Models of Opportunity: How Entrepreneurs Design Firms to Achieve the Unexpected

Citation

Augusto Felício, J. and Rodrigues, R. (2012), "Models of Opportunity: How Entrepreneurs Design Firms to Achieve the Unexpected", Management Decision, Vol. 50 No. 10, pp. 1911-1916. https://doi.org/10.1108/00251741211279675

The researchers based Models of Opportunity on the central idea that entrepreneurs are authors who write organizational histories that happen, taking advantage of real entrepreneurial opportunities as a transformational experience. They draw on research activity and on practical experience to explore new ideas and take advantage of hidden and improbable opportunities. The book Models of Opportunity: How Entrepreneurs Design Firms to Achieve the Unexpected (2012) by Gerard George and Adam J. Bock is about opportunities, entrepreneurship, and business models. It “provides an actionable advice based on a deeper understanding of how business models function and change. The six insights that form the core of the book extend corporate strategy and entrepreneurship in a completely new direction”. To “demonstrate how visionary entrepreneurs achieve unexpected results, the book is supported by case studies of innovative companies across industries”.

The authors investigate “changes in how entrepreneurs address opportunities under significant uncertainty”, to help reveal the important characteristics of the process by which they enact and exploit the interesting opportunities that “will be successfully commercialized”, its “nature and realization”, and “dynamic and uncertain process”. The authors consider that business models are “the heart of entrepreneurship”. In their research, firstly, they conducted a pilot study based on the review of published research papers; secondly, they analysed the reports of hundreds of small and medium sized firms from different contexts and assessed data from large companies with global activities; thirdly, they interviewed CEOs of global organizations from different countries.

The book is structured using insights “to elaborate on how innovative entrepreneurs achieve the unexpected”. The analysis attempts to demonstrate that many of the largest entrepreneurial successes result from unexpected achievements, resulting from the entrepreneurs' intuitive appreciation of unimaginable opportunities, hidden in imperfection. However, “much of entrepreneurial action remains imperfectly characterized”, with “many key questions unanswered”.

1 Six insights to achieve the unexpected

The research is based on “insights, tools, and cases to provide a fresh perspective on emerging trends in entrepreneurship, organizational change, and high‐growth firms”. The conditions that turn improbable ideas into possible business opportunities and viable firms, as a different way of seeing entrepreneurship, “perhaps, even, an art”. Opportunities are static mechanisms for generating profits', or simply “do not exist” because they represent “exploitation activities of the entrepreneur that define and make the opportunity real”. This distinction is important to the approach.

The authors “present a new framework for thinking about entrepreneurs” based on the following issues:

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  How do entrepreneurs shape the very opportunities they exploit?

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  How are their entrepreneurial journeys shaped by the novel challenges they face?

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  How do design organizations when the tenets of organizational design lag rapidly changing technological and social capabilities?

The six insights that structure the book, as a new understanding of entrepreneurial activity, refer to organization design, imperfect opportunities, coherence, build bridges, narrative, and unexpected opportunity.

Chapter 1, “Rethink organization design”, begins with a real case of a small fast growing company, led by the visionary founders. It highlights the important relationship between the design of the company's organizational structure and taking advantage of new opportunities, which is beyond the formal hierarchy and informal structures in value creation. The founders designed the organization according to the existing opportunity “without initially and directly considering product‐market positioning or traditional aspects of long‐term competitive advantage”, and used the tool of the business model.

There are different approaches to business models (Cavalcante et al., 2011; Chesbrough, 2010; Ghaziani and Ventresca, 2005; Halme et al., 2007; Mets, 2009; Zott and Amit, 2010) and some do not agree on precisely what a business model should be (Zott et al., 2011). However, George and Bock focus the perspective of opportunity as “a set of expectations about how the business will be successful in its environment”. “The important conclusion is that business models are primarily about design and opportunity” linked by the organizational structure. However, rethinking organizational design as the basis for comparing the characteristics of the business model or to formalize the model itself demands the understanding of its resource structure or static architecture, the transactive structure or “organizational configuration that determines key transactions with partners and stakeholders”, and the value structure or system of rules, expectations, and mechanisms. The context and other factors influence the adaptation of organizational design (Lewin and Volbverda, 1999; Miles and Snow, 1986; Zott and Amit, 2007).

Business models are inherently non‐reflexive, and are a core building block of the entrepreneurial process but are not strategy, because strategy may be reflexive and include “processes associated with the firm's position in a competitive context”. Business models are associated with “the key conceptual elements that describe how the firm operates” to enact an opportunity, and achieve unexpected outcomes.

Chapter 2, “Appreciate imperfect opportunities”, is about comprehension and taking advantage of imperfect opportunities on the assumption that, if they were perfect, they would be inevitable and predictable. However, this is not the case, as even the more objective analyses are insufficient and present limitations, thus leading to the assumption that the opportunities are imagined and constructed by the entrepreneurs according to their purpose and in an unpredictable process. For instance, for technology‐based ventures it is important to recognize the opportunities (Bergh et al., 2011; Cáceres et al., 2011; Cassia and Colombelli, 2010; Franco and Haase, 2010; Fuentes et al., 2010; Mathew, 2010; Ojala and Heikkilä, 2011; Ramírez et al., 2010; Siegel and Renko, 2012; Tolstoy, 2010). Other authors present different perspectives (Choi and Shepherd, 2004; Park, 2005; Sanz‐Velasco, 2006; Shane, 2000).

Chapter 3, “Remodel for coherence”, is about understanding how firm structure relates to the narrative in the organization to achieve the unexpected, through approaches to entrepreneurship as creative endeavor. Given the diversity of the entrepreneurship concept (Anderson et al., 2012; Audretsch, 2012), that perspective is “an emergent process that develops and deploys novel resources as a social process within organizations”. It is based on imperfect opportunities, on multilevel goals and how the narratives change and evolve, and lay the groundwork for achieving the unexpected.

In order to understand how entrepreneurs manage the change narrative, particularly radical change related to business model innovation, the authors suggest that there are, at least, four types of narrative transition growth, extension, focus, and displacement, all of which are presented in the case study. They consider that “when companies drive towards achieving the unexpected, narrative change needs to result in coherent structures aligned with the opportunity and design for exploitation”.

Chapter 4, “Build bridges”, starts by presenting the real case of a small firm competing with world giants to show how it has consistently bridged the gaps to bring the business so far. George and Bock use different real‐life cases “to explain how entrepreneurs go beyond what they already know to evolve organizations to enact incipient opportunities”. In one of the cases, they show that agility, flexibility and opportunism formed the basis of opportunity creation. However, building bridges is subjected to the “one‐way filters” or discontinuity phenomenon, that generate unexpected outcomes. From the organization perspective, such a phenomenon should occur as a result of asset specificity, learning thresholds, and network embeddedness. The authors show that entrepreneurial action, developed intuitively or in any other way, revealing the hidden opportunities subjected to irreversible filters, becomes much more powerful in changing environments. They describe that, for entrepreneurial firms, they use the analogy of types of change contexts, such as earthquakes, sinkholes, glaciation, and erosion, to examine how firms survive or change orientation in the face of unpredictable events.

Chapter 5, “Inspire the narrative”, starts with the history of a firm that is a mirror of entrepreneurial action and “presents unique capabilities and actions that distinguish the innovative entrepreneur from a strategic executive”. This chapter reveals the importance and coherence of the narrative in highly competitive and fast changing contexts where the role of the entrepreneur to achieve the unexpected emerges, in comparison with the survival.

“Inspire the narrative” is different for large companies and small entrepreneurial businesses, and is more intense in turbulence, uncertainty and change contexts. Large firms face these challenges by trying to simplify their structures and controlling the functions of the organization, making it more flexible to improve competitiveness, while small businesses struggle to gain access to the necessary resources to obtain new unexpected opportunities. In this situation, small businesses do it by overcoming challenges, rewriting their organizational history in real time or rewriting the narrative of their own opportunities by reshaping the preferred configuration, which is and accessible only to the entrepreneur.

The theory of innovation highlights entrepreneurs as change agents, assuming that innovative entrepreneurs think differently. Their action is responsible for the narrative structure and adopts the alignment of discrepancies between apparently contradictory elements addressed by the insight of inspiring narrative on the basis of coherence heuristics. The authors highlight the importance of the history communication process, on one hand, associated with a certain cult‐like reverence and characteristics of charisma of the founders and, on the other, with their ability and to the history narrative rationality, in terms of narrative fidelity but mainly with regard to narrative coherence.

Chapter 6, “Embrace the unexpected opportunity”, analyzes several degrees of complexity of unexpected opportunities from the perspective of finding solutions based on the source of the problems and accepting uncertainty at the personal risk level, aiming to reach a successful conclusion. For George and Bock, this insight “brings back the role of the entrepreneur in the rapidly evolving global context” and “shows how the journey transforms the entrepreneur and simultaneously empowers [the entrepreneur] to achieve the unexpected”.

The entrepreneur sets the challenges based on his own values. His/her characteristics allow the optimization of understanding the decisions they take on the new opportunities they pursue, even when they are unable to completely visualize them, and the assumption or greater levels of responsibility (Comeche and Loras, 2010; Hormiga et al., 2011; Kautonen and Palmroos, 2010; Lee et al., 2011; Liñán et al., 2011; Sebora and Theerapatvong, 2010; Sommer and Haug, 2011; Tihula and Huovinen, 2010).

The researchers consider the confidence that the entrepreneur has in his/her own capacity to manage uncertainty to a comfortable risk level to achieve results as a central characteristic. They develop opportunities' information heuristics supported on known or unknown, specifically dividing unknown in “known unknowns” and “unknown unknowns”, as “predictive factors that drive extraordinary innovations and unexpected outcomes”. They also provide actions to help entrepreneurs embrace unexpected opportunities, such as manage dissonance, unframed opportunities, creating routines to generate novelty, developing new logic to widen horizons, and deploying simple solutions for radical impact.

In conclusion, the value of this book Models of Opportunity: How Entrepreneurs design firms to achieve the unexpected is unquestionable. Researchers and practitioners can find new perspectives on the role of the innovative entrepreneur and understanding of the hidden and improbable opportunities. A fascinating book that gives insights to a new holistic approach on entrepreneurship and understanding the unprecedented opportunities those entrepreneurs can reach.