First, if you are going to fail (you wanted to start that PR firm but no one was interested) you fail quickly and cheaply. That means,

Second, you get more turns up at bat.  Investing hundreds of thousands in starting the PR firm the traditional way would have eaten up lots of your resources and who knows if you would ever have a chance to try a second idea.  Taking the approach that entrepreneurs do allows you try another idea, should the first one not work out.

Sounds like a better approach to me.

Morris: How best to determine when to used prediction and when, instead, to use creation?

Brown: There is not a hard a fast rule, so here’s must suggestion. Every time you confront a new situation ask yourself “is this something I have seen before?” If it is, and you were able to solve the analogous situation successful, then go about approaching it as you always have.

But if it something you have not encountered before and deals with a future that is simply not predictable, then use CreAction.

Morris: Please explain why, for every “predictive check point” that is passed, the potential positive impact of a project or a proposal is diminished?

Brown:  It’s really pretty simple. The more guarantees you want, the lower the potential return you are going to get.

Think investing.  If you want to be absolutely certain you won’t lose money, you invest in government-back investments.  They don’t pay much. But your money is safe (even if the returns you get may not keep up with inflation.)

But, if you want to receive a potential higher return, you would in stocks, which are, of course, more risky.

The same thing happens with new projects.  If you boss wants a “guaranteed” return, you are going to go with a line-extension, instead of trying to create anything unique.

Morris: In Chapter 8, “with the most sincere apologies to Stephen R. Covey,” you provide seven habits of successful creactionists. Which of these habits do most executives find most difficult to develop [begin italics] and then sustain [end italics]? Why?

Brown: It has to be: Link what you want to do to a business imperative. This is just about always fatal if it is overlooked—and it generally is. That’s a shame since it is so easily addressed. Yes, of course, the idea of the rocket backpack that will allow us to fly to work is exciting, but if you work for a company that makes ball bearings it is hard to see the fit.  You want to begin the conversation by being able to say something like this, “you know, the organization has the business goals of A, B, and C. (You can talk about organizational goals—such as improving team work—as well, but odds are you will find a more receptive audience if you start with business goals.)  I’ve got an idea that I think will fit perfectly.”

Morris: Whey did you and your co-authors decide to include a chapter in the book devoted to explaining how to use CreAction with family members and friends?

Brown:  Ah. The mother-in-law question.  We thought from the beginning that the “Act. Build Learn. Repeat” model works everywhere. And so to challenge ourselves, we applied it to families and all social situations, and we found it does indeed work everywhere.

Take dating. You could sit and imagine forever what Mr. or Ms. Right would be like. Or you could spread the word every way you could think of that you would like to meet someone new. Spend small amounts of time with some of your potential partners—coffee; quick phone conversations—and if there seems to be a connection, invest a bit more time and see what happens.

Morris: In your opinion, how specifically can CreAction help to achieve “a better world”?

Brown: Well, just as businesses don’t do anything, the people inside them do, concepts by themselves don’t do anything. They need to be implemented by people.  So, let’s start with our elected officials.

Say what you will about politicians, but they understand that it is always about the economy and creating jobs.  They probably should add CreAction to their tool kit.

Every study I have ever seen says that large, publicly traded firms have added no new jobs—when you net out layoffs and retirements—over the last 25 years.

Large organizations have innovated and it is probably true that the positive effects of those efforts have been the one thing that has kept the job creation from being considerably more negative.

But when you net everything out, entrepreneurial ventures (stand alone and within existing organizations) are the only ones creating jobs and allowing people to join—and remain—in the middle class. Yes, a significant number of start-ups fail, losing as many jobs as they create.  But some start-ups become high impact growth enterprises that end up hiring a lot of people. And mathematically they account for all of the job growth. There is no known recipe that predicts which of the many startups will become these “gazelles”—i.e. high impact growth enterprises. Nor, how to help a particular venture to become more “gazelle-like” at its inception. The only way to have more of these firms is to have more start ups.

In terms of making a better world, the benefits are obvious, both psychological and material, to the actor (the person who ends up with the new job), his or her family, and also to the communities of which they are a part. Successful entrepreneurship will renew decaying cities, lower crime rates and breathe life into local institutions such as churches and other community groups. Entrepreneurship has been a critical skill for the world’s poor to advance over the decades and when combined with micro finance solutions becomes an important advance in the war on poverty and that in turn usually leads to political stability. One of the major sources of political unrest and the rise of global terrorism is the total lack of jobs for young men.

CreAction is useful in individual life in more ways than creating new businesses. CreAction gives you more influence everywhere in your life. You are a driver as you head down the highway, not a passenger. Being behind the wheel always gives you more control and more options. Increased control over one’s environment is one pathway to greater self-confidence and personal fulfillment. While the accomplishment of big goals is certainly a wonderful thing, for many, maybe even all of us, our mood, motivation, creativity and general happiness all increase as we see ourselves making progress on the things that matter to us—a perfect description of CreAction at work.

Many policy makers and experts believe that effective large scale change needs to be driven from the top down and must be rooted in deep planning (“Big problems require big solutions.”)  And yet experience shows that is probably not the case.  These huge problems involve so many fundamental constituencies that trying to organize them to move forward together collapses under the weight of political ideology, infighting and competing personal agendas.

If we look at three of the grand problems of our time—health care, energy and education—all of them have fundamentally resisted top down intervention and all of them now are starting to yield to local or community-based, bottom up experimentation. Yes, we have large numbers of people who are thinking deeply about these issues. We don’t want to stop that but we need to understand that that deep thought needs to get merged with evidence. It is smart action that generates the evidence for the learning that helps us figure out where to go.

Massive change can evolve from the bottom up. The “Arab Spring” we saw in the Middle East in early 2011 is one of the more powerful indication of the ability of people to self-organize entrepreneurially to obtain what they want.

One major advantage of taking small, start steps is that it helps to over-come what we have come to think of as “the tyranny of the optimal right answer.” We desperately want certain things to be better and we turn to the planners, policy-makers and experts to help us. The problem is, of course, these experts don’t agree. While some tell you something can be done, others say, “It can’t be done.” (Or “it will have horrific side effects”; or “someone else has tried something similar and it did not work,” or….)

The problem here is not that the future is unpredictable. Each side is near-certain about their prediction. It’s just that these predictions utterly contradict each other. One expert is certain about something and another is certain about exactly the opposite. The result is an image of the future that is potentially predictable to some degree, but effectively unknowable because of the lack of any common ground. And an impasse. So nothing happens.

The way to break this in action is with small, smart, CreActive steps that are limited by Acceptable Loss. You don’t know what is going to happen and the only way you’re going to find out what is going to happen is take a step, and see where you are and figure out what the next step is.

CreAction argues for taking a number of new, small, smart steps—a pilot project here; a different way of doing things over there—to see what happens. Positive outcomes can be built upon the experiments that show promise.

In a world where nobody really knows (or one that you must treat that way), you want to generate as many solutions as possible. Taking such smart steps is an essential key to making the impossible possible.  Smart action in the face of the unknown is better than arrested progress due to more debate.

Everybody who is intellectually oriented will say “Oh no, when you are facing complicated situations it better to think it through because until you understand it you’re likely to take a disastrous step.” But small steps are not disastrous, even if they are wrong. Big, high impact ideas have their place. But there is no evidence that it is only through big ideas that we resolve the issues.

One quick example to make the point. In 1972, Jimmy Carter called for wholesale changes in the behavior of Americans to fundamentally reduce our dependence on foreign oil. Mileage requirements for cars went up dramatically and certain conservation efforts became mandatory. Today, our dependence our foreign oil is higher than it was then.

Yet, at the same time we have seen that the steps of both individuals and organizations have taken on their own, in their communities or with their employers reduce their carbon footprint have defused and spread on a large scale. These smart actions show much more promise for being able to address these issues than our ability to be able to move big policy initiatives through government.

That’s a long-winded, over-arching answer to how CreAction really can improve our lives. But that change for the better will occur far faster if the largest institutions in society come along. And, as we said, they are starting to. Let’s take a look at what they are doing and what we would like them to do.

Government. As we talk, one of the top priorities at the federal level is making the U.S. more entrepreneurial. Entrepreneurialism is seen as the best way to grow the economy. Our government has taken its responsibility seriously and is actively trying to foster the creation of more new businesses. This is a good thing.

But, as we have seen, it can encourage CreAction by funding small projects to attack big problems like health care costs.  One reason health care is so expensive is because of malpractice suits and the attendant costs of litigation.  A pilot project in New York City, funded by the federal government, is currently experimenting with ways to settle lawsuits sooner and at lower costs.  Will it work?  No one knows.  But it is an experiment worth taking.

But our book is about how CreAction and how it can be applied in daily life. Can government cause entrepreneurial thought? The short answer is not really. And it shouldn’t. It’s not its role. This isn’t bad news. Entrepreneurialism has flourished since the dawn of civilization. Our society is built on millennia of entrepreneurial acts. Entrepreneurial thinking is built into our genes. We will think entrepreneurially. We will act entrepreneurially with or without government. If government has a primary role, it is to keep things from interfering with that.

Government can promote the opportunity for individuals to both think and act to address issues in their locale, issues in their community and so then scale these ideas into more fundamental solutions rather than waiting for large policy oriented solutions to come from the top. Solutions are more lasting and more positive if rooted in the behavior of individuals rather than the prescriptions of government.

And there may be one other role government can play: helping out educators.

Schools. Our educational institutions’ job is to teach thinking. And the CreAction we are advocating is easy to teach, because people already know it. They only need to practice it more. That can happen if it seen as a legitimate complement to the Prediction reasoning that pervades our educational system.

We’re not talking about more courses or substituting courses. We simply argue for adding in a deliberate conscious “action component” to what is already being taught. We want students to recognize when faced with a problem where Prediction may not yield a satisfying answer, it is a logically legitimate time to try CreAction.

We currently have an emphasis on teaching people stuff at the expense of teaching them how to act. And the educational process of preparing people for an assumed exclusively predictive world is fundamentally getting in the way of building a generation of people for whom smart action will be a habit as well, an additional part of their repertoire. So we essentially make the argument for conscious experimentation in schools to build, or at least keep people from losing, their action skills alongside their cognitive skills. Legitimizing the way of thinking and then getting people to practice it.

For example, the Babson strategy revolves around a robust co-curricular experience that is focused on enabling people to live entrepreneurially alongside learning entrepreneurship—living math alongside learning math, living science alongside learning science. We believe that such forms of experiential learning are going to lead to a generation of far more effective actors.

Business. Companies that are not meeting their growth targets and are looking for new alternatives.  Witness the current interest in open innovation, design thinking, and the like. And there is every reason to believe that CreActive efforts are ongoing, even though they may be covert in many cases. Business will be validating the value of the CreActive logic.

Business also offers a great propagation mechanism—second only to individual entrepreneurial effort. Anything that promotes better business results and competitive advantage—as CreAction does—can quickly find acceptance in companies around the globe. Total Quality/Six-Sigma, Reengineering, Customer Relationship Management, and Economic Profit are all ideas that started locally, proved themselves and spread.

Social ventures and religion. Social ventures are another matter. Social entrepreneurial ventures are sprouting up all over the place because of deep needs. The principles in this book fit perfectly.

The directors of these social ventures should take notice and stop requiring the overuse of formal planning, which everyone knows in the face of an unknown is foolish but won’t say so. The directors need to release their social entrepreneurs from the shackles of exclusive use of Prediction and instead learn how to better support their CreActive efforts.

Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in Just Start, which do you think will be of greatest value to leaders in small companies? Why?

Brown: Even in small companies there is a tendency to over-think.  Our hope is the book will get them to try to even more experiments.

Morris: Which question had you hoped to be asked during this interview – but weren’t – and what is your response to it?

Brown: You were remarkably complete. Thanks.

*     *     *

Paul cordially invites you to check out the resources at these websites.

Amazon Page: Just Start

Amazon Page: Paul Brown

Poets and Quants

Harvard Business Review Blog: Paul Brown

Forbes: Paul Brown