THE ENTREPRENEURIAL THINKING GAP
In Craig Eason’s view, successful entrepreneurs are not ‘born’, but ‘made’. When can young people start learning the right skills? Short answer? Not soon enough!
Cool analysis or vivid imagination?
Who would have thought that learning to learn, and thinking about thinking, are the most important foundations for future entrepreneurial success? In fact, cognitive skills such as complex problem-solving, creative and analytical thinking, when paired with mental agility, flexibility and resilience are key to delivering an individual’s entrepreneurial potential. A fantastic idea or business opportunity are only as good as the entrepreneur’s ability to execute it in the market place where high-level thinking skills are so important. After starting a business, the problems and challenges to growth and scaling just keep rolling in and that’s when we need to be at our analytical best.
Start-up success rate
The reality is that not all entrepreneurs or their advisors have developed the high-level thinking skills they need in order to succeed. Yes – creativity and imagination are important at the idea and product development stage, but appropriate thinking skills are much more important when it comes to the strategic and “Business R&D” side of things. This is not a personal opinion – it is what the data tell us when you look at the Seed Investment stats. These data consistently show that in the UK, only 23% of Seed Investments will go on and scale to fulfil the potential of the idea pitched to investors. Of those others, 57% are stuck and 20% will fail.
Why most do not succeed . . .
So, what is it that the 23% get right and that the others don’t? Is it because they have a better product or idea, a better business plan, or is it because they think differently about the problems and challenges they encounter? An investment analyst once told me that businesses get stuck or fail for different reasons and you can’t predict what the cause will be. That is correct, but this misses the common factor to the predicament, which is that they are all stuck for a reason. If you cannot find and understand that reason, then that is where you will stay, failing to fulfil your potential.
. . . and why some do
It’s not that the 23% succeed because they get their business plan right. All plans are wrong in some way or another. What the 23% do that the 77% can’t, is adapt to a new reality and solve the problems that are actually holding them back. By analysing problems properly, we make better decisions and avoid the unconscious bias which is the bear trap for many businesses.
Honing analytical skills
The right kind of thinking skills develop naturally in us all to some degree, but they need careful honing and practice. It is not a question of absorbing and retaining copious amounts of information. If young people are going to be successful entrepreneurs, they need to learn how to think analytically and logically, even when (or perhaps especially when) they are under pressure. Entrepreneurs require an approach that will kick in when they need it most and allow them both to identify what they know and understand what they don’t. You can’t fix problems you don’t see as problems, or that you don’t understand. Spending time and resources solving the wrong problem is an expensive rabbit hole to fall into! This is why conscious reasoning and metacognitive skills matter.
Few entrepreneurs are aware of these ‘neglected skills’, let alone think about how to improve them. But these skills, rather than ‘entrepreneurial intuition’ are central to success. The good news is that training works and teaching the brain how to think in a way that follows a sequence, rather than random ‘inspirational’ thoughts can be learned. Don’t get me wrong, some entrepreneurs can do this intuitively, and have naturally high levels of cognitive ability, but for most of us, it takes time and practice to learn. And like all other skills, the more you practice and use them the more intuitive and natural they become.
Yes – you need to have an understanding of ‘business basics’ to start a successful company, but if you lack the key thinking skills, it will not take off.
It’s never too soon to start honing your dragon skills and developing the habit of analytical thinking.
The obvious place to start is school.
