What is a good idea? It’s the billion dollar question for every entrepreneur. When asked this question, we tend to try to answer in absolute terms. We assume that an idea is some kind of abstract object “out there. In practice, experienced entrepreneurs have a very different answer: an idea is good… if someone is somehow willing to pay for it. Call it the social proof of a good idea.
Some time ago, a friend of mine started her own business as an independent consultant. Like many people, she initially doubted her ability to succeed after a long career as an employee. Did she really have anything to contribute? Did she really have value in the marketplace? She felt like she was taking the plunge without knowing if she could swim. But she took the plunge, and I remember her phone call the day she received payment for her first service. Someone had paid for her work, and she was determined to share her joy with me. It wasn’t much money, but that wasn’t the point. Previously, as an employee, she had always felt that her company employed her as it might have employed anyone else. Was she really being paid for herself? This was different. It was her, her service, her personality, her uniqueness and the uniqueness of her offering that was being paid for and therefore recognized. This small sum in her bank account was far more valuable than the roughly equivalent amount she had been receiving each month in the form of a salary. Words were hard to find, but the pride of this recognition was there, and rightly so. It just goes to show that the purchase order underestimated the philosophical dimensions.
Social proof, the entrepreneur’s driving force
So it is with entrepreneurs: the “proof” of their work, its value and relevance, is provided by the purchase order and its settlement, and nothing else. This is important because when I talk to an entrepreneurial project manager, the question is always, “Is my idea any good?” And that’s a bad question because it reflects a logic of absolutes. In that logic, there would be one way to judge the quality of an idea, and the world would consist of two kinds of ideas, good and bad. This is, of course, wrong. Great entrepreneurial successes have often been based on ideas that initially seemed far-fetched, ridiculous, impossible, or outrageous. As effectuation theory points out, the real question for the entrepreneur is “Who will accept my idea, and how?” In other words, an idea is “good” if someone, somewhere is willing to “pay” for it (in the broadest sense, not necessarily with money). So it’s a relative or intersubjective criterion: it’s enough that the two parties (“inter”) agree for the idea to be “good”, even if it’s only “good” for them (“subjective”), and even if the rest of the world thinks it’s stupid or scandalous. The other party’s approval is social proof of the idea and, moreover, validation of the entrepreneur’s work.
This attitude can be contrasted (in a deliberately schematic way) with that of the militant. The latter is guided by a goal. This goal is an ideal that cannot be compromised. Being right is fundamental to the militant; it’s the belief that underpins his action. The militant acts in the realm of the necessary, in the sense that the achievement of the ideal requires a certain number of actions. This quickly leads to the belief that the (noble) end can justify the (less noble) means. The militant doesn’t need social proof, he doesn’t even want it; it’s enough that he’s right to want what he thinks is necessary. The problem, of course, is who decides he’s right. And there’s no answer outside of faith.
If the activist is guided by the necessity of his ideal, the entrepreneur is guided by the sufficiency of his next step. For him, it’s not a question of being right or having a good idea. He just needs to find someone who will buy his product, and he’s one step further. Compromise is the basis of his actions. “Hello, potential customer, I’d like to sell you the green product. Ah, it looks good,” the customer replies, “but I’d prefer it in blue. OK, I can do it in blue if you promise to buy me ten.” Who’s right between blue and green? Nobody, and that’s not the point. All it takes is for both to agree on green or blue (or red) to move forward. The bar is set very low, so to speak, and the entrepreneur is agnostic about the future. Unlike the activist who believes the future must be blue or green, the entrepreneur creates a future that is either blue, green, or even red, depending on where his or her steps take him or her and the commitments he or she generates.
So the entrepreneur’s action is built transaction by transaction, each one a proof of the value of his work. The proof is not transcendental (my idea is good in the absolute, or I’m doing good) but social (someone is willing to pay for my work).
The Value of Social Proof in Uncertainty
This is not to suggest that the entrepreneurial model is superior to the activist model, but rather to illustrate two fundamentally different ways of approaching world change. Both are useful. But in a world that is largely uncertain, where ideals are hard to define, hard to agree on, and whose achievement has many perverse effects, the entrepreneurial approach, which relies on social proof at every stage, deserves greater consideration.
🇫🇷 French version of this article here.