The Role of Information Search in Opportunity Discovery

One of the core professional skills that all entrepreneurs and innovators need to develop is what I call venture knowledge management. When you think about creating a new venture, from opportunity recognition to launch, founders are inundated with information. This information comes from multiple sources:

  • Market research
  • Talking to customers
  • Seeking advice from mentors
  • Speaking with peer founders

The data is overwhelming. So founders must learn to deal with that information and optimize it. 

To support venture knowledge management, I have created a methodology called SCORE. SCORE stands for Search, Capture, Organize, Recognize, and Expand. You can think of them as stages you go through as you gather and organize essential information. In this article, I will explain how entrepreneurs and innovators search for information in the early discovery stages of venture realization and optimize their knowledge for innovative outcomes. Future posts will explore the other components of venture knowledge management. You can check out Evernote’s Brittany Naylor’s Blog Post and interview with me on Knowledge Management and the SCORE™ Method as part of the Evernote Expert Program

Information Search

The first area focuses on how one actively and sometimes passively searches for information. An active search is purposeful and goal driven. The entrepreneur sets out to find information on a potential opportunity to assess its viability for further exploration. Passive search is more opportunistic and leads to a chance discovery of an opportunity. One encounters data by chance, often while engaged in unrelated activities. Research shows that entrepreneurs tend to apply both approaches, though individual motivation and cognitive styles may influence actual search behavior. I suggest innovators approach information search using both methods in tandem, thus optimizing the search activity. This optimization may lead to enhanced information gathering supporting the entrepreneur’s understanding of the presenting opportunity. 

Recognizing that these two search approaches exist and may work in tandem is the first step to optimizing this dual information search method. Whether an entrepreneur starts research with a specific opportunity in mind or remains attentive to serendipitous discovery, it is essential to navigating both search strategies. In the first incidence, the entrepreneur searches for information about an opportunity they want to explore. During this exploration, it is common to accidentally discover information that may be directly relevant or tangential to some degree. Sometimes you find information that you did not know you needed. For this reason, entrepreneurs need to recognize the importance of information discovered passively and ensure they capture it. More on this later. 

Entrepreneurs should develop their ability to “actively” scan for accidental information, being aware of the possibility of finding helpful information when not purposely focusing on a specific search goal. As it turns out, discovering information passively can significantly impact the entrepreneur’s discovery process. From experience, the information may reinforce the current assumptions surrounding the opportunity, problem, or solution. Accidental information can lead the entrepreneur in new directions, creating pivots in conception or solution strategies. At times the nature and location of the information can lead to new directions. The existence of the information can be unexpected, leading to new paths of search. 

Within the venture realization process, entrepreneurs search for information surrounding an opportunity from various sources. The entrepreneur must find answers to the critical questions about a potential venture idea. Data collection can come from a variety of sources. See the table below. In one sense, the more sources consulted, the more valid the results. However, one can overdo it; the amount of available data can become overwhelming. This availability of information is both an advantage and a challenge.

One of the significant challenges is dealing with an unlimited amount of unstructured information. Even when the goals are well specified, the vast amount of data, the multitude of sources, and the variety of information-seeking methods add to the challenge. For example, during the earliest opportunity identification stage, entrepreneurs gather information from primary sources such as potential customers, industry specialists, domain experts, and ecosystem stakeholders. Concurrently, they search online for information about the problem, current solutions, critical market trends, relevant environmental and social issues, etc. 

Dealing with this information overload can hinder the entrepreneur’s ability to see the opportunity clearly and future venture performance. I have noticed that information overload can be a significant stressor for founders and have a negative impact on their self-efficacy. 

Cognitive Bias and Information Search

Like all of us, entrepreneurs apply cognitive shortcuts to deal with information overload. As with many cognition or behavior, there is a fine line between minimal use and overuse. These mental shortcuts, called heuristics, facilitate our ability to make judgments. When applied appropriately, it can help entrepreneurs to make timely decisions. However, there are times when these heuristics lead to errors in judgment. This outcome is prevalent when then the shortcut limits necessary information search. This limitation challenges the entrepreneur’s capacity to identify and optimize market opportunities. 

There are several ways that cognitive biases influence the judgments and decisions of entrepreneurs. First, many entrepreneurs apply the availability heuristic and focus on familiar areas starting at the earliest opportunity identification stage. When searching for new opportunities, entrepreneurs tend to limit themselves to information sources with which they are knowledgeable, usually because of prior experience and knowledge. Finally, many founders look to start new businesses in industries and technologies that they know from past career paths. Information seems readily accessible for this reason.

As with anyone, entrepreneurs also have mental models or schemas about how things work. An entrepreneur’s existing mental models about a market or innovation may limit the active search for new information. Selective perception can get in the way of seeing market conditions outside one’s mental model. Additionally, these selective perceptions make it difficult for entrepreneurs to look outside the box for new ways of framing a problem or solution.

Some researchers suggest that entrepreneurs apply pattern recognition to market conditions more than non-entrepreneurs. But the reasons or the process is unclear. What is clear is that “connecting the dots” across diverse information is an essential cognitive skill for any innovator. Many innovations occur because an individual or team has recognized a relationship between mixed pieces of information, added to their existing mental models, and applied this new understanding to guide future action. One cognitive bias that stands in the way of this recognition is called functional fixedness. Those that fall prey to this bias tend to see things working in a specific way and cannot imagine them working differently. This type of thinking limits searching for information that may open up new possibilities in how an object or a person functions.

Entrepreneurs’ capacity to frame and reframe customer problems is an essential cognitive effort. Both an initial conceptualization of the problem in conjunction with reframing activities can shake up mental models as to the way things work. Entrepreneurs must actively search for unexpected events and counterfactual information as part of the reframing process.

In every new class, I highlight confirmation bias’s role in the entrepreneurial journey. The reason is that we all tend to look favorably upon information that coincides with our beliefs. Conversely, we discount information that is inconsistent with said beliefs. In the early stages of opportunity identification and information search, this cognitive bias can be devastating, leading entrepreneurs down the wrong path. One of the main reasons for this condition is that most entrepreneurs fall in love with their first solution. Sometimes referred to as the endowment effect, entrepreneurs become attached to their solutions. This pre-supposition of a solution influences every aspect of early information search, from source selection to customer interviews and survey design. The outcome is predictable if you go into a customer interview with your preferred solution implicitly or explicitly referenced during the session. Unfortunately, the customer will validate your solution, confirming your early assumption.

Strategies to Offset Cognitive Biases

There are many strategies that entrepreneurs and innovators can apply to limit the effects of biased thinking during information searches. Here are a few methods to consider. 

  • Embrace cognitive awareness of cognitive biases, your tendencies towards specific heuristics, and potential impacts on your information search and judgment efficacy.
  • Slow down judgments, consciously review your information search strategies, and consider expanding the range of relevant research sources.
  • Seek outside perspectives by assembling a diverse group of contributors with varying areas of expertise and industry experience to facilitate new ways of framing problems and looking at solutions.
  • Search for the non-obvious by intentionally recombining events, sequences, and other counterfactual thinking strategies.
  • Apply structured design thinking, such as storytelling, metaphor, and journey mapping, to support an empathetic understanding of the customer and mitigate such biases as projection and egocentric empathy.
  • Define objective measures to focus on relevant factors and reduce the potential influence of information overload.
  • Appoint a “devil’s advocate” to serve as a counterpoint to the prevailing viewpoints. It is their role to serve as a contrarian, someone who encourages the team to look at opposing options and perspectives.

Search Strategies for New Opportunities

Recognize the fact that entrepreneurs sometimes start with a customer problem in mind. Alternatively, they may be scanning broadly for new venture ideas. In either case, the entrepreneur focuses on a few opportunities that may result in a successful business.

Once the entrepreneur has honed into a specific opportunity, there are several strategies to optimize the information necessary to assess whether it is the right venture for all involved. Here are a few actions to consider.

Knowledge self-assessment. One of the first things to do is to assess your current knowledge regarding the customer, marketplace, and problem-solution space. For example, how much do you know about the customer’s recent experience? How have you acquired this knowledge? What sources are most prominent? Through several such questions, entrepreneurs can evaluate and identify gaps in their knowledge and decide on actions to enhance their understanding of the market. An integral aspect of these plans is adding new information sources to the opportunity screening process.

Pre-screen categorization. There are many pre-screening areas that entrepreneurs need to review to determine whether an opportunity is worth the effort and resources. I break these down to the customer, marketplace, industry, and entrepreneurial ecosystem at a high level. Then, consider creating separate file folders or notebooks for specific pre-screening categories. 

Start with a notebook that contains any information associated with your target customer. This early information should include any references to customer pain points, solutions tried, and demographics. Customer information comes from many sources, and you should remain alert to all possibilities. For example, watch for customer comments on social media, question forums, and product reviews. Actively searching these sources and capturing the information in one place helps build a meaningful early profile of your customer. 

Another information category should focus on any individual or organization working to solve the customer’s problem or provide a solution to the market. Usually, I suggest creating two types, one for problem solvers and the other for solution providers. First, define problem solvers as anyone actively working to solve a problem. If the problem is essential, people are constantly working to understand it deeply. Next, identify domain experts and thought leaders in the area. Start collecting information about their work. Read their books and articles. Follow them on social media. Eventually, there is a high probability that you will want to interview them about their work. 

The exact process applies to solution providers. You want to identify all possible solutions, both current and emerging. What solution choices do customers currently have in the marketplace? Do not limit your search to direct competitors or solution providers. Doing so creates a situation where your thoughts on a solution restrict your search for other possible ways to solve the problem. Activity search for every possible approach to solving the problem. For example, I find many entrepreneurs have a bias toward digital solutions. Make sure to look for non-digital solutions as well. You may want to emphasize these indirect solutions over the ones that coincide with your favored approach. 

Keep a search journal. Early in your information search activity, you may find it helpful to note what actions optimize your search. What keywords are driving the best search results? Which sources provide the most information on each of your main search categories? For example, you should track which keywords offer the most relevant information. With this knowledge, you can apply these keywords in future search activities. I suggest that founders set up “Google Alerts” for specific topics using the appropriate keywords. Google Alerts is a free tool that monitors the web for results that match a user’s search term. As you hone in on the topics and associated keywords, you can set up a Google Alert to send you email updates on any new content recently generated and published on the web. This content comes from websites, social media, scientific reports, blogs, etc. I suggest you set up alerts for new content from domain experts, influencers, solution providers, and industry experts.

Knowledge Management Tip: Select content from your various “Google Alerts” and use Evernote web clipper to capture information and organize it in the appropriate category, e.g., industry trends, customer segments, technology updates, etc. 

Future Posts

In forthcoming posts, I will continue to explain the importance of knowledge management to an entrepreneur’s professional and venture development. As part of this discussion, I will describe the other components of the SCORE™ method and how to optimize your digital brain for venture success. 

For more on this subject and other entrepreneurship topics, get a copy of Patterns of Entrepreneurship Management, 6th Edition.

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