BOOK TIP | How does an entrepreneur navigate uncertainty?

Seeing an opportunity is not the same as knowing whether it’s worth pursuing. An entrepreneur must also determine when it’s time to enter the market, change course, grow, or shut down. Such decisions are often made with incomplete information. These are the types of decisions at the heart of the book The Entrepreneurial Compass by Dean A. Shepherd and Holger Patzelt.

One starting point is metacognition—that is, the ability to pause and examine one’s own thought processes. The authors describe how entrepreneurs need to test their assumptions, seek new information, and rethink their approach when new information doesn’t align with their own perspective. Furthermore, identifying an opportunity for “someone” is different from assessing whether it is actually feasible and attractive for “me” specifically. This is a distinction that recurs in the book’s discussion of how opportunities are shaped and tested.

When it comes to testing an idea, Shepherd and Patzelt highlight a more scientific approach. The business model is viewed as something that needs to be tested: key assumptions are tested early on, and resources are allocated incrementally. The goal is to gradually close the knowledge gaps before committing larger resources. Sooner or later, a point is also reached where more information is no longer worth the cost of waiting.

But entrepreneurship is not described merely as a matter of thinking and decision-making models. The book also addresses how stress, health, emotions, and recovery affect the entrepreneur, as well as how founding teams, employees, and growing companies deal with uncertainty. An entire chapter is devoted to knowing when it’s time to quit and how prior investments and the stigma surrounding failure can make it difficult to shut down projects that are no longer viable.

Nor does the book’s perspective stop at the individual entrepreneur or company. The final chapter discusses, among other things, how the image of entrepreneurship is influenced by the contexts from which the research is conducted. It also addresses social, sustainable, and destructive entrepreneurship.

The Entrepreneurial Compass is published by Palgrave Macmillan and is available to read for free via open access.