THE FACETS OF THE ENTREPRENEUR – IDENTIFYING ENTREPRENEURIAL POTENTIAL
John L Thompson Roger M Bale Professor of Entrepreneurship Huddersfield University Business School
In today’s world of change and uncertainty we need the talents of entrepreneurs more than ever. The difficulty is that we only know them when they appear. We have no effective method for identifying potential entrepreneurs, those people we should ensure we support, although much work has been done over the years to link personality characteristics with the way people behave. Myers-Briggs, for example, using the work of the psychologist Jung, have defined 16 personality types. Whilst this helps to explain behaviour, it does not help us to know in which jobs or roles people will perform best. Various researchers - see, for example, Roberts (1991) and Goldsmith and Wharton 1993) - have suggested the entrepreneur may be one of three different personality types. The lack of convergence of this approach makes identification of the entrepreneur difficult. Does this matter? Some might argue that the most committed people will make it anyway, regardless of any inhibitors or encouragement. It is also arguable that ‘out there’ are many more entrepreneurs who, given the right conditions and opportunities, would simply ‘come out of the woodwork’ as happened in Silicon Valley and around Cambridge in the UK. At the same time many would-be entrepreneurs – who lack the essential characteristics – set off down the route, quite possibly with the help of training courses, relatively soft finance and other forms of encouragement. Without the appropriate support, typically from people who themselves have entrepreneur characteristics, the results will be disappointing. Arguably it does matter. So, in this context, what do we mean by an ‘entrepreneur’? How might we identify one? How should we support them?
Defining the entrepreneur Bolton and Thompson (2000) have defined an entrepreneur as ‘a person who habitually creates and innovates to build something of recognised value around perceived opportunities’. They acknowledge the ‘person’ may in fact be an entrepreneur team, but one with an entrepreneurial champion at its heart. The use of the word ‘habitually’ implies serial behaviour, the pursuit of more than one opportunity sequentially. Clearly some entrepreneurs still chase opportunities long after they have reached a position where they could retire and lead a so-called life of luxury. They simply can’t stop themselves. Finding and seizing opportunities is, for them, natural and instinctive behaviour.
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The recognised value can be economic, social or aesthetic capital. There is nothing to say that entrepreneurial behaviour is confined to the general world of the small and growing business. Indeed, entrepreneurs can be found inside large corporations in both the private and public sectors, championing change and making a difference. Social entrepreneurs similarly have a marked impact on communities and community welfare. Aesthetic entrepreneurs champion new developments in art, music and architecture. They might see themselves, first and foremost, as artists, designers, composers or architects but they create or build something that makes a difference in people’s lives – and quite frequently they become wealthy in the process, much as happens with the business entrepreneur. In their own fields they are entrepreneurs because they make a difference in some significant way. A clear distinction is being made between the enterprising person and the entrepreneur. It is arguable that every one of us could, and perhaps should, be more creative and innovative in many things that we do. The impact, however valuable, might well be limited in scope. Entrepreneurs, on the other hand, build something much more substantial that, typically, is significantly different. In making this distinction the key issue is that not everyone can be entrepreneur, and people should not be encouraged to believe that they can. This is quite different from arguing that everyone should be encouraged to seek to improve at everything they do and invited to try and clarify in which area of life they have the greatest opportunity to excel. It may not be as an entrepreneur. Having defined the entrepreneur, how might we profile and identify one?
Talent, temperament, technique Our talents are certain important characteristics or innate abilities that we are born with, but which have to be discovered - the nature side of the nature-nurture debate. They are areas in which we have the greatest potential to excel, but they have to be developed effectively if this is to happen. Our temperament is the driving force behind our behaviour. It encapsulates our needs and wants; and it is our temperament that affects the extent to which we exploit our talents - and also appreciate the relative value of certain training and techniques. Whybrow (1999) and Buckingham and Coffman (1999) describe temperament respectively in terms of an ‘emotional landscape’ and ‘highways through the brain’ that are formed as we grow up and learn from our environment and experiences, but which relate back to a genetic template. Temperament thus has both born and made elements. It is, of course, the nurture case that recognises that our temperament, and to a lesser extent our talents, can certainly be influenced by the environment in which people grow and develop. The acknowledgement of talent and temperament emphasises the weakness of concentrating on technique-based training for entrepreneurs, especially if it is being claimed that entrepreneurs can simply be made with the right education and training. Though business and other techniques may provide helpful tools and impart knowledge, unless the talent and temperament is there in the first place a person will
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not be a successful entrepreneur. The ability to write a good business plan might be invaluable for the entrepreneur but this ability will never define the entrepreneur. Out temperament, then, is really a spearhead that builds on our talents and utilises techniques to improve performance, but it is something we have to learn how to manage. If our talents are relatively high but our temperament, and our desire to achieve, weaker, then we may fail to achieve the hidden potential that we have. Conversely, if our temperament is substantially greater than our talent we may deceive ourselves into believing we can be better than we really can.
Character themes Character themes refer to those behaviours that are the most natural, instinctive and habitual to us. They are the things we do without thinking. They can, and generally will be, supported by the right techniques because when the appropriate training is available the learning is relatively quick and easy. We all have our own personal set of characteristics. It makes us who we are; it dictates where we have the greatest opportunities to excel. Building on earlier work by the Gallup Organisation, Bolton and Thompson (2000) identified a list of key entrepreneur characteristics, which they later refined (2002). In part these were informed by observations of successful entrepreneurs over many years, by reading and listening to how entrepreneurs explain what they have done and achieved. These are listed and explained below. Some of these behavioural characteristics will be very visible, maybe ‘unsuppressible’, in entrepreneurs. Others will also be natural behaviours, although not quite as instinctive. The remainder will be achievable with some effort. All the themes identified can be classified as either talent or temperament, and some can be strengthened by appropriate techniques. When reading the list it will be apparent that most of us exhibit these character themes at some time and to some extent. That is not the significant issue. What matters is: whether we exhibit these characteristics naturally, serially and consistently whether the themes are present to a high, strong level and how many non-entrepreneur characteristics are more prominent.
Entrepreneur enablers A whole variety of different people, from family and friends to financiers, from professional advisers to trainers and mentors, offer and provide advice and support to the entrepreneur. Sometimes this advice might be poor; on other occasions it will be excellent. The willingness of the entrepreneur to seek help and advice in the first place – and to discern who might be useful and who might not - comes down to certain ‘team’ characteristics. The willingness to listen to the advice will be strongly influenced by the relationship between the entrepreneur and the adviser and whether there is a ‘meeting of minds’. All-too-often the person in the enabling role fails to think like the entrepreneur and, as a result, is met with scepticism.
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The effective enabler, then, helps to spot and develop people with talent, helps the entrepreneur manage his (or her) temperament and imparts useful techniques. The ideal people to help entrepreneurs are those advisers who share some of the entrepreneur characteristics, but who are typically missing other key ones. In place of the missing entrepreneur characteristics, effective enablers are frequently strong on ‘developer’, an ability to spot potential and a desire to help bring out the best in others.
Defining the entrepreneur Bolton and Thompson (2002) offer a new framework for defining the entrepreneur, based on six character theme clusters that conveniently form the acronym FACETS – namely: Focus Advantage Creativity Ego Team Social. Each of these clusters has at least three sub-characteristics. For example, Focus embraces target focus, time focus and action focus, which is often manifested as urgency by the entrepreneur, a real desire to get on with things. Ego, meanwhile, has six components, split into our inner ego and our outer ego. The inner go embraces motivation (typically a desire to achieve, to make a difference and maybe to ‘leave footprints’), self-assurance and dedication. The outer ego is the entrepreneur’s internal locus of control, a desire to be in charge of his or her own destiny. It includes responsibility and accountability and, especially significant, ‘courage’ – an ability and willingness to deal with setbacks. The entrepreneur ‘crystal’, like quartz, has a hexagonal structure. Also like quartz it comes in a variety of shades from the sparkling crystal to the rough-cut gemstone. Some entrepreneurs never reach the limelight; others become household names. But whatever their notoriety they are all essentially the same. They possess some combination of the six facets of the entrepreneur. FAC, Focus, Advantage and Creativity, are linked talents. Creativity provides ideas and opportunities, Advantage selects good opportunities, the ‘right things to do’, and Focus drives the implementation through which these opportunities are taken to fruition. E, Ego, is temperament. It dictates how efficiently and effectively the talents are exploited. T, Team, is a multiplier facet that helps the entrepreneur exploit the FAC characteristics and extend the business. S, Social, influences the nature of the business or initiative, affecting, for example, whether it is profit-seeking or non-profit and the extent to which it has a community or environmental outlook.
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Inter-dependent FACETS The six FACETS clusters are inter-dependent; and the interlinks between them explain the important themes of opportunity and risk, which are at the heart of entrepreneurship. As we need to distinguish between the inner and the outer ego, and because, as we have said, entrepreneurial behaviour is serial and habitual, we might describe these links as ‘the seven habits of the effective entrepreneur’! The process begins with our Inner Ego, our inner drive, our motivation to do something. Creativity and Advantage next work together, a binary requirement to deliver opportunity continuously. Creativity spots opportunities; Advantage selects ones worth pursuing. Ideas, after all, are not necessarily opportunities. The relevant opportunities might be new products, new services or new processes, opportunities for operating a business differently. Focus then combines with our outer ego to make things happen. The opportunity is engaged and taken forward. The entrepreneur binds perseverance and courage to overcome the inevitable setbacks, which confront him on his (or her) journey. The potential in the opportunity is realised. It is rare that an entrepreneur would be able to build something of consequential value entirely alone. Hence Team, the multiplier facet, is used to drive exponential effects. Things start to spin off from each other as the venture gathers momentum. The Social facet may or may not be brought into play. Where Social is significant it impacts on the direction of the business or initiative by affecting motivation (the inner ego that we start with), which in turn opens up new and different opportunities and selection priorities (Advantage), a different Focus and the courage to do something different that has social or maybe environmental outcomes. Where Social is strong it will attract a distinctive type of team member or follower.
Validating the framework It is quite feasible that a person who studies the type of observable behaviour associated with each of the FACETS can make a sound self-assessment of the strength of each of their FACETS. However Bolton and Thompson have developed and tested different questionnaires, which allow an external judgement to be made. The evolving research programme is explained below.
The Huddersfield Business Generator (HBG) The Huddersfield Business Generator was set up to help embryo creative businesses at the start-up stage. It might be described as a pre-incubator as most of the businesses
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involved are, at best, only just beginning to trade when they join. There is a mixture of resident and virtual tenants. In 2000 a sample of 14 tenants agreed to be interviewed face-to-face. A questionnaire was designed, using as its foundation questions previously created and tested by Gallup. Twelve character themes were included, with three questions for each one. Respondents were simply asked the questions by the interviewer; prompting and elaboration did not take place. The interviewer was looking for a particular type of response in every case, the response an entrepreneur would provide that is consistent with the definition provided earlier. These sought-for responses were derived from focus groups and other observations of the behaviour of successful entrepreneurs. Afterwards, and prior to any feedback, each respondent was provided with a list of the characteristics in the questionnaire and asked to judge his or her own strengths and weaknesses. There was no detailed explanation of the implications of the characteristics. When we took the percentage of ‘entrepreneur answers’ to the questions we came up with the following results: Creativity Ego Focus Advantage Team 83% 76% 69% 61% 50%
Given the businesses operate in the creative industries it is, of course, hardly surprising that creativity tops the list. Interestingly the Creativity-Advantage-Focus funnel has a narrow middle, indicating a weaker ability to appreciate the strategic and competitive advantage issues linked to ideas. The FAC (talents) average is 71%, lower than the key temperament, Ego, score of 76%. When we compared the questionnaire responses to the interviewees’ self perceptions there was a strong correlation between Creativity and Ego. However there was a lower correlation between Focus and Team. The respondents tended to think they were lower on Focus but significantly higher on Team. It was the belief of the interviewing team that the interviewees interpreted team behaviour from a very wide perspective; they did not fully appreciate the specific team characteristics associated with the entrepreneur. As highlighted earlier they were provided with only a limited explanation.
The Global Entrepreneurship Monitor (GEM) GEM is an annual research programme which tracks start-up activity in some 40 countries worldwide. It does not set out to analyse the characteristics of the people involved in the start-up activity, per se. In the New Zealand GEM in 2002 a total of 2836 respondents, selected at random, were contacted by telephone to check whether they were actively engaged in starting a business or planning to do so. As an adjunct to the actual GEM work, 242 of those
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who responded positively agreed to answer a follow telephone questionnaire. This was a different questionnaire to the one used in the HBG. It comprised 20 statements, which relate to selected characteristics associated with the entrepreneur, the leader and with someone we might call non-entrepreneurial. Respondents were asked to give themselves a score out of 10 to reflect the extent to which the statement applied to them. The actual scores were seen as relatively unimportant; we were looking for the relative placement or ranking of the characteristics. Opportunity taking emerged as the leading characteristic, regardless of whether those concerned were categorised as opportunity entrepreneurs (people who had spotted an opportunity and were minded to do something about it) or necessity entrepreneurs (those for whom the self-employment or start-up route was perceived to be their best economic option at the time, perhaps because they had been made redundant). The lowest was the motivation to make a significant difference element of Ego – although courage fared better! The rank order was: 1 2 3 4 5 Advantage Creativity Focus Team Ego
This time, the FAC talent scores were higher than the temperament score. As had been the case with the HBG questionnaire, Social was excluded as we were not targeting social entrepreneurs. A number of non-entrepreneur team characteristics were included in the questionnaire and the relative ranking of these was high, higher than the entrepreneur team characteristics. Did these results make sense for New Zealand? Although New Zealand consistently demonstrates relatively high start-up activity amongst the GEM countries, much higher, for example, than most European countries, the relative growth rate of these businesses is not high. They are enterprising small businesses rather than high-growth entrepreneurial firms, although these latter do exist in more limited numbers. Moreover, the failure rate of new start-ups is relatively high in the global context. As this is not Ego oustripping talent, it is perhaps, and at least in part, explained by the low strength of the Team facet. The low Ego itself is quite possibly linked to what the New Zealanders call The Tall Poppy Syndrome, a delight in bringing successful individuals down to earth, rather than treating them as heroes. New Zealand is more committed to team success, as seen with the All Blacks and Team New Zealand. There is also a commitment to the
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recreational lifestyle that the country offers, thereby creating a general lack of urgency to grow. For a fuller explanation of this research see Frederick et al (2002). A third questionnaire, this time a paired comparison test which contrasts sixteen entrepreneur characteristics with sixteen non-entrepreneurial characteristics was later administered to eight part-time, mature students on a Masters degree in Business Innovation and Entrepreneurship in Auckland. The results were different. This time the Ego score was much higher - as one might expect from self-selected students with ambitions for high growth. The Ego score was higher than the scores for Focus, Advantage and Creativity. As was the case with the Huddersfield Business Generator sample, Creativity > Focus > Advantage. This particular sample of students had also had the opportunity to analyse themselves against the FACETS framework, having had it explained to them in some detail. It is apparent that when respondents look into the implications of the relative significance of each theme cluster it helps explain why they behave in particular ways and points the way to the appropriate support from which they might benefit.
The Gallup StrengthsFinder Instrument The Gallup StrengthsFinder Instrument is an on-line paired comparison questionnaire that identifies a person’s five most natural behavioural characteristics or potential strengths. It is explained in detail in Buckingham and Clifton (2001). The 5 are selected from a list of 34, which itself has been distilled from some 400 discrete themes identified by Gallup over 30 years. A sample of 71 ‘entrepreneurs’ and entrepreneur enablers identified by Bolton and Thompson was given access to the instrument and the results analysed. The sample comprised enterprising people and entrepreneurs in the context of the earlier definition – people were not selected on the grounds they had either grown a significant venture or exhibited serial behaviour. Of the 34 Gallup themes, 19 identify or relate directly to the FACETS themes: 2 identify with Focus 3 identify with Advantage 1 identifies with Creativity 6 identify with Ego 5 identify with entrepreneur Team characteristics 2 identify with Social. Adopting a crude measure, as each of 71 respondents produces five key themes out of 34 possibilities – a total of 355 – we might expect each theme to be cited 10.5 times in this sample. Thus, 11 citations and above would represent an above-average incidence.
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The actual citation record was as follows:
Number of possible strengths Focus Advantage Creativity Ego Team Social 2 3 1 6 5 2
Number scoring above 10 1 3 1 2 2 0
Number scoring below 11 1 0 0 4 3 2
In summary, the ranking of the significance of the FACETS clusters is as follows: 1 2 3 4 5 6 Creativity Advantage Focus Team Ego Social
Again it should be pointed out social might be expected to be low as social entrepreneurs were not being targeted. Also again, we find the Ego temperament strength below the talents strength.
Some concluding comments We believe the FACETS framework can provide a valuable new insight to help entrepreneurs and would-be entrepreneurs understand their own strengths and potential and, at the same time, flag up the areas where they are going to need the greatest support if they are to succeed. The themes can also be translated into an Entrepreneur Indicator to enable interested outsiders to do exactly the same and thus target their support more effectively. When we look at entrepreneurs and would-be entrepreneurs who are determined to succeed – as distinct from less ambitious, but nevertheless enterprising, people – we find the relative temperament score becomes stronger and it is in fact higher than the FAC talents scores. The reverse is the case with more enterprising people. Whilst this might not be unexpected it does emphasise the significant importance of the desire to do something, the very start of the entrepreneurship process. To what extent can we put desire in place if it is not already there? At an individual level the relative strengths of Focus, Advantage and Creativity highlights the type of team member a person needs to work with, always remembering ideas are not opportunities, and opportunities have to be engaged and implemented.
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It is also interesting to note the relatively low rankings of Team amongst the populations we investigated. In the context of entrepreneur team characteristics we are looking for four elements: Finding (and selecting) the right people – with complementary FACETS being arguably more important than parallel functional abilities, such as marketing, finance and operations Building these people into an effective entrepreneur team Knowing when and where help is required and who to turn to – the selection of appropriate enablers to build an ‘external team’, and, vitally important Networking – with people who can be of value to the entrepreneur and the business.
Many people will have strong team skills or characteristics, such as being supportive of others and listening attentively, which are different from those listed above. If the entrepreneur team characteristics are missing, there is a clear directional message concerning how we need to target support and assistance.
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References Bolton WK and Thompson JL (2000) Entrepreneurs: Talent, Temperament, Technique, Butterworth Heinemann. Bolton WK and Thompson JL (2003) The Entrepreneur in Focus: Achieve Your Potential, Thomson. Buckingham M and Clifton D (2001) Now, Discover Your Strengths, Simon and Schuster. Buckingham M and Coffman C (1999) First, Break All The Rules, Simon and Schuster. Frederick H, Carswell C, Henry E, Chaston I, Thompson JL, Campbell J and Pivac A (2002) The New Zealand Global Entrepreneurship Monitor Report. Goldsmith M and Wharton M (1993) Knowing Me, Knowing You, SPCK. Roberts EB (1991) Entrepreneurs in High Technology, Oxford University Press. Whybrow PC (1999) A Mood Apart, Picador.
Acknowledgement The author wishes to acknowledge the contribution of Dr W K Bolton to the development of the material contained in this paper.
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