Podcasts about e4e

Europe for Europe – a wonderful opportunity for 18–23-year-olds to discover the EU together. Ahead of Europe Day on 9 May, and the upcoming European elections, 6-9 June, my shows this week and next will have a distinctly European flavour. To start with, Sasha is back with a chat about recent world news. Anne Calteux, Representative of the EU Commission to Luxembourg, is entering a very busy period of work, sharing her passion and knowledge for the European Union. Anne is effectively the Commission's voice in Luxembourg. There were many steps, and setbacks to the European Union becoming what it is today. Luxembourg was one of the founding countries of the EU, along with Belgium, West Germany, France, Italy and the Netherlands. The creation of the ECSC (European Coal and Steel Community) was a pivotal step however. From 1952, Luxembourg, Brussels and Strasbourg became temporary meeting-places for the ECSC. Since 1992, these three cities have become the HQ for all our European institutions. And today, more than 14,000 European civil servants and agents work for the EU institutions in Luxembourg. Europe for Europe Europe for Europe (E4E) is a programme designed for 18 to 23 year olds to tour the founding six member states of the EU. There is only one participant from each of the 27 member states, plus the UK (despite Brexit), vetted by the Rotary Club who designed the programme. https://europe4europe.com This experience lasts for three intense weeks in July, allowing for 3 days in each country, and they all have their own themes: Italy - future industrial developments France - historical heritage Belgium - social responsibility Netherlands - inclusivity Germany - Ariane Space Project Luxembourg - EU institutions Roberto Mancina was a co-founder of Europe for Europe, having been involved with the Youth Exchange for many years. Whilst attending an EEMA congress in Istanbul, he had lunch with some French Rotarians from Thionville. They wanted to find a way to honour the memory of Robert Schumann, who was from Thionville and Founding Father of the EU. And so the idea of E4E was born. Roberto was particularly interested in developing this project as the Rotary Club is American in origin, and he felt it needed a greater European focus. Ellen Spencer is Coordinator of Europe for Europe (E4E) for the Rotary Clubs of Luxembourg. Ellen first became involved with the Rotary Clubs here when she moved to Luxembourg. Ellen has a son and has observed the benefits to him growing up as an EU citizen. She continues to work passionately to support young adult programmes that focus on engagement towards a common future for a better world. The EU Youth Strategy and Erasmus+ are other places to discover programmes for young people, to enhance European values, tolerance, enhance skills and employability. To find out more information just contact the Rotary Clubs of Luxembourg (or indeed other countries across Europe) and the European Youth Portal. https://youth.europa.eu/home_en Subscribe to the Podcast and get in touch! Please do subscribe to the podcast on Apple and / or Spotify. It would be great if you could rate and review too - helps others find us. Tune in on Today Radio Saturdays at 11am, Sundays at noon and Tuesdays at 10am.

Featuring Holly Stubbing, President and CEO of E4E, a social enterprise that offers employee relief programs for global companies and communities.   (Recorded 4/10/24)      

In this episode, I speak with Francisco Pérez about Economics for Emancipation, a free online and in-person course on "capitalism, solidarity, and how we get free.” Francisco is an Assistant Professor of Economics at the University of Utah and senior economist at the Center for Economic Democracy. He's the former director of the Center for Popular Economics, a nonprofit collective of political economists whose programs and publications demystify the economy and put useful economic tools in the hands of people fighting for social and economic justice. Follow at  Francisco Pérez (@Platanomics) on Instagram and TwitterFollow @economics4emancipation on Instagram and @econ4freedom on TwitterEconomics for Emancipation is a course created by the Center for Economic Democracy (CED) and the Center for Popular Economics (CPE). The current version of this course is the result of many years of work first led by the CPE – a collective which was founded in 1979 by radical (or heterodox) economists out of the University of Massachusetts Amherst. Since 2019, CPE has partnered with the Center for Economic Democracy (CED) to update and redesign its curriculum into “Economics for Emancipation” (E4E).  During the 2020 Covid crisis, CPE and CED worked to adapt E4E for virtual learning geared towards regional cohorts of just transition and social justice organizers, and thus was born this offering.E4E has been shaped by decades of dialogue between progressive economists, grassroots organizers, and rank & file union workers; we hope it will strengthen your analysis, fuel your spirit and connect you to efforts challenging this economic system at its root.COCKTAIL PAIRING:Cuba LibreUse a Cuban rum like Havana Club if you're able to get it (outside of the US). Probitas is a good substitute that you can find in the US.1 1/4 oz Light rum 3 oz cola like Coke1/4 oz lime juiceAdd all to Collins glass filled with ice. Garnish with lime wedge.Support the showCocktails & Capitalism is an anticapitalist labor of love, but we could use your help to make this project sustainable. If you can support with even a dollar a month, that would really help us continue to educate, agitate, and amplify the voices of those who are working to destroy capitalism and create a better world. https://www.patreon.com/cocktailsandcapitalismFollow us on Instagram and TwitterSome episodes on YouTube. Please like & subscribe

In this EDTalk, Paula Cole discusses opportunities for educators and families to collaborate, advocate and ultimately hold school districts and legislators accountable for the wellbeing and academic success of young people. She argues that we need to change the narrative around parent engagement, particularly for lower-income and BIPOC families, and provide culturally relevant tools for all families to become powerful agents of change for education excellence. Paula Cole was born and raised in the Dominican Republic, a place she left to pursue her dream of a college education in the United States. After six years as an Educators for Excellence (E4E) member and teacher leader, Paula joined the Minnesota chapter as executive director. Prior to this role, she worked as an elementary teacher and academic coach in Minneapolis Public Schools. Paula believes that the voices of educators are rarely sought and often ignored by policymakers, and she loves her work at E4E because it allows her to ensure that teachers' perspectives are included in education policies that directly impact children's education outcomes. This EDTalk was live streamed from Icehouse in Minneapolis on May 8th, 2023. EDTalks is presented by AchieveTwinCities in partnership with Graves Ventures, a project of The Graves Foundation. For more information on EDTalks or to watch EDTalks videos or listen to audio podcasts, visit achievetwincities.org.

Curt Carlson has devoted his life to value creation and innovation — VC&I as he sometimes characterizes it. He has been CEO of SRI, a “pure innovation” company where the business model was to create important new innovations that positively impacted the lives of many people. Examples of his innovations are Siri (ultimately sold to Apple) and HDTV (the technology that enables the streaming so many people enjoy today). He started a consulting company called Practice Of Innovation, which established methods of innovation available to everyone and every firm. Now he teaches at University, aiming to develop a new generation of innovators. He talks to Economics For Business (econ4business.com) about value creation and innovation as a life skill. Key Takeaways and Actionable Insights Value Creation is a complex adaptive system. Value creation is a system of many agents, components, arrangements, technologies, constraints, and unpredictable emergent outcomes. There are a challenging number of variables, and there's a requirement for highly integrated collaboration and recursive and iterative process, utilizing adaptive feedback loops and continuous readjustment. It's hard — and quite rare — to get right and easy to get wrong. The essential element of value creation is the mental model. The mental model for value creation is solving important and meaningful problems for others. It shouldn't be about launching a new business or a new technology, but about helping others. And, since people don't think in terms of “I have a problem to solve,” the value creator must also understand the customer's mental model. They experience dissatisfactions. They wish things could be better. They make trade-offs. They can't always articulate what they want. They have to learn what to want, and value creators can help them to understand what they can want in the future. Mental models are fundamentally important to the creation of value. We all have mental models of the way we'd like the world to work. The value creator is able to identify — “get inside” — others' mental models and see the world the way others see it. This perspective is vital — the critical first step in the value creation process. The calculus of value is subjective. Value can only be defined by the individual who experiences it. Individuals make a mental calculation of value – it might include some numbers and some thoughts, feelings, preferences, and ideas. They are able to make this calculation in their own mind, even though the potential costs and benefits lay in the future. The dimensions of value are many. When evaluating the purchase of a car, for instance, the price is part of the calculation, but so is the appearance and pride of ownership, the comfort, the gas mileage, the color of the seats, the cost of maintenance, and many, many more features and attributes and functional and emotional benefits. Despite the difficulty and complexity, people are agile and adept at making this complex calculation. Value creators must be able to appreciate how customers make the subjective calculation — the calculus of value. The removal of barriers to the experience of value is a good way to create it. Convenience is often highly valued by customers. It represents the removal of barriers to value – easier to operate, less time taken, less physical or mental effort required. These are all valuable. The iPhone provided a more convenient way to enter data (responsive touch screen versus traditional keypad), and this played a big part in its adoption and success. The mental model is that people want to do things that are easy to do. They don't want the clumsiness of a tiny keyboard on a phone. They don't want to read a 20-page user guide for a new piece of software. They don't want packages that are difficult to open or retail stores that are crowded and hard to shop. Identifying and understanding mental models like these gives skilled value creators their competitive advantage. If barriers are perceived negatively by customers, then create value for them by getting rid of barriers. A need is not a problem to be solved. A need is a mental model. Reframing is the tool for understanding. Curt uses the example of the slow elevator in a prestigious office tower. Residents complain. Engineers might try to solve the problem by re-engineering the elevator for greater speed. A value creator would try to identify the mental model of the complainers. That's reframing. They are annoyed because they feel that their valuable time is being wasted; they're bored for a few seconds. Understanding this mental model opens up the possibility for new value approaches. Add a digital screen in the elevator with a news feed so that people can use the time to catch up on the latest headlines. Or add a mirror so that they can use the time to check their clothes and hair before going into the meeting. Most value creation challenges can be better addressed through reframing. In fact, Curt describes his innovation method as “relentless reframing”. The art of value creation is teasing out the customer's mental model. Do it again and again, back and forth between the value creator and the customer, to get the understanding of the customer's mental model right. Value creation is coupled with innovation: VC&I. The definition of innovation is not just the new idea or new product or new service. It's the sustainability of any new solution once it's delivered into the marketplace. Customers use it and prefer it, they pay enough for it to sustain the financial business model, they repeat their purchases and provide supportive comments and assessments. To be truly sustainable, the innovation must appeal to a lot of people, not just a few early adopters. The benefits must be greater than the costs to the user, based initially on their value calculus, and subsequently on their actual experience. And the offering must be better than competition. To get customers to change from a competitive offering, Curt says the degree of superiority must be 2X to 10X. Curt uses the N-A-B-C process tool as a methodology for innovation teams. On previous visits to the Economics For Business podcast, Curt has laid out the framework of his N-A-B-C model and how to use it. See our E4B graphic tool (Mises.org/E4B_175_PDF) and the Key Takeaways summary from the podcast #37 (Mises.org/E4E_37). N = Need: Identifying and understanding the customer's mental model, and perceiving the world as they perceive it, getting to their perspective of how the world can be improved. This is where relentless reframing applies. A = Approach: Designing an innovative solution with a sustainable business model. The temptation is always to jump straight to the approach without truly understanding the Need, according to Curt. This always leads to error and requires a pivot. B>C = Benefits Per Costs: This is the customer's value calculus, very hard to get right as a result of its multi-dimensionality and combination of qualitative and quantitative measures. C = Competition: What are the alternatives among which customers are choosing, whether direct or indirect - remembering that not buying anything is an alternative they'll consider. Overcoming inertia requires a high degree of superiority. Our econ4business.com toolkit (Mises.org/E4B_175_PDF) includes a full explanation of how to apply this tool. Value Creation and Innovation is a life skill that can be taught to everyone. Solving others' problems is a deeply human activity. We're all wired to do it for each other, every day. Value creation can be taught to kids of any age in school, and it can become a life skill. It can be taught to people studying any discipline in universities and colleges, from humanities to hard sciences, so that they can apply it in their field. It can be taught in every firm, whatever the line of business. The resultant life skill is the mental model that life is about solving meaningful problems for others. It's about understanding and appreciating others' mental models. Reframing is the tool for gaining this understanding. Value creation is a fundamental capacity for everyone. They can make an impact on society by solving problems that matter. Additional Resources "N-A-B-C Innovation Process" (PDF): Mises.org/E4B_175_PDF Curt Carlson on Innovation Champions: Mises.org/E4E_91 "Answering the Million Dollar Question (Part 1)—How Value Creation Forums Help Create Winning Research Proposals": Mises.org/E4B_175_Article

Curt Carlson has devoted his life to value creation and innovation — VC&I as he sometimes characterizes it. He has been CEO of SRI, a “pure innovation” company where the business model was to create important new innovations that positively impacted the lives of many people. Examples of his innovations are Siri (ultimately sold to Apple) and HDTV (the technology that enables the streaming so many people enjoy today). He started a consulting company called Practice Of Innovation, which established methods of innovation available to everyone and every firm. Now he teaches at University, aiming to develop a new generation of innovators. He talks to Economics For Business (econ4business.com) about value creation and innovation as a life skill. Key Takeaways and Actionable Insights Value Creation is a complex adaptive system. Value creation is a system of many agents, components, arrangements, technologies, constraints, and unpredictable emergent outcomes. There are a challenging number of variables, and there's a requirement for highly integrated collaboration and recursive and iterative process, utilizing adaptive feedback loops and continuous readjustment. It's hard — and quite rare — to get right and easy to get wrong. The essential element of value creation is the mental model. The mental model for value creation is solving important and meaningful problems for others. It shouldn't be about launching a new business or a new technology, but about helping others. And, since people don't think in terms of “I have a problem to solve,” the value creator must also understand the customer's mental model. They experience dissatisfactions. They wish things could be better. They make trade-offs. They can't always articulate what they want. They have to learn what to want, and value creators can help them to understand what they can want in the future. Mental models are fundamentally important to the creation of value. We all have mental models of the way we'd like the world to work. The value creator is able to identify — “get inside” — others' mental models and see the world the way others see it. This perspective is vital — the critical first step in the value creation process. The calculus of value is subjective. Value can only be defined by the individual who experiences it. Individuals make a mental calculation of value – it might include some numbers and some thoughts, feelings, preferences, and ideas. They are able to make this calculation in their own mind, even though the potential costs and benefits lay in the future. The dimensions of value are many. When evaluating the purchase of a car, for instance, the price is part of the calculation, but so is the appearance and pride of ownership, the comfort, the gas mileage, the color of the seats, the cost of maintenance, and many, many more features and attributes and functional and emotional benefits. Despite the difficulty and complexity, people are agile and adept at making this complex calculation. Value creators must be able to appreciate how customers make the subjective calculation — the calculus of value. The removal of barriers to the experience of value is a good way to create it. Convenience is often highly valued by customers. It represents the removal of barriers to value – easier to operate, less time taken, less physical or mental effort required. These are all valuable. The iPhone provided a more convenient way to enter data (responsive touch screen versus traditional keypad), and this played a big part in its adoption and success. The mental model is that people want to do things that are easy to do. They don't want the clumsiness of a tiny keyboard on a phone. They don't want to read a 20-page user guide for a new piece of software. They don't want packages that are difficult to open or retail stores that are crowded and hard to shop. Identifying and understanding mental models like these gives skilled value creators their competitive advantage. If barriers are perceived negatively by customers, then create value for them by getting rid of barriers. A need is not a problem to be solved. A need is a mental model. Reframing is the tool for understanding. Curt uses the example of the slow elevator in a prestigious office tower. Residents complain. Engineers might try to solve the problem by re-engineering the elevator for greater speed. A value creator would try to identify the mental model of the complainers. That's reframing. They are annoyed because they feel that their valuable time is being wasted; they're bored for a few seconds. Understanding this mental model opens up the possibility for new value approaches. Add a digital screen in the elevator with a news feed so that people can use the time to catch up on the latest headlines. Or add a mirror so that they can use the time to check their clothes and hair before going into the meeting. Most value creation challenges can be better addressed through reframing. In fact, Curt describes his innovation method as “relentless reframing”. The art of value creation is teasing out the customer's mental model. Do it again and again, back and forth between the value creator and the customer, to get the understanding of the customer's mental model right. Value creation is coupled with innovation: VC&I. The definition of innovation is not just the new idea or new product or new service. It's the sustainability of any new solution once it's delivered into the marketplace. Customers use it and prefer it, they pay enough for it to sustain the financial business model, they repeat their purchases and provide supportive comments and assessments. To be truly sustainable, the innovation must appeal to a lot of people, not just a few early adopters. The benefits must be greater than the costs to the user, based initially on their value calculus, and subsequently on their actual experience. And the offering must be better than competition. To get customers to change from a competitive offering, Curt says the degree of superiority must be 2X to 10X. Curt uses the N-A-B-C process tool as a methodology for innovation teams. On previous visits to the Economics For Business podcast, Curt has laid out the framework of his N-A-B-C model and how to use it. See our E4B graphic tool (Mises.org/E4B_175_PDF) and the Key Takeaways summary from the podcast #37 (Mises.org/E4E_37). N = Need: Identifying and understanding the customer's mental model, and perceiving the world as they perceive it, getting to their perspective of how the world can be improved. This is where relentless reframing applies. A = Approach: Designing an innovative solution with a sustainable business model. The temptation is always to jump straight to the approach without truly understanding the Need, according to Curt. This always leads to error and requires a pivot. B>C = Benefits Per Costs: This is the customer's value calculus, very hard to get right as a result of its multi-dimensionality and combination of qualitative and quantitative measures. C = Competition: What are the alternatives among which customers are choosing, whether direct or indirect - remembering that not buying anything is an alternative they'll consider. Overcoming inertia requires a high degree of superiority. Our econ4business.com toolkit (Mises.org/E4B_175_PDF) includes a full explanation of how to apply this tool. Value Creation and Innovation is a life skill that can be taught to everyone. Solving others' problems is a deeply human activity. We're all wired to do it for each other, every day. Value creation can be taught to kids of any age in school, and it can become a life skill. It can be taught to people studying any discipline in universities and colleges, from humanities to hard sciences, so that they can apply it in their field. It can be taught in every firm, whatever the line of business. The resultant life skill is the mental model that life is about solving meaningful problems for others. It's about understanding and appreciating others' mental models. Reframing is the tool for gaining this understanding. Value creation is a fundamental capacity for everyone. They can make an impact on society by solving problems that matter. Additional Resources "N-A-B-C Innovation Process" (PDF): Mises.org/E4B_175_PDF Curt Carlson on Innovation Champions: Mises.org/E4E_91 "Answering the Million Dollar Question (Part 1)—How Value Creation Forums Help Create Winning Research Proposals": Mises.org/E4B_175_Article

Curt Carlson has devoted his life to value creation and innovation — VC&I as he sometimes characterizes it. He has been CEO of SRI, a “pure innovation” company where the business model was to create important new innovations that positively impacted the lives of many people. Examples of his innovations are Siri (ultimately sold to Apple) and HDTV (the technology that enables the streaming so many people enjoy today). He started a consulting company called Practice Of Innovation, which established methods of innovation available to everyone and every firm. Now he teaches at University, aiming to develop a new generation of innovators. He talks to Economics For Business (econ4business.com) about value creation and innovation as a life skill. Key Takeaways and Actionable Insights Value Creation is a complex adaptive system. Value creation is a system of many agents, components, arrangements, technologies, constraints, and unpredictable emergent outcomes. There are a challenging number of variables, and there's a requirement for highly integrated collaboration and recursive and iterative process, utilizing adaptive feedback loops and continuous readjustment. It's hard — and quite rare — to get right and easy to get wrong. The essential element of value creation is the mental model. The mental model for value creation is solving important and meaningful problems for others. It shouldn't be about launching a new business or a new technology, but about helping others. And, since people don't think in terms of “I have a problem to solve,” the value creator must also understand the customer's mental model. They experience dissatisfactions. They wish things could be better. They make trade-offs. They can't always articulate what they want. They have to learn what to want, and value creators can help them to understand what they can want in the future. Mental models are fundamentally important to the creation of value. We all have mental models of the way we'd like the world to work. The value creator is able to identify — “get inside” — others' mental models and see the world the way others see it. This perspective is vital — the critical first step in the value creation process. The calculus of value is subjective. Value can only be defined by the individual who experiences it. Individuals make a mental calculation of value – it might include some numbers and some thoughts, feelings, preferences, and ideas. They are able to make this calculation in their own mind, even though the potential costs and benefits lay in the future. The dimensions of value are many. When evaluating the purchase of a car, for instance, the price is part of the calculation, but so is the appearance and pride of ownership, the comfort, the gas mileage, the color of the seats, the cost of maintenance, and many, many more features and attributes and functional and emotional benefits. Despite the difficulty and complexity, people are agile and adept at making this complex calculation. Value creators must be able to appreciate how customers make the subjective calculation — the calculus of value. The removal of barriers to the experience of value is a good way to create it. Convenience is often highly valued by customers. It represents the removal of barriers to value – easier to operate, less time taken, less physical or mental effort required. These are all valuable. The iPhone provided a more convenient way to enter data (responsive touch screen versus traditional keypad), and this played a big part in its adoption and success. The mental model is that people want to do things that are easy to do. They don't want the clumsiness of a tiny keyboard on a phone. They don't want to read a 20-page user guide for a new piece of software. They don't want packages that are difficult to open or retail stores that are crowded and hard to shop. Identifying and understanding mental models like these gives skilled value creators their competitive advantage. If barriers are perceived negatively by customers, then create value for them by getting rid of barriers. A need is not a problem to be solved. A need is a mental model. Reframing is the tool for understanding. Curt uses the example of the slow elevator in a prestigious office tower. Residents complain. Engineers might try to solve the problem by re-engineering the elevator for greater speed. A value creator would try to identify the mental model of the complainers. That's reframing. They are annoyed because they feel that their valuable time is being wasted; they're bored for a few seconds. Understanding this mental model opens up the possibility for new value approaches. Add a digital screen in the elevator with a news feed so that people can use the time to catch up on the latest headlines. Or add a mirror so that they can use the time to check their clothes and hair before going into the meeting. Most value creation challenges can be better addressed through reframing. In fact, Curt describes his innovation method as “relentless reframing”. The art of value creation is teasing out the customer's mental model. Do it again and again, back and forth between the value creator and the customer, to get the understanding of the customer's mental model right. Value creation is coupled with innovation: VC&I. The definition of innovation is not just the new idea or new product or new service. It's the sustainability of any new solution once it's delivered into the marketplace. Customers use it and prefer it, they pay enough for it to sustain the financial business model, they repeat their purchases and provide supportive comments and assessments. To be truly sustainable, the innovation must appeal to a lot of people, not just a few early adopters. The benefits must be greater than the costs to the user, based initially on their value calculus, and subsequently on their actual experience. And the offering must be better than competition. To get customers to change from a competitive offering, Curt says the degree of superiority must be 2X to 10X. Curt uses the N-A-B-C process tool as a methodology for innovation teams. On previous visits to the Economics For Business podcast, Curt has laid out the framework of his N-A-B-C model and how to use it. See our E4B graphic tool (Mises.org/E4B_175_PDF) and the Key Takeaways summary from the podcast #37 (Mises.org/E4E_37). N = Need: Identifying and understanding the customer's mental model, and perceiving the world as they perceive it, getting to their perspective of how the world can be improved. This is where relentless reframing applies. A = Approach: Designing an innovative solution with a sustainable business model. The temptation is always to jump straight to the approach without truly understanding the Need, according to Curt. This always leads to error and requires a pivot. B>C = Benefits Per Costs: This is the customer's value calculus, very hard to get right as a result of its multi-dimensionality and combination of qualitative and quantitative measures. C = Competition: What are the alternatives among which customers are choosing, whether direct or indirect - remembering that not buying anything is an alternative they'll consider. Overcoming inertia requires a high degree of superiority. Our econ4business.com toolkit (Mises.org/E4B_175_PDF) includes a full explanation of how to apply this tool. Value Creation and Innovation is a life skill that can be taught to everyone. Solving others' problems is a deeply human activity. We're all wired to do it for each other, every day. Value creation can be taught to kids of any age in school, and it can become a life skill. It can be taught to people studying any discipline in universities and colleges, from humanities to hard sciences, so that they can apply it in their field. It can be taught in every firm, whatever the line of business. The resultant life skill is the mental model that life is about solving meaningful problems for others. It's about understanding and appreciating others' mental models. Reframing is the tool for gaining this understanding. Value creation is a fundamental capacity for everyone. They can make an impact on society by solving problems that matter. Additional Resources "N-A-B-C Innovation Process" (PDF): Mises.org/E4B_175_PDF Curt Carlson on Innovation Champions: Mises.org/E4E_91 "Answering the Million Dollar Question (Part 1)—How Value Creation Forums Help Create Winning Research Proposals": Mises.org/E4B_175_Article

Matt Driscoll, an 18-year veteran teacher, chapter leader, and at-large candidate for executive board with the UFC slate joins us this week to discuss the newest iteration of e4e's shadowy anti-union activities within the UFT. For more background on e4e, check out episode 19 of the show.***To active UFT members: be sure to listen carefully to the part at the very beginning if you have yet to receive your ballot as of today, April 18th, 2022!***

One of the hottest topics affecting many school districts across the country is a sweeping trend of implementing DEI into the staff development and training rigor for teachers that, in turn, incorporate these concepts into teaching materials and program development. While many parents support the social and moral values that DEI represents, other parents believe such program content is an infringement on their parental rights and that such discussions should be reserved to them. Joining us in this episode is the co-founder and leader of the Eanes for Equity parental group here in Westlake, Darshana Kalikstein. Darshana joins Aaron Silva for a candid and thoughtful discussion on why E4E parents support these initiatives.

Imagination is the first stage of any value generation journey — starting a development project, enhancing the customer experience, embarking on innovation, or building a business for the next year or the next decade. Imagination might sound like a fuzzy concept, but it's a robust business tool, the engine of the entrepreneurial design process. Mark Packard joins the E4B podcast to put imagination into a business context and describe the possibilities it opens up. Key Takeaways and Actionable Insights Imagination is central to entrepreneurs and entrepreneurship, and to innovation and advance in all aspects of business. We see business through mental models, as a kind of a movie our minds play for us. In this movie, we remember result and experiences from the past (which requires imagination) and we create images of what might have been, or, in the future, what might be. We know these images are not real, but they play through our mental model of business reality. They inform our plans and projects. We imagine cause-and-effect relationships between imagined concepts and ideas, and between actions and outcomes. From new product development to efficient administrative processes, every aspect of business involves — and requires — imagination. We can use imagination in simulating possible results. Not only do we employ imagination in our regular business activity, we also use it for advanced complex modeling. We add new inputs to what we have constructed in our imagination — in the form of “what if” queries - to create a new mental model that's different from the current one: a prospective reality that we can plan for and try to achieve. As we try to achieve that prospective reality, we receive feedback in various forms, which we use adaptively to further adjust and improve the mental model we hold in our imagination. Imagination is dynamic, always changing. Customers are also imagining, and entrepreneurs must imagine what they are imagining. We've highlighted in earlier episodes, the Value Learning Cycle that customers complete in the process of learning what to want and what to value (see Mises.org/E4E_44). The cycle begins with predictive valuation — consumers predicting to themselves how much value they'll experience from the product or service a business is pitching to them. That's imagination at work. If they buy and consume, value is an experience that results — and experience is a mental representation that includes imagination. Then in their post-experience valuation, customers adjust their mental model based on their new value knowledge. Future predictive valuations will be imagined with this updated knowledge. Imagination is central to customer expectations of value and to customers' decision-making. Businesses use three kinds of imagination to make a value proposition. Businesses develop value propositions for customers, utilizing 3 kinds of imagination: creative imagination (imagining the design of a future product or service that will deliver a valued customer experience); empathic imagination (imagining how the customer will feel as a result of the experience); and predictive simulation (imagining what the world will be like after pursuing the contemplated action). Creative imagination is a combination of needs knowledge (what customers want) and technical knowledge (what can be produced with available resources). In both cases, more knowledge is an aid to the imaginative process. Similarly, empathic imagination can benefit from more knowledge about the customer's mental model, developed through relationships and conversations. Predictive simulation is aided by rapid learning from testing and prototyping and developing design artifacts (like landing pages and A/B tests) that enable interim simulations of customer responses. Imagination can't be shared but visions can. When we work on a team or in a firm, it's productive to be aligned on the imagined future at which the group is aiming and is working towards. Strictly speaking, we can't share imagination. Everyone's imagination is subjective and individual. You can't imagine what I'm imagining. What can be shared is a vision, because it can be described in words developed from a shared language. Of course, every individual may interpret the meaning of the words differently, but with repetition, explanation and persuasive presentation, the group can get closer and closer to shared meaning. The vision becomes a cultural artifact — how we think in this firm, what we aim for in this firm, how we see the future in (and of) this firm. Similarly, in selling value propositions to customers, businesses are trying to get those customers to share a vision. We persuade them with storytelling, whether it's in the form of advertising, or PR or social media or the words printed on a package. Rhetorical skills — being able to communicate in a way that enable other people to see and share a vision, and to adapt it to their own vision — are key to successful entrepreneurship. Some people are better at imagination than others — but you can work on the skill set. Many business icons are or have been symbols of great imagination at work, such as Steve Jobs in the past and Elon Musk today. They're better at seeing the future than others. But everyone who understands imagination at the foundational level, as Mark Packard explained it in the podcast, can get better at it, and train others to get better at it, too. Imagination is a simulation run through our mental model based on knowledge we possess. One important step is to improve the knowledge set available for the simulation — better quality knowledge, more accurate knowledge, more detailed or intimate knowledge. More needs knowledge and more technical knowledge will improve creative imagination. Keep up with new technologies and with consumer trends and marketplace developments. More customer knowledge will enhance empathic imagination. Spend more time with customers. Use qualitative research (such as the E4B contextual in-depth interview: Mises.org/E4B_151_PDF) to understand their mental model better, so that the empathic simulations you run through that mental model will improve. Predictive simulation is an act of imagination that improves with learning about what works and what doesn't. Run more tests and new kinds of explorations. Explore, explore, and explore more. Don't take your own predictions too seriously; rather, expect to be wrong in ways you never imagined. Be humble, be adaptive, be agile, and recognize that you do have to predict in order to act. Triangulate with what others are doing because they're imagining too, and they may have more and better knowledge than you. Try to reconstruct their mental models and assess whether they'd be helpful for you. Additional Resources Elon Musk's Imagination (Video): Mises.org/E4B_151_Video "Subjective Value in Entrepreneurship" by Mark Packard and Per Bylund (PDF): Mises.org/E4B_151_Paper "Empathy for Entrepreneurs: How to Understand and Identify Customer Needs and Wants from Their Perspective" (PDF): Mises.org/E4B_151_PDF "Mark Packard on The Value Learning Process" (Episode): Mises.org/E4E_44

This episode was a Patreon-exclusive but it's been unlocked! For more content like this, check patreon.com/professionaldevelopment. This week we take an in-depth look at Educators for Excellence, also known as E4E. Though it has re-branded itself recently, this astro-turf organization remains every bit the wolf in sheep's clothing of its origins. Learn who is footing the bill for the organization and why we should always be wary, as teachers, of a free breakfast or happy hour with an ask at the end.For further reading:>>https://www.ctulocal1.org/chicago-union-teacher/2018/10/e4e-free-lunch-trap/>>https://www.businessinsider.com/bernie-sanders-walmart-mcdonalds-food-stamps-medicaid-minimum-wage-2020-11>>https://www.populardemocracy.org/news/how-walmart-persuades-its-workers-not-unionize>>https://e4e.org/sites/default/files/e4e_fy20_annual_report_final.pdf>>https://projects.propublica.org/nonprofits/organizations/273382030>>https://www.waltonfamilyfoundation.org/grants-database?grantee=00000169-91e6-d2a9-a7eb-bffe1ab60000

Entrepreneurial action occurs in time. This brings uncertainty, because of continuous change. We can't know what will be our future result, yet we must produce now in order to discover it. Are there answers to this conundrum? Yes. They're found in action, and the timing of action (see Mises.org/E4B_135_PDF1). Mark Packard joins the Economics For Business podcast to share his research. Kay Takeaways and Actionable Insights There are three ways we can think about time. Eternalism: Time goes back in the past to infinity and forward in the future to infinity. It's a real thing, e.g., we can identify “points” in time. This is the time of physics. Presentism: Past time does not exist, it is a memory pattern; the future is undetermined, it's just a mental image. The only time that exists, and is real, is now. This is the time of Austrian economics. Growing tree: The past is real, it has been determined, and there is one real historical truth (think roots and branches). The present is real and unfolding (new leaves growing every day). The future is undetermined. Presentism is the view of time that best aligns with Austrian entrepreneurship and subjectivism. Entrepreneurs act based on their own sense of time, which can be both objective (the clock is ticking) and subjective (how I act in time and how I feel about it). Entrepreneurial action occurs in time, which brings uncertainty. Why must entrepreneurs deal with uncertainty? Because production takes time, and there is continuous change, so the outcomes of the production process in the future can't be known. Even if the entrepreneur knows what demand is today, it can change over time, and can't be known in the future. Businesses choose entrepreneurial action long before they know how it is going to turn out. Entrepreneurial uncertainty is a consequence of the existence of time. Time is scarce, but it's not a resource. We can legitimately refer to time as being scarce. We often feel as though there is not “enough” of it. We'd like to be able to try to pack more effort and action into the time available to us. When we talk in terms of scarcity, it's tempting to think that time is a resource, akin to other scarce resources. We manage those other resources, we allocate them, we combine them, we use them efficiently. We'd like to think the same way about managing time. But we don't have control of it. Time just flows. It's not at our disposal to use and allocate as we see fit. We can't defer judgement on how to allocate our time, for example, because time keeps flowing and by deferring judgement we just did allocate some present time to not acting. The resource over which we do have control is our effort. We can choose how to allocate our efforts in time. Our efforts are not scarce in the same way that time is scarce. Our efforts are limitless; we can put effort into a wide range of applications. It's because time is scarce that effort must be allocated as if it were scarce. As time flows, customers' perception of value changes, and entrepreneurs must follow this change process closely. The effects of the flow of time are not exclusively limited to the allocation of entrepreneurial effort. They are also manifested in the customer's Value Learning Process. (Mark Packard describes this in detail, and gives us some management tools: Mises.org/E4E_44, Mises.org/E4E_55, Mises.org/E4E_62, and Mises.org/E4E_73). As a result of the flow of time, customer value is a process. Customers prefer the best satisfaction they can presently identify. As time flows, and they gain more knowledge and experience, what they value changes. Their preferences are different in the future than in the present. There is continuous change. Since consumers are sovereign to the entrepreneur, it is mandatory to keep up with these changes. The continuous process of value learning never stops, and entrepreneurs must follow closely, gathering feedback, empathically interacting with this feedback, and making adaptive changes in their value propositions in response. Sometimes, customer preferences may stabilize. Entrepreneurs may come to believe that there is a loyal cadre of reliable customers, and may invest in nurturing this loyalty and in relationship building. But they can not permit themselves to become too comfortable in these relationships. Customers are not loyal to a product or service or brand or supplier. They always seek the best satisfaction, and once new knowledge is available to them, they will change their behavior. All entrepreneurial choices about action are made in the context of time, with significant consequences for outcomes. Because customer preferences are continuously changing through time, entrepreneurs are faced with an uncertain decision about when to act. At what point in time do they have enough knowledge to go to market with a new value proposition, or a new or improved product or service? They know that, as soon as they act, customer preferences are going to change further (perhaps as a consequence of the action). If the entrepreneur decides that acting as the first mover in introducing an innovation gives them an advantage, they also know that competitors have an opportunity to process the new changes and overtrump that advantage as a second mover. Both are competing over the customer's shifting sense of greater satisfaction. When does the entrepreneur know enough? How does a business identify the narrow window in the customer's value learning process that provides a signal to act? Timing is a big, important piece in the entrepreneurial puzzle. There are several areas of time management where entrepreneurs can improve their skills. While time isn't a resource to be allocated, it provides a context for action in which entrepreneurs can subjectively make changes for the better. Recalibration Is your internal clock moving too fast or too slow? Do you find that you are always running late, or, alternatively, arriving too early and consequently “wasting” time (i.e., burdened with time periods you can't fill with appropriate action)? If so, it's time to recalibrate. Change the pace at which you do things. The world proceeds objectively at clock time, but your internal clock is subjective. You may need to align the clocks better. Change your schedule or rearrange your tasks to make your internal clock better aligned with real clock time. Better time planning Sometimes we simply err in assessing how much time to allocate to each of our various tasks. Each one takes longer than we planned, and by the end of the day, we're several tasks “behind” and some will remain undone. If that happens over and over again, if there is regularity in your mistiming, you should change your mode of planning. Allocate different — more realistic — amounts of time to the completion of each task. Allow for delays. Don't “lose track of time”. Fix your prospective memory Do you put tasks on your to-do list for the future and then forget them? This is a failure of prospective memory — your memory of the future. Prospective memory is your recall of the schedule you had planned out for yourself. One answer is to use mechanical or digital aids. Write down your to-do's on a calendar. Enter them into your phone. Set an alarm as reminder. Whatever, happens, don't be the bottleneck. Time management is not trivial. For entrepreneurs, being late, missing meetings, missing deadlines, or experiencing delays is likely going to cost you dearly. Don't be the bottleneck, don't be the one causing the problems, for your colleagues, your partners, your customers, or any collaborators. Fix your own timing issues. Additional Resources "How to Master Time" (PDF): Mises.org/E4B_135_PDF1 "Value is a Learning Process" (PDF): Mises.org/E4B_135_PDF2

Entrepreneurs seek to provide markets with new value through innovation wherever they can identify an opportunity. Their vision is broad enough to include free market institutions such as contracting, where they identify new and better ways to expand the mutuality of value and better relationship models than those in the traditional legal approach. Key Takeaways and Actionable Insights Traditional contracting starts from an adversarial mindset. Traditional contracts are written in anticipation of conflict. They aim to anticipate everything that can go wrong. Then they try to put every contingency in black-and-white. Clauses are inserted to give one party the upper hand over the other. This approach fosters negative behaviors that undermine the relationship and the contract itself. Often, little room is left for flexibility when conditions change in unexpected ways, leading to costly problems like litigation, mediation/arbitration, renegotiation, churn, and shading (withdrawal of effort by one party due to lack of trust). A new form of contract called a relational contract aims to address the problem. A relational contract approaches negotiation not from a transactional perspective but from a relational perspective: what are the best provisions to ensure a lasting and mutually beneficial relationship between the two contracting parties? Instead of focusing on how the value pie is divided between two parties, the shared goal is to maximize the total amount of value that can emerge from the partnership. There is a genuine good faith effort to align the two parties' interests and to develop a fair and flexible framework to handle unexpected changes and events in the future. The relational contract is designed to try to solve what economists call the hold-up problem. Contracts refer to future events, and specifics (such as delivery times) can never be determined with certainty beforehand. The contract is said to be incomplete — not every contingency can be specified. The hold-up problem occurs when one party uses this situation to extract concessions from the other party, knowing that it would be costly for that party to change the arrangement. Defense contractors, for example, are notorious for under-bidding costs and then adding to their revenue and profits via change orders. A contract may call for “best efforts” but this can never be defined specifically or completely. The new approach is said to produce healthier and more sustainable partnerships. In the article A New Approach To Contracts, the authors call for a “what's in it for we” partnership mentality in contracting, where both parties have a vested interest in the other party's success. Included relationship-building elements such as shared vision, guiding principles, and “robust governance structures” to keep the parties' expectations and interests aligned. Our guest, Steve Phelan, has written extensively about expectations management in negotiations (see Mises.org/E4E_22), and concurs that contracts can perform as instruments of expectations management. However, they can't be perfect, and the authors' integration of trust building mechanisms into contracts (e.g., regular scheduled trust-building meetings) seemed to him to be a bit artificial. A better approach is to focus on identifying good faith actors — those who work hard to follow both the letter and the spirit of the agreement. As is always underlined by the “Think Austrian” approach, subjectivism (in this case good faith actors) brings better business solutions than hard and fast rules and mechanisms regarding how to build contractual trust. It's important to get there by the best route, since trust lowers transaction costs. The new approach to contracting extends to psychological contracts. Psychological contracts are unwritten relationships in which an individual holds a belief in mutual obligations between themselves and another party. An often-cited example is an employment relationship. There may be a written employment contract but, beyond that, an employee may have tacit expectations about job security, personal development, recognition, promotion, growth, personal well-being and respect. If these are not met, they may withdraw effort. Employers are well-advised to empathize with the unwritten expectations of the psychological contract in order to optimize employee motivation. A brand promise can be a similar psychological contract. Brand make overt promises regarding the benefits they claim to bring to users. In turn, users create their own expectations — as we always emphasize, value is subjective and customers engage in a value learning process when they interact with brands. Their subjectively-defined expectations undergo continuous change, especially as they make comparisons with alternative offers and alternative sources of satisfaction. It's imperative for brand owners to monitor the evolution of customer-perceived mutual obligations. Customers hold a strong perception of how much consumption work they have to do to receive the benefits that the brand promised, and if the equation gets out of balance, they'll withdraw their effort. Additional Resources "Contracting In The New Economy" (PDF): Mises.org/E4B_125_PDF1 "A New Approach To Contracts" (PDF): Mises.org/E4B_125_PDF2

What use is economic theory in business? It's indispensable. It's the necessary starting point for all businesses, brands and projects. Only when you have mastered theory can you master the navigation of specific situations, and be confident in your good decision-making and judgment. Per Bylund explains. Key Takeaways And Actionable Insights Good business starts with good theory. Any type of study of people — how they act, how they interact, what they are trying to achieve, how they make decisions — requires a theory. That includes business, by definition. There must be a conception of what it means to be a human actor in the marketplace, what it means to act and to choose. We can't understand merely through observation. Businesses must, therefore, have a theory of human action. Austrian economics provides that theory in the action axiom: human action is purposeful behavior. Via action, human beings are trying to accomplish something. When they choose means to achieve that accomplishment, we can observe their choice. But we need theory to understand the ends they have in mind. Since they don't always succeed, we can't always observe the ends. Theory provides us with a framework of understanding: we can interpret what they were trying to accomplish, and why they went about it the way they did, and the situational variables influencing their action, and how they might respond to the outcome. Empirical observations and measurements are not only often impractical, they can also be deceiving. We can't always know what people are aiming for. Moreover, theory tells us that they are acting with respect to whatever they are perceiving — i.e., subjectively — which is not observable to a third party. It's the same phenomenon if we try to observe the actions of a firm, perhaps a competitor, because firms are not observable. Institutions are not observable. Yet, there are patterns of behavior that can be deduced from theory. And that is the great power of Austrian economics for business: to uncover what is actually happening that observation can't tell us. With a framework of theory in place, businesses can add data to explain specific situations. Theory can't fully explain any specific situation. And pure inductive observation of data can't provide any understanding without theory. Therefore, a balance between those two is called for. This was the advice of economist Frank H. Knight, and Per Bylund calls the balanced position between pure theory and pure data “Frank's Way”. There's a continuum from pure theory to pure history (i.e. facts only). Pure history starts from facts and tries to make sense of them. Pure theory explains the structure of a market or the economy and then fits actual phenomena into the theoretical structure in order to understand them. The balanced position between the two extremes applies particularly to entrepreneurial economics. Entrepreneurial economics aims at an understanding both of customer choices and actions and of entrepreneurs acting on their own judgment. It's not abstract. Entrepreneurs develop a theory so as to be able to apply it effectively in order to build business, and they judge the sufficiency of the theory by business results. Entrepreneurs have an Austrian understanding of how the market works. They have a good theory — subjective value theory (see Mises.org/E4E_13) — about what customers value, and how they determine that value. Entrepreneurs have an Austrian understanding of capital as a flexible and variable source of consumer revenue streams. There are several more components of entrepreneurial theory that we cover in the Economics For Business series (see Mises.org/E4B_113_PDF2). With their theory in place, entrepreneurs gather feedback from customers in specific situations. They gather responses to a value proposition. They test different prices to apply the theory of Exchange Value. Business is not a theory. It's based on theory, applied in a specific situation, and it is the specific situation that must be well-managed in order to make a profit. A sampling of some theories of entrepreneurial economics. The Means-Ends Chain. Customers choose means to achieve ends. Different customers have different ends. Means-ends theory (see Mises.org/E4E_01_PDF) helps entrepreneurs understand the ends their customers aim at. Some customers in the car market seek admiration of others by signaling social success. They might choose a Ferrari or Bentley as their means. A construction company owner might be seeking efficacy and efficiency in hauling materials, and chooses a pick-up truck. Both customers make choices via the same means-ends model, and their specific situations point to different choices on their respective routes.Diminishing Marginal Utility. This theory posits that in certain markets, a customer, having purchased a product or service, may perceive a lower value in the next unit. Having bought one Ferrari to meet the need for social approbation, to continue our analogy, the customer may not find a second one equally as desirable as the first. The construction company owner, on the other hand, may see equal value in adding another pick-up truck as business grows. Where that same pick-up truck buyer may find diminishing marginal utility is in the proliferation of accessories and bundled features in which he or she does not perceive value. Too many features bundled together may deter a purchase for reasons of diminishing marginal utility. These considerations are important to entrepreneurs in the design of loyalty programs and multiple-purchase discounts.Uncertainty Theory. Entrepreneurs exercise judgment under conditions of uncertainty. Austrian economists employ uncertainty theory to focus their theorizing about entrepreneurship in action. In specific situations, entrepreneurs must apply the theory by choosing the tools to use to overcome uncertainty, such as the explore and expand tool, which identifies the many experiments to run (explore) and then the broad deployment of those experiments that work (expand).Network Theory. Economies and markets are networks, and theory looks into the attributes of densely and loosely connected networks, and those that are wired in different ways. The theory can identify the possibility of “structural holes” in networks, where there are nodes that can be productively connected, yet stay unconnected. Entrepreneurs in specific situations can establish whether such a gap exists in their own network, and work actively to fill the gap and increase their productive capacity, e.g., by connecting to a new vendor or a new customer or a new resource.Entrepreneurial Process Theory. Entrepreneurship is a process, and theory can identify the most productive processual methods, and can employ entrepreneurial history to reconstruct how productive processes have worked well in the past. Entrepreneurs operating in the present, and designing processes for the future, can utilize process theory and its illustrative histories (Per Bylund calls these “biographies of processes”) to help them make the best design choices for the most robust processes. As an example, our N-A-B-C process for innovation (see Mises.org/E4E_37) is a theoretical framework that every entrepreneur can apply in their own specific circumstances to arrive at unique innovative solutions for their business and their customers. Take time to think and time to theorize. Theorizing is hard, rigorous work. It requires identification of the theories you are actually using (consciously or not) in your own mental model, and then relentlessly questioning them and examining them for internal consistency and external validity. Are there gaps or soft spots? Is there something that doesn't quite sit right with you? If so, you then work to change your assumptions or figure out better elements to add, or extending the theory further. It requires thinking, and thinking requires the allocation of time. Per Bylund urges us all to be good thinkers. "Think better, think Austrian," as he says. Additional Resources "Let ' s do it Frank ' s way: general principles and historical specificity in the study of entrepreneurship" by Marek Hudik and Per Bylund (PDF): Mises.org/E4B_118_Paper "Entrepreneurship in Theory and Practice" (PDF): Mises.org/E4B_118_PDF

This week on the Economics For Business Podcast we were gifted the opportunity of reviewing and assessing a completed entrepreneurial journey, courtesy of Jacqui Boland, founder, CEO and now alumna of Red Tricycle, following the acquisition of the company by the corporate owner of tinybeans, a family photo sharing and journaling app. Red Tricycle is a brand — "a lifestyle brand that fuels the parenting universe with daily inspiration for family fun." In the "Economics For Business Value Proposition Template," the Red Tricycle proposition would be: FOR: Fun Moms WHO: Search for and utilize ideas for family activities for parents and children to enjoy together. VALUE PROMISE: A unique daily source of ideas and inspiration for family fun VALUE RATIONALE: Every day, Red Tricycle finds and presents all the best local and in-home family fun opportunities and makes them easy for Moms to research, evaluate and act. BENEFIT > COST: In one daily web visit, Moms have easy access to a unique curation of new ideas and inspirations, simply formatted, and requiring a minimum of their precious time. Jacqui was generous in helping us map her entrepreneurial journey to the stages of the Economics For Business GPS. Key Takeaways And Actionable Insights. Imagination The pre-design phase in which entrepreneurs develop the imaginary construct of their business idea. Jacqui was a new mom in a new and unfamiliar city. She wanted to identify all the opportunities for fun with her family. She became an avid online searcher. A few conversations with some other moms revealed that many moms are searchers — with intensity and determination and a commitment to find and evaluate all the relevant information in their field of search. The idea of an online one-stop location for information about local family-friendly fun activities was born. A useful tool for the Imagination phase of entrepreneurship is "Entrepreneurial Empathy": Mises.org/E4B_113_PDF3 Design The phase where a validated imagination is transformed into a more formal business model. Jacqui capitalized on her existing knowledge field. She knew magazine publishing and the power of content, and how to source it. She knew the advertising revenue model for magazines. She was able to design a crisp business model of content creation, content presentation, consumer engagement, and attractiveness for local and eventually national advertisers. One of the tools in the Design tool set is the "Means-Ends Chain," helping entrepreneurs to align their business design with customer values: Mises.org/E4E_01_PDF. Assembly The phase in which design is operationalized by selecting and combining assets: people, technology, content, operating processes. Assembly for Red Tricycle began with people: content producers, editors, salespeople. Jacqui found investors, initially angel investors, then angel groups, and, later in the business's evolution, institutional venture capital. In turn investors and investor groups like 500 Startups were very useful in providing connections and recommendations for technology and software resources. Comparisons between different operating models that the investor groups were able to provide were useful guidance in making resource selections. Consult our "Austrian Capital Theory" tool for capital assembly of resources: Mises.org/E4E_19_PDF. Marketing The phase in which the designed and assembled entrepreneurial offering is presented to the market for consumer consideration. Red Tricycle adopted a city market-by-market rollout strategy, starting in Seattle, proceeding to San Francisco, then systematically adding more cities. The killer app for market introduction was “Mom Word Of Mouth”. Moms have friends in other cities, and travel between cities, and are excited to share family fun ideas with others. The best sharers were subscribers to the Red Tricycle newsletter, so the brand worked hard to build up a subscriber list. Red Tricycle KPIs were traffic, subscribers, and revenue. As a result of a system of creating and testing content, Red Tricycle could seed new markets with say 20 or 30 stories that drove good SEO traffic. And then the job was to convert that traffic to subscribers to the newsletter. Building brand uniqueness is fundamental for the Marketing Phase. Use our "Brand Uniqueness Blueprint": Mises.org/E4E_30_PDF. Customer Experience The phase of the value learning process in which customers try the offering, experience its benefits, and assess the subjective value. Red Tricycle designed a very specific customer experience, which Jacqui described as: "Quick, get an idea and inspiration to spend time with your kids, and then go offline and do it, and then come back two days later and do it over and over again." The model was distinctive in not asking for too much time (“the infinite scroll”). Red Tricycle helped Moms focus on the lighter side of parenting and having fun with their kids. Social media came into play as an aggregator of subjective value anecdotes. Moms would share a picture of themselves at the zoo and use Red Tricycle's recommended hashtag, "Best weekend ever." And not just everyday moms, but even celebrity moms, like Randi Zuckerberg, Pink, Ivanka Trump, sharing that they found a great idea for a campsite or a restaurant. These were subjective value data points. Facilitate great customer experiences with our VUCA tool: Mises.org/E4E_41_PDF. Management and Growth The phase where the business model is scaled and the marketing and customer experience reach is expanded, with continuous innovation accelerating growth. The major growth pivots for Red Tricycle were the transition from local to national advertisers, and hiring and assembling and empowering the new team members best suited to lead the way in the new business environment that this entailed. The goal for the management and growth phase was to roll out multiple local markets, and build a strong foundation of local advertising revenue until Red Tricycle had enough scale to interest national advertisers. The transition was a 5 year process. As Jacqui described it: "We put a plan in place and then we adjusted and adjusted and adjusted." A core element of the transition management is hiring. Skilled national advertiser salespeople are expensive, and sometimes it might take a year of that salary before a new salesperson can close a big national deal. There's a lot of foundational work that needs to be done. Scaling the business was a delicate process. A fully staffed company would have a sales team across the U.S. in every market, but if you can't afford that, you have to stretch and think, "Can this person sell local and national? Could this person cover Chicago, and L.A.?" And then once you start to get a little bit bigger, and you can hire an L.A. staff, what happens to that Chicago rep?" It's a constant adjustment. How does growth feel? “You're always looking for the next milestone. And you have about a minute after you hit a goal or a milestone to celebrate, and then you run into the next quarter and you have another goal that's even higher. So it's a constant stretch.” "Upsizing a Customer Need" is a useful tool for the Management and Growth Phase: Mises.org/E4E_47_PDF2. Disposition When the entrepreneur decides to sell the business, merge it into a larger business and relinquish the founder / owner role, or to turn it over to the next generation. Selling a business is just as much a marketing task as establishing it and growing it. And that means seeing the business through the eyes of an acquirer — empathic diagnosis of their needs, their preferences, their goals and desires, their constraints. Jacqui had made the economic calculation that the best path forward was not to raise additional venture capital for continued high growth, but to demonstrate solid and sustainable profitability and look for either a strategic partner or an acquisition partner. She didn't use a banker (whose process she compared to a dating app) but conducted her own search for a firm that would recognize a complementary asset that could be a marketing engine for them. She found a partner in an adjacent field (family photo sharing) that was strong in technology and would benefit from Red Tricycle's content creation and sales expertise. The deal was made quite quickly. Additional Resources Map of Jacqui Boland's Entrepreneurial Journey (PDF): Mises.org/E4B_113_PDF1 eGPS Handbook (PDF): Mises.org/E4B_113_PDF2

Key Takeaways and Actionable Insights Our goal at Economics For Business is to help entrepreneurs and their businesses succeed. Per Bylund and Hunter Hastings discuss the true implications of the current furor over the anti-market behavior of some of the Big Tech companies of Silicon Valley. They are destroying value and consuming capital. Why? How can this happen? Read Per Bylund's tweet stream: Mises.org/E4E_101_Twitter Where Is the consumer? The Austrian business model emphasizes that the consumer is in first position. The goal of entrepreneurship is the creation of new value, and Austrian entrepreneurs understand that value is an experience, and evaluation is in the consumer's mind. Entrepreneurs facilitate value experiences, via an understanding of what consumers will value, and of gaps or shortfalls in the value propositions from which they choose today. Business success lies in filling the gaps and solving the shortfalls. 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There's a pride in engineering, as there should be. But even the most beautiful technology can't succeed without consumers in mind. The technology-driven approach to innovation must not contravene the principles of the consumer-driven approach to value. When consumer value is not the business model Facilitating consumer value is a business model. Value is a learning process for consumers, of which exchange value (paying in dollars for value anticipated) is a component part. The revenue model for the entrepreneurial firm consists in earning this exchange. It's all integrated. Some Silicon Valley companies (Google, for one) accepted investor funds and began operations without a business model in place. When consumer value is not integral to the firm, it's quite possible that they lose their grip on the concept. They don't create value for consumers, or for the economy. Or for investors, for that matter — they're using investor funds in ways the consumer does not value. In many Silicon Valley models, consumers are creators of content for the technology company to control, analyze and re-sell as data to the advertiser. Consumers are creating value for the platform, not vice versa. Monetization as an afterthought We often hear the word “monetization” in descriptions of Silicon Valley business models. The word itself is quite revealing. It certainly doesn't connote a commitment to serving the consumer. Monetization is the search for a revenue model after the technology is launched. Many of the monetization schemes are advertising-based, which can be problematic. They are often value-destroying for consumers, especially in the “interrupt and annoy” formats that are common on the internet today. Advertising is certainly not innovative — it's been around for a very long time, long before Silicon Valley came into existence. When firms are selling consumers to advertisers, their commitment to consumer value becomes secondary. It's not that B2B business models are any less valid than B2C. The key is to remember the Austrian principle that value in any stage of the production chain is made possible only if there is consumer value at the end of the chain. Microsoft, for example, is a technology company primarily focused on B2B value propositions in areas like business productivity. They always have an eye on the next stage in the value chain: improved business productivity and efficiency enable Microsoft's customers to, in turn, produce lower-cost consumer services and enhanced consumer experiences. Microsoft has its eye not only on the immediate B2B customer but also on the next stage of the value chain. A cultural problem Ultimately, the kinds of Silicon Valley companies to which these observations apply face a cultural problem. Consumer value and consumer service are not a sufficient part of their DNA. They were founded and developed to nurture technology — in some cases, brilliant technology, in others more mundane; they found technical ways to reach mass distribution based on the new power laws of digital networks; they found bolt-on monetization schemes that responded to mass reach. Culturally, the idea of consumer value has never been central to them. Perhaps that's why, today, we see Twitter censoring its users and throwing them off the platform, angering many more. Generative products versus central control The value promise of today's digital products and digital markets is exciting for consumers. The term “generative” has been coined to describe the new characteristics of products that give consumers leverage – make their jobs easier; that provide adaptability so that consumers can change them to suit their own purposes; and that are easy to master and easy to access. The spirit of generativity lies in unleashing end-user creativity. Some Big Tech companies don't seem to believe in the generativity of their products and their consumer relationships. They prefer centralization and control. They want to collect and control consumer data and turn it into their own closed products. That's why they need so many engineers to build the algorithms and the data banks. That's why they need so many content monitors to project their control. They are centralizers in a world of decentralization. This leaves them open to disruption by the next generation of entrepreneurs who start their journey from the point of view of what consumers value. Additional Resources "Silicon Valley is Bad at Entrepreneurship" (PDF): Mises.org/E4E_101_PDF Protocols, Not Platforms: A Technological Approach to Free Speech by Mike Masnick: Mises.org/E4E_101_PDF2

Why isn't everyone an entrepreneur? Perhaps we don't explain it well enough or in language that lets everyone in on the wonders and the thrills of the pursuit of new economic value. Scott Livengood chooses reframing — thinking in new and different ways about an established concept — to widen the audience for entrepreneurship. Reframing entrepreneurship in the context of popular culture. Scott recently published a multimedia e-book called The Startup of Seinfeld (Mises.org/E4E_99_Book1). In the book he articulates a comprehensive survey of concepts and principles of entrepreneurship, including the entrepreneurial mindset, risk and uncertainty, intellectual property, business models, planning, finance, and many more. The cultural frame Scott selected is everyday city life as illustrated by the characters and situations and market interactions in 180 episodes of Seinfeld. In Scott's hands, this is not a show about nothing, but about entrepreneurship. The multimedia approach is facilitated by a series of links in the e-book to YouTube video clips of short scenes from multiple Seinfeld episodes that are illustrative of entrepreneurial concepts and principles. You'll find the concepts of economic calculation, opportunity, product design, arbitrage, intellectual property, judgment, planning, uncertainty, and several more. The text accompanying the videos is an exposition of economic principles underlying these concepts. There's a lot to learn, and it's fun! A major point to take away is that entrepreneurship is everyday life: people imagining new ways to serve others and meet their needs, and employing design and economic calculation, judgment under uncertainty and marketing and communications to facilitate a valuable exchange. Reframing the teaching of entrepreneurship and strategy. The philosophy underpinning the teaching method in the e-book has been forged in the university classes and seminars that Scott teaches, and for which he prepares meticulously and conducts comparative research into learning and teaching effectiveness. He has found that embedding the principles of entrepreneurial economics and business strategy in cultural iconography illustrated via multimedia technology results in a significant increase in student engagement, participation, learning, and understanding. Humor, for example, is a language and a style that can draw students in, engage them at a deeper level of curiosity, and help to deliver the serious economic message. This kind of approach helps students think of entrepreneurship as more of a normal life choice for themselves — a life of creative problem-solving. Students can think about their ends and the means open to them in a different way. If they are inclined to “social entrepreneurship”, they can learn that that simply means a distinctive identification of ends, without any attempt to operate outside the profit-and-loss system of sound entrepreneurial practice. Reframing entrepreneurship for the disadvantaged. Scott's ultimate test for reframing entrepreneurship for a different audience in a different culture has been presented by his teaching for Education for Humanity. This is group associated with his university, Arizona State, and dedicated to helping displaced refugees. These students who are displaced from their homelands by war and conflict and find themselves in refugee camps in countries that are alien to them, like Uganda and Lebanon. Their prospects for further education are narrow. What are the pathways out of the poverty and restrictions of refugee camp life? Scott's chosen task is to teach them entrepreneurship. Where to start? The basis is empathy — digging deep to understand their situation, circumstances, and context, and understanding them as individuals and identifying their needs and wants. Language becomes critical — using concepts and examples they can relate to. It's contextually impractical to teach entrepreneurial finance in terms of bank loans and venture capital. But Scott can teach individual and family budgeting: how to calculate and manage income and expenditures, how to save, how to build up sufficient savings to make a capital purchase, and how to generate an income stream from that capital. The particular capital artifact may be a second cow for a head of household that uses the first one for feeding the family. The family has knowledge and skills in milking and animal husbandry that can be put to use in their new entrepreneurial business of selling milk and dairy products to other families, or bartering for other kinds of nourishment. Eventually, the family may advance to the use of micro-loans or other forms of micro-finance and expand their entrepreneurial holdings. Scott can now teach about the trust nexus of paying interest and paying back loans, and about return on investment and capital accumulation. Progress comes quickly as a result of starting in the right place. Entrepreneurial communities. One of Scott's realizations has been the power of entrepreneurial communities. In the refugee camps, family entrepreneurs collaborate, learn together, assist each other, and seek to raise the prospects of the entire community. Failure to pay back a loan, for example, would be a setback for the group, and group norms and institutions arise to guard against such a loss of trust. Scott sees direct application of this learning about normative entrepreneurial community action in other parts of the world, including rural communities here in North and Central America, and in the inner city initiative of Entrepreneur Zones in the US. By embedding entrepreneurship in culture, the collaborative service ethic emerges more clearly and emphatically. Additional Resources Enjoy Scott Livengood's book about the culture, concepts, and principles of entrepreneurship: The Startup Of Seinfeld: A Multimedia Approach to Learning Entrepreneurship: Mises.org/E4E_99_Book1 Read the work of Nobel prize-winner Edmund Phelps, mentioned in the podcast introduction, on Mass Flourishing (Mises.org/E4E_99_Book2) and economic Dynamism (Mises.org/E4E_99_Book3).

Empathy, properly employed, is a robust business tool that smart entrepreneurs use to design winning value propositions. Here's why empathy matters for entrepreneurs. Entrepreneurs' success depends on what others do — those others being customers. The entrepreneur has the goal of customers buying, as a result of listening to their preferences and meeting them. But there's a little more work to do than just listening. As we discovered in Dr. Mark Packard's previous podcast episodes, the customer is engaged in a continuous, dynamic, and ever-changing value learning process: learning what they, subjectively, really want. So they can't tell you what they prefer when they are still engaged in the learning process. So listening, while useful in gathering factual knowledge, isn't quite enough for the entrepreneur to embark upon designing a solution. The entrepreneur must develop a special kind of “needs understanding” for their chosen customer group. As Dr. Packard stresses — and as is foundational to the application of Austrian economics to business — the customer determines value, and that value takes the form of an experience: how customers feel about the experienced benefit of an economic exchange like buying a car, driving it, getting it serviced, and sensing the esteem of others for the choice they made. There are two kinds of knowledge, factual and tacit. Your customers can communicate factual knowledge to you. They can't communicate tacit knowledge, because it is derived from experiences that only they can feel. So entrepreneurs must find a tool to represent the tacit knowledge that's locked in the customer's mind — a tool for “needs understanding”. The tool Dr. Packard proposes is a mental model the entrepreneur can use in the empathic process. Importantly, empathy is not emotional mirroring — feeling what another person feels. It's an active implementation of the entrepreneurial imagination, a cognitive act that the entrepreneur can plan and perform. The process of modeling “needs understanding” starts with factual knowledge, purposely gathered and organized. What entrepreneurs must pursue is deep learning about why customers feel the way they do about their experiences The goal is to gain insight in order to be able to improve consumers' future experience. This requires knowledge-based inference from your empathic imagination about the causes of the current experience. To do that, entrepreneurs need substantial background information—especially the personal and situational context surrounding the experience: the specifics of who, what, when, why and how. It's not about imagining the experience of random people; it's about learning a lot about a specific person in order to be able to successfully empathize with them. Factual knowledge can be run through the entrepreneur's mental model. Once factual knowledge of the customer, their context and their current experience is gathered, the entrepreneur makes two runs of this information through their mental model. Think of it as running a simulation — a mental simulation. The first run of the mental model is based on the entrepreneur's own experience. Pick an experience that you've had and can self-analyze, so that you have a model of what that experience feels like. Now run the information you've gathered about the customer through that model — what does it suggest that they might feel? For example, think of an experience that you've had where you bought a product you expected to enjoy, and it disappointed. What did that feel like?The second run of the mental model is the empathic mental model based on the entrepreneur's understanding of the customer's current or recent experience as told during knowledge gathering. You can understand what you felt like when a product disappointed. Now you imagine what the customer feels like or felt like as a consequence of a comparable experience. The final step is to project the empathic mental model into the future. The ultimate goal is to imagine what the customer's feeling would be like in the future, following an experience with a new product or service value proposition offered by the entrepreneur. This is a projection — one that can be carefully constructed from the two previous runs of the mental model. Create a mental model from your own experiences.Run that mental model for an experience that a customer has reported to you that they have felt in the past.Then run a projection of that model for the new experience you are planning to offer. The more developed this skill becomes, the more confidence you can develop in your empathic projection, and the better you will be able to evaluate the business opportunity you are imagining you will design and create, and the value the customer will experience. Just as the customer learns what to value, the entrepreneur can learn to project future value. Dr. Packard emphasizes that the customer is continuously engaged in a learning process — assessing value propositions, making decisions as to what to buy and what to try, then evaluating the resulting experience — was it better or worse than expected? The entrepreneur must keep up with this learning process, monitoring the customer's dynamic subjectivism, their ever-changing preferences amidst an ever-changing context. By keeping up via continuous monitoring, the entrepreneur will be able to make multiple runs of the empathic mental model, and test the model results for increasing predicted value. Additional Resource "Empathy as a Process" (PDF): Mises.org/E4E_98_PDF

With the development of the Austrian Business Paradigm and the Austrian Business Model, and tools such as the "Value Learning Process," businesses of all kinds can utilize the deep insights of Austrian economics to further enhance how they facilitate value for their customers. John Boles — an avid listener of the Economics for Entrepreneurs Podcast — provides an example of how he applies these insights at his accounting firm. Here is a summary resource and a step-by-step outline: Mises.org/E4E_97_PDF. 1) Improved customer understanding. The Austrian business paradigm places the customer in first position. This contrasts with traditional business thinking that puts the firm or the product or service in first position and searches for ways (“strategies”) to sell or market that offering to a set of customers who are to be identified during the selling process. The way to put the customer in first position is to make your top priority a deep and intimate understanding of the customer, demographically (who they are), functionally (what they do and how they do it) and emotionally (how they feel — about key issues and challenges, about vendors and service providers, about competition and every aspect of business). The first question Austrian business practitioners ask themselves is: how deep and intimate is my customer knowledge, and can it be improved? 2) Calibrating the customer's perception of value. Value is a feeling that exists only in the mind of the customer. The entrepreneur's task is to facilitate that feeling of value — ease the way for the customer to arrive at that happy state of mind. It's imperative for entrepreneurs to try to feel what the customer feels — to sympathize with their perception of value, rather than to focus only what the firm is delivering. We must know what the customer is buying, not just what we are selling. The tools to use are monitoring of customer behavior (what they do — for example, shopping around for alternatives — is more important than what they say); making sure you understand their rankings of features, attributes and benefits, that is, what's most important to them; and conducting interviews about the value experience. Ask the question: is the customer's perception of value experienced aligned with the firm's perception of value delivered? 3) Are value adjustments indicated? The Austrian view of the market as a process helps us think about continuous change. Customers are continuously interacting with other customers, competitors, ideas, new value propositions, environmental conditions, regulations and a plethora of marketplace changes. Consequently, their perceptions of value are in constant flux. It should not be a surprise that entrepreneurs need to make value adjustments. It may be necessary to change perceptions of absolute value (via an adjustment in the value proposition), of relative value (via an adjustment in comparison with alternative propositions), or of exchange value (via adjustment in pricing, bling terms, or discounts / rebates). 4) Communicating adjustments. It's easy to overlook a critical component of value adjustments: communication. The Austrian business model advocates frequent in-depth conversations with customers at every level. These conversations, while always two-way of course, can be primarily designed for outbound communication, describing the adjustments made, and why they were made and ensuring the customer understands the responsiveness of the firm; or for inbound data gathering, primarily listening in order to further increase understanding of the customer and their preferences. Customer communication is a component of perceived value. 5) Ongoing evaluation. The customer is always evaluating the service provider / vendor and their value proposition, through the lens of experience: did the value experience match the anticipated experience; and, if not, in what ways was it deficient? The service provider / vendor must also undertake continuous evaluation. Did the value adjustments succeed? Are more called for? What are the indicators of change? Additional Resources The five steps of "Continuous Value Perception Monitoring" are described and annotated in our free downloadable graphic process map: Mises.org/E4E_97_PDF For reference, match this monitoring tool with the customer's "Value Learning Process": Mises.org/E4E_55_PDF. The two processes are complementary, composing a complete yet never-ending cycle of value.

Researchers into entrepreneurship have a powerful incentive to identify new insights about how businesses grow and thrive. Happily for everyone involved in business and innovation, entrepreneurial research is thriving, blossoming, and flourishing. Professor Vishal Gupta's book, Great Minds In Entrepreneurship Research, surveys thirty or more years of research papers that were awarded what is colloquially known as the Nobel Prize in Entrepreneurship Research (formally known as the Global Award for Entrepreneurship Research: GAER). The research field is deep, rich, dynamic and expanding. Research identifies and examines entrepreneurship in every business size and type as a fundamental economic activity. In its earliest days, entrepreneurship research focused a lot on small business but, today, business size and stage are not the constraints. The research identifies entrepreneurship in corporations, non-profits, and many more business sectors. Much of the research focus is on entrepreneurial contribution — to growth, to job creation, to innovation, to progress. Entrepreneurship is identified as the great economic contributor to betterment and well-being, measured via GDP growth in countries large and small, the creation of new and better jobs for people worldwide, new innovations and new business directions, and individual progress in general. As Mises stated, entrepreneurship is the driving force of the market system. New entry, properly understood, is one way to characterize entrepreneurship. The search for a single characteristic of entrepreneurship risks missing critical insights. However, one that garners broad support is “new entry” — entering new markets, entering existing markets with new value propositions, entering established product fields with new innovations, or entering into existing customer mindsets with new ideas. Economic productivity is another. A rich vein of entrepreneurship research has measured the efficiency that entrepreneurs bring to the use of resources — producing more with less. For example, research has measured innovation efficiency as the number of innovations per employee, and has found that smaller, more nimble firms are far more efficient on this metric than big corporations, even if the latter launch more new products in total (and generate more PR). The research has uncovered a new type of firm and business model, and new business ratios that result. NTBF is the acronym for New Technology Based Firms, those that innovate with new business models and new ways to facilitate service experience via dematerialized delivery. One of the results of these new models is new sets of business ratios — for example, revenue per employees which, with software based companies on the internet, can now reach never-before realized levels. This evolution has forced researchers to re-think some of their models. For example, the biologically-derived product life cycle (PLC) model of business maturity — birth, life and death — has to be revised because dematerialized companies can easily be re-born, even after near-death experiences. Think Apple — the founder died and, at one time, it was thought that the company might, but it was reborn. Research opens up entirely new ways to think about business. New research fields such as complex adaptive systems (or complex creative systems as Professor Todd Chiles prefers to call them) represent a new way to think about business — focusing less on individual firms and more on the value networks and service systems of which they are a part. New ways of evaluating business potential are also emerging from research. Professor Gupta discussed characteristics of firms such as knowledge absorption and absorptive capacity. Extending the Hayekian concept of distributed specialized knowledge, researchers have identified the ability to quickly absorb and apply new knowledge as a critical capacity of successful adaptive firms, and have shed light on many of the internal constraints this absorptive capacity. Research recognizes the role of entrepreneurial imagination and subjectivity, although it doesn't always get it right. Austrian economics highlights subjectivity and views entrepreneurial opportunity as a subjective phenomenon, based in the imagination of the entrepreneur. Not all entrepreneurship researchers have been able to become comfortable with this idea, continuing to see opportunity as objectively identifiable. Austrians seem to be in the ascendancy on this controversy. Importantly, entrepreneurship research is becoming interdisciplinary. Systems thinking requires an interdisciplinary approach. Researchers in sociology, psychology, finance and even anthropology are examining entrepreneurship via their own research lenses. This development can only help the advance of entrepreneurship across a broad front of society and culture, as well as economics. Additional Resources "What Entrepreneurship Is (and Isn't)” (PDF): Mises.org/E4E_96_PDF Download our eBook, Austrian Economics in Contemporary Business Applications, featuring a chapter from Vishal (PDF): Mises.org/E4B_eBook

Consumer sovereignty is a principle of Austrian economics. Here's how entrepreneurs apply the principle in business, as told by Martin Lünendonk, co-founder of FounderJar.com, as well as Finance Club and Cleverism.com. How to Make the Customer your Boss Download our "How To Make The Customer Your Boss" graphic at Mises.org/E4E_95_PDF. "There is only one boss. The customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else." —Sam Walton Though they are several decades old, these words by Walmart founder Sam Walton are still very relevant, especially in today's highly competitive world. This is particularly true for those trying to make money online. You are already in competition with hundreds, perhaps thousands of other businesses, and if you do not put your customers first, they can easily move to the competition. It's as easy as tapping a few buttons on their smartphone. Great business leaders understand that businesses exist for one sole purpose — to serve the needs of their customers. If you want your business to not only survive, but to thrive in this hyper-competitive world, it's time you started treating your customers like the boss. Below, let's take a look at the steps you need to take to place your customers in their rightful seat — the boss's seat. 1. Identify the Key Problems Customers Want To Get Solved To effectively serve your customers, you need to first identify what key problems the customer is trying to solve. Very often, entrepreneurs set out to solve problems they think the customer has, without trying to look at things from the customers' point of view and confirm whether the customer has this problem, and whether it is a problem they are trying to solve. For instance, Blackberry assumed that what its customers wanted was a laptop that could fit on the palm, so they focused on improving the physical keyboard. Apple, on the other hand, realized that what customers actually wanted was a device that was amazingly easy to use, and when they introduced a device with a touch screen and no physical buttons, they took Blackberry out of business. So, how do you identify the problems that customers are trying to solve? There are two ways to do this: Listen To Your Customers The easiest way to identify the problems your customers are trying to solve is to actually listen to them. They know what they are struggling with and why they need this problem solved. If you listen to your customers, you are unlikely to find yourself in a situation where you are solving a problem no one cares about. There are two main approaches you can take to listen to your customers and identify the problems they are trying to solve. Here are a few… Interview your customers: Your first option is to get proactive and ask the customers directly. You can do this using surveys on your website, by getting on the phone and talking to customers, through focus groups, and so on.Look at customer reviews: Your customer reviews present another great opportunity for you to learn about the problems your customers are trying to solve. Here, you should place more focus on the negative comments, since these are the ones that highlight customer needs that are not being met. However, even positive comments can give insights into customer problems that you're solving effectively. Listen To Your Salespeople The second approach to identifying the problems customers are trying to solve is to listen to your salespeople. Your salespeople are in direct contact with your customers, and they, therefore, have better insights into your customers' thought processes. They know the pain points that drive customers to purchase your products and services, they know the things that customers like or dislike about your products, they know the reasons that keep some customers from purchasing, and so on. By administering surveys to your sales teams, you can gain insights that will help you figure out your customers' key problems, which will in turn help you to serve them better. When trying to gain insights about customer problems, either from the customers themselves or from your salespeople, it's good to try to get to the root cause of the problem. Sometimes, what you think is the problem might not actually be the problem. For instance, at one point, Disney was experiencing lots of criticism because visitors felt the queues for the rides were too long. At first glance, the problem seems obvious – visitors spending too much time waiting for their rides. The solutions to this problem are obvious as well. To shorten the queues, Disney would either have to invest in more rides, or reduce the number of visitors getting into their parks. Both of these solutions would cost Disney millions. Disney hired a group of designers to help them solve this problem. After interviews with Disney visitors, the designers realized that the problem wasn't the long queues. The problem was that visitors were getting bored because they had nothing to do while waiting in the queue. To solve the problem, they had Disney add themed music and videos that visitors could listen to and watch while waiting for their rides. By getting to the root cause of the problem, they were able to come up with an effective solution that saved Disney millions. Similarly, do not take your customers' feedback at face value. Try to identify what the root problem is before you start developing a solution. 2. Make Sure Your Offering Solves Those Customer Problems Now that you have identified the problems that your customers are trying to solve, it's time to come up with solutions to solve those problems. The best way to ensure that the solution you are developing solves the actual problems your customers are struggling with is to involve your customers in the development process. One approach is to develop a minimum viable product (MVP) of your solution and show it to a group of customers with the problem you are trying to solve. You then collect their feedback, and use insights to improve your next iteration and ensure that your final solution solves the customer problem in the most effective way. [[{"fid":"94714","view_mode":"image_with_caption","fields":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"Why Build a Minimum Viable Product?","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"SOURCE: Clevertap.com/blog/minimum-viable-product","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"Why Build a Minimum Viable Product?","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"SOURCE: Clevertap.com/blog/minimum-viable-product","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Why Build a Minimum Viable Product?","class":"media-element file-image-with-caption media-wysiwyg-align-center","data-delta":"1"}}]] For instance, when creating DropBox, founder Drew Houston didn't want to spend months, perhaps years, working on a product that no one was interested in, so he started with an MVP. Drew's MVP was a simple 3-minute video demonstrating how his product was meant to work. He shared the video on Digg, an online community of technology early adopters. After sharing his video, over 70,000 people joined the DropBox beta waiting list within a single night, which was enough validation that his product was solving the right problem. Another way to involve customers in the development of your solution is to form a small community of beta testers and give them access to your solution during the development process. This works even if you are developing a service-based product. For instance, if you are a digital marketing consultant, you could create a package — say a content marketing package — and test it among a small group of customers before you launch it in full scale. The aim here is to have a group of actual customers continually testing the solution you are developing to make sure that it addresses their key concerns in the best possible manner for them. This way, you don't have to worry about spending months or years coming up with a solution to your customers' problems, only to discover that it is not the kind of solution they were looking for. Another way to ensure that what you are offering solves your customers' actual problems is to conduct A/B tests. This basically involves creating two versions of your offering, giving two small groups of customers access to each version, and then tracking the results to identify the version that solves customers' most effectively. 3. Track Customer Satisfaction Ultimately, what matters is keeping your customers satisfied. If your boss is unsatisfied with your work, you can bet that you will be out of work soon. Similarly, if your customers are unsatisfied with your business, they will fire you – by spending their money on your competitors. Actually, while 96% of unhappy customers will not voice their dissatisfaction, 91% of them will never make another purchase from you. This is definitely something you don't want. To know whether your customers are happy, you need a way to track and measure customer satisfaction. Here are five of the most effective ways of measuring customer satisfaction: Customer Satisfaction Surveys This is one of the easiest ways of tracking customer satisfaction. With this approach, you simply need to put up a survey asking your customers how satisfied they are with your services. Depending on the medium you are using to administer the survey, you can add one to three open-ended questions to learn more about what they think of your services. Customer satisfaction surveys can be served through email, through your website, or through your app. Customer Satisfaction Score (CSAT) The CSAT is the standard metric for measuring customer satisfaction. Here, you ask customers to rate how satisfied they are with your products or services on a scale. The scale could be 1 – 3, 1 – 5, or 1 – 10. After receiving responses from various customers, you then find the average rating to determine your customer satisfaction score. The higher the score, the more satisfied customers are with your services. Net Promoter Score (NPS) This is another popular metric for measuring how happy customers are with your business and your services. Unlike the other metrics covered here, however, NPS does not measure how satisfied customers are with your business. Instead, it measures how likely they are to refer someone to your business. This is especially useful for those in the freelance business, which depends heavily on referrals. The NPS will ask a customer to rate on a scale of 1 – 10, how likely they are to recommend your business to their friends and acquaintances. [[{"fid":"94715","view_mode":"image_with_caption","fields":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"Net Promoter Score","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"Source: Business2Community.com/strategy/using-customer-satisfaction-metrics-nps-best-practices-02261983","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"2":{"format":"image_with_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"Net Promoter Score","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"Source: Business2Community.com/strategy/using-customer-satisfaction-metrics-nps-best-practices-02261983","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Net Promoter Score","class":"media-element file-image-with-caption media-wysiwyg-align-center","data-delta":"2"}}]] The NPS categorizes your customers into 3 groups: Promoters: These are customers who give you a rating of 9 – 10. They are willing to spread the word about your business and recommend your products and services. These customers are already satisfied with your business.Neutral/Passives: These are customers who give you a rating of 7 – 8. They are indifferent to your business. They aren't disappointed with your business, but they aren't satisfied either. They are unlikely to talk about your business to others.Detractors: These are customers who give your business a rating of 6 and below. They are unhappy with your business, and will spread negative word about your business in a bid to discourage others from doing business with you. The Net Promoter Score is a very useful metric. If someone is willing to recommend your business to others, then this means that your products or services are good enough that they would stake their reputation on them. Customer Effort Score (CES) This metric measures customer experience, particularly how hard it is for your customers to get what they want from your business. Customers are typically asked to rate their effort from 1 (very little effort) to 7 (very high effort). A high score means that customers have to work very hard to get what they need from your business, which translates to poor customer experience. Social Media Mentions Keeping track of what people are saying about your business on social media can also help you figure out how satisfied your customers are with your business. Satisfied customers will take to social media to praise your business, while unhappy customers will share their dissatisfaction with their social media followers. Monitoring the conversations about your business happening on social media will allow you to step in and respond to comments in time and control your brand perception, especially when people are sharing negative comments. Here are three tools that you can use to track social media mentions: Google AlertsMentionSocialMention 4. Put Customer Value First, Profits Will Follow A lot of entrepreneurs believe that the core purpose of a business is to make profits. Smart entrepreneurs, those with the right entrepreneurial mindset, on the other hand, know that the core purpose of a business is to serve its customers. Therefore, their core focus is on delivering customer value. Of course, this does not mean that businesses that put customer value first don't think about profits. They do. What differs is their approach. These businesses understand that when you keep your customers happy (by delivering great value), these customers will bring more business, and spread positive word about your business, leading to more business, and ultimately, greater profits. Actually, the findings of research by Deloitte and Touche show that companies that put customers first are 60% more profitable compared to those that don't. So, what exactly does it mean to put customer value first? Putting customer value first means that every single business decision made within your organization should have a positive impact on customer experience. For instance, when upgrading its systems, a customer-centric company will choose systems that allow it to deliver the best customer experience. Similarly, when hiring, customer-centric companies go for employees who show a knack for putting customers first. Basically, every decision is evaluated based on its impact on customer experience. Here are some tips on how to make your company customer-centric and put customer value first: Understand your customers deeply. It is impossible to put customers first when you don't even know who they are. To get a good understanding of who your customers are, you need to develop highly detailed buyer personas. Actually, gaining a good understanding of the customer segments you're targeting is a key component of the business model canvas.Make sure that all your team members are engaged and have a good idea of the impact of their work on customer experience.Make it a habit to collect customer feedback, and then use this feedback to gain insights on how to improve the customer experience.Don't just focus on getting customers to make the purchase. Focus on building relationships that will turn them into loyal customers and brand ambassadors.Be easily accessible. Make it easy for customers to get in touch with your business when they have an issue, or when they need any sort of help. Ready To Put Your Customers In The Boss's Seat? As an entrepreneur, you are in business to serve your customers, which means that your customers are your boss. If you want your business to thrive, you need to start treating them as such, by putting their needs first. In this article, we have gone over 4 key points on how to make the customer your boss. Here's a recap: Identify the key problems customers want to get solvedMake sure your offering solves those customer problemsTrack and measure customer satisfactionPut customer value first and profits will follow Additional Resource "How To Make The Customer Your Boss" (PDF): Mises.org/E4E_95_PDF

Six ways — selected from many — that businesspeople can derive more insightful knowledge and perspective from Austrian economics than from traditional Business School teaching. Download our "A-school vs. B-school" summary PDF at Mises.org/E4E_94_PDF. More Human Austrians believe in business as an uplifting human endeavor, focused on how people as producers can best help people as customers to do well, feel better, and thrive. To do so, entrepreneurs cultivate their power of empathy: to understand others, feel what they feel, and understand their hopes and dreams. Entrepreneurs utilize this understanding to cultivate new ideas, design new solutions, and present new value propositions for customers' consideration. It's the human project. When business schools approach business building as an engineering problem, to design and run an assembly of operating machinery — whether physical or digital - at maximum levels of efficiency, and to manage via mathematical models embedded in spreadsheets and software, they occlude the human factor. More Subjective Emotion and subjectivity are important elements of human decision-making, both for producers and customers. Data and so-called rationality are important, but how people feel, how they perceive, how they interact, and how they subjectively weigh up options are dominant in shaping decisions. Austrians understand this, especially in the subjective imagination entrepreneurs apply to future customers and their potential preferences. No data or predictive models can reproduce this capability. More Individual Austrian economics always starts analysis at the individual level. Every economic phenomenon can be traced back to one buyer exchanging with one seller. What are the motivations and incentives and processes that promote the completion of the exchange? What are the barriers that might prevent it? Can the resulting knowledge be applied in more instances, and even at scale? Austrians are not atomists. We understand — more deeply, perhaps, than the minds behind the business school disciplines — interconnection, community, and the interaction of individual beliefs, values, and preferences. It is the study of these interactions that lies at the core of the Austrian approach to business. Groups and segments are abstractions — only individuals decide, choose, and act. And today, technology is moving in our direction, enabling more fine-grained action to reach individual customers with tailored value propositions. More Imaginative Professor Peter Klein has been, and continues to be, a leader in unwrapping the role of entrepreneurial imagination in the dynamism of business. He emphasizes that humans are fundamentally creative actors, and that entrepreneurs apply imagination to create new possibilities, new solutions, and new combinations of resources the world has never before seen. Opportunities are not “out there” to be discovered. They're imagined by the entrepreneur. Yes, there can be planning, e.g. in the choices between alternative patterns of resource allocation. But even these are subjective, based on individual entrepreneurial assessments. There can be projection of trends, although empathy with future customers is a counterweight to projection. Overall, imagination dominates. More Action-Oriented As Peter Klein also teaches, entrepreneurship is characterized by acting to reap the rewards inherent in imagined possibility. This action orientation makes the Austrian approach to business much more realistic and straightforward than the business schools' insistence on the mysteries and opacity of strategy. Austrian entrepreneurs form their own beliefs, act on them, and gather the results. The results are a feedback mechanism, energizing the entrepreneur to make adjustments and try again. Business is very straightforward. The Austrian action-orientation to business is empowering and inspiring. A Role for Theory Professor Klein told the story of his first foray into executive education. He was nervous about presenting Austrian economic theory to experienced and successful business people. He quickly learned that theory is what business needs and what traditional business instruction lacks. Managers often know everything about their industry, but do not always have theoretical perspective, or frameworks to help them see the forest and not just the trees. Without a theory, all they have is a mess of data. Theory provides a path to interpretation. That's what's so valuable about Austrian economics: it emphasizes theory. One example we discussed for business was pricing theory. Austrian economics provides a pathway for entrepreneurs to map out how pricing for specific goods and services emerges via the interplay of customer preferences and context with entrepreneurs' value propositions. The price that is right for an exchange can be discovered by following this pathway. But the entrepreneur still needs to combine the theory with action and experience: set the price for an offering, and test the customer's willingness to pay in the context of all their alternatives and their previous experiences. Theory provides an invaluable generalized assistance with understanding of the customer's ultimate decision, but can't predict the contingencies of the moment and of the individual's idiosyncratic personal situation. With Austrian theory, an entrepreneur is more likely to get pricing “right” (via theory) but not every time (that's experience). Additional Resource "Austrian School vs. Business School" (PDF): Mises.org/E4E_94_PDF

“Small business” is just a government classification. Entrepreneurial businesses serving well-defined communities via creative specialization exhibit enormous economic productivity, energy and dynamism. Such businesses can not be defined quantitatively as small, medium or large. They're defined by their qualitative impact on their customers' lives. Entrepreneurial businesses care differently, and care more. Big businesses must pay attention to size and scale, to their huge revenue and profit streams, to their many, many shareholders, to journalists and bureaucrats and financial analysts. They are, typically, managing to maintain progress or status on a well-established pathway, and have limited time and resources to devote to customer care. The triple option of the entrepreneur. Small businesses are designed and constructed to care for customers and communities. As Ramon Ray puts it, small business entrepreneurs choose to: Create what we want;Serve whom we want;Collaborate with whom we want. As a consequence, business owners care differently about their customers, their colleagues, and their collaborators and partners. Small business entrepreneurs create communities of fans. Ramon sees small business owners serving their chosen communities as Celebrity CEOs (see Mises.org/E4E_93_PDF). This does not require millions of Twitter followers or a pack of paparazzi. It results from being known and trusted as the specialist supplier of a highly desired service personalized to a well-chosen, often local, customer base. It's the deli owner with the best sandwiches, or the mechanic to whom to trust one's 1958 Edsel. Customers become fans, deeply emotionally bonded to the entrepreneur and the service. Business owners become more deeply intimate with customers-as-fans, and the synergy is complete and lasting. The entrepreneur and the firm come to fit the community perfectly, and become indispensable. The well-served community is a qualitative measure of business success, not quantitative. Ramon Ray aims to build a community of entrepreneurs along similar lines of helping and caring. Entrepreneurs can thrive by serving well-chosen communities, and they can also thrive by being part of a community. His vehicle is a B-corp formed by fellow-entrepreneur Seth Godin, to support small business entrepreneurs. Akimbo provides knowledge, tools, and courses to help entrepreneurs run and grow a business. Ramon's latest contribution is a series called Small Business Essentials, a workshop in 12 modules. The modules cover essentials including pricing, cash flow, and hiring, as well as entrepreneurial refinements such as properly defining what problem you are solving and who are you solving it for. A special feature of the workshop is that participants are joined online by fellow entrepreneurs, so that there is a group experience, group knowledge sharing, and group Q&A. The community helps itself by helping each other. It's a place to learn and a place to ask questions. Additional Resources "Celebrity CEO Mindset" (PDF): Mises.org/E4E_93_PDF Ramon Ray's "Small Business Essentials" Workshop: Mises.org/E4E_93_Workshop Ramon Ray's book, The Celebrity CEO: How Entrepreneurs Can Thrive by Building a Community and a Strong Personal Brand: Mises.org/E4E_93_Book

Principles of Austrian economics have immediate applications in business. Clay Miller, a deeply experienced and highly successful global tech entrepreneur, makes the case via five principles drawn from five easily-accessible sources of Austrian economic theory, with many accompanying examples. Principle 1: The distribution of knowledge requires disaggregated thinking. Source: "The Use Of Knowledge In Society," F.A. Hayek: Mises.org/E4E_92_Hayek Hayek wrote this paper as part of a research program into the problem that economics tries to solve. He defined it as a knowledge problem. Knowledge “never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess”. The implication he drew was for central planning by governments and their departments and committees that would attempt to plan production or set prices. Such central planning is impossible because dispersed knowledge can not be aggregated and so the planners never have enough knowledge on which to base a plan. Quote “The statistics which such a central authority would have to use would have to be arrived at precisely by abstracting from minor differences between the things, by lumping together, as resources of one kind, items which differ as regards location, quality, and other particulars, in a way which may be very significant for the specific decision. It follows from this that central planning based on statistical information by its nature cannot take direct account of these circumstances of time and place…..” Application In our Economics For Business project, we have the opportunity to help entrepreneurs apply the same principle to business knowledge, or data. Too much aggregation can obscure information that is really important and most useful for improving business performance. Here's an example. A frequently used KPI (Key Performance Indicator) is average revenue per customer. It's calculated by aggregating all customer revenue into one number and dividing by the number of customers. For this to be actionable intelligence, it is necessary to assume that spending by each customer is very uniform. But consider the case where average revenue per customer is $190 for a customer base of 10 users, composed of 9 who spend $100 each and one who spends $1,000. The KPI does not suggest that each new customer you acquire will spend $190. In fact, it's more likely they'll spend $100. And, in fact, what you would really like to know is the profile of the $1000 customer and whether that profile, applied in recruiting new customers, would enable you to recruit more $1,000 spenders. You really want to choose metrics that can provide insight into individual customer behavior — like the nature and motivation of the one $1,000 spender. Similar Austrian thinking would apply, for example, to Google analytics, which can profile the type of customer interacting with your website or app, and observable behavior such as conversion rate by page visited, or abandonment rate for specific pages. These are disaggregated statistics that can help you serve customers better. Austrian thinking is rigorous in seeking to identify cause and effect, and to ensure that correlation is not mistaken for causation. A simple example is restaurant data that exhibits a 30% increase in customer traffic on Tuesdays. There's a correlation between day-of-week and traffic increases — but it's not causation. Tuesday does not cause the traffic increase. What does? It requires digging to find out, perhaps, that a local firm offers a perk to office workers to pay for them eating out on Tuesdays. As Hayek would say, this is specific knowledge of time and place, more likely to be qualitative than statistical, embracing the subjectivity that's central to Austrian economics. Principle 2: Consumer Sovereignty requires that entrepreneurs are directed by their customers. Source: Bureaucracy, Ludwig von Mises: Mises.org/E4E_92_Mises This book focuses on the inefficiencies and ineffectiveness of bureaucratic organizational structures and processes. In a chapter titled Profit Management, Mises defines the Austrian concept of consumer sovereignty. Understanding and applying this concept is central to entrepreneurs' capability to create effective value propositions for their offering, brand or business. Quote “Thus the capitalist system of production is an economic democracy, in which every penny gives the right to vote. The consumers are the sovereign people. The capitalists, the entrepreneurs, and the farmers are the people's mandatories. If they do not obey, if they fail to produce, at the lowest possible cost, what the consumers are asking for, they lose their office. Their task is service to the consumer. Profit and loss are the instruments by means of which the consumers keep a tight rein on all business activities.” Application Consumers are the ones driving production. It's up to business managers to make sure that every decision is towards bettering the value proposition offered to customers. For example, the décor in a restaurant should be chosen not because the owner favors it or because an interior designer decrees it, but for the purpose of enhancing the value experience of those consumers the owner wants to attract and to serve. This requires empathy. Consumer sovereignty and entrepreneurial empathy go together. Because consumers are the ones valuing what is produced, they are the ones ascribing value to the product or service the entrepreneur produces. The entrepreneur needs to anticipate what they value, and to do so requires ever-greater closeness to the customer. Clay described the value provided by simple but tasty barbecue restaurants in his home state of north Carolina, in a décor of plastic and paper and small booths. But that wouldn't attract the customers who prefer fine dining in a five star restaurant. The customer decides what experience they value. Startups can usefully anticipate consumer preferences by creating an imaginary perfect customer, and thinking through the value they want and the value the business can facilitate for them. Once in production, get as much feedback as possible on the actual value experience and the customer's feeling about it. Every decision made inside the business needs to be for the purpose of and directed towards improving the customer value proposition and value experience. Principle 3: Human value scales are complex and ever-changing and entrepreneurial empathy is required in order to reach an understanding of customers' value dynamics. Source: Human Action, Ludwig von Mises: Mises.org/E4E_92_Mises2 Human Action is the magnum opus of Austrian economic theory. Every chapter will yield great insights for business. Clay selected value scales as a topic. Quote “It is customary to say that acting man has a scale of wants or values in his mind when he arranges his actions. On the basis of such a scale he satisfies what is of higher value, i.e., his more urgent wants, and leaves unsatisfied what is of lower value, i.e., what is a less urgent want. There is no objection to such a presentation of the state of affairs. However, one must not forget that the scale of values or wants manifests itself only in the reality of action. These scales have no independent existence apart from the actual behavior of individuals. The only source from which our knowledge concerning these scales is derived is the observation of a man's actions.” Application When a person makes a decision to purchase your product or service, they conduct a quite complex evaluation to integrate your offering into their scale of values. And the values and the scale is constantly changing. Consumers are not static robots. Their circumstances change, their preferences for saving or spending change, their time of life or even time of day demand rearranging of value scales. A consumer may have a high preference for Krispy-Kreme donuts. But then they go on a diet. Their value scale changes. Losing weight and increasing fitness are now higher values than enjoying a donut. If you are the Krispy-Kreme donut franchisee, it's important to be aware of the value scale change, and to empathize with the customer. Maybe you could develop a promotion called “Cheat Day” that rewards them with a donut treat after a week of exercise and donut restraint. As Wayne Gretzky used to say, skate to where the puck is going to be, not where it is now. How can you understand value scales? One interview with a customer — what a researcher would call deep, rich qualitative information — can be worth much, much more than survey data. Mises said that we can only know an individual's value scales by observing an individual's actions. Having them answer a survey question such as “How highly do you value this item?” or “What price would you pay for this item?” does not indicate how they would fit the item into their value scale. They may say they would pay $250,000 for a Ferrari, but, when they weighted the experience of owning the Ferrari versus the opportunity cost of foregoing other experiences, would they actually make the purchase? The survey answers won't tell you. Entrepreneurs are rewarded for estimating correctly what the customer values and creating the appropriate value proposition. Principle 4: The market is a discovery process, with uncertainty on both sides of market exchanges. All entrepreneurial actions are tests, with no certain outcomes. Source: Competition And Entrepreneurship, Israel Kirzner: Mises.org/E4E_92_Kirzner This is a seminal work on entrepreneurship. One of the major themes is that markets are a process of discovery. That insight directs entrepreneurs to think in dynamic, process terms. The entrepreneur experiences uncertainty in what he or she is producing, because they are not sure of what customers will value in the future. The customer is uncertain, too, because they're unsure of how they'll value what the entrepreneur produces. Whenever we, as consumers, feel trepidation about “pulling the trigger” on a purchase, we are experiencing this uncertainty. Meanwhile, the producer is anxiously discovering the receptiveness to his or her value proposition. Quote “The market process, then, is set in motion by the results of the initial market ignorance of the participants. The process itself consists of the systematic plan changes generated by the flow of market information released by market participation — that is, by the testing of the plans in the market.” Application Kirzner points out that every plan an entrepreneur has, every value proposition, every offering made to prospective customers can only be a test, a trial. Nothing in the market can be certain. Entrepreneurs are trying to anticipate what customers are going to value, and they can never be sure in advance. That's why entrepreneurs use empathy, to imagine, if they were the customer, what type of experience the customer would be looking for. Entrepreneurs must imagine what customers might enjoy in the future. They must seek the customer's agreement that, “Yes, your product or service delivered what you promised and made me feel better.” One implication of Kirzner's principle of “market ignorance” is for branding. If a brand has accrued a certain level of market reputation, consumers will feel less ignorant. They will feel they “know” a brand that's been producing for 100 years, that is symbolized by the 3-point star that can be seen everywhere, and that is trusted and approved by many other consumers. A brand represents the stored experience and the stored reputation of many customers. Principle 5: All entrepreneurship is for social good, and more social good is achieved by subjecting business to the marketplace test of profit and loss. Source: Austrian Perspectives on Entrepreneurship, Strategy and Organization, Peter G Klein, Nicolai Foss, and Matthew McCaffrey, "Austrian Perspectives On Entrepreneurship, Strategy and Organization": Mises.org/E4E_92_Perspectives In Chapter 4 of this book, the authors discuss the concept of social entrepreneurship. This is an idea that seems to be gaining traction, especially among millennial business owners and millennial entrepreneurs. The idea is that business should be focused on something more than profit and loss. It should provide some “social value”, making the world better. Klein, Foss and McCaffrey provide some robust Austrian thinking with regard to social entrepreneurship. Quote “However, these metaphors (“social value”, etc) often imply a false conflict with traditional entrepreneurship. For example, the contrast between conventional market entrepreneurship and social entrepreneurship implies that the former is somehow not social, or even anti-social. This is misleading, however; for example, Austrians would respond that Mises's calculation argument demonstrates that the entrepreneurial market economy is profoundly social. Entrepreneurs, by bearing uncertainty in an effort to satisfy consumers, work ceaselessly to improve the welfare of all members of society, and their work in turn strengthens bonds of cooperation between individuals and communities, while at the same time disincentivizing conflict and exploitation. This is social behavior in its most fundamental form.” Application Steve Jobs improved society greatly by inventing the iPhone. The impact on society was considerable — better communication and information sharing, and higher productivity for billions of people. Every venture — including social ventures — must grapple with basic economic problems. Taking on a social mission does not relieve the firm of the pressures of the marketplace. Social enterprises are business organizations, and if they earn revenues through the sale of goods and services, they must apply judgement to allocate scarce resources in the face of uncertainty. Genuine participation in the marketplace requires them to be subject to the profit and loss test. Klein, Foss and McCaffrey make the point that “social value” is incalculable. What's good for one individual is not the same as for another. Individuals value things subjectively. When a business pleases one group, it may be adversely affecting another. Profit is not evil. It's impossible to make a profit without serving your fellow man. You are doing good for society by being an entrepreneur, by producing things that people want and value. You forego your own consumption by investing in your business, and so you are making a sacrifice to serve others. And if social entrepreneurs are not subjecting themselves to the profit and loss test — if they are supported by charity or grants — then they are not receiving the signals form consumers that they are allocating scarce resources in the way that consumers — i.e., society — prefers. The ethic of entrepreneurship is to serve, and to make others' lives better, and to receive the approval and reward of customers via the profit and loss mechanism of the market. Downloads and Extras Mentioned in the Episode: "The Use Of Knowledge In Society," F.A. Hayek (American Economic Review, Vol. XXXV, No. 4, September 1945; pp. 519–30): Mises.org/E4E_92_Hayek Bureaucracy, Ludwig von Mises (Yale University Press, 1944): Mises.org/E4E_92_Mises Human Action, Ludwig von Mises (Mises Institute, 1999): Mises.org/E4E_92_Mises2 Competition and Entrepreneurship, Israel Kirzner (Liberty Fund, 1978): Mises.org/E4E_92_Kirzner Austrian Perspectives on Entrepreneurship, Strategy and Organization, Peter G Klein, Nicolai Foss, and Matthew McCaffrey (Cambridge University Press, 2019): Mises.org/E4E_92_Perspectives

Key Takeaways and Actionable Insights Austrian economics sees an economy in motion, perpetually renewing itself. Economic agents (firms, customers, investors) constantly change their actions and strategies in response to outcome they mutually create. This further changes the outcome, which requires them to adjust afresh. Entrepreneurs live in a world where their beliefs and strategies are constantly being “tested” for survival within an outcome these beliefs and strategies create. It's complex. One of the strategies required in this dynamic system is innovation: the enabling of new value propositions to customers, sustained by new resource combinations, new technologies, new go-to-market capabilities, new channels and new delivery mechanisms. Innovation has often been characterized as presenting the entrepreneur with an unmanageable level of uncertainty. Curt Carlson challenges this idea and believes innovation can be predictable via the utilization of sound process, captured in his N-A-B-C method (see Mises.org/E4E_37_PDF), which we explained fully in E4EPod episode #37 (Mises.org/E4E_37). In addition, Curt tells us in episode #91 that the right individuals can strengthen the process by acting as innovation champions. Here are their characteristics. 1. Originate a value proposition. The route to value starts with a value proposition — accurately identifying a need and developing the appropriately differentiated approach with the right cost structure. Champions are those who can originate innovation projects with an energizing and inspiring proposition. They are customer advocates with creative capabilities. Champions can use Curt's process map for guidance, or our own "Economics For Business Template" (). 2. Collaborate with a complementary partner. Innovation is a team game, and it often starts with a partnership of two. Venture capital funds often look for a team of co-founders rather than on brilliant individual. A combination of an engineer and a marketer is a good one, but there are many more. The key is that the partner is complementary: different skills, different experience, same commitment and passion. 3. Build a team over time. The benefit of complementary skills is not limited to co-founders or co-champions. As an innovation project evolves, the need for more skills and different experiences expands. A champion is able to add complementary skills via new team embers over time, while maintaining team cohesion and integrity. 4. Learn necessary value-facilitation skills. Recruitment is not the only route to new skills for the team. The champion should be able to recognize skill gaps and fill them via their own learning. For example, mastering the interpretation of qualitative data from customer learning sessions is imperative but not intuitive. Champions work hard at gathering the data (listening and empathy skills) and processing the data (interpretation skills) to project possible future solutions (imagination skills). These new skills are learned over time. 5. Iterate with the team and in larger forums. It is impossible to predict how an innovation process will proceed, and what twists and turns will be necessary. A champion is able to iterate the understanding of the need, the approach to solving it, the use of technology, and the management of costs. Change is constant not only in the world, but in the innovation project. Iteration can be conducted in the small team, but the champion should also seek larger — perhaps company-wide — forums for sharing and commentary. Everyone's input counts. Champions don't become too possessive of their ideas. 6. Champions exhibit enviable human values. Project teams are often under stress. Deadlines loom, experiments fail, ideas clash. A champion demonstrates human value of trust and respect and integrity that bind teams and projects together. People want to work with champions. 7. Champions take organizational responsibility. All innovation projects are fraught with risk and uncertainty. Some will fail. Others will take unexpected turns. When the unwanted or unexpected happens, a champion takes responsibility and does not try to deflect blame to exogenous factors. All decisions are subjective, and champions take ownership of their decisions. 8. Champions persevere. Innovation project timelines can be long. Curt described some that took 10 years or more (like the development of Siri, which eventually became associated with the iPhone4). Despite barriers that might seem insurmountable, and setbacks that might feel humbling, champion s keep going no matter what. They are inspired, and inspirational to others. 9. Champions succeed. Success is not a behavior or a characteristic, it is an outcome. Nevertheless, with the right process and a good team, champions succeed repeatedly. In our hyper-competitive world, without a champion success is not possible. The only viable path is to aspire to be the best at what we do. That starts and ends with someone committed to success — a champion. Additional Resources Check out Curt Carlson's HBR article, "Innovation for Impact" (PDF): Mises.org/E4E_91_PDF Curt's website is PracticeOfInnovation.com. Click on "Innovative Indices" to see how to assess the innovative potential of your firm and projects. "N-A-B-C Innovation Process" (PDF): Mises.org/E4E_37_PDF "Curt Carlson: There is a Systematic, Repeatable Process to Generate Customer Value" (E4EPod episode #37) : Mises.org/E4E_37

Key Takeaways and Actionable Insights What exactly do we mean by paradigm? In our project to make a useful link between Austrian economic theory and business practice, we earlier introduced the Austrian Business Model. This is a recipe to make a profit — a template adaptable to any individual firm. A paradigm is precedent to a business model (see Mises.org/E4E_90_PDF). It's the underlying way of thinking — a set of values, beliefs, concepts and practices that combine to constitute a distinctive entrepreneurial approach to business. Per Bylund's exposition of the principle of Facilitation of Value leads to a new — Austrian — paradigm for business. Here is the framework: The Purpose of Business is to facilitate value for customers. In today's interconnected, fast-changing world, businesses are formed and managed with the intention of ensuring value experiences for customers. This challenge is fraught with uncertainty, because value is an emergent — and therefore unpredictable — property of the interaction of people, artifacts and behaviors in complex systems. Customers, whether consumers or businesses, operate in their own system. They must fit everything they consume into their existing system — their life or their business processes and organization. Customers experience value in their own systemic context. If they own a car, for example, they experience ownership value within a system of taking kids to school, commuting to work, and shopping, as well as in an intersecting system of service, maintenance, fueling, accessorizing, and replacing worn parts. Businesses interface with the customer's systems from their own system of design, procurement, resource management, partnering, warehousing, distribution, payments, technological enablement, regulatory compliance, communications and many more elements. A business system facilitates value to realize the customer's experience within their own system. The value of any offering is positively perceived by customers when they fit into their system is felt to be a good one and the offering contributes to system improvement or enhancement in some dimension. Uncertainty is always present because the system improvement can not be predicted with certainty in advance. Austrian economics provides the principles for entrepreneurs, managers, and strategists to establish a unique, sustainable, profitable, and scalable process to facilitate value for customers. The end-user / consumer takes the primary role. A business can not be an assembly of resources or an expression of core competencies or the implementation of innovation in isolation. It can't be the result of a strategy to penetrate a market or disrupt a competitive set without first understanding the hopes and dreams and aspirations of customers. It can't be a simplistic choice from a set of business models on the business school shelf. A business must stem from giving the customer the primary role. The very purpose of a business is to please customers by serving their needs, and so their perception and preferences must define the business design. Since the needs of customers are subjective, idiosyncratic, changeable, and context-dependent, methodological individualism — making the individual the unit of analysis, rather than groups or segments or markets or industries — is the indicated approach. This approach is a lot different than ideas of shareholder value or stakeholder value. It is sometimes acknowledged in terms such as consumer-centricity or consumer-first. But those commitments tend to be tactical and implementational. Relentlessly and unfailingly taking the point of view of the customer is fundamental to the new business paradigm. It's what make business purposeful and ethical, sustainable and responsible. Value is determined by the end-user or consumer. What consumers seek from business is value. Value is hard to define and challenging to quantify because it is a subjective experience of the consumer, within that consumer's own individual context. What's perceived as valuable by one individual consumer will not be the same as another individual, and any individual can change their perceptions or their ranking of what's more valuable at any time. Value, therefore, can not be created by a firm or a brand, despite the traditional use of that language. Value is formed in the consumer domain, as an emergent property of the consumer's choices, behaviors and context. Take a laptop PC for example. The value experience changes depending on whether the user is a gamer, an executive in the financial system, or a video editor. It varies based on the software the user installs, the usage advice he or she receives from peers and experts, the quality of the user's network, their preferences for in-use performance, and many more variables. You can examine the same value experience thought experiment for any good or service of your choice, e.g. the value of an Audi A8 to a family of 6 living in rural South Dakota compared to a family of two in Manhattan with a one-bedroom apartment and a single parking space. Value emerges in lived experiences within these varied contexts. For a business to business enterprise, it is sometimes expedient to limit the value analysis to the final purchaser / end user. There are sometimes some special value considerations in these contexts. For example, business customers tend to evaluate every economic choice in money terms - does it lower costs or contribute to higher revenues? But it is also the case that a business customer is often, in fact, multiple users (whether a procurement committee or a department all using the same item), and so a group rather than individual assessment of value is appropriate. Nevertheless, value remains a subjective, idiosyncratic, changeable phenomenon. Empathy for customer dissatisfaction is the starting point for business development. Dissatisfaction with the status quo — Austrian economists sometimes call it unease — is the raw material for business development. The genius of consumers is to always sense that their experience could be better than it is. Empathy is the diagnostic skill of observing and analyzing behavioral data and deducing emotional drivers for change and innovation. A customer searching online for more efficient home heating solutions may be dissatisfied with the ambient conditions in the home, or with the level of his or her gas bills. An individual interview can determine which of these — or other alternatives — applies and point the way to a desired solution. The entrepreneurial practice is to focus empathetic attention on the inner drivers which are manifested in observable behavior. There is no shortage of customer dissatisfactions to be addressed by businesses. The skill of empathy is to advance beyond taking the point of view of the consumer and to feel the experience that the consumer feels, and to identify the feelings that really matter. This is counter-factual — it's not actually possible to feel what another human being feels — and is therefore an act of imagination. Imagination provides the energy for consumers' dissatisfaction (they imagine a better future) and for entrepreneurs' creativity (they imagine what dissatisfaction feels like for the consumer, and they imagine solutions to that dissatisfaction). Empathic design To advance from imagination to a business plan is an act of design. Design can be captured as a process in which an innovating business creates a blueprint for a good or service or technology or other artifact that presents a practical solution to a customer. There are many design process alternatives. The shared design principle is to start with an identifiable customer with a problem to be solved, and progress towards a solution with which the customer can interact and can evaluate. Early prototype solutions should be adequate to share a resonant imagination between entrepreneur and customer, and to stimulate realistic responses from customers regarding features and attributes they do or do not find valuable, and flexible enough to accommodate frequent iterative adjustments based on those responses. Uncertainty exists as a barrier to be overcome in the delivery of new solutions to customer dissatisfaction. Adaptiveness is the entrepreneurial response to uncertainty. Uncertainty is integral to the business paradigm. Uncertainty can be experienced as the impossibility of predicting the future because of the extreme complexity of the interactions of customers, entrepreneurial offerings and potential solutions, opportunity costs, transaction costs, environmental factors and other system elements. The response to uncertainty is adaptation: making a change in a business offering and monitoring the resulting change in customer acceptance, customer behavior, customer interactions or other consequential results. Favorable changes are preserved, unfavorable ones discarded. Continuous dynamic change then becomes the norm for businesses in an adaptive system. There is no equilibrium, no stasis, no predictive planning, no stable combination of assets or resources. There are no system-imposed or structural boundaries to a firm's activities, just the subjective entrepreneurial judgment about interaction with customers to facilitate customer value. In complexity theory terminology, customer value is the constraint to the system that can shape change and emergent outcomes (think of Steve Jobs constraining his designers to “no buttons” on Apple devices). Businesses accumulate capital as a result of the flows of income from customers. The measure of business effectiveness is the flow of income from customers. Insofar as entrepreneurial actions set in motion a flow which is projectable into the future, a business is in a position to make capital investments both to expand its capacity to generate income flows and to create new innovations to stimulate new flows. Current flows are subject to change at any time when customer preferences change, or their environment changes or there are shocks to the customer's system. Entrepreneurs must develop accurate appraisals of which of their assets - in what specific combination - are most responsible for generating income flows, and establish them in such a way as to be flexible in rearranging them and recombining them in response to (or in anticipation of) market change. Future flows from investments in innovation are uncertain and unpredictable. Entrepreneurial skill in identifying productive investments (foresight) differentiates more successful from less successful firms. Additional Resource "The Austrian Business Paradigm" (PDF): Mises.org/E4E_90_PDF

What is technological deflation, and how can entrepreneurs take advantage of it? By combining already available and easily accessible technologies to facilitate the accelerated information flows that constitute value in the 21st Century: higher quality, faster speeds, lower costs. Jeff Booth explains. FREE DOWNLOAD: "Value Then vs. Value Now" (PDF): Mises.org/E4E_89_PDF Key Takeaways and Actionable Insights Technology reduces the labor factor, lowers costs, and frees up time. These are the components of deflation: less labor and effort for any unit of output, faster speed, lower material costs, and re-allocation of time from lower to higher productivity activities. The speed at which this technological change is happening is “staggering” in Jeff Booth's words, and will accelerate. More and more time will be freed up to allocate to higher uses. The result is deflation: higher quality for lower cost at faster speeds. The only reason price deflation is not pervasive throughout the economy is the status quo governmental system. Federal Reserve money printing, more and more debt, lower interest rates — these are actions designed to drive price inflation. This scheme defies the natural order of technological deflation. It is the great fight of our time, says Booth, to end the inflationary scheme. But for entrepreneurs, the right action is to embrace and harness tech deflation. There is tremendous leverage for entrepreneurs in the current economy of technological change. Jeff uses his “folding analogy”. If you could fold a piece of paper 50 times, it would reach the sun. Technological change is at the early folding stage today, but each new fold doubles the growth rate and the impact. The way for entrepreneurs to put this folding analogy to work for them is by combining technologies. Several folds at once. One of Jeff's examples is Elon Musk. In Jeff Booth's words, Musk forecast three exponentials: the exponential improvement in battery technology, the exponential increase in the role of software in automotive engineering, bringing information flow into the vehicle, and the exponential improvement in A.I. to bring self-driving features to automobiles. Taken together, these three widely available technologies made Tesla a revolutionary venture, surpassing GM in market capitalization. The same “crazy opportunities” are available to all entrepreneurs. We don't all have to be Elon Musk. The possibility to increase customer value and reduce costs at the same time are available to all entrepreneurs. One of the keys to success is to direct technology towards increasing data capture: more and more data signals to drive deep learning via algorithms, leading to better and better and faster and faster decision-making. Data collection platforms managed with A.I. algorithms can generate the exponential growth that Jeff refers to. Google and Amazon are the examples everyone talks about; but here on E4E, in episode #84 (Mises.org/E4E_84), Bob Luddy talked about sensor-based data collection in his CaptiveAire restaurant ventilation systems, feeding performance data back to the central platform for increased learning and improvement. The opportunity is available to all types of business. Value looks different today than in the past, and it will look different again in the future. “What will value look like in the future?” is one of the questions Jeff Booth urges all entrepreneurs to ask for themselves and their business. He cited one example from history: the Blockbuster video rental business. To Blockbuster's owners and managers, value looked like the convenience for consumers of movie entertainment of 9000 stores across the country, each with a huge selection of videotapes to choose from. Their idea of adding value was to provide popcorn and candy in the checkout aisles. But when Netflix came along, value starts to look different. It's the convenience of streaming movies directly to your digital TV or tablet in your home or on the go, with constant additions to the offering, both of original content and content from other channels. The 9000 Blockbuster stores no longer look so convenient. Information flow and digitization make value look different. Another example Jeff cited is the university education business. Traditionally, its value is based on real estate — an exclusive set of physical buildings in one specific place to which students must travel (or rent a dorm room) in order to access an exclusive faculty of high-reputation teachers. Now, with technology and information flow, the core knowledge is accessible anywhere/anytime, and is tending towards free. Offline educational ventures can hire teachers to make video classes available to the world, and virtual reality will make the experience even more vivid and more enjoyable. The knowledge is the same. Students' questions are probably the same. The cost structure is totally different. Three principles for entrepreneurs to facilitate new value in the future. Given these examples, and given the trends of accelerating digitization, data flow, multiplicative combinations, and algorithmic analysis and intelligence, what are the principles for business to follow to be able to facilitate new value for customers? 1) Aim for 10X improvement in the customer experience. The rate of acceleration is so fast, and the exponential potential of new combinations of technology is so great, that innovators must aim for a 10X improvement in customer-perceived benefit to command attention, turn heads and dislodge customers from their current choices (Curt Carlson made the same point in episode #37: Mises.org/E4E_37). 2) Make your thinking boundary-less. One of the great restrictions on entrepreneurial creativity is the institutionally and historically imposed tradition of thinking in silos, and thinking that industries have boundaries. Universities have their faculty departments and corporations have their divisions, and they tend to put silos around thinking. But the Elon Musk example of batteries + software + A.I. crosses industry boundaries, technology boundaries, performance boundaries, and financial boundaries. Boundary-less thinking can open up endless new possibilities. Entrepreneurial economics teaches the re-combination of assets, not necessarily the creation of new ones. Busting silos can lead to new combinations. 3) Forecast the exponential. Where in your frame will exponential change occur? Use your imagination to try to forecast it. The future can't be predicted but it can be imagined. The challenge is to imagine the next fold of the paper and the next one and the next one; and the next combination of two or three or four or more new technologies. The idea of the exponential can be applied everywhere. Additional Resources "Value Then vs. Value Now" (PDF): Mises.org/E4E_89_PDF Purchase Jeff Booth's book, The Price of Tomorrow: Why Deflation is the Key to an Abundant Future: Mises.org/E4E_89_Book

In many situations, the complexities in managing a diverse and layered team of people are to view individuals as ends and not means. Management and organizational frameworks often treat people as means. The business ends are external: so-called shareholder value, or stakeholder value, which is fashionable today, or simply revenue and unit sales goals, or metrics and KPIs. Managers are taught to look at people through an economic lens as resources ― human resources ― in the same way as material resources and financial resources, to be utilized as efficiently as possible. But people are not means. They are subjects, and they have subjective ends of their own. They're searching for identity, meaning, and trying to meet their own potential. If managers recognize this, their approach to people as team members and employees will be much different. Individuals need to be able to tell their own story in their own space. We work for money but we live for the story. The most important story is the one we tell about ourselves and our values. People need opportunities to tell their story. Everyone at every level in an organization and in every type of role or job needs this opportunity. To do so, they need their own space in which to create and embellish their story, a space that is unique to them and gives them a fine-grained perspective of which they are masters, and for which others will prize them. David Hurst gave the example of Costco, where the in-store personnel have space to use their own discretion to serve customers. If a customer (a guest, in Costco parlance) requires assistance in locating an item, a Costco associate will stop whatever they are doing and escort the guest all the way to the shelf location. They have their own space and their own discretion to design and deliver a unique level of service, and a story they can tell about their customer commitment. This becomes a culture that pervades the entire company. FedEx has similar spaces, and similar stories about individual employees going to extraordinary lengths to make sure packages are delivered on time. One way to create these spaces is to give everyone intelligence-gathering roles. David Hurst tells the story of delivery truck drivers in the steel fabrication business. He treated them with deference for their ability to gather real-time intelligence: which competitors had trucks in the customer's yard; what concerns were customer employees talking about; which customers were friendly and which ones adversarial? These frontline employees are able to gather and feedback market intelligence that was faster, deeper, more local, and more detailed than traditional reports. It's small data, often much more valuable than big data. And the employees can tell their stories about their intelligence gathering and their important role in company processes, from their unique space. The word in management usage now is fine-grained. The front line has a fine-grained perspective and fine-grained intelligence. This fine grain is highly valuable, especially when shared in collaborative teams and structures where everyone knows their role, which is not tied to hierarchy. Hierarchy and structure create a cascade of negative effects for the people in them. As companies grow and become larger, they require internal specializations and experts in narrow, technical fields. Specialization brings hierarchy, where general managers can supervise those in specialized roles. Hierarchy leads to careerism and status when employees are not collaborating with each other, but competing. The result is what David calls a power trap. The firm becomes trapped on the right-hand side of his "Management in a Field of Tensions: model. [[{"fid":"93076","view_mode":"image_no_caption","fields":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":""Management in a Field of Tensions" Model","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":""Management in a Field of Tensions" Model","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":""Management in a Field of Tensions" Model","class":"media-element file-image-no-caption media-wysiwyg-align-center","data-delta":"1"}}]] The tension for management lies in a continuous pull of the “hard, scientific” side of the model, away from the humanistic side. Austrians lean towards the left-hand side of David's model: humanistic, treating people as ends, respecting narrative more than data. For example, the exercise of judgment under uncertainty, so central to the Austrian paradigm of the entrepreneurially-driven economic system, lies on the left-hand side of the model. It's practical, grounded wisdom, when entrepreneurs make decisions when they don't have all the data. (And the Hayekian insight is that no-one ever has all the data.) They glean what they can from the individual observations of people involved in the situation at hand (small data), and then decide, knowing that the consequences are uncertain, and that they will need to be adaptive to change in the future. The right-hand side of the model represents the pull of so-called science: hard data, mathematical calculation, plans, and administrative bureaucracy. Smaller, private, more entrepreneurial companies can often avoid the right-hand side of the model. Smaller and privately held companies have many advantages. They tend to be more frugal in good times and bad, and act carefully with cash, thus retaining flexibility in difficult markets. They have a high bar for capital expenditures and make fewer malinvestment decisions. They often try to avoid carrying too much debt, so that bankers don't have power over them. And, importantly, they are often better at retaining talent and keeping experience inside the firm. They can avoid the careerism of competing for status in the hierarchy, and just let people become better and better at their jobs. On the left-hand side of the model, as David describes, it's all about people. Additional Resources "Lead Like a Gardener! ― Agile and Design Thinking Will Become Management Fads Unless We Expand Our Concept of Management": Mises.org/E4E_88_Article The New Ecology of Leadership: Business Mastery in a Chaotic World by David Hurst: Mises.org/E4E_88_Book.

Key Takeaways and Actionable Insights An understanding of the Austrian definition of capital is tremendously useful to all business owners and managers. What is capital? Austrian economics has a precise and distinctive definition — unlike business schools and most business publications, books, and columnists. Among those entities, the term capital tends to be used very imprecisely. You might see sentences like, “Entrepreneurs must ensure they have sufficient capital to get their new product to market”, or “to get to break-even”. Such usages imply that capital is a cash reserve to be “burned off” in the process of launching and scaling a business. Recently, it has become fashionable to coin terms such as human capital, or brand capital, or relationship capital, or even spiritual capital or street capital. All of these terms are sloppy definitions of capital from an Austrian point of view. And it's important to note that capital is not the same as capital goods, which are “produced means of production”. Capital is not a means of production, it is a consequence of production. What, then, is the precise Austrian definition of capital? On the E4E podcast #87, Professor Matthew McCaffrey gives us this definition: Capital is the monetary value of a business's claims to income. This includes all of its marketable assets, whether they are tangible or intangible. It's a sum of individual values. These values are ultimately determined by consumers, because the value of a firm's assets and the value of its income streams ultimately depend on how consumers value the final product. Crucially, capital is distinct from what are called capital goods or production goods, which are the physical goods used in production. Those are also vital for understanding how entrepreneurship works in practice, but they are not capital in the sense in which we mean it. In summary: Capital is a flow (rather than a stock)Coming into your businessFrom consumersReflecting the value consumers perceive in your company's services. B2B businesses can substitute the term “final purchasers” for consumers if producing goods and services purely for business customers. But it is important to remember that the value of capital always eventually reflects the valuations of goods and services by consumers. The software or professional services your B2B business provides to a business customer will command less of a claim to income if that business customer faces a change in preferences and a decline in market demand from their consumer population. When forecasting future income flows, every business must bear in mind the climate among ultimate consumers. What are the implications for entrepreneurs and business managers? Flows can be generated via tangible or intangible assets.Consumers' valuation of services is the key variable.Entrepreneurs must be able to appraise which assets — in which combinations — are generating the flow.The flow can change — even disappear — when consumer preferences change: entrepreneurs must be able to adjust.Large flows can result from a low asset base — and vice versa.Appraisal — predicting future prices and flows — is the vital skill to determine what to invest in, how to organize, and what to produce.Cash flow is the measurement variable.Use cash flow to calculate asset productivity.Update appraisals continuously based on cash flow. What about capital goods? Capital is NOT the same as capital goods.But capital goods can be generators of capital flows.IF consumers value their output.Austrians stress HETEROGENEOUS capital goods, both tangible and intangible.A jigsaw puzzle to assemble, disassemble, and reassemble in the right combination, based on consumers' valuations. What actions should entrepreneurs take as a consequence of the Austrian view of capital? Always focus on the value you are facilitating from consumers.They, in turn, will generate your capital flow.Measure the flow in dollars — especially the trend.Be a master appraiser: know your asset productivity.Set up your assets for flexibility — be fully able to disassemble and reassemble capital combinations.Experiment frequently with different combinations.Become comfortable with continuous change in asset combinations. Additional Resources Professor McCaffrey made reference to Frank Fetter's role in defining capital in his online discussion, "Frank Fetter and the Austrian Tradition in the United States": Mises.org/E4E_87_McCaffrey Professor Peter Klein explains why metaphors like Human Capital are unhelpful to entrepreneurs in his article, "A Note on Human Capital": Mises.org/E4E_87_Klein

Key Takeaways and Actionable Insights Entrepreneurship is a way of life that can be learned around the dinner table. Allan's parents were entrepreneurs, although it would never have occurred to him to call them that. They were in the service business, including restaurants and car washes. As a kid, Allan would help around the car wash, everything from washing down cars to emptying the trash to accounting. He internalized the idea that entrepreneurship was always doing two jobs, such as running one car wash while getting another ready for opening. The “two jobs” metaphor stayed with him. Around the dinner table, the family would talk about how the businesses were going. It wasn't so much a lesson in entrepreneurship as immersion in a lifestyle. Entrepreneurship can be the source of a sense of control over one's destiny. Following this childhood immersion, Allan quickly realized his felt need to control his own destiny. Being an employee would not achieve that goal. He did not want to await permission to try new pathways. He studied design in college and took on clients for design work, and quickly found out that he had a taste for business. He found out that print design work was not profitable and in declining demand as design shifted to the web. From web design, he migrated to internet software design and production. He calls this pathway “slowly adapting to what I find interesting”, which has been his story for 20 years. Allan applied his “two jobs” mentality to launching a SaaS accounting software business. Allan developed a software design and consulting firm, which generated cash flow. He and his business partner poured the cash into developing a superior SaaS accounting software. They worked on it on nights and weekends — doing two jobs. He describes juggling the clients and leads and sales and payroll of the consulting company with the development of a new business with different customers, leads, sales and payroll. The “two jobs” mindset is typical for entrepreneurs as they grow and ideate and innovate. Agility is a more effective and productive pathway than planning. Allan tells us that he never had an official roadmap or business plan for the SaaS software company, with known milestones a year or two years or more in the future. Entrepreneurial management lies more in knowing how to be nimble, how to move fast, how to make decisions quickly. The hardest part is knowing what features to work on, when to work on them and how long to work on them. Orchestration is the entrepreneur's organizational skill. To be an entrepreneur, and to build a business around you, it is necessary to attract talent, motivate talent and keep talent. It's like being a conductor in an orchestra. You may not be the best violin player, but you know what another great violin player sounds like. You know how to assemble a team of players and blend them in a harmonious way. And the attitude of the employees is as important, if not more important than the talent. Churn in employees is typically a business killer. It's important to be able to recognize both talent and the right attitude. Allan ascribes success to transparent and continuous communication about the company's mission and values — these will attract the right talented people. The journey is strewn with mistakes all the way to its successful conclusion. Allan built and steadily grew his SaaS software company over a ten year period and then sold it. His analogy is that of the duck that looks like it is gliding smoothly over the water, while kicking like crazy underneath the surface. Self-doubt along the way is normal. Errors and mistakes that require correction are normal. For entrepreneurs, it's important to become comfortable with being uncomfortable. Entrepreneurs are in the human reaction business. The measurement of success is making people smile. All businesses are human reaction businesses. The goal is to make an emotional bond with the customer: they enjoy the experience you make possible for them, whether it is managing their own accounting using your software over a long period of time, or whether it is finding out about one new feature that they discover and find works well for them. Entrepreneurs strive for those moments of understanding. Making people smile is the metaphor — but in software, it's hard to see them smile, so it's necessary to find the right KPI's that will be a proxy for smiling. Empathy is the skill of being able to feel when invisible customers are smiling. Allan advanced into real estate and other ventures — but sees it all as storytelling. After selling his SaaS business, Allan continued in software design and consulting for clients. He also involved himself in real estate, including a brewery in his home town. The brewery is a platform for telling the stories that make up the history of the town. And it is storytelling that Allan makes the overall metaphor of the entrepreneurial life. You are writing the story that your grandkids will tell about you in the future. What is the story you want to write? What is the story you want to tell about your business to attract and engage customers? The great brands and great businesses tell great stories. Entrepreneurship is a story told about life. Additional Resources "Allan Branch's Entrepreneurial Journey" (PDF): Mises.org/E4E_86_PDF1 Hunter Hastings mentioned effectuation theory in his prologue to the conversation with Allan Branch. For those interested to learn more, refer to the useful definitional academic paper by Saras D. Sarasvathy, "Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency" (PDF): Mises.org/E4E_86_PDF2

Key Takeaways and Actionable Insights Why do business schools exist? Dr. Bylund wonders if business schools are facing an existential problem. Originally, their purpose was to train young people for a trade career. They transitioned into the field of management, preparing young people for the practice of management in large corporations. But the transition also turned the schools into creatures of academia, where research and theory are the dominant currency for professorial careers. Research and theory are not well-matched to the teaching of practice skills. So the professors borrowed from the rest of the university, especially the departments of economics, psychology and sociology, in order to concoct a management discipline. The result has been a disconnect with the realities of business. Business school models and strategies reflect their academic, non-business sources. One of the consequences of the derivative nature of the management discipline in business schools is the unrealistic nature of their models and strategies. Models tend to be static, calling for a “positioning” of firms or brands in a market or industry framework that is given or pre-existing. Dr. Bylund sees this as an extension of the equilibrium principles of classical economics, where the ideal is an absence of change. Business school models tend to require an assumption that industries and markets and competitive conditions are static, enabling the focus to fall on the variables of a firm or brand or offering, and how it penetrates or invades or “disrupts” the status quo. Business schools miss the continuous dynamics of the Austrian view of business, markets, and economic processes. The Austrian view of the market as a process unpacks a view of entrepreneurship and business management that sheds all vestiges of statics. Austrians understand that consumer preferences are continuously changing and that a firm's offerings need to be continuously adjusted to reflect those changing consumer preferences. Austrian entrepreneurs know that the features and attributes of their products and services need similar continuous adjustment; the same goes for prices and promotional offers and advertising messages. Competing firms are doing the same, resulting in a complex adaptive system of multidirectional adjustment. Continuous change in response to marketplace changes is the norm. There is no place for fixed assumptions or static thinking or unbreachable boundaries. The Austrian Business Model focuses entrepreneurs on value agility. Entrepreneurship is the process of discovering how best to contribute to the ongoing market process, and how to facilitate a value experience for customers at every point in time. This focus on value automatically accommodates the changes in customer preferences and competitive offerings. Value in the perception of the customer is always relative to alternatives – either alternative offerings or alternative uses of their money for entirely different purposes (including buying nothing and saving instead). These relative comparisons, and the context in which they are made, are always changing. This is a totally different perspective for entrepreneurs than the “positioning” of business school models. The Austrian perspective makes many of the standard business school concepts inapplicable. Dr. Bylund's overall commentary on business school content (their models and their strategy frameworks, for instance) concerns their applicability in real business situations. For example, their concepts of competition generally are framed against competing firms with substitute offerings in a given industry. But entrepreneurs know they are competing for the customer's use of their dollars in the most favorable subjective value exchange, not against other firms. Business schools urge business efficiency through cost reduction, but the real business objective is the customer's value experience. They teach positioning in and penetration of markets, but there is no market without entrepreneurship; entrepreneurs create markets. They teach disruption and substitution, but entrepreneurs facilitate new ways of doing things for customers, which is neither disruption nor substitution — it's creative advancement. They teach students to prepare comprehensive business plans, which can be useful exercises in thorough preparation, but they don't substitute for interaction in the marketplace; customers don't care to see your business plan. And their ideas of incubation are often to protect ideas from real market exposure. Business schools can sometimes confuse the “who” of entrepreneurship with the “what”. Austrian economics studies and analyses the “what” of entrepreneurship: the action of serving customers in a changing market in conditions of uncertainty. Evaluations of success come after the action is taken; it can't be predicted, and no entrepreneur is more successful than any other in the planning stages of taking products and services to market. Only the customer decides. When business schools elevate characters like Elon Musk or Jeff Bezos to iconic status and analyze their character and individual style, they are confusing the “who” of entrepreneurship with the “what”. Musk and Bezos are heroes because customers bought their offerings. Evaluating how and why the customer discovered and experienced value is more important than studying how Musk and Bezos behave. Additional Resources "Austrian School vs. Business School" (PDF): Mises.org/E4E_85_PDF The Seen, The Unseen, and The Unrealized by Per Bylund: Mises.org/E4E_85_Book1 The Problem of Production: A New Theory of The Firm by Per Bylund: Mises.org/E4E_85_Book2 Dr. Bylund's essay, "The Realm Of Entrepreneurship in The Market in The Next Generation Of Austrian Economics": Mises.org/E4E_85_Essay "The Austrian Business Model" (video): Mises.org/E4E_ABM2

Key Takeaways and Indicated Actions Bob Luddy is founder and CEO of CaptiveAire (CaptiveAire.com), the US market leader in commercial kitchen ventilation systems. It's a $500MM+ business with 1,000+ employees and a 40+-year success record. Bob explains to Economics tor Entrepreneurs how these principles of Austrian economics, applied as active processes, played a part. Say's Law Say's Law is a fundamental proposition in support of a production-driven market system as opposed to a consumption-driven view. It's quite difficult to interpret and pithy summaries like “production creates its own demand” and “production precedes demand” don't help entrepreneurs very much. Bob Luddy doesn't interpret, he applies. His application formula is this: new supply that is brought to market can solve problems that have not so far been solved. In that case, demand will result. He gave this example: in the 1980s, many of the harmful effluents from cooking in a restaurant were escaping into the kitchen and sometimes even into the dining room. Those effluents could contain carcinogens, and at the very least, they're very unpleasant. That was a problem – but it was the status quo. So Bob thought, in Say's Law mode: if CaptiveAire could solve that problem, and bring the solution to market at an acceptable price, demand (i.e., lots of customers) would follow. That turned out to be exactly right. Implied in this formula, of course, is attention to market signals regarding unsolved problems, a problem-solution design process, and a communications and customer interaction capability to inform the market of the new solution. Say's Law applies, but not in isolation from other entrepreneurial actions. Those actions, Bob tells us, include accuracy and completeness in solving the problem, since many competitors may be trying to address it at the same time. Small details can make a big difference in applying Say's Law. Subjective Value Many podcast listeners have asked whether the concept of subjective value — which holds that it is the subjective and emotional evaluation by customers of an entrepreneurial offering that determines its market acceptance – applies equally in B2B markets as in B2C markets. Isn't subjective value more relevant to consumers' choices of fashion and food than it is to business customers' choice of service es from vendors and suppliers? Bob's response: The subjectivity of value is very, very clear, and it's reinforced in the market every single day. He used the example of bringing an integrated ventilation system to a restaurant. CaptiveAire might be successful in explaining all of the problems it's going to solve, its sustainability, and all relevant features and functions. Completion of a sale still comes down to the user subjectively assessing the exchange value, by asking “Am I willing to pay X amount of money to solve these problems?” The customer very well could say, "No, I'd rather live with some of the problems and depart with that much money.” Bob emphasized the importance of communications in addressing the challenges raised in calibrating subjective value appraisal. A strategy of “solving all the problems” requires clear communications to the customer of how CaptiveAire solves the problems, so that the user can make a fully-informed decision. “If we don't communicate well, the value of the product in the user's mind may be lower. So part of the issue of getting a higher subjectivity of value is to have a full understanding of what the product does.” Clear communication is a component of value. Comparative Advantage There's a big difference between competitive advantage and comparative advantage. Bob explains it this way: competitive advantage lies in striving to provide the same service and same solution in a better way than a competitor. Such an advantage may be achievable from time to time, but it is temporary and quite easily taken away by a hard working competitor. The market signals are clear and unobscured, telling the competitor where they must improve and the incentives to do so are compelling. No competitive advantage is sustainable over the long term. Comparative advantage is different. It's an unmatched capability, often built over time by accumulating unique knowledge and experience and applying them in a unique capital structure. Such an advantage is longer term, maybe not absolutely invincible, but very hard to overcome. Bob cited an example outside of his field: winemaking in Napa Valley, California. “If you decided you wanted to make wine and compete with Napa Valley, it's going to be a hard way to go.” In the case of CapitveAire, “over time, we've been able to develop those design technologies, techniques, automated equipment and software, and when you marry all those things together and you integrate them, we gain a major comparative advantage. It's very hard to overcome because it's not one thing. It's many things, and they're all well thought out and have been developed over a number of years.” Bob refers to on important element of CaptiveAire's comparative advantage as “technique”. An example is “bending metal in real time and dynamically stacking it right up on the assembly line”, resulting in elimination of inventory, and very rapid turnaround time. It's CaptiveAire's unique methodology, developed over many years. Competitors can attempt to emulate but they fail. It's a comparative advantage. Opportunity Cost The cost of any choice or decision includes its opportunity cost: what option must be declined or given up in order to make the choice you prefer. Bob explains: Understanding opportunity costs means turning down opportunities that would divert resources, and, instead, focus on getting the best utilization out of your human resources possible, and making the most sustainable solutions, which are going to save time and money over a period of time. We make 10 major categories of products. No more. To keep those products at the right price, at a high level of performance and sustainability requires all of our time. So if we divert any of that time, opportunity costs might result in us failing at our most primary mission. He gave the example of a line of business that required extensive customization. The benefit of customization is that each customer feels that they enjoy unique value. The opportunity cost is that it's impossible to be all things to all people — it absorbs too much time and too many resources. CaptiveAire addressed the opportunity cost problem by replacing customization with software-enabled adjustability of certain key inputs like voltage and phase. They found that this solution could effectively address 95% of customer-requested flexibility. While competitors asked, “Just tell us what you want, we'll figure it out” and spent resources on responding, CaptiveAire was able to stay focused on its core mission and core products and services. Every opportunity that comes a firm's way must be examined through the lens of opportunity cost. Austrians see opportunity cost as an active process — the same way they see value and resource allocation and pricing and many other elements of business. Pricing Pricing is a discovery process. At the same time, it's an element of business strategy. Bob made a strategic decision at the outset to price “lower than the market,” while aiming for highest quality. The market informs CaptiveAire of what the pricing norm is, and therefore what “lower than the market” is. The discovery part is: how low to go to maximize unit sales and revenues. The second part of Austrian pricing theory is that producers choose their own costs. Bob chose to seek ways to keep costs low enough to sustain his pricing and quality strategy, which led him to the efficiencies, automation, speed, inventory-reduction, high technology, and opportunity-cost sensitivity that characterize CaptiveAire. Price, cost, and profit are integrated in a strategic formula that's tested every day by the customer's willingness to pay the price of high quality. Additional Resources "Bob Luddy's Effectuation Process" (PDF): Mises.org/E4E_84_PDF1 "Five Active And Integrated Processes Of Austrian Economics" (PDF): Mises.org/E4E_84_PDF2 Entrepreneurial Life: The Path From Startup to Market Leader by Bob Luddy: Mises.org/E4E_84_Book

Key Takeaways The entrepreneurial instinct can be sparked in K-12 and around the family dinner table. An entrepreneurial culture is highly beneficial to society at the global, national, and local levels. We should examine how well we nurture the entrepreneurial instinct in K-12 schooling and in the discussions we have with our kids at home. Clay Miller got a Commodore 64 (you can look it up!) when he was 11 years old, and his interest in computing, software and writing code started there. He was a programmer at 11 years old (something that is more common today than it was when Clay was young) and developed a taste for programming and an aptitude and some skills. He learned how to jump over hurdles of software-writing complexity at a young age. A mentor can reinforce a young person's disposition towards entrepreneurship, and accelerate their progress. A local tech entrepreneur took Clay under his wing and hired him for programming projects. Clay built accounting software and other products in this arrangement as a high school student. Observing and participating in this entrepreneurial environment at an early stage in life gave Clay the idea of entrepreneurship as a future pursuit. He started to take on consulting assignments while at college, although he wouldn't yet identify tech entrepreneurship as a “career”. He was able to begin to make the transition from pure programmer to customer service entrepreneur. Starting early can influence a lifelong entrepreneurial journey. There are many ways to accumulate knowledge, and entrepreneurship is a fast track to applicable knowledge. Clay chose serving customers as a pathway as opposed to continued learning in school and a conventional corporate career path. Both paths are ways to acquire knowledge. Identifying the process you prefer for knowledge acquisition — school or entrepreneurship — is a valid choice. Entrepreneurship may be the quicker and more direct route. And entrepreneurial knowledge is often more applicable, and more rapidly applicable, for your own individual economic ends. An entrepreneurial leap forward resulted from identifying and supporting a new emergent industry. Clay took a job as a CTO in an emerging industry: organ and tissue transplants. This enabled him to experience economic growth at a higher level through the application of technology in a high-demand environment. He learned about fundraising and financing and shaping resource allocation based on the funding available. He learned about mass customization for a diverse customer base. He learned the role of the technical advisor vis-à-vis the CEO, enabling the executive suite to achieve its vision. Finding a growth industry can accelerate your individual development. Transition from tech expert to global customer service entrepreneur. Clay was initially a user of offshore outsourced technological services. He mastered the economics and logistics of this organizational arrangement. Quickly, he founded his own Asia-based outsourcing corporation, and added a significant innovation: the embedded outsourced CTO. Often, firms use outsourced technology services for the flexibility of dialing up and dialing down service intensity on demand. There is a downside to this flexibility, which is loss of continuity and accumulated knowledge, as contractors move on to other jobs. Clay performs the role of CTO for his clients, ensuring them continuity of strategy, and keeps his outsourced tech talent available in his own ecosystem, so that accumulated client knowledge is not lost and can be reapplied later in the cycle. Perception-Decision-Action Clay's journey can be seen as an illustration of what psychologists call the PDA cycle — Perception, Decision, Action (see Mises.org/E4E_83_PDF1). Entrepreneurs perceive the world around them in a subjective manner, conditioned by their individual circumstances. In Clay's case, those circumstances included exposure to technology, and some experimentation with it, at an early time in his life. Later, he made some decisions on best choices — for example, between school and entrepreneurship — based on his perceptions. He acted, became a tech entrepreneur, and then a customer service innovator. Every action changes the world, and so changes the entrepreneur's (and the client's) perceptions, leading to new decisions and new actions. Entrepreneurial success emerges from the process. Additional Resources "The Entrepreneur's PDA Cycle" (PDF): Mises.org/E4E_83_PDF1 You might also enjoy reading this paper from our colleagues Nicolai Foss and Peter Klein on the language of opportunity ("Entrepreneurial Opportunities: Who Needs Them?"): Mises.org/E4E_83_PDF2. They say that opportunities do not exist in any objective fashion. They are not “out there” to be “seized”. Entrepreneurs create their own outcomes. Foss and Klein call their process B-A-R: Belief, Action, Results. See if you think B-A-R differs from P-D-A.

At E4E, we believe that Austrian economics can guide business execs and entrepreneurs to better thinking about how to manage businesses that thrive. Business educator David K. Hurst blames neoclassical, Chicago school economics for the bad thinking that pervades business today. Here's how he phrased it in our @e4epod Episode #82: I emerged from Chicago believing, or at least accepting, the basic assumptions which lay behind business education at that time, which was heavily influenced by what I came to understand was neoclassical economics. That is, it believed in greed as the primary motivation. It was all about individual self-interest and utility maximization, I think, was the word. It was heavily rationalistic in that it believes that we ought to behave like little mini scientists with everything based on evidence and data and then lastly, the focus was very much on equilibrium, that markets were self-equilibrating and that the natural condition in organizations was stable. Stability was the norm and change was something that you had to manage and that if things went awry, it was mainly because you weren't following standard procedures. Management was essentially about allocating resources... It was nothing about innovation... and making sure things ran in a steady, linear, rational fashion. When I got into the real world, I found that these principles were, well, wrong. The right principles are those that Jesus Huerta de Soto includes in his Austrian theory of dynamic efficiency. David Hurst sums them up this way: Of course the linear, stable, rational model is the way academics think businesses ought to run, if only they would listen to them, and the fact you can't run them that way because the world is nonlinear. It's dynamic. Organizational Dynamism To illustrate dynamism at work, David described a frantic time of disarray in a newly acquired company when a major project management problem arose, and sclerosis caused by hierarchy and central planning, multiple process manuals, traditional career paths and rigid job descriptions impeded a response. Spontaneously, individuals on the front line formed small teams (they'd be called Agile today) to hunt down innovative and collaborative solutions to this and other challenges that arose. They were non-hierarchical, with no process manual, no reporting structure and no fixed operating plan. Similar small, collaborative, horizontal teams multiplied to solve problems of business recapitalization, debt and cash flow management, innovation, pricing and many more. The business, after divesting unproductive divisions and products, became profitable, grew and thrived. There was improvement and it was, as David put it, non-linear. New Organizational Theory: Boxes and Bubbles David reflected on this experience and developed a theory to explain it. He observed that, in the dynamic crisis time, traditional hierarchy and procedure had faded into the background, and the spontaneous order of agile teams had taken the foreground. Both continued to exist. I called them boxes and bubbles, boxes being the formal box structure which productive, large-scale organizations end up using, and bubbles were these soft, informal teams that we formed at a moment's notice. They formed easy coalitions with each other and when they did the job, they burst. They disappeared and went back into the mixture out of which new bubbles could come. The Theory Of Complex Systems Applying complexity theory, David developed what he calls an organic approach to business management, modeled after natural ecosystems, such as a forest. Forests start off as weeds — small and fast — and end up as big and slow trees. Yet forests are dynamic: they renew themselves through fire, burning the obsolete, decadent growth to create the space into which new growth can come. At that stage, the forest starts to build a new community of fresh growth. It continues in an infinite loop, existing for indefinite periods of time. 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We know that any economic endeavor, any market, and any firm operates within a complex system of millions and billions of provider-customer exchanges, governed by the idiosyncratic subjective value scales of consumers and the entrepreneurs who strive to empathize with them and serve them. We know that these complex systems can't be managed in any traditional, hierarchical, procedures-manual sense, and they can't be predicted. We understand business cycles and adaptive behavior. How Did Business Schools Come to Teach The Wrong Model? How did the business schools get to teach their totally inadequate model? They adopted this model in the late 1950s. Their goal was to come up with systems to produce economies of scale, how to produce more of the same. Like the steel business - very inefficient, highly polluting but facing tremendous demand for steel for rebuilding the world in the 1950s and there was no reason to change. The theory that emerged was how to perpetuate this success. But nothing lasts unless it is incessantly renewed. Firms must innovate to maintain dynamic competitiveness. The organizational structure required to run something with economies of scale, a very mechanical, machine-like, productive hierarchy, is very poor at innovation because those are exactly the dynamics that you've got rid of in the pursuit of efficiency, in the pursuit of low prices. The theory that businesspeople used to support them in this productive model was of course neoclassical economics. It appealed to them to explain why it was all about rationality and it was all about stability, keeping things the same. The Uses of Knowledge David tells us that Hayek became his guide. It seemed to me that The Fatal Conceit applied to the corporate world, the mini socialist structures. I mean, when I graduated from business school, the Fortune 500 were the sort of last refuges of Stalinist bureaucracy. They were central planners, so Hayek's critique applied to them. That's the way they work. People at the top were dictators, that's the word for it. Businesses fall into what David refers to as a “power trap”, bureaucratic and rigid. The boss would come and say, "Well, I want to do this deal so find me some assumptions that make it work." Instead of getting evidence-driven strategy, you got strategy-driven evidence. It was totally inverted. The process was actually a process of power, and the structures are structures of power. It ends up with elites”. The Organic Approach to Management David described working with an entrepreneur in South Africa. He was Austrian, but not an economist. He was a tool and die maker in Austria and he had come out to South Africa and he had set up a tool and die business to make fuel tanks for the automotive industry in South Africa. This guy was a wizard on the technology of stamping. It was just know-how, practical knowledge. He wasn't dealing in abstractions at all. It was all about practice and things emerged on the shop floor, "Oops. Okay, so that's interesting." He was continually experimenting, tinkering, and he was hugely successful because he had this extremely efficient, effective process. And he was not intellectual in the remotest. If you tried to ask him, "What principles are you operating by?" he wouldn't be able to tell you and that was okay. It's the power of practice and that the actions come first, and the words come later. There is a space in my diagram, on the left-hand side, it's all about acting your way into better ways of thinking and on the right-hand side, it's about thinking your ways into better way of acting. The two are melded together. It's a dance, if you will, between the two sides. The way you come out of business school is thinking about the job of management like an engineer. You had this machine which required to be maintained, lubricated, fixed, parts replaced sometimes, but it was essentially a machine, a smooth running machine, and you think like an engineer. I see the manager as a gardener. A gardener has engineering aspects, but they also have wilder aspects to them. The gardener creates the conditions in which, in the case of enterprises, people can grow. They grow people. That's what it's all about. I see this gardener as the one being able to conduct this dance. You need to dig up soil and replace it. You may need to tear down existing plants and put them on a bonfire and burn them, break out the chainsaw and saw. At other times, you need to supply structure, a lattice on which they can be trained and pruned and all that kind of stuff. The gardener seemed, to me, to capture this duality to the manager's task. Measuring Unmeasurables Peter Drucker said that there a lot of unmeasurable things which are absolutely valid and are absolutely critical. Like Mises, he understood that measurement is always about the past. It's always about what happened. He says, The things that really matter are the unmeasurables that refer to the future." The example he gives is the ability of the enterprise to attract young, high motivated people. He said, "If you can't attract these people, eventually it'll show up in the numbers, but it's not something you'll see in the numbers right now because it hasn't happened yet. It's straws in the wind. How do you measure unmeasurables? Through Hayekian knowledge theory: getting everybody in the organization talking to each other about what's happening, about what they're seeing every day, because that's where it's happening, on the ground. This is all a part of acting our way into better ways of thinking, getting ideas, seeing the opportunities emerge out of what we're doing, out of the action. Additional Resources David Hurst's ecosystem model (JPG): Mises.org/E4E_82_JPG David's book, The New Ecology Of Leadership: Mises.org/E4E_82_Book David's original HBR article on “Boxes and Bubbles”: Mises.org/E4E_82_PDF2 Jesus Huerta de Soto's side-by-side comparison of elements of Austrian and Neo-Classical economics: Mises.org/E4E_82_PDF1

Key Takeaways And Actionable Insights Dr. Keith Smith, co-founder of The Free Market Medical Association (FMMA.org), is an entrepreneur and free market warrior who is undaunted by the seeming scale of his innovation task: to bring to healthcare the kind of customer experience only entrepreneurial free markets can deliver (see "Pillars of the Free Market Medical Association" (PDF): Mises.org/E4E_81_PDF). He is laser-focused on the problem to solve. The aim is to bring buyers and sellers together. As Dr. Smith explains, simply stating that there is a need to bring buyers and sellers together is an indication of dysfunction in the market for healthcare. Buyers and sellers talking directly with each other is what makes a market: willing buyer, willing seller, mutually agreed price. Buyers are patients who care what healthcare costs. Today, they have sticker shock. Buyers who care about price can be direct-buying individuals, and their proxy buyers, who can include self-funded employer health benefits systems, more and more of which are emerging. Innovations like Health Savings Accounts and high-deductible insurance policies are bringing more direct buying into the market. Willing sellers should be complete and comprehensive advocates for the patient, across the whole range of their needs, including financial aspects. The targeted customer experience is for patients to feel confident when they visit a doctor that they have an unapologetic advocate. Today, physicians are medical advocates, but to be a more complete advocate, physicians must think and act like entrepreneurs, bearing some risk in serving their patients. Many say, “I don't want anything to do with the business side or the money side of medicine.” By doing so, they are abandoning their patients to the financial wolves, many of whom are willing to step in and make a living off the patient. It's not so much willful neglect of the patient's interests, as simply caving in to a system that has become extremely difficult to navigate. A problem in healthcare is the dominant presence of intermediaries between the buyer and the seller. Dr. Smith described the wide range of intermediaries, cartels and proxies that get in the way of a direct, transparent and mutually beneficial relationship between buyer and seller. Insurance companies are “money handlers and money changers”, keeping healthcare prices high, so they can offer false discounts and skim off the difference. There are brokers and consultants to employers, whom Dr. Smith calls “self-dealing”, who add a layer of costs. There is Big Pharma, the pharmaceutical industry that largely funds the FDA, making it inevitable that the regulator will protect the pharmaceutical companies and their business model and their pricing. In the end, the “ultimate culprit” is the Federal Government. None of the financial abuse of the patient would be possible “without Uncle Sam riding shotgun for all of this thievery”. A solution lies in decentralization, disintermediation and the application of Hayekian knowledge theory. Dr. Smith alluded to F.A. Hayek's concept of dispersed tacit knowledge in describing the FMMA's decentralized approach. The Free Market Medical Association establishes local chapters, who follow a small number of “pillars” regarding price and value and mutually beneficial exchange, including equal pricing to all cash buyers of the same service. The chapters are completely free to respond to customer preferences in their own local market. These chapters create new knowledge based on their transactions and experiences in their local market, and can share it with all other chapters. Austrian principles of decentralization, free exchange without intermediaries, and the recognition of the value-creating dispersed knowledge of patients and entrepreneur-practitioners are Dr. Smith's starting point. Additional Resources "Pillars of the Free Market Medical Association" (PDF): Mises.org/E4E_81_PDF The Free Market Medical Association's annual conference, "Mission Possible: Healthcare Entrepreneurship as the Antidote to the Broken Healthcare System": Mises.org/E4E_81_FMMA

Key Takeaways And Actionable Insights The entrepreneurial life is a life of meaning and purpose. We believe that strongly, and our belief is anchored in the ethic of entrepreneurship: to serve others, making their lives better, and thereby improve one's own life, making an entrepreneurial profit, both economic and psychic. In episode #80, we review some deep research support for this linkage between entrepreneurship, free market capitalism, and meaning in life. An intersection between psychology and economics. Clay Routledge is a social psychologist, with a focus on human motivation: what gives us the energy to pursue our goals and aspirations. John Bitzan is an economist who has taught courses on international business and international economics. He fully understands the huge role played by economic freedom in elevating people out of poverty and making lives better. He now leads the Challey Institute (full name: Sheila and Robert Challey Institute for Global Innovation and Growth: Mises.org/E4E_80_Challey) that is focused on looking for ways to unleash the power of the private sector to create economic opportunity. John and Clay collaborated on the research we discuss on E4E #80. What is meaning and why is it important? Meaning is defined as people's perception of the coherence, significance and purpose of their lives. We are all trying to find a place in the world where we function, and we have a desire to be significant, to play a role in society, and to have a purposeful existence. And people understand this about themselves. They have a good subjective sense of what it means to have a meaningful and purposeful life. They have a greater sense of meaning if they play an important part in the lives of others. Meaning embraces a contribution to someone else — to family, to community, to society — beyond just making a contribution to your own welfare. The strong link between meaning and motivation. People who see their lives as meaningful tend to live longer and healthier lives. Why? Because they are more motivated to live healthy lives. They make the choices that reduce the risk of mortality. They eat healthier, exercise more, avoid harmful behaviors like drug and alcohol abuse. When people have a purpose in life, they take better care of themselves. Meaning is a motivational force. And that's how it connects to economics. Existential agency, capitalism, and entrepreneurship. According to Clay and John, existential agency is the extent to which people believe they have the ability — it's in their power — to pursue and maintain meaning in their lives. And people's beliefs about meaning and existential agency influences a range of economic beliefs. Clay and John researched the connection between people's beliefs about existential agency and their views towards capitalism and entrepreneurship, both on the macro or institutional level regarding their role in solving important problems, and on the micro or individual level of their own entrepreneurial aspirations. They researched over 1200 Americans and asked questions including both their general views towards economic freedom and their motivations to become an entrepreneur. The survey revealed that people who have more existential agency, i.e. a greater belief that they can obtain and maintain meaning in life, were more likely to have positive view towards capitalism, about entrepreneurship, and more likely to be motivated to start or run their own business. It's not self-interested, it's pro-social. Clay also emphasized how much meaning in life and existential agency are associated with pro-social beliefs, attitudes, and behaviors. For these people, motivation is not focused solely on their own wellbeing and their own life outcomes. Part of the motivation is to serve a community and serve society. Entrepreneurs are motivated to solve problems for others: entrepreneurship is pro-social. It can solve the major challenges of society, including macro problems like climate change or poverty. The existential vulnerabilities of our current world. The opposite of existential agency is the feeling of a lack of ability to play a meaningful role, or to take on a meaningful challenge or to see the opportunity to make a direct contribution via one's own efforts. Clay and John worry that young people are being educated to believe they have no control over their lives, and don't have the ability to overcome obstacles that they face. They are told that problems are systemic, and discouraged from thinking about ways they could make a meaningful contribution, or make a difference. They are indoctrinated with a cultural world view that undermines existential agency. Symptoms include a decline of faith in capitalism and its institutions, and a sympathy for socialism. A focus on meaning is especially important now, when people are told that they need to rely on the state to improve their situation, and are provided with negative work incentives via supplemental unemployment payments that make not working a better financial choice than working. And Clay and John emphasized that the meaning-motivation axis applies to all social groups, including minorities. It's important that we give all people — especially the young and minority groups — the message that they have the ability, through the agency of entrepreneurship and the institutions of free markets, to make a difference, contribute to something beyond themselves, and play an important role in society. Additional Resources Research Brief: "How are attitudes toward entrepreneurship and entrepreneurial motivation affected by meaning?" (PDF): Mises.org/E4E_80_PDF1 Research Brief: "Does a feeling of meaning and purpose in life affect views toward capitalism?" (PDF): Mises.org/E4E_80_PDF2 Research Report: "Does a feeling of meaning and purpose in life affect views toward capitalism?" (PDF): Mises.org/E4E_80_Report Clay Routledge on "Why Meaning Matters for Freedom and Flourishing" (PDF): Mises.org/E4E_80_PDF3

Key Takeaways and Actionable Insights Steve Phelan has spent a lifetime in entrepreneurship, as a student, a researcher, a teacher, an investor, an innovator and a practitioner. He found that people today — especially young people — are over-focused on the Silicon Valley / Venture Capital / Become A Billionaire model. That's pretty rare (and may not even be a good model). He decided, therefore, to classify all the different kinds and flavors of entrepreneurship, to help people think through all the business and lifestyle options. The result is a book called Startup Stories: Lessons For Everyday Entrepreneurs (Mises.org/E4E_79_Book). It's full of interesting personal interviews and experiences, analysis, data and insights. We've drafted a summary of the six levels of entrepreneurship Steven identified below, and in this downloadable Knowledge Map: Mises.org/E4E_79_PDF. Level 1: The Personal Entrepreneur We're all capable of entrepreneurial behavior because we all have resources: our brain, our body and our time. If we apply those resources to pursue valuable experiences for others and ourselves, we are personal entrepreneurs. A career entrepreneur is one who takes personal responsibility as the custodian of their own human capital — the economic value we derive from our own stock of personality traits, knowledge, skills and experience, all of which can be developed. Career entrepreneurs invest in their own human capital and chart a path through life to achieve the highest long term return. Personal responsibility lies at the heart of entrepreneurship. Being an intrapreneur is another way to exercise personal entrepreneurship. An intrapreneur is an employee who acts entrepreneurially — identifying customers' desired experiences, designing innovative services and introducing new offerings into the market. While the incentives may be lower-powered than for entrepreneurs, they can nevertheless be attractive in the form of bonuses and stock options. It's a good route to fulfillment for many. Level 2: The Nascent Entrepreneur This is the more conventional classification of an entrepreneur starting a business. An embryonic entrepreneur's business is pre-revenue. They're engaged in the exciting phase of customer discovery — which can include value proposition development, securing funding, hiring initial employees, assembling a team, planning launch activities, assembling resources, and testing prototypes. They key is action: ideas are plentiful, action is scarce. Embryonic entrepreneurs are action-oriented doers. Emerging entrepreneurs' businesses are post-revenue, pre-profit — they are pursuing a scalable and profitable business model. By definition, this stage is temporary — the emerging firm is designed to search for that sustainable model. Constant tweaking and experimenting is the dominant mode. Eventually, emerging entrepreneurs become growth entrepreneurs. Level 3: The Lifestyle Entrepreneur Entrepreneurship is a lifestyle choice for many — often driven by the desire for autonomy: to personally direct how to work and how to live. One form of lifestyle entrepreneur that Steven identifies is the craft entrepreneur. Craft entrepreneurs have a highly developed individual talent, skill or expertise and they find a way to capitalize it and apply it entrepreneurially in the marketplace. They're always trying to improve the quality of their product or service, and to reinforce their own mastery. If they can add some sales and marketing hustle, business can be very good. A 21st Century version of the craft entrepreneur is the virtual entrepreneur. This is an individual, team or small business that takes advantage of the modern day digital-driven opportunity to interconnect, build online supply chains and download infrastructure. A virtual entrepreneur can run a business from anywhere where they can connect a device with a screen to the internet. There are plenty of challenges — especially in the fragility of the supply chain and finding trusted partners, but many profitable businesses follow this model. Level 4: The Employer Entrepreneur There is a major change in responsibilities, operations, management and personal experience when an entrepreneur takes on employees. Startup Stories explores two examples: family business owners and small business owners. Family business owners have the advantage of built in trust and loyalty with their employees, which can result in greater stability. However, it may come with more complexity and tensions in inter-family member relationships. Small business owners who are employers must delegate some authority and decision-making to employees, and therefore must become experts in identifying, hiring, managing and nurturing. Hiring employees can take your business to a new higher level, but poorly managed employees can damage your business in areas like lost productivity or damage to brand and business reputation. Successful small business entrepreneurs must overcome these challenges. Level 5: The Growth Entrepreneur Growth entrepreneurs experience the exhilaration of escaping the confines of small business. They can also start thinking about becoming rich if they can sustain the growth. Expansionary entrepreneurs expand to multiple locations, or multiple products line, or to millions of customers on the internet. There are plenty of challenges with managing growth — it may require business model revision; it may consume cash at such a rate that finance management becomes a problem; it may require continual organizational revisions. It can be personally exhausting, as Steve depicts in one of his interviews. But it can also be tremendously rewarding. Gazelle entrepreneurs, in Steven's terminology, are those growth entrepreneurs who take venture capital funding to boost growth rates and business acceleration. VC funding enables firms to fly faster and higher. Venture capital is rare and hard to get. It can also be destructive, especially to founders who can lose control of their companies (Steve explained how in the book). Term sheets set up these potentials. Securing venture capital is an exciting and energizing moment and a milestone of achievement. It's important to read the fine print and think ahead! Level 6: Super Entrepreneurs This is the peak of the profession. Steve picks out Mavericks and Heroes. The discussion about mavericks is structured around the question: “Are entrepreneurs born or made?” Researchers have tried to establish whether or not there is an entrepreneurial personality, but the consensus is that there are no common traits that predict entrepreneurial success. But some personality traits may be more common in the entrepreneurial community than outside it. The maverick personality is one of them — willing to think and act differently from others, to pursue a distinctive imagination, to bet on a hunch. And the good news is that personality traits are not fixed — habits and behaviors can be acquired over time, through acting and learning. Entrepreneurs are made through action. The second classification of Super Entrepreneurs that Steven considers are Hero Entrepreneurs. He makes the link between hero status and PR, and from there to the power of heroes to raise funding. It is possible to craft a hero persona, shaping the perception of others through “impression management”. At E4E, we believe all entrepreneurs are economic heroes. They aim to better the lives of others, bringing new product and services to the market and responding to the preferences of customers based on their positive or negative response. They sacrifice in the short term, while designing their new solutions, in order to benefit in the long term if they serve customers well. This short term sacrifice for long term gain is not only economic, it's the essence pf morality. We aim to continue to serve this community of heroes. Additional Resources Learn about the "Austrian Business Model" — a design guide for your firm's individual business model: Mises.org/E4E_ABM "6 Levels of Entrepreneurship" (PDF): Mises.org/E4E_79_PDF Startup Stories: Lessons For Everyday Entrepreneurs by Steven Phelan: Mises.org/E4E_79_Book

Key Takeaways and Actionable Insights Every business needs a business model, a recipe for generating profitable and sustainable revenues that result from bringing the customer an experience on which they place a high value. How do entrepreneurs design successful and profitable business models? They combine theory and experience — theory provides the foundational starting point, and experience refines the model based on action-based learning and real-life feedback. The best theory — the meta-theory — for business models comes from Austrian economics. This is a proposition we intend to demonstrate rigorously and completely in our Economics For Business platform. Dr. Per Bylund joined us on the Economics For Entrepreneurs podcast to provide an exposition and explanation of the core structure of the Austrian Business Model (ABM). The model can be expressed as 4 core components for the entrepreneur: Understanding and defining subjective value.Facilitating value for specific customers.Exchanging value with customers in the market.Value dynamics — agility in continuously refining the value proposition. 1. Understanding Value The foundation of the Austrian Business Model is a deep understanding of subjective value. This understanding changes everything: its implications ripple through the entire model from the beginning and throughout all phases. Value is created only in consumption. The customer (in both B2C and B2B models) creates value. Value is in the customer's domain. It's an experience that customers evaluate after the fact against their expectations. The entrepreneur isn't even present when value is created. This is a very different premise than we are traditionally taught at business school or even in the everyday language of business discussion. For example, a popular book on business modelsi makes this statement: there is something about some firms that makes them more profitable than their rivals. In the framework of the ABM, we would say: there is something about some customers' desired experiences that makes facilitating them more profitable than other customers' desired experiences. It's hard to get one's head around just how different this approach is. It requires some new behaviors: Obsessive and total focus on the customer — identifying them, understanding them, letting them lead the process of value creation.Selection of a precisely defined group or cohort of customers as your audience, with continuous development of ever deeper and more detailed understanding of their subjective preferences.Development of a value proposition — a hypothesis about how you will help the customer to an experience that they will value. It's simply that — a hypothesis that you will test as much as possible for verification, but which is never proven until the cycle of market exchange, experience and evaluation is completed. Phase 1 is an understanding phase for the entrepreneur. 2. Facilitating Value for Specific Customers Starting from the hypothetical value proposition, the entrepreneur advances to the phase of designing a value experience for the chosen target audience of customers, based on as deep an understanding of their subjective values as it is has been possible to develop so far. The entrepreneur is continually adding to that understanding — creating new knowledge as much and as frequently as they can. Design consists of imagining every element of the customer's experience, based on their value learning cycle. What is it about your value proposition that will make them anticipate a valuable experience? What will make them feel that this experience is preferable to any alternative they have, direct or indirect. What will cause them to exchange value — give their dollars for your offering — and what is the price they will be willing to pay? What ensures that they will assess the experience positively after the event? The key to design is (1) to imagine every possible element of the subjective experience, empathically embracing the customer's individual context; (2) to understand that every little detail counts and that small differences in delivery can make a huge difference to the perceived experience. In fact, since customer service is so highly developed in modern economies, it is the small details that generate differentiation and uniqueness for your brand. Then the entrepreneur turns to value assembly, assembling the resources to deliver the desired features and attributes of the experience to market. What is the right organization for market delivery? Since it is impossible to know exactly the costs and quality you will be able to achieve in your firm, Austrian theory advises entrepreneurs to obtain as much of the required capability on the market at market prices — via outsourcing, partnerships, alliances, and external supply chains — and to limit internal capabilities only to those that cannot be obtained on the market, those that are genuinely unique and advantaged for you. Use a value alignment approach to check for each element that your value delivery is aligned with the customer value preference — that you know what they want and you can deliver it in the way that they want it. And include communications design and delivery as part of your experience design. It's not an add-on or a supplement or a marketing budget item to dial up or dial down depending on cash availability. It's part of the customer experience that you are designing and delivering. Finally, make measurement part of the experience design. Once in the marketplace, your value proposition goes “wild”. You no longer control it. The customer is creating the value and you are not. The best you can do is to be available if they want to invite you into their process, and to be observant of their behavior. Measurement is observation. Don't presuppose, but do collect data, preferably qualitative data at the individual customer level. This is your raw input for continuous improvement. Phase 2 is a customer-led design and assembly phase for the entrepreneur. 3. Exchanging Value Does the customer perceive sufficient value to enter into exchange? It's the ultimate market test. The customer is weighing the benefits they subjectively perceive against the costs, which include money but also any other difficulties or barriers they perceive to making the exchange. Is participating in your offering totally convenient (which is the general standard today) or is there anything in the experience that makes it less convenient and less compelling? The best way to solve this challenge is to experiment with as many offer bundles as you can in order to observe market results. Does your service sell better online or direct-to-customer? Do customers prefer to subscribe to buy by the unit? If they try, do they convert? Test as many bundles as you can. Once you have established the right bundle and willingness to pay, calculate your cash flow and choose your costs in order to generate the margins and profits you require. This is the opposite of the margin math taught in business school, where firms calculate their costs and then add a margin. Austrians discover the price the customer is willing to pay, and then chooses the costs compatible with that willingness to pay. The customer determines the price of the exchange, not the entrepreneur. Cash flow is your most important financial metric. Make sure you monitor it closely and make sure your accounting methods are the right ones to serve your individual ends. Accounting is a tool like any other — use it subjectively to help you meet your goals. Phase 3 is an experimenting and testing phase for the entrepreneur. 4. Value Agility You've achieved some marketplace results. You've established that the customer perceives value in your offering and they're willing to pay a price that generates positive cash flow and profit. That same marketplace is incessantly changing. Your approach to the 4th stage of the Austrian business model is dynamic. You make sure that you have all the feedback loops required to receive marketplace data about the acceptance of your offering, and any changes in customer preferences and competitive behaviors. You manage 360 degree monitoring of the customer experience and you anticipate and expect that your experience design, however excellent, will erode over time. The customer will demand something even better, and competitors will aim to match or improve on your delivery. It's important to keep your model of customer value preferences fresh, and to be planning and preparing new and improved value facilitations. Agile entrepreneurs continually test and evaluate innovations, and introduce them to the marketplace. Value improvement and value innovation are your goals. The process never stops. The journey never comes to an end. Your business model must yield sufficient cash flow for substantial amounts of new capital investment each year. Your organizational design must facilitate the addition of new capabilities and the discontinuation or de-emphasis of existing capabilities that no longer are perceived as unique or compelling by the changing customer. Agile entrepreneurs monitor their dynamic capability — how much is being added, how much is being changed or updated. Are you keeping up with the customer, the ecosystem in which you engage, and your competitors? Phase 4 is a phase of continuous dynamic change for the entrepreneur. Over the next few months, we'll be building out the tools and knowledge entrepreneurs need for every one of the four phases of the model and the steps within. Keep up with us at E4EPod.com/signup. Extra Tools and Resources Mentioned in the Podcast Dr. Bylund's Mises University Lecture, "Austrian Economics in Business": Mises.org/E4E_78_Lecture1 Dr. Bylund's Mises University Lecture, "How Entrepreneurs Built the World": Mises.org/E4E_78_Lecture2 "Means-Ends Chain Tool" (PDF): Mises.org/E4E_01_PDF "Tools for the Value Learning Process" (PDF): Mises.org/E4E_62_PDF "Identifying Dissatisfaction Interview Guide" (PDF): Mises.org/E4E_Interview "Insights Generation Tool" (PDF): Mises.org/E4E_67_PDF_A "ACT! Austrian Capital Theory at Work" (PDF): Mises.org/E4E_19_PDF "The Austrian Business Model" (video): Mises.org/E4E_ABM

Key Takeaways and Actionable Insights Business strategy and business model design has traditionally been firm-centric. Entrepreneurs are called upon to establish firms, to make the firm the locus of value creation through value proposition design, assembly of resources, and production; and to ensure competitive advantage in comparison to rival firms pursuing the same customers. There is an entirely different way to approach economic value creation (see Mises.org/E4E_77_PDF). Ralph Welborn discusses this new approach for the 2020s on the Economics For Entrepreneurs podcast, and in his book Topple: The End of the Firm-Based Strategy and the Rise of New Models for Explosive Growth (Mises.org/E4E_77_Book). The innovation of the new strategic approach is the focus on ecosystems instead of firms. The new approach preserves — and, in fact, elevates and intensifies — the Austrian business model principle of customer sovereignty and the deep understanding of the customer as the first step on the value creation path. But it changes the perspective to the ecosystem level. Defining the business ecosystem. Ralph defines a business ecosystem as the methods of orchestrating capabilities from diverse organizations to capture new sources of value. Austrians see entrepreneurs as orchestrators, and so we are very comfortable with this starting point. We are equally comfortable with the core analytic action Ralph proposes: studying where value is being created and destroyed within an ecosystem, and taking steps to capture emergent new value. As an example, think of a consumer's nutrition ecosystem, and how it might have changed — that is, how new value has been created and old value destroyed — over the past twenty years. In the past, value was created by Big Food firms (think Kraft Heinz) via low prices, convenience packaging (e.g. canned foods and frozen foods), standardization, high volume, and supermarket distribution. But then some consumers sought new value in fresh food, organic food, less processed food, fewer preservative ingredients and fewer additives and new recipes. New brands took advantage of the emergent value opportunities. And even more recently, new value has been created by delivery platforms that can bring the food directly to the home, and escape the “war in the store” for shelf space and distribution slots. You can begin to appreciate how a business ecosystem such as “consumer nutrition” can change, how new value creation can emerge, and how entrepreneurs might take new action. Ralph mentions another example in his book: the ecosystem in which automobile companies operate has changed from transportation to mobility. The companies must now deliver value in areas such as in-car productivity, entertainment, communications, connectivity and more. In order to implement an ecosystem-based strategy, Ralph recommends the following steps: First, shift your unit of focus. Business schools have told us that our point of focus should be our firm, or corporation, or business unit or department: to maximize the performance of that unit in comparison to other firms or units. The shift is to focus not on the firm but on the ecosystem in which you and your customers engage, in order to develop a new value perspective. Step one in business is always to identify and know the customer. The added perspective is to identify, and study, the ecosystem in which you and the customer are engaged. Second, see the ecosystem as a locus of shifting value. Once you've defined it, observe the ecosystem as a network of economic interactions where value is being created and destroyed via changing customer preferences and needs. A consequence of these changes will be shifts in the competitive environment, and you can observe these too, as clues. To continue with our nutrition ecosystem as an example, you can observe the shifts in market share between traditional and innovative food companies, and use these shifts as a signal of changing consumer preferences. Of course, you can also simply observe consumer behavior and conduct traditional research. Plug all of this observation into a dynamic ecosystem perspective: where and how is value being created and destroyed in the ecosystem? Ralph's memorable phrase is: value seen is value captured. If you can see where value is shifting and where new value is being created (or will be created in the future) you will be able to capture it. Third, answer the questions: “How can I fit in to the ecosystem?” and “How can I contribute to the ecosystem?” The changed perspective of the ecosystem approach is the shift from “how can my firm compete with other firms?” to “how can I qualify to be invited into the customer's ecosystem?” If you have a new line of organic, healthy food products for health- and diet-conscious consumers, how can you engage with the communication channels within the ecosystem to make those consumers aware, how can you utilize those channels to communicate your benefits, how can you engage with ecosystem retailers and distributors to make it convenient for the consumer to buy your physical products, and how can you participate in the consumer's preparation systems to provide extra service in addition to your physical product? Where is new value emerging? Where is old value being destroyed? How can you take advantage of the shifts? The answer to the question “How can I contribute to the ecosystem?” requires an analysis and articulation of what are the capabilities required to meet new needs, who has those capabilities (if your firm does not have them all), and how can you orchestrate these capabilities in service of those needs? Perhaps home delivery is required for ultimate customer convenience. Who does that and how can you orchestrate that capability on the customer's behalf? Perhaps food preparation videos will help the customer get the most value from your product — who can prepare the content (a celebrity chef, perhaps) and which is the best platform to host and deliver the content to the kitchen? Perhaps your packaging can be recycled — how can you orchestrate that to make it convenient for your customer (as Nespresso does, for example, with recycling bags for their capsules, which can be mailed back free, or dropped off at a Nespresso boutique). To fit in and contribute, choose a bundling or un-bundling strategy. Austrian economics directs entrepreneurs to assemble resources to facilitate customer value in a unique manner. In the book Topple, Ralph Welborn calls this a bundling versus unbundling decision. If you decide to be a bundler, you improve customer value by providing multiple services around the desired benefit — such as amazon does with retailing and delivery, making shopping more convenient. Unbundling refers to a focus on a single benefit-delivering capability, such as manufacturing a new organic food product that is clearly differentiated from the preservative-laden portfolio of the Big Food company. You can choose to be a bundler or an un-bundler based on how you want to deliver value to customers. Fourth, audit your own capabilities and identify the 20% that deliver the majority of your value. The capabilities underlying your product or service (skill sets, software, distribution, customer relationships, media channels, process) decay over time, often at an accelerating rate. Ralph points out that entrepreneurs should be creating new capabilities continuously, and making those new capabilities into the 20% that drive explosive growth. This is pure Austrian Capital Theory — identifying the business assets that most contribute to customer satisfaction and keeping them refreshed and up-to-date as customer preferences change. Ralph cites Uber as an example: the new capabilities are mobile connectivity (from carriers), payment transactions (banks and credit card companies) and dynamic GPS and mapping software (from Google and others). These capabilities are: Centered around what the customer wants to do.Taking friction out of what it is they want to do, making it extraordinarily convenient.Orchestrating different capabilities from different types of actors and organizations.Reserving the enabling orchestration capabilities to Uber. The implications for business are to: (i) identify your assets and their half-life — the rate of decay; (ii) identify where to play in your newly understood ecosystem and how to develop the new assets and capabilities to do so. This is a continuing process. Additional Resources "An Ecosystem-Based Development Strategy" (PDF): Mises.org/E4E_77_PDF Ralph Welborn's book, Topple: The End of the Firm-Based Strategy and the Rise of New Models for Explosive Growth: Mises.org/E4E_77_Book

Key Takeaways There is a group of innovative thinkers in economics calling themselves i4j: innovation for jobs. They focus on an economic theme they refer to as the People-Centered Economy. When many innovators are exploring how to automate jobs and replace human with technology — especially the software called A.I. — they are exploring how to design the structures and incentives to make people even more engaged in the economic process of wealth creation, rather than less. When thinking about the future of jobs and the people centered economy, we should think of entrepreneurs. In the future, everyone will be an entrepreneur. Entrepreneurship is the people-centered economy, or what we call practical economic humanism. Is our language right? Entrepreneurship is a tough word for young people to deal with. What does it mean? What exactly is entrepreneurship? What might be more inspiring for them is to focus on the ethic of entrepreneurship. That ethic is service to one's fellow man — service that is designed to improve their lives. Customers indicate whether or not the entrepreneur is successful in improving their lives by buying or not buying. And it is through the lens of ethical service that they can understand the role of profit. Profit is not the reason people become entrepreneurs — it's the emergent result. Profit is the signal that society judges that the entrepreneur is allocating scarce resources well. Without profit, the entrepreneur does not continue the service. Service without profit is unsustainable. The ethic of service to others and the emergence of profit as an outcome — a signal of approval — go hand in hand. In this podcast, we experimented with a new language of entrepreneurship via the acronym S-E-R-V-I-C-E. S stands for Service: practical economic humanism is entrepreneurs serving others and doing so for profit. It's the Austrian version of service: I serve you because it is good for me, in every way (purpose, meaning and autonomy). Profit is the signal from the marketplace that the act of serving is positively viewed by customers. E stands for Empathy. In order to serve, one needs to understand the subjective needs of others and to understand how to meet those needs on the user's terms. Subjective preferences are idiosyncratic, inconsistent and emotionally based. Empathy recognizes this, and treats everyone's preferences with respect. Empathy is the number one skill of the entrepreneur. R stands for Resourcefulness — to meet others' needs in ways that are new, different and better, the entrepreneur assembles resources and persuades others to contribute to the initiative — financiers, employees, partners, vendors. An assembler of scarce resources must convince others that this is the best use that could be made of them — make a business case. There's a self-reliant resourcefulness in the virtuous character of the entrepreneur. V stands for Value — creating value and facilitating a valuable experience for customers is the point of entrepreneurship. Value is in the mind of the person who experiences it — it's a feeling, a satisfaction, the kind you get when a promise is kept. Taken together, all the people whom the entrepreneur serves constitute the market and the market is the judge of what is valuable. Firms and entrepreneurs don't create value or add value, they make it possible for customers to experience value. I = Investment, the action of sacrificing in the current time period in order to produce greater value in the next time period. Investment is the opposite of hedonism. It requires the long term view — if I make this sacrifice now, or this investment now, I am giving up alternative current uses of that money or those resources, but I am willing to do so because I see the possibility of a return in the future. Society needs entrepreneur-investors to create the future. C = Collaborativeness; entrepreneurship requires the assembly and molding of a team, and synthesis of team ideas and contributions; finding the right way to collaborate by maximizing individual talents and perspectives. A supply chain is a collaboration. A factory is a collaboration. A beauty salon is a collaboration. A construction site is a collaboration. Man is naturally collaborative in bringing value experiences to others. E = Ethical: successful entrepreneurship is moral action, with pure intentions. Any other approach will fail. The idea of exploitation in capitalism is so far wrong and it doesn't withstand scrutiny. The entrepreneur needs the approval of customers and markets, including the market for labor and for partners. It makes no commercial sense to be unethical. Perhaps we could communicate the acronym S-E-R-V-I-C-E and the cogent set of ideas behind it, the integrated concept of what entrepreneurs do and what entrepreneurship is. The mental model is that of SERVICE WARRIORS. Energetic committed people, combating need and want and dissatisfaction. Organizing people and resources in the fight to establish new improved value, to raise standards, to lead the way to a better place. Models to Graphically Communicate Complex Ideas and Concepts Another part of my discussion with Jeff Saperstein concerned the design of simple visual models to clarify complex processes and concepts. One example to which we referred was that of the Individual Economy. With today's technology, any individual can become a Service Warrior entrepreneur, integrated into the larger ecosystem of economic services through interconnectivity, networks and global exchanges and supply chains. The idea of the individual economy is explained in Chapter 2 of our book, The Interconnected Individual: Seizing Opportunity in the Era of AI, Platforms, Apps, and Global Exchanges (Mises.org/E4E_76_Interconnected). See also the action model of "The Individual Economy" at Mises.org/E4E_76_PDF. It identifies a process and a journey, with a starting point, key structural elements, relationships and dynamics. That's a complex system about which authors could write white papers and books — but a simple graphic can capture its essence in one page. Each week at Economics For Entrepreneurs, we offer such knowledge graphics and models as free downloads. Recently, for example, Dr. Mark Packard offered his groundbreaking theory of marketing for the 2020s in a series of five podcast lessons. We captured the essence of his "Value Learning Process" in one process map: Mises.org/E4E_44_PDF. Trini Amador presented the essence of three decades of learning about how to build and nurture powerful and effective brands for any kind of business: Mises.org/E4E_30. We captured this expertise in our "Brand Uniqueness Blueprint" (Mises.org/E4E_30_PDF). Additional Resources "The Individual Economy" (PDF): Mises.org/E4E_76_PDF Hunter's Author Page on Amazon.com: Mises.org/E4E_Hunter Jeff's Author Page on Amazon.com: Mises.org/E4E_Jeff Where Good Ideas Come From: The Natural History Of Innovation by Steven Johnson: Mises.org/E4E_76_Book

Key Takeaways and Actionable Insights There are many kinds of entrepreneurs. They are all instigators of win-win arrangements in which customers are served in innovative ways by enterprising individuals and firms. Lives are improved for consumers and producers. On this week's Economics For Entrepreneurs podcast we dissect the path to success of an individual who chose the crowded and highly contested field of sports content production, navigated a way to the top, and then broke out in a new entrepreneurial distribution initiative. Jason Whitlock shares with us many principles of his success (Mises.org/E4E_75_PDF); we highlight just a few of them here to whet your appetite for the podcast. Choose a field that fits your personality and interests. We have talked a lot with our contributing economics professors about assembling a unique and competitively advantaged set of resources. Jason's unique resources were a love of sports, some original thinking, and a distinctive personality that he was able to express in writing. He wasn't deeply technically trained for his first profession (journalism) beyond writing for his college newspaper. That wasn't the point. His commitment to the pathway — starting at the very lowest point in the climb — was the point. This is what the textbooks and white papers call effectual entrepreneurship. Credentials are nice but hard work and experience advance you. Jason has won a number of prestigious awards over his time on the path to success. He was delighted to receive them. But he stressed that advancement comes not from the credentials but from the hard work and experience-gathering of which they are a reflection. Experience is the most important: learning from others, learning from circumstances and events, learning from setbacks, learning from observing industry trends and what happens to others. At Mises University 2020, Dr. Per Bylund told us that experienced entrepreneurs are the most Austrian (Mises.org/E4E_75_Bylund) — and therefore the most successful in business — because they are able to glean from their experiences what is most important for the success of a business and what is merely incidental or actually detrimental. Let your values guide you the whole way — define them, write them down, adhere to them. Jason has thought deeply about — and codified — his own values. He includes them in his personal profile (Outkick.com/Jason-Whitlock) on his entrepreneurial distribution platform, Outkick.com. The entrepreneurial life is a values-driven life. Your intuition and innate ability to read people are your best tools for managing the future. We discussed the entrepreneurial act of embracing change and trying to “stay ahead of it,” in Jason's words. How do you do that? He elevates the role of intuition and empathy over data gathering and predictive analytics. Again, at Mises University 2020, Professor Peter Klein spoke of the elevated role Austrian economics allocates to those two cognitive skills, and even cited academic studies about the entrepreneurial advantages of intuition ("smart intuitors") among cognitive skills (Mises.org/E4E_75_Klein). Always, always put your customer first. Be honest with them, be objective, and serve them distinctively. It is the first principle of Austrian economics in business that the consumer is sovereign and that an Austrian business puts the customer in first role in everything that they do. Jason Whitlock confirmed the same principle without any prompting. For a sports content producer, the customer is the reader, viewer or listener. Jason characterizes his audience as the intelligent sports fan who can appreciate an original take and distinctive reporting on subjects that many other content producers are covering. He commented on how athletes today don't understand the principle. The customers are fans who attend the events and enjoy the performance. Athletes sometimes misunderstand and think that “their twitter feeds are their fans” and often go to the point of ridiculing or rejecting or offending their customers. We'd call that a failure to demonstrate empathy, and disrespecting consumer sovereignty. Successful entrepreneurs don't make that mistake. These are just a few of the incisive and instinctively Austrian insights from Economics For Entrepreneurs podcast #75 with Jason Whitlock. Additional Resources "Jason Whitlock's 10 Steps to Entrepreneurial Success" (PDF): Mises.org/E4E_75_PDF Per Bylund's Mises U lecture, "Austrian Economics in Business": Mises.org/E4E_75_Bylund Peter Klein's Mises U lecture, "Entrepreneurship": Mises.org/E4E_75_Klein

Key Takeaways and Actionable Insights At the time of the introduction of any innovation, new product, new service, upgrade or improvement to a current offering — any change, in other words — there is uncertainty for both the customer and the entrepreneur. The customer does not know how to assess the value of the new offering, and the entrepreneur does not know if the customer will decide in favor of choosing the new offering. That's a lot of complexity to deal with. Uncertainty can't be eliminated from business, and, for the entrepreneur, it's an anxious state of mind when knowledge is absent. Happily, there are tools to help bolster confidence in facing knowledge absences. Mark Packard introduced several in our E4E podcast #73. 1) Use the most appropriate decision logic. All knowledge absences are not the same. There are some unknowns that are knowable — such as costs of goods or market size. And there are some unknowns that are unknowable — such as the future behavior of individuals making choices in a changing and competitive marketplace. There is also a cost of obtaining more data or more knowledge to fill gaps even when they are fill-able. If the cost of knowledge is high, and the risk of loss from not having the knowledge is low, then it might not be worth pursuing additional knowledge. There are two types of strategy available to the entrepreneur. There's a choice between “predictive logic” in which the entrepreneur undergoes more cost to get better data to make a prediction about the future, or “adaptive logic” in which the entrepreneur decides to stick with the amount of information currently available and proceed anyway, being sure to be doing so only when risk of loss is limited, i.e. going with the gut but not betting the farm. For example, a very high risk factor in an entrepreneurial judgment would be how much the production inputs will cost. But collecting that information is typically pretty low cost, and it may be easy enough to get a price guarantee. So, while predictively estimating total costs is ‘uncertain' or unpredictable in a strict sense, an adaptive strategy in dealing with uncertain costs is not worth the trouble. A predictive strategy is probably better. A counter example would be whether consumers would be more drawn to an orange logo or a red one. You can get that data, but it would cost a bit to do enough market research to get a definitive answer. But it's such a low-risk factor that it's probably better to just (predictively) pick one. Mark has provided us with a decision logic tool (PDF): Mises.org/E4E_73_PDF_1 2) Information marketing. Customers choose goods and services for emotional reasons — their feelings about whether or not the new offering will improve their lives and give them satisfaction. But before they can make the emotional decision, they want to make sure they have all the functional information they need to even make the consideration. Will it work? Will it work for me? Consequently, the customer's uncertainty about how to choose varies with the amount of information they feel they have versus how much they need to make a decision. The entrepreneur may believe that they have provided all the information possible or required. But customers don't always absorb it, aren't always paying attention, or can't always remember it, or receive the information in the wrong context. Wise entrepreneurs continuously monitor the target customer's level of information. A simple who-what-how-why tool will suffice (and you can add when and where if they're relevant to your market). Who? — Is it for me? What — what benefit does it deliver? How — how does it work? Why? — Why should I believe the claims. Make sure customers can answer these functional questions before working on their emotional acceptance. Here's Mark's checklist for Information Marketing (PDF): Mises.org/E4E_73_PDF_2 3) Opportunity Cost Calculator Economics tells us that the cost of choice for a customer is opportunity cost — what does the customer give up by choosing in favor of the new offering? Opportunity cost calculation may not always be a conscious process for customers (although sometimes it is, such as in comparison shopping for a new car), but it is always an active one. The entrepreneur should therefore calculate the opportunity cost that's in the customer's mind. What alternatives are they considering? How dissatisfied are they with alternatives? How do they feel about the capability of the new offering to resolve their dissatisfaction? How do they relate that to price and exchange value? What adjustments can entrepreneurs make to change the calculation in their favor? Every customer's calculation is different, so the entrepreneur should collect the data from individuals rather than in survey data. We provide a calculating mechanism you can use: Mises.org/E4E_73_PDF_3 The Value Learning Process This is the final installment in Mark Packard's value-dominant marketing series on the Value Learning Process. Check out previous episodes and the tools Mark provided to complete the picture of the value cycle and how to manage it. #44 Value Learning Process: Introduction and Overview with Process Map: Mises.org/E4E_44 #55 High-Knowledge Customer Tool and Mindfulness Tool: Mises.org/E4E_55 #62 City-of-From, City-of-To Tool: Mises.org/E4E_62 #69 The Two Kinds of Knowledge Entrepreneurs Must Have, and How to Compound Them: Mises.org/E4E_69 Additional Resources "Dr. Mark Packard's Decision Logic Model" (PDF): Mises.org/E4E_73_PDF_1 "Information Marketing To Target Customers For New Products" (PDF): Mises.org/E4E_73_PDF_2 "Customer Opportunity Cost Calculator" (PDF): Mises.org/E4E_73_PDF_3

Key Takeaways And Actionable Insights For entrepreneurs, the future is not risky, it's uncertain. Risk is a calculable mathematical probability, like the result of 1000 tosses of a (fair) coin, or the likelihood of you being involved in a car accident in 40 years of driving on US interstate highways. The outcomes of entrepreneurial decision making are not calculable. They can't be computed. Yet entrepreneurs need to make decisions, without having all the facts in hand today, and without knowing the odds of the future results. That's uncertainty. Therefore they exercise judgment. Judgment is action. It's business practice. Judgment is not guessing, or speculating, or hoping. Judgment is action. Specifically, judgment is taking ownership of property and resources, combining and recombining them in different ways, and using them to make a product or service to offer to the market. Judgment also incorporates spirit: the imagination, energy, creativity and bravery that entrepreneurs apply when they act. Judgment is human action. And judgment is continuous. Entrepreneurs are called upon every minute of every day to make decisions of judgment. Judgment quickly becomes team action. As firms grow, the founder can't be the sole exerciser of judgment, or the only one making commitments or acting creatively and imaginatively. In larger, more complex, multi-divisional forms, there are many executives, managers and employees who will be called upon to make judgments. And they will be well-qualified to do so, since they have special skills and tacit knowledge that the rest of the firm, including the founder, do not have. In fact the founders or owners (or Board Of Directors) actively seek the judgment of the whole firm, in order to achieve the highest level of business success. Often, they make sure that everyone in the firm has enough “skin in the game” (in the form of incentives, commissions and supplemental compensation) to motivate them to give their best judgment. How does judgment apply in complex organizations? The firm develops a mix of original judgment and derived judgment (see Mises.org/E4E_72_PDF). Derived judgment is Peter Klein's term for the delegating of decision-making power and its distribution throughout the firm. Original judgment — the ultimate decision-making power — rests with the entrepreneur-founder, or may reside with a Board Of Directors or an appointed CEO. Derived judgment is granted to others throughout the firm who have special knowledge and skills to act creatively and imaginatively on the specific uncertainty they face in their positions. The skill of original judgment is selecting the right people to exercise derived judgment, and designing the right combination of motivating incentives and appropriate controls. What's the best combination of incentives and control? Austrian subjectivism and individualism, along with opportunity cost analysis, can point the way to the best mix of incentives and control. Subjectivism tells us that there is no objective right answer to questions about which decision rights the owner should delegate to which employees under specific circumstances. The answer to those questions depends on the particular circumstances of the venture, its technology, its market, its business environment, the characteristics of the employees and the characteristics of the owner. Individualism tells us that there are no generalizations about people — each one has different knowledge and skills and characteristics like reliability or trustworthiness, as well as creativity and imagination. The entrepreneur must judge each one individually, and match them as well as possible to specific circumstances. Opportunity cost analysis tells us to always weigh the potential upsides and potential downsides of each choice and each appointment of an individual to a position in which they can exercise derived judgment. Exercise judgment about judgment. Consequently there are four considerations: Be as sure as you can to choose the individual with the most (and most relevant) tacit knowledge for the area in which they are going to exercise derived judgment.Choose the individual who adds the greatest amount of experience as possible to the relevant knowledge.Make sure the derived judgment of managers and employees is guided by a well-articulated mission (why we do what we do) and business model (how we do what we do). Pay attention to how well these are understood and shared.Balance knowledge and experience against the potential for abuse (misjudgment) and the potential cost of that abuse should it occur. Don't risk “destructive entrepreneurship”. There are no “bossless” organizations. Peter Klein points out that even in the flattest of organizational designs (think Wikipedia, Zappos, Spotify, or W.L. Gore) there is always some kind of governance, either of rules or of hierarchical authority, to limit the risk from derived judgment gone awry. Don't design an organization with an excessive amount of derived judgment relative to the controls that are in place. How good are you at original judgment and at delegating derived judgment? Entrepreneurship in action is real people in real-life situations. It's not theory. Some are going to be better than others, as indicated by results and outcomes. It will be useful for you — although not definitive — to self-assess your entrepreneurial judgment and how you delegate it. Gallup's Builder self-assessment promises to help you build a thriving company and a winning team. Personality assessments like the Big 5 are less specifically tailored to entrepreneurial judgment but can nonetheless shed some light on personality traits that are applicable in entrepreneurship, whether in a small business, a growth firm or a corporate structure. Additional Resources "Uncertainty and Entrepreneurship" (PDF): Mises.org/E4E_72_PDF Read Peter Klein's paper (with Kirsten Foss and Nicolai J. Foss), "Original and Derived Judgment: An Entrepreneurial Theory of Economic Organization" (PDF): Mises.org/E4E_72_Paper Organizing Entrepreneurial Judgment: A New Approach to the Firm by Peter Klein and Nicolai Foss: Mises.org/E4E_72_Book

Key Takeaways And Actionable Insights Negotiation skills are vital to your business. How well you negotiate will directly affect your cash flows, your costs, your margins, your scale, your financing and your resource allocation. It will indirectly affect your brand reputation, your organizational designs and your delegated management capabilities based on the employment contracts you negotiate. Negotiation can be taught and learned. As with everything in business, knowledge absence renders your outcome more uncertain. If your knowledge of the appropriate skills is lacking, you might experience disappointing results when negotiating with customers, suppliers, partners, employees and others in your ecosystem. If your role includes negotiating, allocate some time to skill development. Negotiation is a process — best results come from knowing how to do the right things in the right order. For example, taking time to establish shared trust at the outset is better than having to recover lost trust later in the process. Think through the process from beginning to end — including what could go wrong or what unexpected difficulties might arise — so that you are never thrown off-track. When you know the correct next step to advance negotiations, you'll be prepared in advance for that step and be ready with the appropriate action. Negotiation is responsive to many Austrian principles. Individualism: Austrian economics helps us think about the individual with whom we are negotiating, rather than the organization he or she represents. Every individual in every negotiation has unique identity, unique needs, a unique set of preferences and a unique context. Understanding individualism helps build trust and rapport. Empathy: We are trained in Austrian economics to go inside the mind of the customer, in our imagination, in order to empathically understand their dissatisfactions and unmet needs. The same is true when working with a negotiator on the other side of the desk from us. Empathy helps us understand their goals and motivations, and to potentially create some subjective value from that knowledge. And it helps us think about the best tone and language. Roundaboutness: Your actions early in the negotiation process will emerge as consequences later. If you pitch an absurdly high price at the beginning of a negotiation, thinking it will give you flexibility to lower it later, you'll lose the trust of the other party and make negotiating harder. Small positive signals at the beginning can become major negotiating advantages later. Entrepreneurial mindset: An entrepreneur thinks in terms of solving a problem — or relieving a dissatisfaction — for others. The market rewards creative solutions. Negotiation is an entrepreneurial undertaking — think about how to solve the other party's problem. Understanding value and communicating value are critical success factors. Austrians have the best understanding of value. This is a huge advantage. At the outset, be sure to spend significant time communicating to the one with whom you're negotiating the value of your offering. Value is not related to cost; it's related to the experience your customer / partner / supplier is going to have as a result of collaborating or contracting with you. Be sure your counterparty can properly assess the subjective value you are going to create for them. If they anticipate the same value that you propose, then negotiation will not be a barrier to an exchange. You can establish a negotiation culture. Some companies — especially a small one negotiating with a large one (and especially with the procurement department!) — fall into the trap of feeling overwhelmed or under-qualified. Confidence in both content and process is important for success in negotiation. You can develop a negotiation culture of confidence via training, practice and preparation. Negotiation is a universally applicable skill. Mastery of the negotiation process is a life skill as well as a business skill. You'll feel confident about establishing and managing relationships between your company and its customers, as well as with people you contract to provide services at your home, and in any kind of association or organization. You might find yourself negotiating with your spouse. Use your skills! Negotiators are happy people. Sanjay's sign-off advice: negotiators are happy people. They know the value they are offering, they know how to get the appropriate rewards for their value, they are comfortable and confident with the process of negotiated value exchange, and they know how to resolve conflicts. Additional Resources "Negotiation" (PDF): Mises.org/E4E_71_PDF Discover negotiation readiness: PurpleSkyPartnership.com

Key Takeaways And Actionable Insights How do creative entrepreneurs design and build new businesses, new products and new services that grow and succeed? You'll make a big difference for your own venture if you follow Per Bylund's advice to Think Better, and Think Austrian. One step in the right direction is to clear your head of thoughts about competitors to fight, markets to invade, beachheads to take, or moats to construct around your business and your brand. The alternative way of thinking is to envision your business enterprise, your brand or your offering as an island of specialization. What you create, launch, build, grow and sustain is something that is so special that your customers experience a deep and rich feeling of value that they can't possibly get anywhere else. For your customers, it provides the business equivalent of a visit to (and eventually permanent residence in) a comfortable, amenity-laden resort on a beautiful tropical island, where the staff recognizes and caters to their every wish. There's nothing else like it. How can you create one? There are four principles that successful entrepreneurs follow to build their island. Aim To Please. That's not the kind of advice you'll find in business school or textbooks. Yet it captures the core of our Austrian approach to business. The customer is the reason for you to be in business. Aiming to please them is the right way to think about strategy. Aiming to please is a process of observing, listening, studying and empathically sensing what will please customers the most. You aim to understand their ecosystem and their logic, their hopes and their dreams. Your offering is the way you indicate to them that you can fit in to their ecosystem and contribute to their goals. Your business model is the way you arrange your activities to please customers once you've fully understood their preferences and desires. Competition, cost, resources and other considerations are secondary. Don't copy — move beyond. Military business metaphors depict competition as conducting wars over business territory, or fighting for customer attention. In Per's Austrian way of thinking, there is no new value for customers when a firm merely copies what is already offered by others. There's no point — no value — in fighting over market spaces. Value emerges from what's new and better and different. Smart entrepreneurial island builders assess the current landscape, predict where the customer will be in the future, and navigate to that place to build a new island. Build from strength. Entrepreneurs distinguish what is unique about themselves, their partners and employees, their processes, their brand and their resources that can be of benefit to customers. Much of the uniqueness is subjective — the owners' or the business's identity, their unique knowledge and expertise, their relationships and interconnections that can co-ordinate the assembly of specific solutions. It's not about arraying more destroyers on the battle lines than the opponent; it's arraying a set of uniquely desirable and attractive brand features and attributes that are attractive to the customer. Maximize value not output. The island builder keeps on building. Not for scale or market share or maximizing output. The direction of growth is to maximize value. Value is a feeling of satisfaction in the customer's mind. Maximization, in this view, refers to higher levels of satisfaction, over a wider range of experiences, for more customers on more occasions. Maximization is not a quantitative or mathematical concept, to be compared with rivals to ascertain who is “winning”. It's a qualitative concept — what quality of value has been experienced, and how can it be improved. The four guiding principles — aim to please, in unique ways, based on your own identity and strengths, always thinking about the value that's experienced by customers — lead to beautiful businesses. If you are developing visual island imagery in your mind's eye as you read this, think of a balmy climate, vibrant flowers and trees, bubbling streams and distinctive animals and birds. Let your imagination run free in conjuring up beauty — that's what entrepreneurs do as the start, grow and sustain their businesses. Additional Resources "How Entrepreneurs Build Islands of Specialization" (PDF): Mises.org/E4E_70_PDF For a full-length essay by Per Bylund ("Make Your Startup an Island"), download our latest free e-book, Austrian Economics in Contemporary Business Applications: (PDF): Mises.org/E4B_eBook For a shorter essay, see Per's Entrepreneur.com article, "Forget the Moat and Make Your Startup a Tropical Island": Mises.org/E4E_70_Article For a full exposition of the Austrian theory of the firm and the concept of islands of specialization, see The Problem of Production: A New Theory of The Firm: Mises.org/E4E_70_Book

Key Takeaways and Actionable Insights Innovation is one of the keys to business success. The world is changing at such a pace, and your customers' preferences are changing so fast, that your business has to change at the same speed, or even faster. How to keep up is a part of the entrepreneurial challenge. Mark Packard has a big insight about how entrepreneurs manage innovation. Producers don't innovate. Customers do. That may sound a little odd, but Mark's Value Learning Process makes it clear. Customers are always looking for new value. They're always dissatisfied, seeking to make things better for themselves. They know what's wrong or disappointing or less than perfect with their current experience. And they're always looking for new solutions, better ways to do things, improved experiences. If you know how to interpret their behavior and their dissatisfactions, they'll tell you what to do. Then, as a producer, you need to figure out how to do what the customer wants. Two kinds of knowledge and two kinds of thinking are essential. Entrepreneurs need to know about what customers want. Then they need the know-how to deliver the solution. Mark calls these two kinds of knowledge: Needs Knowledge and Technical Knowledge. They require two different mindsets. [[{"fid":"90432","view_mode":"default","fields":{"format":"default","alignment":"center","field_file_image_alt_text[und][0][value]":"the Two Kinds of Knowledge Entrepreneurs Mus Have","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"default","alignment":"center","field_file_image_alt_text[und][0][value]":"the Two Kinds of Knowledge Entrepreneurs Mus Have","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"the Two Kinds of Knowledge Entrepreneurs Mus Have","class":"media-element file-default media-wysiwyg-align-center","data-delta":"1"}}]] Download "The Two Kinds of Knowledge Entrepreneurs Must Have" (PDF) at Mises.org/E4E_69_PDF. Mindset 1: Think like a customer. If customers are the ones who innovate, entrepreneurs must be able to think like customers. Really think like them. Be dissatisfied. Demand better. We call the required entrepreneurial skillset “empathy”. It's sentiment mirroring – your brain and sensory system has to be able to mirror those of the customer. You must feel the same feelings they do. It can be done. Practice it. A big part of the economy is consumers innovating for themselves. Think like they do. Make a list of what's most important to you. These are innovation opportunities that you know more about than anyone else. Think about how you'd like to improve your experiences in these areas. What features can you not do without? Why? Think like a customer. Start with your own problem in order to immerse yourself in the problems others want to solve. Mindset 2: Think like a producer. You love your customers. You want to please them. Develop the technical knowledge to do so. This doesn't necessarily mean high technology. If you want them, for example, to enjoy a new kind of convenience grocery store with an organic food emphasis and lots of innovative food-to-go options, you need to know store operations, supply chain logistics, inventory management, and flexible / adaptive hiring practices. You need mastery of technical knowledge. And while you don't need to be a programmer, you do need knowledge of the latest technologies from a producer's viewpoint: how do these technologies help you to deliver a better, faster, lower cost customer experience. Geeking out on these technologies is a good idea for producers. Knowledge Compounding. Many innovative solutions come from combining two existing pieces of knowledge. Combining needs knowledge and technical knowledge can produce a new solution to the market. Mark also talks about combining active knowledge — what we know about that's prominent in our mind — with semi-active knowledge — what we know about that we don't use every day or is stored away deeper in our memory that's hidden by our recency bias. These and other knowledge combinations can generate big ideas. In fact, Curt Carlson in episode #37 told us that combining knowledge is not just additive, it's multiplicative. Knowledge compounds when we combine it, leading to faster innovative progress. Utilizing Mark Packard's knowledge combination techniques is the way to get there. Additional Resource "The Two Kinds of Knowledge Entrepreneurs Must Have" (PDF): Mises.org/E4E_69_PDF

Key Takeaways and Actionable Insights What is Entrepreneurial Intelligence? For Steven Phelan, “It's all about the spark” — the moment of inspiration in combining disparate elements together to develop a new solution. Humans draw on “the fringes of consciousness” to create new constructs. Entrepreneurs also take risks, investing time, talent and treasure in their venture in hopes of gain, yet understanding that they could lose something of value to them in the endeavor. How do we contrast Entrepreneurial Intelligence and Artificial Intelligence? First, we need to differentiate between the narrow and general forms of AI. Narrow AI is software that can solve problems in a single domain. For example, a Nest thermostat can raise the temperature or lower it in a room according to a pre-set rule. “If this, then that” is the general rule for this kind of intelligence. The parameters are designed by the programmers. For the unstructured problems of life and business, a truly intelligent computer would have to figure out for itself what is important. Part of the problem is that understanding or predicting human motivations — as entrepreneurs do — requires a “theory of mind”, an understanding of what makes humans tick. Entrepreneurs need empathic accuracy — unavailable to AI — to anticipate the needs of consumers. A sentient computer would need self-awareness or consciousness to truly empathize with humans, and have a set of values with which to prioritize decisions. What's the role of machine learning? If you work in a business that generates a lot of data, it can be mined by data scientists for patterns, and those patterns might indicate a better way to respond to customer needs. The richest source of data is behavioral — like choosing songs to listen to on Pandora. Machine learning can detect a pattern of what kinds of sings a user chooses most. A human interpreter can translate those patterns into preferences — in other words, motivations are embedded in behavior and machine learning can help entrepreneurs extract them. So, the entrepreneur's best resource is entrepreneurial intelligence. The psychologist Howard Gardner helped us to recognize many types of intelligence, including math, language, spatial, musical and social. There are two types that might be indicative of entrepreneurial intelligence: EQ (Emotional intelligence) might be associated with intensified empathic skills and empathic accuracy; CQ (Curiosity Intelligence) is linked to the kind of creativity that finds solutions by combining elements on the “fringes of consciousness”, as Hubert Dreyfus puts it. Can entrepreneurs and business owners assess their own entrepreneurial intelligence? There are scales to measure EQ and Creativity. Here's a link to an entrepreneurial quotient assessment: Mises.org/E4E_68_QA And here is a more action-oriented self-assessment we developed for E4E: Mises.org/E4E_68_SA The bottom line: Entrepreneurs need knowledge of how to profitably satisfy customer preferences given the resources at hand. This is not a trivial requirement. It is not possible to pre-state all of the uses for a given resource nor to compute the payoff for a given application. Current computational methods are thwarted without a complete list of entrepreneurially valid moves and the payoffs from such moves. No amount of growth in processing power, data communication, or data storage, can solve this problem. The late Steve Jobs is often held up as the epitome of a successful entrepreneur. His founding of Apple, ousting by his own board, and subsequent return to rescue the company, and then make it the most valuable publicly traded company in the world is the stuff of legend. One of the apparent secrets of his success was to understand that “people don't know what they want until you show it to them. That's why I never rely on market research. Our task is to read things that are not yet on the page.” This ability to “read things that are not yet on the page” lies at the heart of the concept of empathic accuracy. Empathic accuracy is “the ability to accurately infer the specific content of other people's thoughts and feelings”. Until AI can do this, Entrepreneurial Intelligence is a better tool for the innovating entrepreneur. Additional Resources "Entrepreneurial Intelligence vs. Artificial Intelligence" (PDF): Mises.org/E4E_68_PDF "Entrepreneurial judgment as empathic accuracy: a sequential decision-making approach to entrepreneurial action" by Jeffrey S. McMullen (PDF): Mises.org/E4E_68_Article "Are you ready to be an entrepreneur?" (PDF): Mises.org/E4E_68_QA "Entrepreneurial Self-Assessment" (PDF): Mises.org/E4E_68_SA

Every successful business is built on empathic understanding of customers' preferences. As we know from the theories of Austrian economics, the preference scales of every individual are highly subjective, idiosyncratic, context-dependent, and highly changeable. How does an entrepreneur develop the appropriate level of understanding? Can this understanding be a source of business-building advantage? We talked with Trini Amador, a returning guest and an in-demand global branding and marketing consultant who has developed an effective process for every entrepreneur to achieve a breakthrough level of insight into customer motivations. Customers bond with businesses and brands they love and trust. The choices they make have their own internal logic. Entrepreneurs must develop insights into their motivations. Insights are the lifeblood of any brand- or business-owner, says Trini. Why do customers behave the way they do — especially in buying or not buying? Insights tell you. They become the difference between “just a business” and a brand that successfully delivers against the needs of their customers. Insights are the entrepreneur's understanding of customers' motivations, values and attitudes. They're the “Why” in why people act the way they do. Always emotional, always subjective. Entrepreneurs who understand “Why” can design stimulus or communication or innovation to motivate buying behavior. There's an insights generation process. It starts with identifying the people you wish to serve. Trini recommends a focus on your “core target” audience — not a general definition of who might buy, rather a highly specific profiling of your most likely and best prospects. Mark Packard, in episode #62, called them “high knowledge” customers. They know what they want, they know the category and they're precise about what experience is satisfactory and what is not. There is no shortage of data for you to utilize. Make sure you select the most important and useful data: Attitudinal data: how your customer feels, especially if they are expressing dissatisfaction; Behavioral data: behavior reveals preferences — “motivations are embedded in behaviors”. The best sources of data are first hand observation and one-on-one conversation. Organize your data in an insightful way. To avoid data overload (there's so much of it to collect!) Trini suggested couple of organizational techniques. One is visualization: build a visual profile of the customer with photos and notes indicating their hobbies, favorite brands, activities — visuals that depict their behavior and preferences. A second is personalization: write a composite profile as if it were one individual and use it as a “one perfect customer” persona. The objective is to change behaviors. Insight is the required key to unlock the possibility of doing so. Trini cited the example of his own wine brand from Sonoma County, California: Gracianna. For example, the objective may be to get people to visit the tasting room who have never visited before. That's a behavior change. Why do people behave the way they do? One inquiry tool is the 5 Why's, which is a way to examine the sequential rungs on the individual's means-ends ladder to identify their highest value, the motivation that is ultimately driving them. Trini used the example of why some people feel better about buying a Tesla than an alternative vehicle. Ultimately, they want to feel that they are better citizens of the planet. Trini entertainingly ascends the rungs of the ladder from “need a new car” and “get from A to B” to arrive at “the feeling of being a better citizen”. Using these tools, we arrive at a deep understanding of why customers make the choices they make — that is, an insight. The Insight feeds the Behavior Modification tool. The definitive “Why?” that emerges from the 5 Why's inquiry becomes the current state in the behavior modification tool. This tool has two components: Attitude Modification: behaviors are related to attitudes, and so to change an attitude can lead to a change in behavior. Attitude modification documents the FROM (the attitude we want to change) and the TO (the new attitude we want to encourage). Key Marketing Platform: a marketing platform is a staging point for all initiatives aimed at achieving the desired attitude among target customers: communication, promotion, innovation, distribution, relationship. Continuing the Tesla example, we want our prospective customer to feel that Tesla is the most progressive electric car that helps save the planet in the coolest, most prestigious ultra-premium way. If we can get them to feel that way, they'll buy. The entrepreneur imagines the future behavior, and then acts through the marketing platform to cultivate that motivation. How? Consider all resources that fall under the headings of communication, innovation, promotion, expanded distribution, and enhanced relationships. Experiment, experiment, experiment. Test, test, test. We'll discuss the techniques in a future episode of Economics For Entrepreneurs. Additional Resources "Insights Statement Template" (PDF): Mises.org/E4E_67_PDF_A "Marketing Platform Tool": (PDF): Mises.org/E4E_67_PDF_B One-Question Survey with Free Wine Giveaway: E4EPod.com/Question

Key Takeaways and Actionable Insights A growth business is what John Rossman, in episode #50, termed a flywheel. Using Amazon.com as an example, he gave us this simple image. [[{"fid":"90017","view_mode":"image_no_caption","fields":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"E4E Flywheel","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"E4E Flywheel","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"E4E Flywheel","class":"media-element file-image-no-caption media-wysiwyg-align-center","data-delta":"1"}}]] The flywheel looks simple, but in reality it's quite nuanced. Lower prices and a great customer experience will bring customers in, Bezos reasoned. High traffic will lead to higher sales numbers, which will draw in more third-party, commission-paying sellers. Each additional seller will allow Amazon to get more out of fixed costs like fulfillment centers and the servers needed to run the website. This greater efficiency will then enable it to lower prices further. More sellers will also lead to better selection. All of these effects will come full circle back to a better customer experience. John Tamny sees the American entrepreneurial economy as a beautiful and productive flywheel (see Mises.orgE4E_66_PDF​). Why are Americans so entrepreneurially focused? We descend from “the crazies” — the other thinkers who came from around the world, dissatisfied with their lives, and willing to cross oceans and borders to get to a place that offers no security but offers freedom. They took the ultimate entrepreneurial leap. We got the nut cases. Steve Jobs, for example, was of Syrian descent. Could he have started Apple in Syria? No. Entrepreneurs lead us to a better place. John's definition of an entrepreneur is someone who has a vision that everyone else thinks is ridiculous, yet they follow it anyway. They have no time for the way things are done today. They want something different. And to win consumer acceptance, what's different must also be better. So they quite literally lead us to a better place. Horse drawn carriages weren't enough, so Henry Ford gave people something different. Everyone wanted Blackberry phones when Steve Jobs brought out the iPhone, and he quickly demonstrated its superiority. Every entrepreneurial act is speculation — there is never certainty that people are going to want the new product. That's what is so important about entrepreneurs. Entrepreneurs need to attract intrepid finance and intrepid financiers. Silicon Valley is littered with VC's who turned down Facebook, and turned down Amazon. Founding entrepreneurs think differently and have a vision that is far out of the norm, and they need to be matched with financiers who can be strong supporters and collaborators on the path to a better place. Irrespective of whether it is from Wall Street or Sand Hill Road, or from visionary friends and family, it's critically important that we figure out a way to get financing to brilliant people. Government restrictions on entrepreneurial activity are certainly barriers to growth, but so is failure of imagination on the part of capitalists. Intrepid lending takes place far away from banks. Unspent wealth is the source, and the more unspent wealth one person has, the more risks they can take. We tend to complain about the antiquated and sclerotic banking system, but it has nothing to do with entrepreneurs and innovation. Banks make loans to entities they know will pay them back. Entrepreneurs fail 90% of the time. Banks want nothing to do with innovation. Those with unspent wealth are the most crucial people in the economy when they match their unspent wealth with entrepreneurial talent and vision. The more unspent wealth they have – and the less the government takes away from them in taxes — the more intrepid they can be in investing it. When we tax away the wealth if the richest, we tax away the most important wealth of all — that which has the highest odds of being directed towards new ideas that, while they look promising, have high odds of failure. More and more of us have the opportunity to become entrepreneurs, if we harness the flywheel of original ideas that attract intrepid capital. One of John's many books, The End Of Work, describes how we are all now so enabled with interconnectivity to resources that we have the chance to make money by doing what we love. Our passion can become our job. If we are able to imagine a future place that is better — that improves the lives of individuals — we can create a growing business. The more of us who can do this, the more we grow the whole economy — which, after all, is made up of individuals. If we can also attract that intrepid capital that John refers to, growth becomes faster and higher. Besides The End Of Work: Why Your Passion Can Become Your Job, John's books include Popular Economics: What The Rolling Stones, Downton Abbey and LeBron James Can Teach You About Economics, and Who Needs The Fed: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank. Additional Resource "John Tamny's Entrepreneurial Flywheel" (PDF): Mises.org/E4E_66_PDF

Key Takeaways and Actionable Insights When we talk about entrepreneurial alertness to opportunity, it can sound pretty vague. What exactly does that mean? How is alertness translated into profitable action? This week's guest, David Bienstock, provided us with a very precise example. He had just started his media buying services business when a phone call came in. Do you provide service in the category of political advertising? David's answer was yes. There was no reason for it to be otherwise because there was no information at the time that would indicate any differences between media buying services in the political advertising category compared to the commercial advertising category. He was able to transfer existing knowledge from his expertise in media buying and placement, and also develop more and more new knowledge. He thereby identified more and more ways in which political advertising was specialized — factors of timing, competitiveness, geography, pricing, regulation, and many more. David built his own island of specialization and became the foremost expert in a burgeoning field. What can we learn from following David's entrepreneurial journey? [[{"fid":"89836","view_mode":"image_no_caption","fields":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"David Bienstock's Logic Of Customer-Led Growth","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"David Bienstock's Logic Of Customer-Led Growth","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"David Bienstock's Logic Of Customer-Led Growth","class":"media-element file-image-no-caption media-wysiwyg-align-center","data-delta":"1"}}]] 1) The alertness we talk about that entrepreneurs display to opportunities can be triggered by the smallest piece of data. For David, it was one phone call. His instantaneously positive and open response led to a long and successful journey. 2) Wherever there is business expenditure there is an opportunity for an entrepreneurial business service. The business we discussed in episode #65 is campaigning — political, public affairs, ballot measures. How much is spent on campaigns? A lot. There's the opportunity. 3) The best entrepreneurial businesses are often the ones that clients put you into. David's inbound phone call was a new client stating an unmet need. That's all the invitation the alert entrepreneur requires. 4) Opportunities, once seized, expand. David has expanded his original business by adding many related services for current clients to utilize, including multi-channel media, market research and analytics. In addition, he has added multiple new businesses in related spaces. He's been creative, he's taken action, he's been constantly looking for new opportunities that are complementary to the first one that he spotted. However small the start, the next steps will quickly become apparent to the entrepreneur who is not only alert to opportunity but also to expansion and growth. Additional Resource "David Bienstock's Logic of Customer-Led Growth" (PDF): Mises.org/E4E_65_PDF