Are Entrepreneurs Wired Differently?

by Lane Wallace on June 23, 2009

A few months ago, I was talking to a friend who runs an innovation and management consulting company. After hearing about some of the firm’s current projects attempting to spark more innovation at large, established corporations, I posed a simple question:

“Does it work?” 

My friend paused for a moment, then laughed. “Well, sometimes,” he admitted, “it does feel a little like trying to teach pigs to fly.”

Which raises the question … are entrepreneurs, who tend to excel at innovation, hard-wired different than people who are drawn to corporations? And if so, can corporate types ever successfully innovate? (And, perhaps conversely, can entrepreneurs run steady companies?)

I don’t have a full answer to those questions. But I got some interesting new insights last week at an international conference sponsored by the Boston-based Design Management Institute. Jeanne Liedtka, a professor at the University of Virginia’s Darden School of Business, told me that personality types definitely play into both management decisions and levels of innovation at a company.

Innovation, after all, involves both risk and uncertainty. It’s about trying something new, exploring new territory, and embracing change. Which is perhaps why entrepreneurs seem to innovate so much better than corporate managers.

“People are hard-wired for different levels of comfort with ambiguity,” Liedtka said. “And most people who end up in business tend to have a low tolerance for ambiguity.”

Liedtka went on to say that people also, generally speaking, have one of two types of mindsets: a “learning” mindset, or a ‘fixed” mindset. People with a learning mindset tend to continually seek new experiences that will improve and expand their understanding of the world. In contrast, the mantra of a fixed-mindset person, Liedtka said, could be summed up as “don’t look stupid.” “If you’re in that group,” she noted, “you make a completely different set of choices that are all about avoiding failure.”

Given the failure rate of entrepreneurial ventures, it follows that most entrepreneurs come from the “learning” mindset group.  “Entrepreneurs,” Liedtka said, “don’t think in terms of ROI (Return on Investment). They think in terms of affordable loss.”

Not surprisingly, Liedtka finds that the managers who are best at innovation also tend to think like entrepreneurs, even if they work for a big company. “By the time they’re 40,” she explained, “managers who have a learning mindset have a broad repertoire of experiences that give them a huge advantage when it comes to innovation. Managers with a fixed mindset just don’t have the raw material, or the toolkit, to cope with the risks and ambiguity involved.”

But there’s some good news for established companies who find themselves needing to change and innovate more. Apparently, Liedtka says, research shows that those mindsets aren’t permanently hard-wired in our brains. Fixed-mindset people can become more tolerant of ambiguity, if two things happen.

First, they need to be in an organization that has a learning mindset, as opposed to a control-oriented “fixed” mindset. Then, they need to be shown that analyzing and seeking absolute control from data doesn’t actually reduce the risks involved in trying something new. Experimentation on a small-scale, on the other hand, can actually generate better and more reliable data about what a new innovation would look like and do—hence reducing the risk, and the attendant stress, of change and new ideas. “Hypothesis generating and testing is one of the best ways to combat fear,” Liedtka argued.

The obstacles of personality and experience are still formidable, I’m sure. Even if Liedtka’s right, encouraging an innovative approach among fixed-mindset employees might be akin to teaching an old dog new tricks. But even so … teaching an old dog new tricks is still easier than teaching pigs to fly.

{ 1 comment… read it below or add one }

1 Mike Huck 06.24.09 at 11:34 am

I knew I was on the right track when I spent my late 20’s and 30’s trying to construct a solo sailing team, then when that didn’t work out pursuing the MBA in my 40’s. It gives me a “what, me worry?” approach that leads to invitations to participate and originate some pretty cool projects - even when locked into a decidedly risk averse municipal environment.

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