Sensemaking and entrepreneurship
C. Chet Miller
Sensemaking is an elusive concept. On the one hand, sensemaking implies a straightforward, unbiased process through which individuals and social collectives perceive, interpret, and draw conclusions about the objective world around them. This simple definition has intuitive appeal, and seems to capture the essence of what making sense of the world is all about. On the other hand, sensemaking implies a much more complex process, where developing an understanding of one’s situation is still the key, but where perceptions are driven by preexisting personal and organizational identities, where interpretation of an existing world is placed in partnership with ongoing enactment of that world, and where conclusions are driven by plausibility rather than accuracy (see Weick, 1995). It is this complex definition that has proven useful in recent strategy, entrepreneur ship, and organizational behavior research (e.g., Anand and Peterson, 2000; Orton, 2000; Vaara, 2003), and it is this definition that provides the basis for the discussion that follows.
Sensemaking by the Entrepreneur
Entrepreneurs concern themselves with creativity and innovation as they attempt to exploit previously unexploited opportunities (Ireland et al., 2001). In the words of Drucker (1985), they ‘‘create something new, something different; they change or transmute values.’’ Import antly, as they go about their creative endeavors, entrepreneurs often face a great deal of equivocality.
Equivocality is, within a single person or entity, the existence of multiple interpretations of an event, outcome, or set of experiences. In some situations, the meaning of an event is clear, or can be made clear with simple information gathering. The cause–effect relationships that generated the event are clear or easily deter mined, and what the event means for the future is clear or readily knowable. In other situations, particularly novel ones such as those encountered by entrepreneurs, multiple interpretations by a given individual are more likely, and choosing among the multiple interpretations is difficult given the novel and non routine nature of the situation. It is this equivocality that forces sensemaking.
Consider a simple example. Apple Computer introduced the Newton in the early 1990s. The company sold 140,000 of these personal digital assistants in the first two years of the product. Was this a success or a failure? If a success, what explains the success? If a failure, what explains the failure? And what did it all mean for Apple’s future endeavors? A few facts may help in answering these questions. First, Apple Computer was built on the success of the Apple II. It, however, sold only 43,000 of these personal computers in the first two years of the product. Second, the Newton was positioned in a new barely emerging market, just as the Apple II had been in the late 1970s. In such a market, smaller volumes in the early years and some technological issues might be expected. Was the Newton a success or a failure? By most accounts, it was a tremendous failure. Why? Because it generated low volume and had some technological issues (Christensen, 1997). Other accounts, however, tell a different story. In these alternative accounts, the Newton is viewed positively as a trailblazing, market creating product (Christensen, 1997). Which interpretation is correct? Both? Neither? For those within Apple who held both interpretations and could not choose between them, how could the equivocality have been resolved? Going forward, what should Apple have learned from the Newton experience? This is a key sensemaking question, but it is very difficult to answer in a definitive way.
The role of identity. An entrepreneur may have several identities. They may have an identity grounded in successful risk taking and out of box thinking (an entrepreneurial self), but they may also have an identity grounded in the ability to effectively apply existing rules and standards (an engineering self) or an identity grounded in steadfast defense of egalitarian values (an equalityself). Which identity is used in a given situation affects what is noticed and affects the choice of variables and data for ongoing attention. What is noticed and focused upon in turn affects decisions and actions. Further – and this is a key aspect of sensemaking – which identity is used is driven not just by objective features of the situation and the predisposition of the entrepreneur, but also by how people around them respond to their actions. This dynamic is captured by a simple question: ‘‘How can I know who I am until I see what they do?’’ (Weick, 1995). For example, a project manager involved with the Apple Newton project may have been positively reinforced for focusing on technical excellence, which probably caused the individual to use their engineering identity. But when corporate management, the business press, and the technology press began to question the Newton’s technology, the individual may have moved sub consciously to an entrepreneurial identity, where self esteem would have been protected (‘‘I have been working on an entrepreneurial project with many unknowns; I have not been working on an engineering project where the path from X to Y could be optimized’’).
The role of enactment. Enactment means that entrepreneurs are partially responsible for many of the events, outcomes, and experiences they must interpret. In other words, entrepreneurs take actions over time and this influences the course of events. They are simultaneously creators and discoverers of what is out there.
Enactment sometimes involves straight for ward actions, outcomes, and interpretations, such as when an entrepreneur establishes a strong cost accounting unit in her small firm and then hears complaints from organizational members about the loss of an entrepreneurial environment. Enactment, however, extends to richer conceptual territory as well. For example, it encompasses instances where individuals experiment on the world in order to test tentative explanations of past events. These experiments may influence ongoing events in unforeseen ways, forcing interpretations of a new set of circumstances. Enactment also extends to self fulfilling prophecies, and such prophecies lie at the heart of much enactment (Weick, 1979). A simple example illustrates this common phenomenon. An entrepreneur feels that an angel investor (see business angel net work) is being overly aggressive in monitoring the new business. Lacking the time or inclination to handle this, the entrepreneur attempts to wall himself off from the investor. The investor, who had not actually been aggressive in monitoring, reacts by stepping up efforts to stay in contact with the entrepreneur. The entrepreneur concludes that he has a real problem on his hands. This problem, which has in fact become real, is self induced. Being careful with assumptions and preconceived notions is one lesson from a sensemaking perspective.
The role of plausibility. Sensemaking is not necessarily focused on discovering or developing an accurate view of the world. Instead, it is focused on creating a plausible view, a view that basically fits the data but perhaps not perfectly so. Why is this important, and perhaps useful? The key idea is to avoid inaction based on too much investigation and too much thinking. Weick (1995) put it this way: ‘‘I need to know enough about what I think to get on with my projects, but no more, which means sufficiency and plausibility take preference over accuracy.’’ Borrowing from pop culture in early twenty first century America, ‘‘Just do it’’ seems to capture the sensemaking perspective.
Entrepreneurs often face dynamic, shifting environments, and cannot afford to become mired in too much analysis. Sensemaking that has the limited goal of plausible viewpoints frees entrepreneurs to act and then learn from experience.
Conclusion
Sensemaking offers an alternative to traditional perspectives on entrepreneurial information gathering, decision making, and planning (see entrepreneurial decisions). In more traditional perspectives, information is gathered until the marginal cost of doing so exceeds the marginal benefit in discovering truth about an objective world. Sensemaking emphasizes the role of identity, enactment, and plausibility in understanding a subjective world. It offers a different way to think about entrepreneurs and entrepreneurial organizations.
In this essay, a basic but meaningful interpretation of sensemaking has been offered. In more elaborate treatments, the intersubjective nature of sensemaking and perhaps its retrospective flavor might also be emphasized.
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