Thinking like an entrepreneur

Thinking like an entrepreneur

What sets the entrepreneur’s mindset apart? Business leaders and researchers consider whether there are traits that all entrepreneurs share, and whether it is possible to train yourself to think like them.

Dan Wagner is thinking about the essential qualities and characteristics of an entrepreneur. Since the 1980s, he has set up a series of successful businesses primarily focused on online information and e-commerce, such as MAID, Dialog and Venda.

His latest venture is Powa Technologies, which has created a smartphone app called PowaTag, which he hopes will make online shopping easier for the consumer.

“A combination of qualities makes up an entrepreneur,” he says. “Optimism and a self-confident attitude play a part, as does a stable upbringing and environment. Your peer group is also important, as it is a reference point. One of my friends was trading books at Camden Market when he was 12 years old, whilst another friend set up a hi-fi store when he was a teenager. I was selling hi-fis at the time and then moved into marketing. I thought: hold on, if they can do it then I can do it. I had a good idea and I had the endeavour to do it despite my mum telling me I couldn’t give up my office job. She thought I was risking everything.”

Learning about the mindsets of entrepreneurs such as Wagner, Richard Branson or Jamie Oliver is not only an interesting intellectual exercise, but it could also help us more ordinary types. What can we learn from entrepreneurs, and can anybody train themselves to be one?

Common traits

Chris Coleridge, innovation researcher at the London School of Economics, says a combination of the following six traits can be found in most successful entrepreneurs: a difficult background; coming from a minority or disadvantaged group; disability; love of risk and optimism; independence; and a need for achievement and power.

Dr Tamara McNeill, senior research associate at the Centre for Enterprise at Manchester Metropolitan University, believes that similar genes may play a role but “no clear entrepreneurial genetic pattern has been found”. She says that most researchers have moved away from trying to define the “entrepreneurial personality” or traits. Research into entrepreneurial psychology does not provide an “exhaustive set of defining characteristics”, but some key elements stand out.

One is ‘entrepreneurial intention’ – in simple terms, really wanting to start a business. “While this may sound rather obvious, a stated intention may not be a genuine intention. The things that influence intention are: the person’s own attitudes, their belief in their own ability, and also the expectations of others,” McNeill says. “The ability to visualise what they want to achieve and to take a flexible approach to achieving it is another. This might mean changing tack as opportunities arise – so business plans can be most useful if they are not too rigid.

“There is also the ability to recognise opportunities. People often talk about ‘joining the dots’, often leading to innovations in products or services. This is likely to be underpinned by a heightened awareness of what’s going on in the marketplace.”

Gut feeling and heuristic reasoning

A tendency not to see risk – or to underestimate it comparison with others – is another characteristic. “While this may lead entrepreneurs to take risks and start businesses, it can obviously have negative consequences too,” says McNeill. “One factor in this is an often overinflated sense of control over factors which are actually outside the control of the individual. Entrepreneurs have been shown to use heuristics, basically mental shortcuts, more than others. When entrepreneurs talk about ‘gut feeling’, they are often talking about heuristic reasoning.  The risk example illustrates this, and more successful entrepreneurs might be better at choosing their thinking strategy, so knowing when to go with their gut, which can lead to extraordinary achievements, and knowing when to take a more ‘rational’ approach that might involve more detailed financial analysis.”

So can these traits be learned? “I am not sure you can really learn the mindset of an entrepreneur, but the skill set that I see come through most readily is that of seeing entrepreneurship as a continuous learning journey,” says Michelle Wright, chief executive of social enterprise Cause4. “There are so many new skills to learn and lessons along the way. Be willing to learn and be very humble in taking feedback so that you can be successful. Another way that entrepreneurs can be different from other employees is in their willingness to learn.”

Wagner is more optimistic about the ability to learn the entrepreneur’s mindset. He says the UK is gradually developing a more American-style ‘can do’ attitude when it comes to entrepreneurialism. “In the US, if you fail then you go for it again and again. We are gradually getting there and getting more entrepreneurial confidence,” he says. “Of course you can train yourself. I speak to schoolchildren and they are enthusiastic about what I do. Being an entrepreneur should be just as valid an occupation as being a doctor or a lawyer.”

Learning by doing

McNeill also urges everyday folk to believe they can be an entrepreneur. “Almost certainly you can train yourself. As eminent entrepreneurship researcher Bill Garter puts it: entrepreneurship is something one does, not who one is,” she says. “Entrepreneurs typically emphasise the value of experiential learning – in other words, learning by doing. The ability to reflect and actually taking the time to do so is critical in order to alter thinking and behaviour. “

Perhaps one of the best ways to begin developing an entrepreneurial mindset is to be an ‘intrapreneur’ at your existing place of work. An intrapreneur either encourages or is encouraged by their employers to think like an entrepreneur in their day job, coming up with new ideas and thinking to help their company grow.

One notable example is the humble Post-it Note, which emerged from 3M’s intrapreneurial ‘bootlegging policy’, which allowed employees to spend around a fifth of their time at work developing their own creative ideas. It is now ubiquitous in offices and homes.

Other examples include Google’s innovation time off program, allowing employees to spend a fifth of their working hours on side projects.

“As organisations become larger and more complex, it is more difficult for organisations to innovate dynamically. As such, it becomes essential that we foster intrapreneurs as well as entrepreneurs,” says Wright.

Nurturing innovation

“In fact, often the founding entrepreneurs that began the organisation may now be struggling, as their company has grown, to find the innovation space to move the organisation ahead. Developing a culture of internal innovation needs daily support. Internal entrepreneurship needs to be part of the evaluation and reward process, and it needs to be clear to employees both how it is valued and how it is rewarded. There needs to be space for this sort of thinking alongside the day job to push new and experiential ideas forward. Agility needs to be built into the organisational structure and new ideas need to be given specific space to grow and develop.”

McNeill says: “This is about establishing a working culture that doesn’t seek to apportion blame when things go wrong, and allows people to try new things – and potentially fail – without negative consequences. There will obviously be some limits to this in practice, but organisations can often find ways of de-risking experimentation.”

However, she warns: “When seeking to ‘foster an entrepreneurial mindset at work’, bear in mind that entrepreneurial behaviour is by its nature disruptive. How much do organisations really want all their staff to start behaving entrepreneurially? It is also important to communicate what is meant by ‘entrepreneurial mindset’ because it means different things to different people.”

Wagner also believes promoting intrapreneurship has its time and place. “We don’t have a formal process at the moment, because I want my staff to deliver my idea first! But I’ve encouraged it at my previous businesses. It is about creating more opportunities for new ideas to emerge. Big businesses might worry about a loss of control or cost creep, but if Google can do it then so can they.”

 

 

As organisations become larger and more complex, it is more difficult for organisations to innovate dynamically. As such, it becomes essential that we foster intrapreneurs as well as entrepreneurs.
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