Attributes that make for a successful entrepreneur

Tuesday September 27 2016

I have heard that entrepreneurs are born but some people say they are made. Which is which? I have a desire to enter into business but my worry is, Am I cut for it? How can I know if I will succeed?
— Richard

A lot of people have wondered whether they will be successful in business based on their personality or abilities, hence the question, “what makes entrepreneurs entrepreneurial?” Prof. S. D. Sarasvathy of the University of Virginia was pondering over the same question over a decade ago and came up with the best conclusion I have come across so far.
This conclusion was arrived at after a meticulous research process involving interviews and background research with 30 founders of companies in the USA ranging in size from $200 million (Sh20 billion) to $6.5 billion (Sh657 billion) spanning a wide variety of industries. The research revealed that there was a unique reasoning style and logic among the entrepreneurs different from the normal managerial “causal or predictive thinking”. This kind of reasoning called “effectual thinking” is what makes an entrepreneur.

The simple task of cooking may be used to contrast the two types of reasoning. A chef who is given a specific menu and has only to pick out his or her favourite recipes for the items on the menu, shop for ingredients and cook the meal in their own well equipped kitchens is an example of causal reasoning. An example of effectual reasoning would involve a chef who is not given a menu in advance, and is escorted to a strange kitchen where he or she has to explore the cupboards for unspecified ingredients and cook a meal with them.

While both causal and effectual reasoning call for domain-specific skills and training, effectual reasoning demands something more – imagination, spontaneity, risk-taking, and salesmanship.

All entrepreneurs begin with three categories of means: (1) Who they are – their traits, tastes and abilities; (2) What they know – their education, 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.

Unlike causal reasoning that comes to life through careful planning and subsequent execution, effectual reasoning lives and breathes execution. Through their actions, the effectual entrepreneurs’ set of means and consequently the set of possible effects change and get reconfigured.

Eventually, certain of the emerging effects merge into clearly achievable and desirable goals. Entrepreneurs are action oriented and improve over time. Often it is a function of environment, partners and other external factors that allow them to find their way to success. In conclusion, all else being equal, you have got as good a chance as the next person to consciously learn to think effectually and in essence improve gradually as an entrepreneur.