Jaroslavs Kaplans's interview

media publications entrepreneurial task business intelligence context analysis


1. Jaroslavs, how would you like to be remembered by your readers?
I see myself as a researcher in the field of entrepreneurial thinking. An interesting historical analogy comes to mind. It may be hard to believe now, but the Silk Road, humanity's greatest trade route, thrived for 15 centuries largely due to a false assumption. People believed it was the only viable route for moving goods from Asia to Europe, even though alternative paths did exist. This misconception granted the Silk Road a competitive advantage for centuries.

In the entrepreneurial context, the analogy serves to highlight that many business owners believe there's only one path to growing their enterprise. However, I am confident that alternative, and potentially better, routes do exist.
2. Over the past few years, you've been researching the frequent failure of new companies, as well as the collapse of massive business empires. Can you outline the core mistakes made by both budding entrepreneurs and established corporations?
Certainly, this is a complex but vital question for many entrepreneurs, so I will delve into it in depth. My Business Intelligence research project originated from this very inquiry. I was intrigued by why only three out of ten entrepreneurs make it to their tenth anniversary. These statistics do vary by country and industry, but the general trend is quite consistent.

Albert Einstein once said, "One cannot solve a problem at the level at which it was created; one must rise above it." So the question is, at what level can we resolve this issue? That's precisely where my research began seven years ago.

In my analysis, any entrepreneurial venture consists of three distinct "layers" of activity, each with its own unique logic.

The first layer, which I call the "Resource" layer, focuses on converting available resources into a product through the application of various technologies. Here, the entrepreneur's attention is solely on how to utilize resources to create a product, without much regard for the market or consumers. This is often a simplistic, trial-and-error approach that is increasingly insufficient in today's complex business landscape.

The second layer, termed the "Constructors" layer, is where the entrepreneur recognizes that the strategies which worked in the first layer are not universally applicable. They work only within certain conditions or boundaries. On this layer, the entrepreneur constructs a more complex business system that considers multiple factors and variables, beyond just production. For example, quality control becomes crucial here; not everyone given a piece of wood will want or know how to make a table from it.

The third layer, the "Research" layer, is where the entrepreneur identifies and understands patterns that can help predict changes in their business ecosystem. This is more about a holistic view of the business rather than focusing solely on individual parts or products.

To answer your question about the core mistakes: I believe budding entrepreneurs often fail because they can't progress from the Resource layer to the Constructors layer. Established business empires, on the other hand, tend to collapse because they are unable to advance from the Constructors layer to the Research layer.
3. What conclusions have you reached based on your research findings?
The main thrust of my research contends that entrepreneurs often neither set nor solve any specific, context-dependent tasks in their operations. I refer to this as an "entrepreneurial task." Unlike other kinds of tasks—be it managerial, financial, or production—an entrepreneurial task is unique in that its solution, and often its very meaning, is contingent upon a specific context.

The approach to solving an entrepreneurial task is largely influenced by the environment in which the issue arises, rather than the issue itself. This environment includes the entrepreneur, who will ultimately define, structure, and tackle the problem.

I anticipate that this concept will be novel for many entrepreneurs globally. However, the irony lies in the fact that addressing other types of tasks, such as managerial ones, often fails to provide comprehensive solutions. In other words, using conventional problem-solving methods for entrepreneurial challenges is akin to applying a bandage to a severed head.

As legendary boxer Sugar Ray Leonard once said, "You don’t play boxing. You really don’t. You play golf, you play tennis, but you don’t play boxing." Similarly, if you can't identify and resolve an entrepreneurial problem, you're merely playing at business. My study confirms that we're dealing with concrete phenomena of great significance to entrepreneurs.

To illustrate, consider this: If you ask someone to compare two companies, in 99 out of 100 cases, you will receive evaluations based on superficial criteria such as turnover, pre-tax income, earnings per employee, and market share. But what do these metrics really tell you? Not much.

True assessment requires examining companies through the lens of their customer interactions. Take Blockbuster and Netflix, for example. In 2007, from a financial perspective, Blockbuster was quite successful. But when examined through the prism of customer interaction and future scalability, it was clearly in decline. Conversely, Netflix was a burgeoning startup excelling in a more scalable and fast-growing sector—digital streaming.

In essence, the true value of a company isn't solely based on its bottom line, but rather on the context in which it interacts with consumers. Companies like Blockbuster may excel in managerial and financial metrics, yet fail because they couldn't identify and solve the critical entrepreneurial tasks at hand.

So, for entrepreneurs struggling to compete, the challenge isn't always external. More often than not, they are wrestling with these entrepreneurial tasks and failing to adapt. As French philosopher Claude Helvetius rightly noted, "Knowledge of certain principles easily compensates for ignorance of certain facts." My research aims to identify these principles to aid entrepreneurs in their journey.
4. What is the core concept underlying the entrepreneurial task, according to your research?
In popular perception, entrepreneurship is often reduced to elements like money, success, or power. This not only reflects societal values but also imposes limitations on the true essence of entrepreneurship. In my analysis, the crux of the entrepreneurial task centers around how consumers perceive the value of products or services.

The moment customers no longer see value in a product, entrepreneurial activity grinds to a halt. This presents a paradox: if a businessperson doesn't have a product, there's no value to offer the consumer. However, just having a product doesn't automatically make it valuable in the eyes of the consumer.

Many entrepreneurial ventures fail within a decade either because the product isn't truly present or because it loses its perceived value. In simple terms, what was once considered valuable by consumers may no longer be seen that way.

Consumer perception of value is heavily influenced by personal preferences and societal norms. Nothing is inherently valuable until its worth is established. For example, until the value of oil was recognized, people paid workers to remove it from their properties. Similarly, De Beers revolutionized the diamond industry in the 1940s with its "A Diamond is Forever" campaign, thereby creating a new criterion for value—diamonds as a symbol in wedding rings. This led to a substantial increase in their sales, from 23 million dollars in 1939 to 2.1 billion dollars in 1979 in the U.S. market.

In conclusion, the key factor embedded in the entrepreneurial task is the consumers' perception of the value of products and services.
5. What do you think is the biggest challenge currently facing entrepreneurs?
In today's landscape, entrepreneurs face numerous challenges, many of which can cause ongoing discomfort or "chronic pain" in the business context. However, I don't believe this pain should necessarily be avoided. In contact sports like boxing or karate, pain is part of the experience, and the same holds true for entrepreneurship.

The real issue arises when entrepreneurs find themselves unable to address or mitigate this chronic pain. Often, it becomes a persistent problem that they can't resolve. I believe the root cause of these ongoing issues is the entrepreneurs' diminishing ability to effectively enhance the perceived value of their products and services among consumers.

To sum it up succinctly, the biggest challenge facing entrepreneurs today is the struggle to maintain a high perceived value for their offerings in the eyes of consumers.
6. Jaroslavs, you recently released a book titled "Business Incognita: How to Expand the Boundaries of Entrepreneurial Thinking," which took you over six years to write. What was the purpose behind dedicating six years to this book?
I had two primary objectives in writing this book.

The first goal was to show entrepreneurs that the root cause of their ongoing business struggles often lies deeper than where the symptoms manifest. As a result, traditional solutions typically employed by entrepreneurs today may not effectively address the source of these issues. This leads to a cycle where business owners jump from one 'magic bullet' to another, hoping one will finally solve their problems. My core argument is that understanding the fundamental principles of entrepreneurship—not just management, production, or marketing—allows entrepreneurs to better anticipate environmental changes and make more informed decisions about their businesses. During my six years of research for the book, I identified around a thousand patterns related to entrepreneurial activity, 167 of which are included in "Business INCOGNITA."

My second objective was to develop and outline a methodology for tackling specialized entrepreneurial challenges. The book delves deeply into the history and evolution of the 'entrepreneurial task' concept, explaining how it differs from other kinds of tasks and elaborating on its structure and function. I never intended for this single volume to address every question arising from this new class of entrepreneurial challenges. That's why I've decided to write a series of books based on my research findings, and a sequel is likely in the works.

I hope these edits make the text clearer and easier to read, while also correcting any grammatical or punctuation issues.
7. What is the key takeaway from the book?
The central takeaway from the book is that before making any changes to an entrepreneur's actions or strategies, it's crucial to first address their underlying mindset. Changing what entrepreneurs do without altering how they think is akin to treating the symptoms rather than the root cause. The quality of our decisions, and ultimately our lives, is significantly influenced by our perspectives on the problems we face.

Thank you for your attention.