Skills and behaviors that enable entrepreneurs to succeed

Skills and behaviors that enable entrepreneurs to succeed

Research at Harvard Business School by Lynda Applegate, Janet Kraus and Timothy Butler takes a unique approach to understanding the behaviors and skills of successful entrepreneurs.

through HBS work knowledge

What makes the entrepreneur successful?

Is this the brilliant technique of Bill Gates? The obsessive attention to the user experience of Steve Jobs? The vision, passion and strong performance of Sheila Lirio Marcelo of Care.com? Or it is a matter of prior experience, education or living conditions that increase confidence in a person’s entrepreneurial skills.

Like the conviction of Marla Malcolm Beck and her husband Barry Beck, the high-end retail stores and spas that were closely associated with online stores were the future business model, while other entrepreneurs and the mortar companies were endangered dinosaurs. The success of Bluemercury proved that critics were wrong.

“We’ve always striven to identify the skills and behaviors of business leaders”
Despite much research that explains what motivates entrepreneurs, the answers are far from clear. In fact, most studies show conflicting results. Entrepreneurs, it seems, are still opening a black box.

A Harvard Business School research team hopes a new approach will help the entrepreneur understand better. The program combines self-assessments of their skills and behaviors by the entrepreneurs themselves with assessments of their colleagues, friends and employees.

Over time, the data also allow researchers to examine the characteristics of entrepreneurs by gender and to compare serial entrepreneurs and founders for the first time.

“We’ve always striven to identify the skills and behaviors of business leaders,” says Lynda Applegate, a professor at HBS who spent 20 years researching the approaches and behaviors of successful entrepreneurs. “Part of the problem is that people usually focus on an entrepreneurial” personality “rather than identifying the unique skills and behaviors of entrepreneurs who start and grow their own businesses.

According to Applegate, these many types of business dealings complicate this understanding. These include small-scale lifestyle businesses, multi-generation family businesses, high-growth, venture-backed technology companies, and new businesses to commercialize breakthrough discoveries in the life sciences, clean technologies, and other science.

“These kinds of initiatives seem to address and challenge different types of business leaders, and we hope that our research will help us understand these differences, if they exist,” says Applegate, Professor of Business Administration at Sarofim-Rock at HBS. , President of the HBS Executive Education portfolio for entrepreneurs and entrepreneurs.

The answers are already starting, thanks to the first results of a pilot study in the study “Entrepreneurial Leader: Self Assessment”, which was conducted by 1300 former HBS students. The results allowed researchers to refine their self-assessment and to conduct a second survey entitled “The Business Leader: Peer Review”. Both are in preparation for the launch in the summer of 2016.

The team included Applegate; Janet Kraus, entrepreneur in residence; and Tim Butler, Senior Partner and Senior Career Development and Professional Development Advisor at HBS, and Chief Scientist and Co-Founder of Career Leader.

Dimensions of entrepreneurial leadership

An analysis of the literature, combined with interviews with successful entrepreneurs, helped the team to define the key factors that formed the basis for self-assessment. These dimensions were refined based on a statistical analysis of pilot test responses to create a new survey tool that defines 11 factors and the related questions that are used to understand the level of comfort and self-confidence of individuals. Founder and non-founder. different dimensions of entrepreneurial leadership (chart 1).

Graphic 1: Preliminary search method.

These 11 dimensions are:

Identification of possibilities. Measures the skills and behaviors associated with the ability to identify and search for potential business opportunities.
Vision and Influence Measures the skills and behaviors associated with the ability to influence all internal and external stakeholders who need to work together to implement a corporate vision and strategy.
Comfort with uncertainty. Measures the skills and behaviors associated with the ability to drive a business agenda in the face of uncertain and ambiguous circumstances.
Assemble and motivate a sales team. Measures the skills and behaviors required to select the right team members and motivate that team to achieve business goals.
Effective decision-making. Measures skills and behaviors associated with the ability to make effective and efficient business decisions, even when insufficient information is available.
Construction Networks Measures the skills and behaviors associated with the ability to gather the resources needed and the professional and business networks needed to build and grow a business.
Cooperation and orientation of the team. Measures the skills and behaviors associated with a good team player who can subordinate a personal agenda to business success.
Operations Management Measures the skills and behaviors associated with the ability to successfully manage a company’s operations.
Financial and financial management. Measures the skills and behaviors associated with effectively managing all the financial aspects of a business.
Sales. Measures the skills and behaviors required to create an effective sales organization and distribution channel that can successfully acquire, retain and serve customers while fostering strong customer relationships and engagement.
Preference for the established structure. Measures the preference for operating in more established and structured business environments rather than creating new businesses where the structure must adapt to an uncertain and rapidly changing business environment and strategy.

Although the 11 factors provided for a degree of discrimination between founders and non-founders, five factors showed statistically significant differences. For example, the founders have done significantly better than non-founders in terms of “comfort of insecurity”, “opportunity identification”, “vision and influence”, “networking” and “financial and financial management”. “. their dimension “preference for the established structure” (chart 2).

Figure 2: Entrepreneurial leadership distinguishes between founders and non-founders
Although some factors, such as comfort with uncertainty and the ability to recognize opportunities, appear as obvious indicators of business success, the study has developed a statistically reliable and valid tool to deepen the understanding of the founders. and non-founder. but also differences and similarities between the founders, who found and develop different kinds of companies, between male and female founders, serial founders and founders and founders of different countries.

In addition, a closer look at the individual factors that make up each factor provides a richer description of specific behaviors and abilities that explain the differences in the profile of entrepreneurs who set up different types of companies and different origins.

Take for example visibility and influence. Although it has long been believed that great leaders have a vision and influence, researchers have found that business leaders have more confidence in their abilities than leaders in this dimension – and

Financial management and governance proved to be another non-obvious differentiator.

“Financial management is a skill that all our HBS graduates must apply with confidence,” says Kraus. “Among the former students interviewed in the pilot project, those who chose to be founders felt more confident in their financial management skills – especially in terms of cash flow management.”

Self-confidence in financial management and fundraising has been particularly strong for male entrepreneurs, she says. “Our future research will expand our sample beyond the old HBS to allow us to differentiate between MBA and non-MBA graduates, and trust in capital and financial management and a variety of other skills through various types of founders and non-founders. ”

Effective operations management was another important but less obvious factor. “Although we often think that employees in established organizations have more confidence in their ability to effectively manage operations, we were surprised to see that this is a distinctive and differentiating feature of entrepreneurs,” says Kraus. “All business owners know they have to do more with less, which means they have to work faster and with fewer resources.”

Distinguish between male and female entrepreneurs

The pilot study allowed researchers to study gender differences. While men and women organized themselves in many ways, women were more confident in their ability to “effectively manage operations” and in their “vision and influence,” while men were more likely to cope (Chart 3).).

Chart 3: Entrepreneurial leadership distinguishes male and female founders
These differences apply to Kraus, herself an entrepreneur who founded and developed three successful companies.

“The successful entrepreneurs I know have many great ideas and are very competent in creating a compelling vision that inspires people to take action,” she says. “They are also extremely capable of producing batches with very few resources, which enables efficient operations management, meaning that these women are often more conservative when they plan financial goals and receive substantial capital, and even if they have a great vision, they have less confidence in saying right away that their goal is to become a billion dollar business. ”

In fact, the study confirms the observations (pdf) that women create more companies than men, but rarely become that big.

According to his earlier research, these findings also caught the attention of Tim Butler: “In terms of self-assessment of financial education, women are more likely than men to be lower than objective observers.There are implications for educators when losing self-confidence in skills associated with entrepreneurial careers, represents a major obstacle for future talented entrepreneurs.

Researchers hope to deepen their understanding of male and female entrepreneurs as they gather more data.

Distinguish serial founders and founders

The founders are not all cut off from the same stuff, the study says. The analysis of the pilot data also revealed significant differences between founders and serial founders, including those who launched a number of new companies such as Elon Musk (PayPal, Tesla Motors, SpaceX) and Kraus (Circles). , Spire). ; Fishing).

One important difference that the research team has discovered: Serial founders seem to be more familiar with mastering uncertainty and risk. This does not mean that they want to take risks, Kraus says, “but they seem to be convinced that right from the beginning they are able to reduce their risk and manage uncertainty” (Chart 4).

Chart 4: Entrepreneurial leadership distinguishes between serial and non-serial founders.
Although the data is not yet robust enough to say so with certainty, Kraus believes that reputable entrepreneurs often found companies with the highest risk because they have confidence in their ability to deal with uncertainty. ,

Other factors that differentiate serial entrepreneurs from former entrepreneurs include confidence in their network, finance and financial management skills, as well as creating creative opportunities to identify and respond to market opportunities.

FUTURE OPPORTUNITIES

As more and more people evaluate and HBS develops a larger dataset, researchers, educators, entrepreneurs, and those who support them will be able to develop ideas that will have some fallout.

“The business leaders we know are always on the lookout for tools that can help them become more self-confident in order to be more effective,” says Kraus. “This tool will be particularly useful as it has been specifically designed to help entrepreneurs understand the skills and behaviors they need to succeed.”

In addition, researchers can examine data by age, gender, country, industry, company size, growth rate and type of business to understand the full range of skills and behaviors of entrepreneurs similar and different, “says Applegate.” This information will enable us to better train entrepreneurs, develop training programs and provide the necessary care. ”

The data will also be useful to identify the skills and behaviors required to revive entrepreneurial leadership in established companies and to understand how a business leader drives innovation throughout the lifecycle of a business, starting at the ramp.

“Today, I often find that the creativity and innovation that was so prevalent in the early days of an entrepreneurial enterprise grew as the company grew and grew.” says Applegate. “But instead of replacing entrepreneurs with professional managers, we need to ensure that we have entrepreneurial leadership and creativity in all organizations and at all organizational levels, and we hope that our research will help clarify the required behavior and skills and us over time to help track the entrepreneurial leadership and capabilities of companies of all sizes from all industries and around the world.

Given the critical importance that business leaders play in stimulating the economy and improving society, there is little understanding. The data and analysis provided by HBS will provide important insights that can help answer the following questions: “What makes a successful entrepreneur and how to become a successful entrepreneur?

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