Succeeding As An Entrepreneur: It’s All About How You Think 

Succeeding As An Entrepreneur: It’s All About How You Think 

Business researchers and psychologists have tried to discover the personal qualities and attributes that set an individual up for success as an entrepreneur. The findings would help those with the innate talent for being an entrepreneur to hone their advantages and steer others away from pursuing a path where they are likely to fail.

The failure rate is already so high for new enterprises – 20  percent of small businesses fail within the first year, and by year ten, only about 30 percent of companies are still open for business, a 70 percent failure rate – why add injury to insult for those not gifted with the spirit for entrepreneurship?

Notably, researchers have found no entrepreneurial personality type, and while age has some correlation with success, with the advantage going to people with more work experience aged 35-to-64 years, not all older entrepreneurs succeed, not by a long shot. And entrepreneurs are no different than anybody else in their willingness to take risks or avoid them.

But cognitive psychologist Saras Sarasvathy, University of Virginia’s Darden Professor of Business Administration, found that high-performing entrepreneurs display unique cognitive styles and processes that power their success.

She explains that people tend to display a preference for one of two cognitive styles:

The causal reasoning process starts with a “predetermined goal and a given set of means and seeks to identify the optimal—fastest, cheapest, most efficient, etc.—alternative to achieve the given goals.”

The effectual reasoning process does not start with a specific goal in mind but “begins with a given set of means and allows goals to emerge contingently over time.”

“Causal thinkers are like great generals seeking to conquer fertile lands. Effectual thinkers are like explorers setting out on voyages into uncharted waters,” she describes.

The Cook’s Test

Professor Sarasvathy proposes a simple kitchen counter test to determine one’s predominant cognitive style. In the kitchen, are you more likely to closely follow a recipe or wing it?

A cook who thinks causally finds a recipe for the dish they want to serve, buys the necessary ingredients and follows the recipe to prepare it. The goal is predetermined and the steps to accomplish it are defined.

An effectual cook, however, begins with the ingredients available in the kitchen – a given set of means –and lets that determine the final dish served, so that the means determine the ends.

That’s why Bobby Flay invariably wins on his “Beat Bobby Flay” show, where he and a challenger chef prepare the challenger’s signature dish. The challenger chef comes prepared with their predetermined recipe while Bobby uses his effectual reasoning style to put a spin on the dish to make it uniquely his own. And nine times out of ten, the judges reward Flay for it.

The Art and Science of Entrepreneurship

Regarding one’s cognitive style, it’s not an either/or proposition, Professor Sarasvathy explains. High-performing entrepreneurs use both the causal and effectual modes of thinking, but they tend to prefer the effectual process of thinking, which is creative, requiring imagination, spontaneity and risk-taking.