Chapter 8: Forgiving Business Models
Key ideas Although constrained, systematic search is very eﬀective in discovering ideas with wealth-creating potential; the most that it can accomplish is to improve an entrepreneur’s odds of success. Its use cannot rule out failure. This chapter sets forth the attributes of forgiving business models that entrepreneurs can use to minimize losses while exploiting ideas to launch new ventures. Thus, I introduce forgiving business models here so that they can be used in combination with constrained, systematic search. Forgiving business models are based on the situational attributes of a venture idea, which can impact the associated level of risk that an entrepreneur must bear to exploit it. I explain how entrepreneurs in acknowledging these attributes can use them to shift risk to willing resource providers. In addition, I will show how the success of a venture partially depends on the market conditions for others, which aﬀect how an opportunity can be exploited. I emphasize combinations of outside options for resource providers, together with their market interaction costs. Finally, I discuss impediments to using these models, their pedagogical and ethical implications, and directions for future research. We put this page in the back of my book that said, “Introducing absolute reference for Journal 123 users” . . . you send us $60 and we’ll send you this newsletter. You know, horrible, just did everything possible wrong . . . in terms of promoting a newsletter. . . . Before the year was over, this book [was] published in October, we’d sold 3,000 subscriptions. We had 3,000...
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