Entrepreneurs have become the new superheroes of the C21st, figures like Zuckerberg, Bezos, and Musk are icons, seen as innovative pioneers. However, we tend to fall back on broad stereotypes without really understanding what makes entrepreneurial leaders special.
Research by Tim Butler from Harvard Business School compared the psychological-testing results of more than 4,000 successful entrepreneurs from several countries against those of 1,800 business leaders who described themselves as successful business managers, but not as entrepreneurs.
Unsurprisingly, the two groups had much in common. On 75% of the 40+ dimensions of leadership evaluated, there was little or no difference between their skills. Yet when Butler looked more closely, combining the skill assessments with data on their life interests and personality traits, he discovered that entrepreneurs had three distinguishing characteristics:
– the ability to thrive in uncertainty
– a passionate desire to author and own projects
– unique skills at persuasion and influence
Butler also found that many of the traits popularly associated with entrepreneurial leaders didn’t truly apply. For example entrepreneurs aren’t always exceptionally creative – but they are more curious and restless; they aren’t risk seekers – but they find uncertainty and novelty motivating. Butler’s research tackled some of the myths about entrepreneurs and explained the more nuanced reality.
Let’s take a look at four key elements of Butler’s research and the popular perceptions about entrepreneurship, and what the research findings indicate are the true drivers of entrepreneurship. Reflect on this, and what it says about the entrepreneurial leader in you.
1. The Stereotype: Entrepreneurs are unusually creative. The Subtler Truth: Entrepreneurs are curious seekers of adventure, learning and opportunity.
One popular notion is that entrepreneurs enjoy constantly changing, innovative environments and are more creative than others. But ‘creative’ can mean fixing things that are broken and have been stuck for some time. While it’s certainly true that entrepreneurs excel at original thinking, so do many non-entrepreneurs. In reality, what sets entrepreneurial individuals apart is the ability to thrive in ambiguity and tolerate uncertainty.
A critical aspect of this is openness to new experiences. Butler’s research found that it is the single entrepreneurial leader trait that most distinguishes them.
Openness to new experiences is about having a hunger to explore and learn, not just a willingness to proceed in unpredictable environments but a heightened state of motivation that occurs at the edge of the unknown and the untried. The unknown is a source of excitement rather than anxiety.
They don’t see the constraints of boundaries, rather looking at a blank piece of paper and saying, ‘Now, what do I want to create here?’ Entrepreneurs enjoy the ‘dreaming it up’ process, they thrive where there is an unfulfilled market opportunity with no product or service, or where there is a product but the go-to-market strategy is not clear.
2. The Stereotype: Entrepreneurs enjoy and seek risk. The Subtler Truth: Entrepreneurs are more comfortable with risk.
Another prevailing view is that entrepreneurs love risk, the thrill of taking chances. This is not true; entrepreneurs are not skydivers, they seek to minimise risk at every opportunity but have higher comfort and tolerance thresholds with risk than others. In other words, when accepting risk is necessary to reach a desired outcome, entrepreneurs are better at living with it and managing the anxiety that might be disabling to others.
Butler’s research likewise showed entrepreneurial leaders aren’t necessarily tougher and more stress-hardy, rather the point that emerged was that highly unpredictable and ambiguous environments are a source of motivation. This is a second reason they thrive in uncertainty.
Openness to new experiences and comfort with risk are the main components of the ability to perform well in unpredictable environments, although many people misperceive the essentials to be tough-mindedness, hardiness, or resilience. An entrepreneurial leader has made choices that clearly favour adventure and learning over convention and minimisation of risk.
3. The Stereotype: Entrepreneurs are more personally ambitious than other leaders. The Subtler Truth: Entrepreneurs are driven by a need to own products, projects, and initiatives.
Entrepreneurial leaders score exceptionally high on the need for power and control. We know that, they have big personalities and are extroverts! Not always so. Butler discerned an interesting variation on the need for power in that it’s less about dominance and more about ownership, and ‘making a mark’. It’s not about having supremacy or authority, it’s about having control over the finished product. In this way, entrepreneurs have more in common with authors and artists than with dictators.
Entrepreneurs are hands-on, they want to be in the middle of the buzz and hustle as a new venture, day by day, comes into the world and starts to walk, then run. They are not ones to sit in corner offices sitting on their hands. They want to be the artisans with their hands on the wet clay. They want to take a finished piece from the kiln and say, ‘This is mine – I did this’ – not in an egotistical sense but in the manner of ‘I shape materials that become valuable and useful things.’
Long after Apple had become a large company, Steve Jobs still had to be part of every critical design discussion, hold prototypes in his hand, and assess every detail. Power, for the entrepreneurial spirit, is about being the owner of and driving force behind an initiative. Getting it right becomes a compulsive obsession.
This expression of power is different from positional power (based on rank), charismatic power (influencing people through your personality), or expert power (when others defer to your knowledge). Entrepreneurial leaders do not see themselves as exerting power or authority from above, rather they see their role as being at the centre of a circle, creating and enabling with their energy, influence and resources, rather than the top of a pyramid.
That is not to say that entrepreneurial leaders do not display aspects of authority, expertise, or charisma, but the aspect that unites them is not the desire to be a decision maker. For such leaders, a venture is an expression to the world of who they are.
4. The Stereotype: Entrepreneurs are natural salespeople. The Truth: This one is correct.
Butler’s research corroborated many earlier studies that highlighted the importance of confidence and persuasiveness among entrepreneurial leaders. When it’s crucial to get somewhere or make something happen, but it’s not clear how to do so, you must, first, believe that you can reach your goal and, second, convince all the people whose help you need that you can, too and very often, with little or no evidence to back you up.
Many startup founders have to sell their ideas to initial investors – and all entrepreneurs must be able to sell to the customer. But they’re not trained sales people, and are often clumsy. However, they have a natural self-belief, sell the vision, and remove all roadblocks creating the ‘art of possible’ as they create engagement with prospects.
So taking Butler’s research and the framework of four entrepreneurial leadership norms, let’s consider further attributes and characteristics frequently noted in the entrepreneurial personna, and use this analysis to reflect on your own leadership dna.
Emotional intelligence This is perhaps an unexpected quality to mention in a list of leading traits for entrepreneurs, but I consider it essential. An entrepreneur’s EI depends on the ability to understand his or her own emotions and to self-regulate those emotions in the interests of attaining a higher goal. Emotionally intelligent leaders are also attuned to others’ sensitivities, and are able to demonstrate empathy. They use this understanding to lead others in times of turbulence and uncertainty, creating trust
Authenticity and integrity These qualities involve remaining true to one’s own aspirations and vision, even in the face of opposition, and often lack of support. By rising beyond the day-to-day setbacks and challenges that every startup faces sooner or later, it’s important that you remain true to yourself, don’t fall for compromises, and continue to do the right things for the right reason.
Create an atmosphere conducive to growth With a deep understanding of the importance of other people’s contribution to organisational success, the entrepreneurial leader creates an atmosphere that encourages everyone to share ideas, grow, and thrive. They actively seek other’s opinions and encourage them to come up with solutions to the problems that they face. The entrepreneurial leader also provides positive feedback when employees come forward with an opinion.
Mental toughness In some ways, resilience is related to emotional intelligence and risk tolerance, but it goes further in helping an entrepreneur build immunity to the ups and downs, the successes and slumps, that accompany the launch of any new enterprise. Emotionally resilient people become frustrated by failure, but they refuse to allow it to defeat them or to interfere with their ability to integrate important lessons from the experience into the way they approach problems in the future.
A sense of passion and purpose Entrepreneurial leaders’ strong individual convictions inspire those around them to produce their best efforts. A good leader has developed the ability to share a powerful vision of success in ways that infect others with the desire to help make it a reality. The force of dedication to a larger purpose can serve as a major source of inspiration both within and beyond a company.
Self-esteem Underlying everything is a high sense of one’s own self-worth. Without that, you will never undertake tough challenges. Making a start, keeping going, and never doubting yourself at any time is part of an entrepreneur’s journey of self-discovery and learning. If you begin to doubt yourself you lose the confidence to make decisions by instinct, and end up making steps into safety and not growth. Conformity is the jailer of free thinking and the enemy of growth, brought on by self-doubt.
Entrepreneurial leaders know who they are and what is meaningful to them. They have a purpose in life and work, knowing why they started their companies and why they lead them. They understand how their businesses fit into their industry and their community.
Entrepreneurial leaders simply get up and do what needs to be done. However, it’s hard to lead a cavalry charge if you think you look funny on a horse, so the characteristics and traits outlined above are vital behaviours, and don’t come scripted. There is a link between startup growth and entrepreneurial know-how – market insight, strategic orientation, customer impact – but aligning leadership characteristics and traits with the company’s growth ambitions, potential and trajectory is essential. Is there an entrepreneurial leader in you?