The foundations and ethics of entrepreneurial strategy

The central strategic challenge facing entrepreneurs is how to choose. Motivated by a significant disconnect between theory, practice and teaching, we propose a new approach to entrepreneurial strategy that places the forward-looking and uncertain choices entrepreneurs face at the center of the process of venture formation and scaling. Whether it is the choice of their first customer, the hiring of a first employee, or the choice about which partners to work with (or not), founding teams’ key choices often do not have a “best” answer but instead are choosing among alternative visions for their idea and their growing team. Ultimately, these choices come down not to a question of simple economic value but also to questions of founder purpose and ethics. For example, whether a sharing economy service offers full transparency and so allows for online discrimination is not simply a business choice but a choice about what values the founders choose to embed in the platform they are building. Our framework yields a new class of decision-making tools that allow entrepreneurs to clarify the role of traditional business development tools (e.g., the lean start-up approach) versus the role of choice among uncertain alternatives. We highlight one new tool – Test Two, Choose One – that offers a novel approach for how to undertake entrepreneurial decision-making under uncertainty, and offers a framework for honest and structures discussion about how to make choices under uncertainty that ultimately reflect the values and ethics of founders.