Entrepreneurship; Process Improvement; Time Allocation; Dynamic Programming;
For many entrepreneurs, time is a key constraint. They need to invest time to achieve growth, but also lose time because of recurring crises. The authors develop a simple stochastic dynamic program to model how an entrepreneur should prioritize between improving processes to reduce crises versus harvesting revenue or ensuring future growth.They show that it is initially optimal to prioritize process improvement: an entrepreneur should strive for high process quality early in the venture’s growth process. The authors numerically analyze a simple heuristic derived from this optimal policy and identify the conditions under which it is (or is not) effective. It performs near optimally except when process quality or revenue rate may deteriorate too fast or when the cost of process improvement or revenue enhancement is too high.This work provides a theoretical foundation for the advice found in the popular entrepreneurship and time management literature to invest time now to save time later.