Skills and Behaviors that Make Entrepreneurs
Successful PART II
While the 11 factors provided some level of discrimination
between founders and non-founders, five factors showed statistically
significant differences. For example, founders scored significantly higher than
non-founders on “comfort with uncertainty,” “identification of opportunities,”
“vision and influence,” “building networks,” and “finance and financial
management.” Founders also had significantly lower ratings on their “preference
for established structure” dimension.
Although some of the factors—like comfort with uncertainty and
the ability to identify opportunities—seemed like obvious markers for
entrepreneurial success, the study built a statistically reliable and valid
tool that can be used to deepen understanding, not only of founders versus
non-founders, but also of differences and similarities among founders who start
and grow different types of businesses, between male and female founders,
serial founders and first-time founders and founders from different countries.
In addition, a deeper examination of the individual questions
that make up each factor provides richer descriptions of specific behaviors and
skills that account for the differences in the profile of entrepreneurs who are
launching different types of ventures and from many different backgrounds.
Take vision and influence, for example. Although it is a
long-standing belief that great leaders have vision and influence, the
researchers found that entrepreneurial leaders have more confidence of their
abilities than the average leader on this dimension—and that leaders working
within established firms actually rated themselves much lower.
Financial management and governance turned out to be another
non-obvious differentiator.
“Financial management is a skill that all of our HBS alumni
should feel confident in applying,” Kraus says. “Yet among the alumni surveyed
in the pilot, those who had chosen to be founders rated themselves as much more
confident in their financial management skills—especially those related to
managing cash flow, raising capital, and board governance—than did non-founder
alumni.”
Self-confidence in financial management and raising capital was
especially strong for male entrepreneurs, she says. “Our future research will
broaden our sample beyond HBS alumni to enable us to differentiate between
those who graduated with and without an MBA, and to assess confidence in
raising capital and financial management and a wide variety of other skills by
different types of founders and non-founders.”
Efficient management of operations was another crucial, yet less
obvious, factor. “While we often think that employees within established
organizations would be more confident in their ability to efficiently manage
operations, we were surprised to see that it is a distinguishing and
differentiating attribute of entrepreneurs,” says Kraus. “All entrepreneurs
know that they must do more with less—which means that they must work faster
and with fewer resources.”
Differentiating
male and female entrepreneurs
The pilot study allowed researchers to examine gender
differences. While men and women rated themselves similarly on many dimensions,
women were more confident in their ability to “efficiently manage operations”
and in their “vision and influence,” while men expressed greater confidence in
their “comfort with uncertainty” and “finance and financial management”.
These differences rang true for Kraus, herself a serial
entrepreneur who founded and grew three successful entrepreneurial ventures.
“Successful women entrepreneurs that I know have lots of great
ideas, and are super skilled at creating a compelling vision that moves people
to action,” she says. “They are also extremely capable of getting lots done with
very little resources so are great at efficient management of operations. That
said, these same women are often more conservative when forecasting financial
goals and with raising significant rounds of capital. And, even if they have a
big vision, they are less confident in declaring at the outset that their goal
is to become a billion-dollar business.”
Indeed, research confirms observations (pdf) that women start more companies than men, but rarely grow
them as large.
Based on his earlier research, these results also resonated with
Tim Butler: “When it comes to self-rating on finance skills, women are more
likely than men to rate themselves lower than ratings given them by objective
observers. There are definitely implications for educators when lower
self-confidence in skills associated with entrepreneurial careers becomes a
significant obstacle for talented would-be entrepreneurs.”
The researchers hope to deepen their understanding of male and
female entrepreneurial leaders as they collect more data.
Differentiating
serial founders and first-time founders
Not all founders are cut from the same cloth, the study
underscores. Analysis of the pilot data also revealed important differences
between first-time founders and serial founders—those who launch and grow a
number of new ventures, such as Elon Musk (PayPal, Tesla Motors, SpaceX) and
research team member Kraus (Circles, Spire; peach).
One key difference the research team discovered: serial founders
appear more comfortable with managing uncertainty and risk. That doesn’t mean
they enjoy taking risks, Kraus says, “but they appear to be confident that they
are adept and capable of knowing how to ‘de-risk’ their venture and manage
uncertainty from the very beginning”.
While the data are not yet robust enough to say so with
certainty, Kraus believes that serial entrepreneurs often enjoy launching
businesses where the risk is highest because of confidence in their ability to
manage uncertainty, and perhaps because they enjoy the process of creating
clarity from uncertainty.
Other factors that set serial entrepreneurs apart from
one-timers include confidence in their skills at building networks, securing
financing and financial management, and generating creative ways to identify
and meet market opportunities.
FUTURE
OPPORTUNITIES
As more people take the assessment and HBS develops a richer
data set, scholars, educators, entrepreneurs and those who support them will be
able to develop insights that will have a number of payoffs.
“The entrepreneurial leaders we know are constantly searching
for tools that can help them become more self-aware so they can be more
effective,” Kraus explains. “This tool is going to be uniquely useful in that
it was specifically developed to help entrepreneurs gain a deeper understanding
of the skills and behaviors that they need to be successful.”
In addition, researchers will be able to examine the data by
age, gender, country, industry, size of company, pace of growth, and type of
venture “to understand the full range of entrepreneurial leadership skills and
behaviors, and how different types of entrepreneurs are similar and different,”
Applegate says. “These insights will enable us to do a better job of educating
entrepreneurs, designing apprenticeships and providing the mentorship needed.”
The data will also be useful in identifying skills and behaviors
needed to jumpstart entrepreneurial leadership in established firms, and in
understanding how an entrepreneurial leader continues to lead innovation throughout
the lifecycle of a business—from startup through scale-up.
“Today, I often see that the creativity and innovation that was
so prevalent in the early days of an entrepreneurial venture gets squeezed out
as the company grows and starts to scale,” says Applegate. “But, rather than
replace entrepreneurs with professional managers, we need to ensure that we
have entrepreneurial leadership and creativity in all organizations and at
levels in organizations. We hope that our research will help clarify the behavior
and skills needed and, over time, will help us track the entrepreneurial
leadership behaviors and skills of companies of all size, in all industries,
and around the world.”
Given the critical importance of entrepreneurial leaders in
driving the economy and improving society, shockingly little is understood
about them. The data and analysis emerging from HBS will provide important
insights that can help answer the questions, “What makes a successful
entrepreneurial leader and how can I become a successful entrepreneurial
leader?”
·
06 JUN 2016
https://hbswk.hbs.edu/item/skills-and-behaviors-that-make-entrepreneurs-successful
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