There has been extensive research conducted on the characteristics that successful entrepreneurs possess. These attributes vary widely across literature, however there are common key traits that are required to achieve any form of success. Frederick et al (2013) suggest entrepreneurs are risk takers, optimistic, have sound judgement and an ability to manage. While a review of literature relating to the psychology of an entrepreneur reveals a large variety of characteristics in a successful entrepreneur, these can be consolidated to a a few into only a few traits that are essential for a successful entrepreneur. Whilst taking into consideration Frederick et al (2013) point of view of key characteristic, other research suggests that there are further primary attributes that a successful entrepreneur necessitates.
The most important traits that all entrepreneurs must retain to have any form of success will be discussed with backing arguments from related literature. While there are many other characteristic, within the scope of this piece three essential traits are discussed. Of interest is the characteristics of confidence, while it will be the negative implications off excessive confidence will be outlined. Additionally, the ability to think creatively and innovative to help differentiate an entrepreneur from a manager or executive is to be analysed based on a example of Steve Jobs. Finally, leadership and it’s importance to an entrepreneurs organisation to allow people to share the vision of the entrepreneur.
It will be argued that without confidence an entrepreneur cannot succeed, however, overconfidence can be a drawback to the point where it is destructive in a entrepreneurs venture. While, any successful entrepreneur must contain the traits of creativeness and have the ability to innovate where society requires a product or service and what factors dictate the extent of the trait. Finally, leadership and it’s ability to motivate and how it is able to share the vision of the company will be discussed with an example as evidence.
Confidence is a trait commonly described in literature as an essential trait for any entrepreneur. It is essential for their confidence to not waver in times of difficult down periods and consequently assists maintaining their confidence as well as the one of the people around them. Their own optimism and creates a level of self confidence that is required in decision making such that Nandan (2011) suggests that it is the self-confidence that allows an entrepreneur to make decisions to overcome any obstacle. Frederick et al (2013) describe self-confidence as a belief within their own ability which lacks hesitation.
Although confidence is an essential trait for an entrepreneur, recent research has suggested that there is a cognitive bias of overconfidence in entrepreneurs (Fitzsimmons et al 2011) leading to failure. While Fitzsimmonms and Douglas suggest that the overconfidence is what separates them from being a manager, studies have found that overconfidence can also be harmful when making decisions in response to setbacks (Trevelyan 2008). This has also been backed up by Koellinger el al. (2007) who proposed that a negative relationship between entrepreneurial confidence and the ability for their survival. The evidence collected by literature suggests a general negative correlation between excessive confidence and success of an entrepreneur but it tends to be the case that without confidence an entrepreneur cannot succeed. While literature seems to indicate a fine line between confidence and an excess of it, it is clear any form of overconfidence is seen to be destructive.
For example, a highly successful entrepreneur in Australia’s coal mining, Nathan Tinkler, has made his fortune by backing his judgement and investing in a bold play in Middlemount mine at a young age of 26, by taking out a half a million dollar loan. The subsequent sale of the land pocketed himself a sizable profit in which he continued to build his wealth on to become a billionaire and one of Australia’s richest men. However, it is his overconfidence in the coal mining has become his downfall in 2012. While it was Tinkler’s optimism and overconfidence on new venture activity resulted in his wealth, the research has detailed that excess optimism and overconfidence can be a drawback. Whyte et al (1997) found that overconfidence predicts an escalation of commitment to losing course of action and similarly in a simulation study conducted by Audia et al (2000) found that entrepreneurs that experience success were more likely to be overconfident and stuck to their original course of action (Audia et al, 2000).
This is research is shown most prevalent in Tinkler’s actions immediately after his initial success to the point that his blindness and lack of any ability to review alternative decisions with his wealth resulted in is wealth halving. A further instance of this was when Tinkler invested heavily back in the coal mining sector with his wealth as this was the original course of action that made his wealth. Consequently, with a dip in the global coal price, Tinklers wealth halved from $1.18 billion to $630 million with many of his coal business’s put into receivership (Low 2013).
His over confidence lead to an over evaluation of his business (Hayward and Hambrick 1997) and resulted in him investing in now unprofitable ventures (Zacharakis and Shepard 2001) because of his excess in confidence and belief of the business he had while lacking the ability on new venture development.
Creativeness and Innovation
Successful entrepreneur natural trait of being creative or innovative are of people who are driven by the desire to create or change something (Wiley 2007). Frederick et al (2013) suggest that the level of innovation in entrepreneurs is closely correlated to the geographic location and environment. As a result, their findings suggest that innovation and creativeness is not something that is genetic but a trait related to culture. Based on these findings, it would seem that creativeness and innovation may be learned and developed when they have been forced to create change in something (Wiley 2007). Wiley et al (2007) argues in their studies that innovative entrepreneurs include technological entrepreneurs and social entrepreneurs who are not driven to create inventions or new science break through, however, are driven by culture to create change. As a result, studies indicate that this driver emerges from the need for change where unique goods and services are needed to be produced (Frederick et al 2013).
Additionally Jeffery et al (2009) argue in their studies that innovative entrepreneurs differ from executives based on four behavioral patterns. They suggest that innovative entrepreneurs acquire information differently to many top executives as the are able to question, observe the market, experiment and idea network (Jeffery et al 2009). Accordingly, innovative entrepreneurs develop a different train of thought to top managers where it can explain the ability for a innovative entrepreneur to create new innovative ventures. For these reasons it might be suggested that innovative entrepreneurs are less sensitive to the status quo bias and have the motivation to change the status quo through the creativeness and innovation.
For instance, regarded by many as the most creative entrepreneur in the last decade, Steve Jobs, one of the co-founders of Apple, opened new product markets where none had existed before, turning Apple into a highly profitable business. He saw what many were not able to see, and developed new products such as the smart phone to compete with the conventional phone, which became the norm of the 21st century. Winslow (2007), suggests that the innovation and creativity has spawned not only because of the electronic era but the plethora of new materials and products (Winslow 2007) and it is clear that Jobs took full advantage of these developments.
Leadership is a device that is used to obtain an organisations goal or desire though the means of influencing, motivation and sharing of a vision (Samson & Draft 2007). Studies suggest that leadership is associated with confidence where without self-assurance there would not be any leadership where it indicates that self-confidence is the fundamental basis of an entrepreneur (Francisco Dau). Furthermore according to Nandan (2011), self confidence is key to overcome any obstacles that may lie in front of an entrepreneur which is essential low periods and periods of uncertainty.
Leadership was best demonstrated by Lee Iacoca in the lats 1970s and 80s in his ability to reshape the automotive industry. He is widely seen as one the the most influential leaders of the 20th century that helped reshape America. Indeed, it was his leadership that save Chrysler auto-motives from bankruptcy. Studies conducted by Samson and Draft illustrated that a organisations performance correlated to whether the senior executives and managers demonstrated strong leadership. They also indicated that strong leadership from the top resulted in increase in job satisfaction and commitment which assists in promoting creativity and sharing a vision of change.
As a result Iacocca developed his nine C’s for leadership (curiosity, creative, communicate, character, courage, conviction, charisma, competent) where he utilised them to share his vision for change and influenced his employees to support him. Choosing to reduce his salary to $1 a year in order to help restore the company, Iacocca was able to illustrate his commitment to stakeholders and through rational persuasion was able to get the stakeholders to believe in his credibility. His $1 a year salary motivated others and assisted him inspire labor unions to accept a pay cut.
Without this level of leadership, entrepreneur’s are not able to share their vision with their employees as entrepreneurs require a team to support them achieve their goals. Iaccoca suggested that having a dynamic team and keeping their enthusiasm and support was critical to achieving any change and vision.
It has been discussed in detail that there are three main characteristics that are essential to a successful entrepreneur. While studies have detailed the numerous other characteristics that have not been mentioned this this piece, they all shared a common view point that confidence, leadership and creativity and innovative characteristics are all associated with successful entrepreneurs. Based on the examples of previous successful entrepreneurs Steve Jobs and Lee Iacocca, it was illustrated that they all shared the same essential characteristics listed above.
The first and most important characteristic for a successful entrepreneur was to be able to have self confidence. Without this key trait, it was illustrated through literature that other characteristics are not possible or ineffective and that it was the fundamental trait any entrepreneur requires. It was followed by the need for entrepreneurs to require a form of creativeness and innovation to create new cheaper solutions, and change the market by implementing services and products subjected to the surrounding culture. Finally, Leadership and its ability to influence and motivate employees to assist the entrepreneur achieve the change and goals they seek is only possible with the help of self confidence.