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Four traits that drive entrepreneurial success
This book landed on our desks recently and looks promising. In Heart, Smarts, Guts and Luck, authors Anthony Tjan, Richard Harrington, and Tsun-Yan Hsieh outline four traits that drive entrepreneurial success. Tjan et.al. base their conclusions on research (conducted at Cue Ball, a Boston-based VC firm) into “what makes entrepreneurs tick” and includes an Entrepreneurial Aptitude Test.
Tjan and his colleagues cover a great deal of ground in those four categories before concluding that one trait is even more essential: “self-awareness and reflection” that “allows you to fully appreciate your strengths and limitations” and surround yourself with the right team members. “All four of these traits are required for success at some level,” says Tjan, “but most people are dominant in one or two areas – and understanding your tendencies can be a major competitive advantage.”
In a review of the book in Forbes, Dorie Clark focuses on two of the four traits – Smarts and Luck – in ways that echo some of our own contributions on the subject. While on an opposite side of the country from Mr. Tjan, investing in different ventures, we’ve dispensed similar advice.
Clark points out that there are different types of Smarts:
When it comes to entrepreneurship, it’s easy to overthink and create elaborate spreadsheets and projections that never materialize. “Of the businesses [in our survey] that successfully exited,” Tjan says, “less than 30% started with a formal business plan.” Adaptability matters a lot more than “book smarts.”
This jibes with two previous posts here at NVSE: Inside the Mind of Great Entrepreneurs, on the different types of reasoning skills found in different environments; and Does Success Always Start With Failure, on adaptability and how to fail productively.
[Darden professor Saras] Sarasvathy likens great entrepreneurs to Iron Chefs, “at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest.” She terms this mindset effectual reasoning, and contrasts it to the causal reasoning of successful corporate executives who “set a goal and diligently seek the best ways to achieve it.”
…Corporate managers believe that to the extent they can predict the future, they can control it. Entrepreneurs believe that to the extent they can control the future, they don’t need to predict it. Entrepreneurs thrive on contingency. The best ones improvise their way to an outcome that in retrospect feels ordained…
In our experience, the entrepreneurs who make it from garage to funding to successful high-growth company have the ability to reason both ways: causally and effectually.
Success may not always start with failure, but the wise man expects a cameo appearance at some point in the movie… these points are brought together in the newly published Adapt: Why Success Always Starts with Failure, by Tim Harford – columnist for The Financial Times and the author of “The Undercover Economist.” Harford offers three principles for failing productively:
- Variation: be willing to fail… alot.
- Survivability: fail on a small enough scale to survive.
- Selection: seek feedback, spot failures and fix them early, avoid the instinctive reaction of denial.
On the subject of Luck, she (and the authors) say it is often mislabeled in business:
“In many instances, when we talk to people who describe themselves as lucky, it’s really their outlook toward relationships that helps them create the circumstances for luck, and their attitude helps them take advantage of it.” …(I)t often pays to chill out a little. “People who are laid-back and luck-driven are the ones who discover the wallflowers,” he says, “and they benefit disproportionately later in life from some of those relationships.” After all, not every future success is obvious: “There are many great leaders who, if you met them at a cocktail party, you’d just skip over because they have a different personality type.” … “Lucky people have an openness, an authenticity, and a generosity toward embracing people – without overthinking ‘what’s the value exchange’?
This, too, resonates with Seeing Meaningful Combinations Where Others Do Not, our post on the nature of luck, serendipity, and an “optimal degree of wastefulness”:
Thriving on contingency, outcomes that feel ordained… some could argue this conflates luck and skill. Napoleon famously (and apocryphally) was said to prefer lucky generals over clever ones. (He was reliably quoted on the subject thusly: “A bold general may be lucky but no general can be lucky unless he is bold.”)
Recent research, this time from Harvard Business School, emphasizes the importance of serendipity as opposed to simple luck. In Make Serendipity Work For You authors Mark de Rond, Adrian Moorhouse, and Matt Rogan recount an old tale about three princes from Serendip and their skills of observation and problem-solving:
The princes did far more than make chance observations. The tale is instructive because the princes relied on their ability to recombine a series of casual observations into something meaningful. And it is just this combinatorial skill — the ability to combine events or observations in meaningful ways — that differentiates serendipity from luck. Serendipity is to see meaningful combinations where others do not.
The authors speculate that some organizations are “luckier” than others because they tolerate “an optimal degree of wastefulness” based on the assumption that serendipity “relies on loafing and savoring the moment, of wandering and loitering and directionless activity of all sorts.“ They argue serendipity is a close relative of creativity and can be encouraged by a few organizational factors.