The Importance of Acting Quickly in Entrepreneurship
ETTO principle and entrepreneurship. Follow the 70% rule. What is real and perceived risk and what are the differences between them? If you are not ashamed of the original version of your product, it means that you have released the product to the market too late.
Speed is the key to success as an entrepreneur. The reason for this is "Take Action!" Do you know when and how to press the button? If you don't know, this article is for you.
One of Mark Zuckerberg's most famous quotes is: "If you're not breaking things, you're not moving fast enough." This advice is extremely common among entrepreneurs who aim to climb the ladder of success. Zuckerberg's word shows us that everything comes at a price: You will either move fast and break something, or move slowly and break nothing. Unfortunately, there is no option such as "move fast and not break anything".
The principle, which can be translated as Efficiency / thoroughness trade-off (ETTO), in other words "the trade-off between efficiency / diligence", means that entrepreneurs make a choice between efficiency and meticulousness, since they cannot do both at the same time.
Let's say you're editing an article. Have 10 hours to edit articles. Suppose it takes you 2 hours to edit it.
At this point, you have to choose between the following:
Either you will edit an article five times and be extremely meticulous, or you will be more active by editing five articles in ten hours.
Resources are always limited. That's why you always have to choose between being more efficient and being more meticulous. You will either get more done or do less work more meticulously. If you are launching a product to the market, you can focus on a single product or offer four different products for sale at the same time interval.
Follow the 70% rule.
As Mario Andretti said: "If everything looks under your control, you're not going fast enough." But how exactly should this speed be set? What is the appropriate point for your company or project to fall within the scope of ETTO principle? This is where the 70% rule comes to your aid.
The 70% rule works like this: If you're 70% of anything, just do it. Is 70% of the book complete? Publish. Is 70% of the project finished? Send to relevant people. Are you 70% sure of a decision? Apply.
Why 70%? You can think of this in terms of standard deviation. In the normal distribution, namely the bell curve, approximately 70% of the data falls into a single standard deviation area, 95% falls on two standard deviation areas and 99% falls on three different standard deviation areas. If you are editing an article, you will usually detect 70% of the errors in your first review. You will see 95% of the errors on your second reading and 99% on the third time. But most importantly, the closer you get to getting the job done completely, the more time it will take to develop and change.
The mistake most entrepreneurs make is to think "I want to put the best work out, so I have to try up to 99%". This kind of thinking ignores opportunity cost. If it takes three months to complete a project by 70%, is it more profitable to work for another six months to reach 99%, or is it more profitable to complete two other projects by 70%?
For entrepreneurs and startups, the answer is often the latter. Completing three projects at 70% is much better than completing a single project at 99%. Most entrepreneurs who fail are faced with this result, not because they sell products quickly, but because they are extremely slow.
When is the 70% rule not applied?
The 70% rule is based on an entrepreneurial principle called "reasonable loss". So, whatever your entrepreneurship industry is, you have to decide whether you can be mistaken or not. For example, if you are running a nuclear reactor plant, you have to be ten times more careful and 99.999% sure before you bring anything to life. As a result, if you are mistaken in such a thing, the consequences will be devastating and irreversible.
However, if A) you are busy with something that is not costly to be mistaken, or B) easily reversible, you can learn what people think by completing 70% instead of reaching 95%. For example, if you are developing a software product, updating the code you wrote will take just a few minutes to fix the error. However, finding a new code can take hundreds or even thousands of hours if programmers do not yet know how to find it. Allow beta users to detect errors and allow programmers to fix them. So, follow the 70% rule.
Real and perceived risk.
The only snag of the reasonable loss principle is that you have to decide whether the potential loss is real or perception. One of the great lessons that evolutionary psychology teaches us is that our brains are way behind the age. Although we live in a world very different from our ancestors who lived 10,000 years ago, we still have the same nervous system as them.
This means that we fear social exclusion for good reason. For example, let's say you lived in a tribe of one hundred and fifty people. If 99% of the tribe didn't love or care about you, you were expelled from the tribe if only 1% really cared for you. This is extremely bad, considering you depend on that tribe to survive.
But this same ratio is the secret of success today. If you ask any successful product to potential customers in the market, 99% of them will say that they either do not like the product or do not care, only 1% of them like it. Many people do not use Apple products, but still Apple is one of the most valuable companies in the world.
Despite this, the fear that 99% of people will not like or care about our product keeps us from moving forward. However, this risk is not real, it is just a perception. Whoever you ask when launching a new product, he will tell you that this is a risk by referring to his feelings. However, this often does not correspond to reality.
For a real risk, it should look like this: Let's say it will cost you $ 10,000 to launch the product, and you have only $ 10,000 in the palm of your hand. Since you have no other way of making money, if the product fails you will starve. Here is the real risk.
If you are still hesitant when you reach 70%, write down the worst things that can happen to you and think about how you can get rid of them. For example, let's say you will publish a book. The worst case scenario could well be something like this: Everyone will hate the book and people will think you are a loser. Just below you can add a solution like this: I will refund their money back to everyone who bought my book and go back to my old job. It is that simple ...
Such a situation, although emotionally scary, cannot under any circumstances be considered a real risk. On the contrary, the later you publish the book, the greater the risk you take. If you don't publish the book and work on it for another three years and then fail, you will have lost much more time and money this time.
Speed: The only secret to progress.
Reid Hoffman, co-founder of LinkedIn, says:
If you are not ashamed of the original version of your product, it means that you have released the product to the market too late.
Most entrepreneurs focus on not breaking things instead of moving fast, and that's why they fail. If the project you are working on admits errors, the 70% rule will help you find your place in the ETTO policy. You will advance quickly and possibly succeed.
The basis of the 70% rule is that what you think is risky is safe, and what you think is safe is risky.
So when you reach 70%, "Take Action!" Press the button.