Monday, May 16, 2011

BOOST O2 | BUSINESS | > The Success Traits of Entrepreneurs (Tips - Practical Lessons)

Mind over manager

The characteristics, behaviours and habits of entrepreneurs have been long debated and discussed. It seems scientists, researchers and businesspeople alike have differing theories on what makes this species of business person a success or failure.

In the first of a two part series, Jonathan Jackson spoke with three members of the Entrepreneurs Organisation (EO) to talk about mindset and the affect of this on accomplishment.

Planning, projection and process is a winning formula in the battle to build business empires. It's simple really: plan how the business will work, the requirements necessary to meet the demands of your potential consumer or client base, project where this will lead you in one, five, ten or 20 years and then write the processes you believe will help you achieve your goals.
This method is known as causal reasoning and is taught the world over at universities and business schools. Causal reasoning works,   having produced many of the world's great managers, but does it take into account other business building processes?
Sue Jackson is the executive chairman of Solterbeck, a company that provides performance management services to many of the world's most successful businesses. Sue cites "What makes an entrepreneur entrepreneurial?" an article written by Saras Sarasvathy, as the perfect case study into the two schools of business thinking. The article separates business learning into two categories: causal reasoning and effectual reasoning. She says that while causal reasoning has its place, entrepreneurs fall into the latter category.
"Entrepreneurs are creative thinkers, they are not risk averse. The entrepreneur explores many questionable directions without a map but they usually come out fine."
Sarasvathy's article states:

All entrepreneurs begin with three categories of means:
1. Who they are—their traits, tastes and abilities;
2. What they know—their training, expertise and experience and,  
3. Whom they know—their social and professional networks.

Using these means, the entrepreneurs begin to imagine and implement possible effects that can be created with them. Most often they start very small with the means that are closest at hand and move almost directly into action without elaborate planning.
This theory is backed by Sue who says, "Where others want answers, entrepreneurs will capture an idea without knowing the solutions or the   exact market, but they will still proceed down the path because it is a good idea.
"They are also more likely to bring a business to fruition faster. They consider who they know and what they don't know they try to find out; they don't become overwhelmed because they don't overanalyse. If you instinctively make decisions you move things along and when you're starting out, it's better to get things moving."
Carlo Santoro agrees. He says, "Sometimes ideas can be overanalysed to the point they are not going to work, but entrepreneurs can believe in an idea so much they make it work, even when others tell you an idea isn't viable.
Carlo is the Global Board Member of EO and director of Retail Care, facilitating the start-up of numerous companies including his own. Retail Care develops and manages operations and IT infrastructure for retailers. His new business is rolling out a new franchise in Victoria called Flight Experience, which offers the public the opportunity to fly an airline simulator.
He is a man of incredible energy. He speaks quickly. He is emotional and considers himself a relationships man. Carlo fits well into the effectual category.
It has been this way since he was a kid making violet crumble to sell at school. For Carlo entrepreneurialism and emotion go hand in hand; it is where man connects with an idea.
Rob Cecconi, president of EO has a slightly different take, but the principle is the same. Rob is the Executive Chairman of Sportsnet Corporation and like any entrepreneur came about the idea for his business, a sports-based travel company, by discussing the lack of ticketing options with friends and confirming his suspicions over snags at a barbecue.
"Heart is everything," Rob says. "You wouldn't do what you did if it wasn't in your heart. Many entrepreneurs are driven by something far greater than profit. It's about creating freedom, a lifestyle, a great business or something that needs to be done. It is the passion of the entrepreneur that grows the business."
Carlo agrees. "To me entrepreneurial success is access of freedom but that can be defined in many different ways."

In the case of the entrepreneur it seems heart and mind are interchangeable; wanting to succeed is an emotional pursuit and you have to want to succeed to make a fist of your project.
Rob cites the buyout of his business in 2004 and the subsequent repurchase in 2007 after it was put in the hands of the administrator as a lesson in why effectual reasoning is so important.
"What happens with many businesses purchased from the original owner is that people are scaled down; that is how the purchaser makes money. What they fail to do is look at the reasons behind the construction of the business. They haven't understood the culture and importance of the process. They look at the business from a balance sheet perspective, but without a heart and passionate people the business fails.
"In my opinion the acquirer neglects to understand the culture and by looking at things from a profit and loss point of view they take the soul out of the business. They don't stick around with the entrepreneur long enough to learn about the business. Corporate Australia could do so much better by understanding what the entrepreneur represents before asking about the business."

All three entrepreneurs we spoke with for this piece are gifted with both causal and effectual traits, but they are guided more by their ideas and the goals those ideas represent than by the business process.
While possessing a combination of causal and effectual traits, Sue is driven by ideas and learning. However, she understands that once the idea is up and running there has to be solid business practices in place to make things work.
"I portray those traits (causal and effectual) but at the same time we run a very solid business; just because you are an entrepreneur, it doesn't mean you play around in high risk areas. The way I use entrepreneurialism is to ensure there is always a future plan and direction to go in:   it's about finding new products and services and getting a kick out of something you haven't yet done or learnt."
Sue didn't consider the question of entrepreneurialism until four to five years ago when she was approached by the EO and became involved in discussions about shared characteristics. She has found over the years that while entrepreneurs can differ in personalities, their one similar characteristic is attitude.
And this is clear when speaking with Sue, Rob and Carlo. For all three of them, the drive comes from, as Sue points out, "believing in possibilities and realising them if you want to."
Rob reiterates the point. "Some entrepreneurs have great passion, others don't. Some have enthusiasm, others don't. What they share, however, are the common traits of dreaming and drive and the can-do attitude.

So if entrepreneurs work on an emotional plain, does this make them rational in business?
"We do it for years without profit and we make sacrifices with family and lifestyle. Is it rational to forego that stability?" asks Rob.
Carlo cites the absolute belief in an idea as irrational behaviour. Sue, however, believes that if it wasn't rational the business wouldn't be successful. "It takes a certain kind of person to be successful," she says. All three of them run successful businesses and all three probably straddle both the causal and effectual trait lines, yet all three possess completely different personalities. This brings me to the conclusion that an entrepreneurial mindset transcends personality and is dictated by belief.
As Sarasvathy rightly concludes in his article: they believe in a yet-to-be-made future that can substantially be shaped by human action; and they realise that to the extent that this human action can control the future, they need not expend energies trying to predict it.
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