Description
This document about the entrepreneurial trap of human biases by randy white.
1
An early version of this article first appeared in a two part article in the April 2009 issue of the
White Hutchinson Leisure & Learning Group’s Leisure eNewsletter.
The entrepreneurial trap of human biases
by Randy White
© 2009 White Hutchinson Leisure & Learning Group
Starting a location-based entertainment business (LBE) such as a family
entertainment center (FEC); children’s entertainment, edutainment or enrichment
center; play café; eatertainment facility such as a family pizza buffet-
entertainment center; bowling center, laser tag center or other type of LBE is
fraught with landmines and challenges. Unfortunately, many of these businesses
never open or fail soon after they do and end up in the LBE roadkill graveyard.
Many times each year, White Hutchinson Leisure & Learning Group is hired by
owners of poorly performing LBEs to identify and analyze their root cause
problems and develop turnaround strategies for those businesses. Unfortunately,
in some cases the prognosis is terminal. That’s because the poor performance is
due to incurable major mistakes made before the center even opened. In other
situations, the owners waited too long to call in experts and have depleted all
their working capital. So even if their problems are solvable, they don’t have the
financial wherewithal to make necessary changes.
Here’s a summary of the some of the major traps we have seen entrepreneurs
fall into based on our 20 years of experience in the LBE industry. Entrepreneurs
planning to enter the industry take heed!
You are NOT your customer
This is one of the mistakes we see most consistently. LBE developers make
decisions about all aspects of their projects based upon their personal
perspective and preferences. Rarely are the business developer’s preferences
and perspective identical to those of the customers they will serve. To be
successful, you need to see through your customers’ eyes and think in their
brains, not your own. Below are various elements of the ‘You are NOT your
customer’ trap that LBE developers become victims to.
Androcentrism
This is the most common version of “You are NOT your customer.” With rare
exceptions, women make the decisions about which LBEs their families will visit
White Hutchinson Leisure & Learning Group page
2
and when they’ll go. And even for non-family adult-
only venues, women still rule the decision-making.
Women make more than 80% of all purchase
decisions and often have veto power over the
decisions they don’t make. Men are from Mars,
women are from Venus, and when it comes to kids,
their story is from a completely different planet.
Women think differently than men. Their brains are
wired differently. They see, feel and experience the
world differently than men do. They have different
wants, needs, desires and preferences. Likewise,
children’s wants, needs and desires are completely different than those of adults.
Most LBEs are developed by men, designed by men and managed by men. This
introduces a major gender bias in the LBE’s entire design and management,
known as androcentrism. You can also call it male-centeredness. Whatever you
call it, it typically results in a significant mismatch between all aspects of the LBE
and its core customers: women and children.
Cohortism
We all know how different Generation Y (Millennials) is from older generations.
Well, there are also differences between Generation X and Baby Boomers. Too
often, the LBE entrepreneur is from an age cohort different than the LBE’s target
market or a large majority of the target market. This cohort bias creates a
mismatch: decisions about design, management and marketing of the LBE are
made from a far different generational perspective than is held by their
customers.
Cultural faux pas
Less prevalent a problem in the U.S., but one we see all too frequently in our
international work is the attempt to transport a Western model to another culture
without making appropriate adjustments for a good cultural fit. (There are also
cultural differences to take into account in different areas of the U.S.) We’ve all
heard about Disney’s cultural faux pas when Disneyland Resort Paris opened —
no wine being one. And that move was still within a Western culture. Move a
Western model into Middle Eastern, African or Asian cultures and there are even
more challenges.
White Hutchinson Leisure & Learning Group page
When it comes to decisions,
woman rule.
3
Classism
Birds of a feather flock together. That is a polite way of
saying people like to hang out with people like themselves,
and whether they want to admit it or not, are class
conscious. This is just as true in America as in nearly every
culture in the world. There is a big difference between
customers who frequent Denny’s restaurants and those
who’re members of country clubs, just as there is a big
difference between people who shop at Nordstrom versus
Walmart.
To be successful, LBEs (particular indoor venues) need to target a group of
guests with a specific socioeconomic lifestyle. If the developer isn’t from the
same group, there easily can be a mismatch between the LBE’s design, finishes,
level of service and management and the preferences of the customers it’s trying
to attract.
Be aware of your own incompetence
Real knowledge is to know the extent of one’s ignorance.
Confucius
This wisdom is 26 centuries old. In the June 2003 issue of Current Directions in
Psychological Science, researchers from Cornell University and the University of
Illinois at Urbana-Champaign stated, “People tend to be blissfully unaware of
their incompetence. This lack of awareness arises because poor performers are
doubly cursed: Their lack of skill deprives them not only of the ability to produce
correct responses, but also the expertise necessary to surmise that they are not
producing them. . . People are unaware of their incompetence, innocent of their
ignorance.”
This double curse of not having the skills needed to produce the correct
judgments, which are the very same skills needed to evaluate the accuracy of
one’s responses, is one of the most difficult for entrepreneurs to overcome. An
example of how this affects LBEs: The skills needed to develop the mix and
layout of a center are the exact same skills necessary to recognize whether the
mix and layout is correct.
Put simply, people incompetent in any area of knowledge are likewise ignorant of
their incompetence. Ignorance may be bliss, but when it comes to developing an
LBE, this bliss more often than not will produce roadkill.
White Hutchinson Leisure & Learning Group page
Birds of a feather like to flock
together.
4
Many things are counterintuitive
Amazingly, or maybe not so amazingly if you consider human nature, developers
of LBEs continue to make many classic mistakes, so we see history continue to
repeat itself. Most of these mistakes have resulted from practices that appear
logical on the surface. However, the correct approach with LBEs is often just the
opposite of what intuition tells someone just entering the industry. In a sense, this
is a variation of “Be aware of your own incompetence.” One intuitive mistake we
repeatedly see is “you’ve got to have something for everyone.” The correct
counterintuitive approach is just the opposite; it’s call focused assortment—you
focus on one well defined market niche and then develop a mix that appeals to
them.
The emotional trap of ‘fun’
We also call this the emotional feasibility study. Many novice LBE developers
have their decision-making ability clouded because they get so emotionally
caught up in the “fun” of an LBE. It’s going to be so much fun that they just know
it will be successful! They lose sight of the other factors and the hundreds of
aspects of the business that must be executed correctly for it to succeed.
Ego and self-serving and collective bias
It takes entrepreneurial spirit to develop a major project such as an LBE. One
essential component of a successful entrepreneur is ego, that strong sense of
self. However, ego is a double-edged sword. Too much ego becomes hubris or
arrogance, which is the sure path to irrational business decisions and failure. Too
little ego, and the confidence isn’t sufficient to take on the project risk in the first
place or to continue to pursue it through setbacks. Ego can be a success driver
or a project killer, or both. The successful entrepreneur is one who has the ability
to take intelligent risks by benefiting from their ego’s strengths while mitigating its
weaknesses.
The nature of the ego can cause an entrepreneur to fall victim to a number of
biases. One is known as confirmation bias or self-serving bias. When you make a
decision, it may be tentative at first, but soon you’ll come up with reasons
confirming your brilliant move, and you’ll ignore all factors that suggest otherwise.
Psychological research shows our desires and emotions have powerful influence
on how we interpret information, even when we believe we are trying our
darnedest to be objective and impartial. We are motivated to confirm the decision
we have already made. Without being aware we’re doing it, we critically
White Hutchinson Leisure & Learning Group page
5
scrutinize and then discount facts that are contrary to the conclusions we want to
reach or confirm. By the same token, we uncritically embrace evidence that
supports our conclusions. Being unaware of our skewed information processing,
we conclude our judgments are free from bias.
With self-serving bias, people reach conclusions that favor their own interests. In
other words, self-serving bias distorts how we interpret information.
Entrepreneurs’ egos also can lead to collective bias, which can manifest itself in
two ways:
•
An ego-driven developer may hire “yes” people and “yes” consultants. The
developer surrounds himself with people who confirm his decisions, rather than
with critical thinkers who are not afraid to voice their opinions.
•
The entrepreneurs’ enthusiasm and often charisma become contagious and
create a collective belief that pervades the entire development team. Everyone
gets caught up in wanting the project to succeed and believing it will succeed,
which creates a shared collective self-serving bias with the whole group.
The bottom line of either scenario is that everyone on the project team, whether
consultants or company insiders, is rooting for something they believe in. This
unconsciously blinds them to the critical judgment skills that are really needed.
Research by Drew Weston, a professor of psychology at Emory University
reinforces this idea that people will ignore facts that contradict what they want to
believe. His research shows that most of the time, people make decisions based
upon bias, not fact. In the scenarios used in his study, the strength or weakness
of the evidence turned out to be immaterial about 80% of the time. In other
words, we believe what we want, facts be damned.
Selection bias
In an attempt to claim a winning formula for an LBE, many entrepreneurs go out
and look at an existing center and copy it. We sometimes refer to these
entrepreneurs as wannabes. On the surface, their plan seems totally logical.
Unfortunately, copying what appear to be successful LBEs can be misleading
and dangerous – and become a direct route to failure.
The statistical community frequently cites an anecdote to illustrate selection bias.
World War II statistician Abraham Wald was studying the vulnerability of airplanes
to enemy fire. All the data showed that certain parts of planes were hit much
more often by enemy fire than other parts. So military personnel concluded that
reinforcing those parts would increase the planes’ survival rate. Seems logical,
White Hutchinson Leisure & Learning Group page
6
doesn’t it? Well, Wald came to just the opposite conclusion: the parts hit least
often should be protected more.
Wald came to this conclusion because of his understanding of the selection bias
inherent in the data. The data was from only the planes that returned. It didn't
include any data from the planes that were shot down. Wald reasoned that a
plane would be less likely to return if it were hit in a critical area. Therefore, the
ones that returned, even when hit, had not been hit in a critical location. Wald
argued that reinforcing parts of returning planes that had the most hits would be
unlikely to have any benefit.
Selection bias results from looking only at existing and supposedly successful
LBEs, not the entire universe, which includes LBEs that failed. Anyone who tries
to reach conclusions about what the winning formula is for a business by
studying existing companies falls into this statistical trap. If LBE developers study
only successful centers, any relationship they infer between their design, mix and
management and their success will be misleading and quite possibly wrong.
Rather than copying a formula for success, they may very well be copying the
formula for failure. In addition to the problem of selection bias, there can be many
factors that contribute to the success of existing centers that will not be present in
the developer’s center. One simple example is cost. An older center cost less to
build than one built at today’s prices, so what is profitable for the older LBE might
not be profitable for a new center. Maybe the center failed originally and was
bought by the existing owner for cents on the dollar. Maybe the existing center,
although operating, is not generating enough profit to justify its replication
elsewhere. (See the article below, Remember When by Frank Price, that
discusses a current LBE copycat phenomenon.)
Optimism bias
Put simply, this is the tendency for people to be over-optimistic about the
outcome of their planned actions. This may include overestimating the likelihood
of positive outcomes and under-estimating the likelihood of negative events.
In the planning of LBEs, we often see entrepreneurs overestimate their revenues
and underestimate both costs and operating expenses. We often refer to this
phenomenon as seducing yourself with the pro forma.
Is there any hope?
Considering the flawed nature of the human cognitive condition when it comes to
entrepreneurs starting businesses, can LBE entrepreneurs have a better success
White Hutchinson Leisure & Learning Group page
7
rate and can industry roadkill be prevented? Perhaps not entirely. Blind ambition
will continue to drive many entrepreneurial ventures.
Hopefully, though, many fledgling entrepreneurs will recognize the fragility of their
human condition when it comes to decision-making and will turn to experienced
LBE industry consultants, designers and producers to guide them through the
minefields of developing a successful entertainment venue. Malcolm Gladwell’s
new book, Outliers: The Story of Success, says it takes 10,000 hours,
approximately 10 years, to be a world-class expert in virtually anything.
Entrepreneurs starting an LBE need to seriously consider their lack of expertise
when it comes to Gladwell’s 10,000-hour rule and team up
with veteran industry experts.
Entrepreneurs working on LBE business development
frequently approach our company to ask what our fees are.
When we tell them, their response is often, “It’s not in my
budget,” or “I can’t afford it.” Well, you get what you pay for.
This may sound self-serving, but it’s really directed at trying
to prevent industry roadkill. The failure of any LBE hurts the
industry’s reputation and the ability of future entrepreneurs
to lease store spaces and access capital. Entrepreneurs
who say they can’t afford expert guidance are usually the
ones who most need to save themselves from the blissful
ignorance of not recognizing just how much help they really need. Successful
entrepreneurs have an understanding of how their inherent sense of self, ego
and cognitive biases affect their decisions.
Entrepreneurs that don’t meet the 10,000-hour rule have a very low probability of
success unless they marry themselves with a company or expert who does. That
rented experience can make all the difference between success and failure. It’s
the difference between starting a business at the top of the learning curve versus
starting at the bottom. The expert should not be a “yes” consultant or designer.
Yes consultants will constantly agree with their clients to keep them happy in
order to be assured of getting more business. This practice only supports
collective bias. A good consultant has no hesitation in letting clients know when
they are going down the wrong road, even if it creates the risk of not getting
future work from the client.
Our 20-year-old company is one of a number of LBE industry consultants,
designers and producers. We are not a perfect match for everyone. If you are an
White Hutchinson Leisure & Learning Group page
Malcolm Gladwell says
it takes 10,000 hours of
experience to become a
world-class expert.
8
aspiring LBE entrepreneur, search out industry experts, put adequate money in
your budget and hire the best you can find to assure your project becomes a 10-
year+ successful LBE that joins the ranks of industry evergreens.
Additional reading:
The feasibility study, the blueprint for success
Randy White is the CEO of the Kansas City, Missouri- and Doha, Qatar-based
White Hutchinson Leisure & Learning Group. The company specializes in the
feasibility, design and production of location-based entertainment and leisure
venues. Randy can be reached at +816.931-1040, ext 100 or via the company’s
website www.whitehutchinson.com
White Hutchinson Leisure & Learning Group page
doc_874140864.pdf
This document about the entrepreneurial trap of human biases by randy white.
1
An early version of this article first appeared in a two part article in the April 2009 issue of the
White Hutchinson Leisure & Learning Group’s Leisure eNewsletter.
The entrepreneurial trap of human biases
by Randy White
© 2009 White Hutchinson Leisure & Learning Group
Starting a location-based entertainment business (LBE) such as a family
entertainment center (FEC); children’s entertainment, edutainment or enrichment
center; play café; eatertainment facility such as a family pizza buffet-
entertainment center; bowling center, laser tag center or other type of LBE is
fraught with landmines and challenges. Unfortunately, many of these businesses
never open or fail soon after they do and end up in the LBE roadkill graveyard.
Many times each year, White Hutchinson Leisure & Learning Group is hired by
owners of poorly performing LBEs to identify and analyze their root cause
problems and develop turnaround strategies for those businesses. Unfortunately,
in some cases the prognosis is terminal. That’s because the poor performance is
due to incurable major mistakes made before the center even opened. In other
situations, the owners waited too long to call in experts and have depleted all
their working capital. So even if their problems are solvable, they don’t have the
financial wherewithal to make necessary changes.
Here’s a summary of the some of the major traps we have seen entrepreneurs
fall into based on our 20 years of experience in the LBE industry. Entrepreneurs
planning to enter the industry take heed!
You are NOT your customer
This is one of the mistakes we see most consistently. LBE developers make
decisions about all aspects of their projects based upon their personal
perspective and preferences. Rarely are the business developer’s preferences
and perspective identical to those of the customers they will serve. To be
successful, you need to see through your customers’ eyes and think in their
brains, not your own. Below are various elements of the ‘You are NOT your
customer’ trap that LBE developers become victims to.
Androcentrism
This is the most common version of “You are NOT your customer.” With rare
exceptions, women make the decisions about which LBEs their families will visit
White Hutchinson Leisure & Learning Group page
2
and when they’ll go. And even for non-family adult-
only venues, women still rule the decision-making.
Women make more than 80% of all purchase
decisions and often have veto power over the
decisions they don’t make. Men are from Mars,
women are from Venus, and when it comes to kids,
their story is from a completely different planet.
Women think differently than men. Their brains are
wired differently. They see, feel and experience the
world differently than men do. They have different
wants, needs, desires and preferences. Likewise,
children’s wants, needs and desires are completely different than those of adults.
Most LBEs are developed by men, designed by men and managed by men. This
introduces a major gender bias in the LBE’s entire design and management,
known as androcentrism. You can also call it male-centeredness. Whatever you
call it, it typically results in a significant mismatch between all aspects of the LBE
and its core customers: women and children.
Cohortism
We all know how different Generation Y (Millennials) is from older generations.
Well, there are also differences between Generation X and Baby Boomers. Too
often, the LBE entrepreneur is from an age cohort different than the LBE’s target
market or a large majority of the target market. This cohort bias creates a
mismatch: decisions about design, management and marketing of the LBE are
made from a far different generational perspective than is held by their
customers.
Cultural faux pas
Less prevalent a problem in the U.S., but one we see all too frequently in our
international work is the attempt to transport a Western model to another culture
without making appropriate adjustments for a good cultural fit. (There are also
cultural differences to take into account in different areas of the U.S.) We’ve all
heard about Disney’s cultural faux pas when Disneyland Resort Paris opened —
no wine being one. And that move was still within a Western culture. Move a
Western model into Middle Eastern, African or Asian cultures and there are even
more challenges.
White Hutchinson Leisure & Learning Group page
When it comes to decisions,
woman rule.
3
Classism
Birds of a feather flock together. That is a polite way of
saying people like to hang out with people like themselves,
and whether they want to admit it or not, are class
conscious. This is just as true in America as in nearly every
culture in the world. There is a big difference between
customers who frequent Denny’s restaurants and those
who’re members of country clubs, just as there is a big
difference between people who shop at Nordstrom versus
Walmart.
To be successful, LBEs (particular indoor venues) need to target a group of
guests with a specific socioeconomic lifestyle. If the developer isn’t from the
same group, there easily can be a mismatch between the LBE’s design, finishes,
level of service and management and the preferences of the customers it’s trying
to attract.
Be aware of your own incompetence
Real knowledge is to know the extent of one’s ignorance.
Confucius
This wisdom is 26 centuries old. In the June 2003 issue of Current Directions in
Psychological Science, researchers from Cornell University and the University of
Illinois at Urbana-Champaign stated, “People tend to be blissfully unaware of
their incompetence. This lack of awareness arises because poor performers are
doubly cursed: Their lack of skill deprives them not only of the ability to produce
correct responses, but also the expertise necessary to surmise that they are not
producing them. . . People are unaware of their incompetence, innocent of their
ignorance.”
This double curse of not having the skills needed to produce the correct
judgments, which are the very same skills needed to evaluate the accuracy of
one’s responses, is one of the most difficult for entrepreneurs to overcome. An
example of how this affects LBEs: The skills needed to develop the mix and
layout of a center are the exact same skills necessary to recognize whether the
mix and layout is correct.
Put simply, people incompetent in any area of knowledge are likewise ignorant of
their incompetence. Ignorance may be bliss, but when it comes to developing an
LBE, this bliss more often than not will produce roadkill.
White Hutchinson Leisure & Learning Group page
Birds of a feather like to flock
together.
4
Many things are counterintuitive
Amazingly, or maybe not so amazingly if you consider human nature, developers
of LBEs continue to make many classic mistakes, so we see history continue to
repeat itself. Most of these mistakes have resulted from practices that appear
logical on the surface. However, the correct approach with LBEs is often just the
opposite of what intuition tells someone just entering the industry. In a sense, this
is a variation of “Be aware of your own incompetence.” One intuitive mistake we
repeatedly see is “you’ve got to have something for everyone.” The correct
counterintuitive approach is just the opposite; it’s call focused assortment—you
focus on one well defined market niche and then develop a mix that appeals to
them.
The emotional trap of ‘fun’
We also call this the emotional feasibility study. Many novice LBE developers
have their decision-making ability clouded because they get so emotionally
caught up in the “fun” of an LBE. It’s going to be so much fun that they just know
it will be successful! They lose sight of the other factors and the hundreds of
aspects of the business that must be executed correctly for it to succeed.
Ego and self-serving and collective bias
It takes entrepreneurial spirit to develop a major project such as an LBE. One
essential component of a successful entrepreneur is ego, that strong sense of
self. However, ego is a double-edged sword. Too much ego becomes hubris or
arrogance, which is the sure path to irrational business decisions and failure. Too
little ego, and the confidence isn’t sufficient to take on the project risk in the first
place or to continue to pursue it through setbacks. Ego can be a success driver
or a project killer, or both. The successful entrepreneur is one who has the ability
to take intelligent risks by benefiting from their ego’s strengths while mitigating its
weaknesses.
The nature of the ego can cause an entrepreneur to fall victim to a number of
biases. One is known as confirmation bias or self-serving bias. When you make a
decision, it may be tentative at first, but soon you’ll come up with reasons
confirming your brilliant move, and you’ll ignore all factors that suggest otherwise.
Psychological research shows our desires and emotions have powerful influence
on how we interpret information, even when we believe we are trying our
darnedest to be objective and impartial. We are motivated to confirm the decision
we have already made. Without being aware we’re doing it, we critically
White Hutchinson Leisure & Learning Group page
5
scrutinize and then discount facts that are contrary to the conclusions we want to
reach or confirm. By the same token, we uncritically embrace evidence that
supports our conclusions. Being unaware of our skewed information processing,
we conclude our judgments are free from bias.
With self-serving bias, people reach conclusions that favor their own interests. In
other words, self-serving bias distorts how we interpret information.
Entrepreneurs’ egos also can lead to collective bias, which can manifest itself in
two ways:
•
An ego-driven developer may hire “yes” people and “yes” consultants. The
developer surrounds himself with people who confirm his decisions, rather than
with critical thinkers who are not afraid to voice their opinions.
•
The entrepreneurs’ enthusiasm and often charisma become contagious and
create a collective belief that pervades the entire development team. Everyone
gets caught up in wanting the project to succeed and believing it will succeed,
which creates a shared collective self-serving bias with the whole group.
The bottom line of either scenario is that everyone on the project team, whether
consultants or company insiders, is rooting for something they believe in. This
unconsciously blinds them to the critical judgment skills that are really needed.
Research by Drew Weston, a professor of psychology at Emory University
reinforces this idea that people will ignore facts that contradict what they want to
believe. His research shows that most of the time, people make decisions based
upon bias, not fact. In the scenarios used in his study, the strength or weakness
of the evidence turned out to be immaterial about 80% of the time. In other
words, we believe what we want, facts be damned.
Selection bias
In an attempt to claim a winning formula for an LBE, many entrepreneurs go out
and look at an existing center and copy it. We sometimes refer to these
entrepreneurs as wannabes. On the surface, their plan seems totally logical.
Unfortunately, copying what appear to be successful LBEs can be misleading
and dangerous – and become a direct route to failure.
The statistical community frequently cites an anecdote to illustrate selection bias.
World War II statistician Abraham Wald was studying the vulnerability of airplanes
to enemy fire. All the data showed that certain parts of planes were hit much
more often by enemy fire than other parts. So military personnel concluded that
reinforcing those parts would increase the planes’ survival rate. Seems logical,
White Hutchinson Leisure & Learning Group page
6
doesn’t it? Well, Wald came to just the opposite conclusion: the parts hit least
often should be protected more.
Wald came to this conclusion because of his understanding of the selection bias
inherent in the data. The data was from only the planes that returned. It didn't
include any data from the planes that were shot down. Wald reasoned that a
plane would be less likely to return if it were hit in a critical area. Therefore, the
ones that returned, even when hit, had not been hit in a critical location. Wald
argued that reinforcing parts of returning planes that had the most hits would be
unlikely to have any benefit.
Selection bias results from looking only at existing and supposedly successful
LBEs, not the entire universe, which includes LBEs that failed. Anyone who tries
to reach conclusions about what the winning formula is for a business by
studying existing companies falls into this statistical trap. If LBE developers study
only successful centers, any relationship they infer between their design, mix and
management and their success will be misleading and quite possibly wrong.
Rather than copying a formula for success, they may very well be copying the
formula for failure. In addition to the problem of selection bias, there can be many
factors that contribute to the success of existing centers that will not be present in
the developer’s center. One simple example is cost. An older center cost less to
build than one built at today’s prices, so what is profitable for the older LBE might
not be profitable for a new center. Maybe the center failed originally and was
bought by the existing owner for cents on the dollar. Maybe the existing center,
although operating, is not generating enough profit to justify its replication
elsewhere. (See the article below, Remember When by Frank Price, that
discusses a current LBE copycat phenomenon.)
Optimism bias
Put simply, this is the tendency for people to be over-optimistic about the
outcome of their planned actions. This may include overestimating the likelihood
of positive outcomes and under-estimating the likelihood of negative events.
In the planning of LBEs, we often see entrepreneurs overestimate their revenues
and underestimate both costs and operating expenses. We often refer to this
phenomenon as seducing yourself with the pro forma.
Is there any hope?
Considering the flawed nature of the human cognitive condition when it comes to
entrepreneurs starting businesses, can LBE entrepreneurs have a better success
White Hutchinson Leisure & Learning Group page
7
rate and can industry roadkill be prevented? Perhaps not entirely. Blind ambition
will continue to drive many entrepreneurial ventures.
Hopefully, though, many fledgling entrepreneurs will recognize the fragility of their
human condition when it comes to decision-making and will turn to experienced
LBE industry consultants, designers and producers to guide them through the
minefields of developing a successful entertainment venue. Malcolm Gladwell’s
new book, Outliers: The Story of Success, says it takes 10,000 hours,
approximately 10 years, to be a world-class expert in virtually anything.
Entrepreneurs starting an LBE need to seriously consider their lack of expertise
when it comes to Gladwell’s 10,000-hour rule and team up
with veteran industry experts.
Entrepreneurs working on LBE business development
frequently approach our company to ask what our fees are.
When we tell them, their response is often, “It’s not in my
budget,” or “I can’t afford it.” Well, you get what you pay for.
This may sound self-serving, but it’s really directed at trying
to prevent industry roadkill. The failure of any LBE hurts the
industry’s reputation and the ability of future entrepreneurs
to lease store spaces and access capital. Entrepreneurs
who say they can’t afford expert guidance are usually the
ones who most need to save themselves from the blissful
ignorance of not recognizing just how much help they really need. Successful
entrepreneurs have an understanding of how their inherent sense of self, ego
and cognitive biases affect their decisions.
Entrepreneurs that don’t meet the 10,000-hour rule have a very low probability of
success unless they marry themselves with a company or expert who does. That
rented experience can make all the difference between success and failure. It’s
the difference between starting a business at the top of the learning curve versus
starting at the bottom. The expert should not be a “yes” consultant or designer.
Yes consultants will constantly agree with their clients to keep them happy in
order to be assured of getting more business. This practice only supports
collective bias. A good consultant has no hesitation in letting clients know when
they are going down the wrong road, even if it creates the risk of not getting
future work from the client.
Our 20-year-old company is one of a number of LBE industry consultants,
designers and producers. We are not a perfect match for everyone. If you are an
White Hutchinson Leisure & Learning Group page
Malcolm Gladwell says
it takes 10,000 hours of
experience to become a
world-class expert.
8
aspiring LBE entrepreneur, search out industry experts, put adequate money in
your budget and hire the best you can find to assure your project becomes a 10-
year+ successful LBE that joins the ranks of industry evergreens.
Additional reading:
The feasibility study, the blueprint for success
Randy White is the CEO of the Kansas City, Missouri- and Doha, Qatar-based
White Hutchinson Leisure & Learning Group. The company specializes in the
feasibility, design and production of location-based entertainment and leisure
venues. Randy can be reached at +816.931-1040, ext 100 or via the company’s
website www.whitehutchinson.com
White Hutchinson Leisure & Learning Group page
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