Entrepreneurial learning and strategic foresight

Research Summary We study how learning by experience across projects affects an entrepreneur's strategic foresight. In a quantitative study of 314 entrepreneurs across 722 crowdfunded projects supplemented with a program of qualitative interviews, we counterintuitively find that entrepreneurs make less accurate predictions as they gain experience executing projects: they miss their predicted timeline to bring a product to market by nearly six additional weeks on each successive project. Although learning should improve prediction accuracy in principle, we argue that entrepreneurs also learn of opportunities to augment each successive product, which drastically expands the interdependencies beyond what an entrepreneur can anticipate. We find that entrepreneurs encounter more unforeseen interdependencies in their subsequent projects, and they sacrifice on-time delivery to address these interdependencies. Managerial Summary Entrepreneurs consistently struggle to set timelines that they can meet. And, counterintuitively, accumulating experience can actually make this problem even worse: experienced entrepreneurs can miss timelines by even wider margins on subsequent projects. In our study of crowdfunding entrepreneurs launching hardware technology products, we find that entrepreneurs fail to anticipate how many more things can go wrong when they do something even just a little bit more challenging on their next project. In other words, the number of unknown unknowns in a project increases very rapidly even when making only simple improvements on a product. We argue that entrepreneurs can more accurately predict their timelines by intentionally accounting for the rapid increase in things that can go wrong.