Nature or nurture? Decoding the DNA of the entrepreneur
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8 Iunie 2011 |
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ERNST & YOUNG S.R.L. |
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Executive summary
Few roles in business attract as much interest and attention as entrepreneurship. Often characterized as the “rock stars” of the business world, entrepreneurial leaders enjoy a reputation as freewheeling, innovative mavericks. They are assumed to have a level of freedom of which traditional managers can only dream, and are perceived as operating in a world far removed from the staid bureaucracy of corporate life.
This romantic vision of entrepreneurship is appealing but, like most stereotypes, wide of the mark. The overlap between entrepreneurial leaders and traditional managers is much larger than is often assumed. Creative, innovative individuals may possess copious excellent ideas, but it takes leadership and business discipline to turn them into successful ventures.
Decades of academic research has sought to identify the particular characteristics of successful entrepreneurial leaders. This work may not have identified a simple formula or “entrepreneurship gene” that can be nurtured and replicated, but it reveals certain characteristics and habits typically shared by successful entrepreneurial leaders.
But these characteristics alone are not enough to create the conditions for business success. Building a successful entrepreneurial venture also depends on a complex interaction of internal and external factors, including timing, geography, culture and sometimes luck.
With many major governments and industries around the world extolling entrepreneurship and innovation as a source of economic growth and job creation, the question remains, what makes up an entrepreneurial mindset? This question is echoed in major corporate boardrooms, with many chief executives keen to encourage internal entrepreneurial thinking and innovation as a way to reinvent their businesses and stay ahead of the competition.
The aim of this report is to provide some insights into the minds of today’s most successful entrepreneurial leaders and discern what makes them successful. We conclude with a model that we feel describes the core of an entrepreneurial leader, which represents both the intrinsic and extrinsic characteristics of their mindset and abilities.
As the founders of the World Entrepreneur Of The Year Program, Ernst & Young is uniquely positioned to share these insights. The report features perspective from a survey of 685 entrepreneurial business leaders from around the world and is informed by a series of in-depth interviews with Ernst & Young Entrepreneur Of The Year Award winners.
Key findings of the report
1. Entrepreneurial leaders are made, not born.
The concept of the young, dynamic entrepreneurial leader who starts a venture fresh out of college is one that persists. But although many entrepreneurial leaders start at a reasonably young age, the experience they gain through education and time spent in a more traditional corporate environment is vital to their future success. Indeed, more than half of respondents describe themselves as “transitioned” entrepreneurs — in other words, they have previously spent time in traditional employment before setting out on their own.
2. Entrepreneurship is rarely a one-off decision.
The majority of respondents to this survey are “serial entrepreneurs” who have launched at least two companies. Entrepreneurial leaders who embark on more than one venture gain valuable insight and lessons into how to make a new business successful. As such, they perform a vital role in the economy and, among them, start a significant proportion of all new ventures.
3. Funding, people and know-how are the biggest barriers to entrepreneurial success.
Among the 6 out of 10 respondents who experienced obstacles in their ventures, the most common barrier is lack of funding or finance. This is particularly pertinent in the current environment, when many entrepreneurs continue to experience problems with accessing finance, despite a gradual easing of credit conditions in many countries. The two other most-cited obstacles are people and expertise. As a result, entrepreneurial leaders are well–advised to build “ecosystems” — networks of resources — to address these three areas.
4. Entrepreneurs share common traits.
Entrepreneurs may be made rather than born, but our research has found that entrepreneurs will typically exhibit a combination of behaviors and attitudes. At the heart of this model is a strong internal locus of control — a belief that events result directly from an individual’s own actions or behavior. This is complemented by a mindset that sees opportunity where others see disruption, along with an acceptance of calculated risk and a tolerance of failure.
5. Traditional companies can learn from entrepreneurial leaders.
Employee incentives and fostering innovation are good places to start. It is no coincidence that fast-growing entrepreneurial companies tend to place larger amounts of share ownership in the hands of employees. And in terms of innovation, traditional companies have few incentives to disrupt their own business models with game-changing innovations. But companies that can are richly rewarded.
Entrepreneurial leaders are made, not born
• There is no entrepreneurship gene
• Most entrepreneurial leaders start at a young age
• More than half of entrepreneurial leaders are “transitioned” (from employees)
Despite decades of academic research into the subject, there is still little agreement over the precise definition of entrepreneurship. Entrepreneurial leaders are variously described as risk-takers, innovators, bold opportunists or restless agents of change. Some commentators have even argued that entrepreneurial leaders are born with a unique set of characteristics that will always set them apart from more traditional corporate managers.
In reality, there is no single entrepreneurship gene. But there are traits and experiences that make it more likely that an individual will choose the path of entrepreneurship and, crucially, succeed over the long term.
The set of management behaviors that characterize many entrepreneurial leaders lies along a spectrum, which includes factors such as a willingness to take risks and seize opportunities, and an openness to changing. Successful entrepreneurial leaders will often fall toward one end of that spectrum in at least one of those factors, but they will also draw upon a variety of other life experiences to create the finished product.
Entrepreneurial leaders may be made rather than born, but a large majority of the most successful embarked on their first ventures at a young age. Among a survey of 685 leading entrepreneurial leaders conducted for this report, more than half started their first company before the age of 30 (see Chart 1).
Despite starting at a relatively young age, most entrepreneurial leaders do not launch straight into their ventures from higher education. More than half of the entrepreneurial leaders in the survey describe themselves as “transitioned” — meaning that they had some experience outside of the world of entrepreneurship before launching their ventures (see Chart 2). Although there are notable examples of entrepreneurial leaders who left college to form hugely successful businesses, such as Bill Gates of Microsoft or Mark Zuckerberg of Facebook, these are very much in the minority. Among our survey respondents, some form of business experience is a vital foundation that increases the chances of future entrepreneurial success.
