What key qualities do successful entrepreneurs share? How do uncertainty and potential for failure affect entrepreneurs? These key themes emerged in a lively give-and-take when a panel of academics, business and policy leaders discussed the findings of the 2014 Amway Global Entrepreneurship Report (AGER). Following are discussion excerpts.
ENTREPRENEURS HAVE A MINDSET
Ari Ginsberg
Professor of entrepreneurship and management at New York University Stern School of Business
Entrepreneurial mindset begins with being opportunity-oriented. Typically, when established businesses consider what to develop next, they first look at resources – budgets, employees’ skills, and the company’s assets.
Entrepreneurs begin with paying careful attention to what is going on around them. They ask, ‘What are the important problems or difficulties? Who’s unhappy with things as they are, starting with myself?’ If they didn’t like the way they were treated in a certain transaction, for example, they think that maybe others feel the same, and begin to look for opportunities to solve the problem they encountered in a superior and potentially lucrative way.
An entrepreneurial mindset also demonstrates leadership. Once entrepreneurs see opportunity, they see obstacles as things to get around, not things that will stop them. They use their leadership skills to convince others to follow them in their quest to fulfill their business vision and to take significant risks and make extraordinary efforts towards that end.
Lisa Miller
Chief growth officer, Network For Teaching Entrepreneurship, New York
Key aspects of entrepreneurial mindset are:
- Persistence, which enables you to remain steadfast and committed to pursuing your goals.
- Learning to fail. If you’re going to be an entrepreneur, you will fail, and it is all about what you do with that failure, how you persist to get your ideas out there.
- Grit, which is similar to persistence in that it is the refusal to give up on something. I’d say, though, that grit is a bit different – it is being able to survive failure, and the character that develops as a result. People who start businesses can’t be afraid to put in the hard work and long hours, to keep working at something.
- Teamwork.
- Ability to envision a more successful future.
It is our goal with our education of young people to unlock these domains of the entrepreneurial mindset.
ENTREPRENEURSHIP THRIVES ON AMBIGUITY AND UNCERTAINTY
Kevin Hassett
Director of economic policy studies, American Enterprise Institute
Entrepreneurship happens when you don’t know what’s going to happen, where there’s high ambiguity about whether you know if you’ll succeed. Leonard Jimmie Savage, while at the University of Chicago, wrote back in the 1920s that the biggest profits are found in the environments of high ambiguity and uncertainty. That’s sort of a key to understanding capitalism. The person who has the courage to go in and explore the space that we don’t know is the one who is going to make the money.
Innovation is something that entrepreneurs do, and it happens in hugely ambiguous spaces. For example, it’s a fact that almost every drug that you take in your life was developed by some entrepreneur. They weren’t developed by some university. The entrepreneur profited from the risk he took.
But humans are incredibly averse to ambiguity. They think pretty rationally when they know the probabilities for success, and tend to avoid those ‘dark room’ circumstances where they don’t know the probabilities. We need to teach people to overcome their innate fear of ambiguous situations, and I think the question to ask is, how do we do that well?
SUCCESSFUL ENTREPRENEURS LEARN TO FAIL
Lisa Miller:
We look at failure as an important part of the entrepreneurship process and as having two other elements.
The first is planning to fail. It’s going to happen. Knowing it is likely, being prepared for it and being able to deal with it is critical. That’s grit and exactly the spirit that enables you to get back up and try again. It’s easier to deal with failure and stick to your plans if you expect things to go wrong.
The second part is learning. When you fail, you should learn. Not only what happened, but why. And make changes. That way, failure can be a learning exercise which will make you more likely to succeed in the future.
Kevin Hassett:
Let’s go to the most important things you need to know if you’re going to take a risk in an ambiguous space and try to be an entrepreneur. You have to know that if you fail, it’s not the end of the world.
But if you think about our school systems, what do we teach our kids? We teach them that we have to be perfect. And they’re not going to get into college unless they’re perfect their whole lives. Some people say, don’t go to college if you want to be an entrepreneur because you’re learning the wrong thing – you’re learning not to take risks. You need to teach them, as they are learning to run, how to also fail.
If you make it easier for people to start a business, it’s going to be natural for more people to do it. If you lower the cost of doing it, then the cost of failure’s not so high – and loss-averse people are going to be more willing to try.
Environments matter. For example, in the countries where bankruptcy laws are very strict, of course people will be less likely to risk failure, because the costs are very high. To take that chance to become an entrepreneur, you need to be in an environment where there are people who can help you understand what the process is to reduce the ambiguity and the risk, by saying, for example, are people going to want to buy my stuff.
Lisa Miller:
Environment plays a role in our young people’s vision of what an entrepreneur is. When they hear the names of famous entrepreneurs that seems way larger than life, way beyond where they can go themselves, and they don’t see themselves as able to be entrepreneurs.
But when we educate them about what entrepreneurship really is, about the mindset and everything that entrepreneurs do, they start to be able to see themselves in that role. It tells them they can do it, and that makes a huge difference. When you give them role models they can relate to and show them themselves as entrepreneurs, it changes the way they think.
Also participating in the 2014 AGER panel were Elmira Bayrasli, Entrepreneurship Ecosystems Project leader, World Policy Institute and Gene Marks, columnist, author and owner, The Marks Group, PC. For their comments on entrepreneurial mindset, watch for the second article in our series, What’s the best way to develop entrepreneurial ability?
