Thursday, December 16, 2010

So What's an Entrepreneur?--The Sequel

I met up with Peter Worrell, Managing Director of the Bigelow Company, on a cold December day a few weeks ago at his office overlooking Portsmouth Harbor.  Despite a frigid wind whipping off the water, downtown Portsmouth was decorated for Christmas and bustling with shoppers.  
Pete's bio states that "Worrell has a particular interest in the intersection of psychology and finance and its relevance to building value in private capital markets."  In fact, Pete is a hugely accomplished M&A guy specializing, as does all of Bigelow, in addressing the particular (and often idiosyncratic) needs of the owner-entrepreneurs of privately-held companies.  

But Pete is also a serious academic, working hard to understand what makes entrepreneurs tick, and more importantly, what makes them successful.
As proof, in 2009 he published a paper which outlined the strengths of successful entrepreneurs.  The paper was conceived while he was attending the University of Pennsylvania in a psychology graduate degree program under advisor Martin E.P. Seligman, Ph.D., who works on positive psychology, learned helplessness, depression, and on optimism and pessimism. 
What says "entrepreneur" better than “learned helplessness” and “depression,” eh?  (Indeed, before I make too big a mess of Pete’s excellent work, a good summary of some of the paper’s key findings are on the Bigelow website here.) 
Pete worked with 200 seasoned, successful entrepreneurs and expert advisors (answering for successful entrepreneur clients) who completed an online survey measuring their character strengths, consistency of interest and persistence of interest.  These were people who had owned and operated businesses, created tens of millions of dollars of value, and employed hundreds of people over their working lifetimes. 
Now, think fast: What are the top two or three characteristics of successful entrepreneurs?  (Note that this is a very different question--"What is an entrepreneur?"--that we tackled earlier.)  Creativity, right?  Passion.  Focus. Risk-taking.
Here's the truth. Of 24 character traits, Pete’s survey found these to be the top five among successful entrepreneurs:
1.  Authenticity--speaking the truth, presenting oneself in a genuine way, without pretense.  This ranks far above the general population. (Pete: Some are "candid to the point of being blunt.")
What’s that you say?  Worked for one of those before?  Still pulling out the shrapnel?
2.      Leadership--encouraging a group to get things done while maintaining good relations within the group (which was also far above the general population).

3.      Zest--approaching life with excitement and energy, and the best predictor of "work as a calling."  Of the top measures, this characteristic shows the single greatest gap between successful entrepreneurs and the general population.  Because of zest, Peter writes, "The most successful entrepreneurs persist and adjust long after others might rationally call it a day."

4.      Fairness (about in line with the general population).

5.      Gratitude--being thankful for the good things that happen, which is also a predictor of life satisfaction.  (This is just slightly above the general population.)

Successful entrepreneurs show, by these strengths, Pete concludes, that they are strongly "outwardly focused."
The bottom five characteristics of the 24—which is not to say they are unimportant, but that they are less (and often far less)  important—are (24) religiousness/spirituality, (23) forgiveness/mercy, (22) creativity, (21) love of learning, and (20) appreciation of beauty.
I might point out that 19, 18 and 17 are self-regulation, modesty and prudence.  Except for creativity, does any of this “bottom list” surprise you?  
The other thing I learned from Peter’s work is that the single quality that may most distinguish successful entrepreneurs from everyone else is grit.  "Grit is perseverance and passion for long-term goals, working strenuously toward challenges, and maintaining effort and interest over years despite failure, adversity, and plateaus in progress."
Against the general population, entrepreneurs score high on grit and exceptionally high on "persistence of effort."  In fact, grit predicts the accomplishment of very high challenges among very high achievers better than self-discipline or intelligence.
And one other thing Pete discovered about entrepreneurs: “Profit motivated?  Hardly. . .They are more often occupied with trying to build sustaining organizations, ones that have longevity beyond themselves as mere individual owners."
I can think of lots of uses for this information, the most obvious being that an entrepreneur who knows himself or herself well could build a surrounding team that insures these key characteristics are well represented.
My thanks to Peter Worrell for a great piece of research, and taking the time to discuss it.