Do you admire leaders like Steve Jobs and Bill Gates who have turned their ideas into world-leading public companies? I certainly do. But it is one thing to admire such leaders and another thing to have the skills needed to become a successful entrepreneur.
Which raises an important question: What skills do successful founders have that other business leaders lack? Thanks to a survey of 1,300 Harvard Business School alumni, here are the five key skills — out of 11 examined by the researchers — at which entrepreneurial leaders distinguish themselves compared to non-founders.
1. Identification of Opportunities
Founders excel in skills and behaviors associated with the ability to identify and seek out high-potential business opportunities, according to the research. This should come as no surprise. But what makes for a great business opportunity?
My interviews with hundreds of entrepreneurs reveal four tests:
- Does the product relieve deeply-felt customer pain that other companies are ignoring?
- Does the founder have a passion for doing a market-beating job of solving that problem?
- Does the startup’s founding team have the critical skills to build that solution?
- Is the market opportunity large enough — e.g., at least $1 billion?
2. Vision and Influence
Founders have strong abilities to influence all internal and external stakeholders that must work together to turn a strategy into action and results.
Harvard researchers found that entrepreneurial leaders have more confidence of their abilities to provide vision and influence than the average leader — and that leaders working within established firms actually rated themselves much lower.
As I wrote in my 2012 book, Hungry Start-up Strategy, a successful entrepreneur is able to attract and motivate talent by creating what I called emotional currency — rather than paying people more money than Google does, they offer a powerful mission which gives work at the startup much more meaning.
3. Comfort with Uncertainty
Entrepreneurial leaders are better able to “move a business agenda forward in the face of uncertain and ambiguous circumstances,” according to the researchers.
You’ll know whether you share this skill if you are willing to start a company even though you have no money, no product, and no customers — but you do have a clear idea of what problem you are trying to solve and what your solution will look like.
Starting there, successful entrepreneurs are far more comfortable living with the uncertainty needed to go from there to building a large company.
4. Building Networks
One reason for founders’ comfort with uncertainty is that they are good at assembling the resources the startup needs because they can create professional and business networks that will help them realize their vision.
Indeed, many of the CEOs I’ve interviewed have told me that they often find themselves not knowing how to solve problems — but they are able to get advice from CEOs who have been there before.
5. Finance and Financial Management
Being able to raise capital and control cash flow are essential to a successful startup. The founders HBS surveyed were “much more confident in their skills at managing cash flow, raising capital, and board governance — than were non-founder alumni.”
My interviews this year with CEOs for my forthcoming book on scaling startups highlights that successful entrepreneurs are great at persuading investors to write them checks.
The most successful sales pitches for money emphasize the size of the market the company is targeting, the value that the company’s product provides for customers, and the rapid rate at which the company is winning new customers and retaining old ones who spend more on the company’s products.
Not surprisingly, there is one area where founders are not as good as non-founders — preference for established structure.
Entrepreneurial leaders have a lower preference for operating in more established and structured business environments and would rather “adapt to an uncertain and rapidly changing business context and strategy,” according to the HBS researchers.
If you are great in these five skill areas, you may just have what it takes to be a successful entrepreneur.