Sensemaking for Entrepreneurs
Sensemaking is a critical skill for entrepreneurs, allowing them to navigate uncertainty and adapt to unexpected challenges. It is triggered when results deviate from expectations. It is also helpful when you are in an unfamiliar environment or encounter events or outcomes with anomalous elements–aspects that do not fit established patterns. Entrepreneurs who master sensemaking can turn confusion into clarity, setbacks into learning opportunities, and some anomalies into strategic advantages.
The Natural Response to the Unexpected
Surprise, confusion, and even a sense of being lost are natural initial reactions to setbacks and unexpected events. Your reflexes may have you freeze up or withdraw from a situation. You may even feel like you are over your head and starting to fail. Surprise mixed with fear is nature’s way of telling you, “Pay attention, this may be important! Try to learn something.” Successful entrepreneurs quickly transition into a structured sensemaking process that fosters insight, adaptation, and action.
The Sensemaking Process
Sensemaking involves observation, reflection, conversation, and experimentation. Once triggered, it typically follows four key steps:
- Understanding What Happened – The first step is to assess the situation and identify patterns. Is this event part of a broader trend? Does it resemble past occurrences? Viewing an anomaly as part of a category rather than an isolated event helps entrepreneurs analyze it more effectively.
- Determining the Forces at Work and Contributing Factors– Understanding why something happened requires investigation, careful observation, data analysis, and discussions with others. Sometimes, experimentation is needed to test hypotheses about the underlying causes or factors at work. Some situations arise from a single simple cause but most have several forces at work or factors that contributed to your surprise or failure.
- Developing a Response – Based on insights gained, entrepreneurs must determine an appropriate course of action. Responses may include adjusting current plans, implementing a corrective measure, or even formulating an entirely new strategy. In some cases, temporarily abandoning an approach that isn’t working may be necessary, especially when time and resources are constrained.
- Monitoring Outcomes – The final step is tracking the effectiveness of the chosen response. This could involve continued monitoring, refining the approach, or implementing a structured “get well” plan to address deeper issues. Sometimes, it’s appropriate to decide something is not worth reacting to but is worth keeping an eye on.
Practical Tips for Effective Sensemaking
To improve sensemaking, entrepreneurs should develop habits that enhance awareness and adaptability:
- Adjust Observation Methods – Modify what is being measured or monitored to avoid blind spots and detect emerging risks or opportunities.
- Refine Operational Rules of Thumb – Update heuristics and decision-making frameworks to prevent recurring failures or inefficiencies.
- Recognize Unexpected Success – Positive anomalies should also trigger sensemaking. When things go better than expected, investigate why—there may be hidden opportunities.
- Analyze Near Misses and Absences – Close calls and events that almost happened (but didn’t) can offer as much insight as a failure.
- Keep Track of Missed Predictions – This helps calibrate your forecasting and anticipating skills by adjusting an excess of pessimism or optimism. Please note that planning for a contingency that does not occur can still be a good use of time and resources. For example, carrying a spare tire in your trunk, taking an umbrella on a cloudy day, and bringing a book in case someone runs late for a lunch date all make sense. But wearing both a belt and suspenders may not.
- Keep a Log – Documenting observations, decisions, and outcomes allows for pattern recognition that might not be immediately obvious.
- Benchmark Against the Past – Regularly compare current conditions to historical data to avoid gradual negative shifts (the “boiled frog” effect).
- Periodically Reevaluate Efforts – Entrepreneurs should ask themselves, “Knowing what we know now, would we still launch this product or pursue this strategy?” If the answer is no, it may be time to pivot or abandon the initiative.
- Learn from Others – Engaging with peers, especially in new markets or unfamiliar territories, helps identify potential pitfalls and best practices. When multiple people experience the same “one-off” event, it may indicate an underlying trend that requires attention.
Mastermind (Peer Advisory Groups) Openings
We have found that Mastermind groups offer entrepreneurs an effective vehicle for augmenting their sensemaking and detecting blind spots. We offer open houses every month, contact us to check it out.
Related Blog Post on Sensemaking
- Elzet Blaauw Part 2: Human vs. Algorithmic Moderation
- Associating, Pattern Matching, and Sensemaking
- Seven Insights from “Solving for Pattern” by Wendell Berry
- Are You Using Cognitive Task Analysis for New Market Exploration?
- Sketching The Likeness Of An Imaginary Business
- Scott Swaaley: A Good Advisor Provides Context
- Cultivating Luck in Business Endeavors and Relationships
- Managing Change in an Organization: An Incomplete Resource List
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