HBR On Strategy To Make Better Decisions, Think Like a Venture Capitalist
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Apr 2, 2025 Ilya Strebulaev, a professor at Stanford Graduate School of Business and co-author of "The Venture Mindset," discusses how businesses can benefit from thinking like venture capitalists. He explains the importance of accepting failure while pursuing impactful investments. Strebulaev highlights the advantage of fostering a culture of disagreement to enhance decision-making, suggesting strategies like appointing a devil's advocate. He also emphasizes how agility and innovation in large organizations can be improved by embracing diverse opinions and refining decision-making practices.
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Home Run Strategy
- Venture capitalists prioritize home runs over strikeouts, accepting that most investments will fail.
- A single successful investment can compensate for many failed ones, as long as the overall portfolio performs well.
One Successful Company
- In a Stanford class, a famous VC shared an example of a fund where all but one company failed.
- Despite the failures, the fund could still be successful if the remaining company becomes a home run.
Portfolio Allocation Strategy
- Evaluate your portfolio's risk strategy, not just individual bets, to ensure sufficient risk-taking.
- Use an "anti-portfolio" to track rejected projects and assess if they outperform your current investments.
