Leaders Need Grit, But It’s Not Enough For Success

What kind of personality succeeds in an environment where the failure rate is over 90%? Can an entrepreneur with any personality become successful? Or do certain personality traits count to tip the odds in their favour?

If you, or some entrepreneur you know has a great idea and is embarking on a new venture founding a technology company, then they need all the help they can get. The field is populated by the smartest people with the brightest ideas, yet still only a small number will succeed.

Research abounds on why tech start-ups fail and what successful tech entrepreneurs do, meaning the actions they take. However, the questions the research miss are: why do founding entrepreneurs take those actions? What is it that successful entrepreneurs do naturally? And if not naturally, what do they adjust for?

To explore this, psychometric data analytics firm Humantelligence accumulated and analysed the pyschometric personality profiles of successful tech company entrepreneurs, and compared them to those at the early stage of their ventures to see whether there are differences between those who have succeeded and those who have failed.

Why startups fail

Look through what High Tech Strategies, Accenture, CB Insights, Technation, Alley Watch and others report about fails and all list similar reasons. Taking just one, the most common reasons on CB Insight’s Top 20 list include: No market need (cited by four out 10 respondents); ran out of cash; wrong team and pricing/cost issues. The chart lists all 20.

All good factual stuff.

More than grit

Then there are the studies on successful founders habits and the grit needed for success. To summarise: Start with a vision and then keep going, no matter what. There are additional particular habits, like the need to work all hours, be totally focussed on building the company that are also well documented, but these reinforce the grit, resilience and determination message.

When we look at the reasons a tech company fails – loss of focus and lack of passion are the only ones that could point to a lack of grit. You could also argue that failing to pivot (which is about adapting to the market) and disharmony amongst the team and/or investors could be caused by too much of the founders’ belief, grit, and determination.

When we examine the other reasons for failure, a lack of grit, determination or resilience is not obvious anywhere in the top 20 reasons.

So what are the elusive ingredients of success? We investigated whether personality traits might be part of the answer. In this case we are saying that personality consists of the traits and preferences in an entrepreneur’s motivations, behaviours, preferred environment and priorities. It’s these traits that cause them to make their specific choices, decisions and judgements and how they engage with others in the way they do. It’s the why, what and how of the way they do things.

Small differences make a difference

Inside a world where the difference between success and failure may be doing, acting or thinking just a small percentage differently, then picking out and measuring those small things might give us some valuable insights.

It may give us more upfront perception into what is required to be a successful tech founder and entrepreneur, and help those embarking on the journey to understand the areas where they may need help to either accentuate themselves or dial back some of those traits that may not be helpful.

The personality profiles of successful entrepreneurs

We looked at the psychometric profiles of a select number of highly successful entrepreneurs who have founded and built very successful companies – sometimes more than one. Included are people who have founded successful social media sites; owners of some of the most valuable real estate on the web; there are blockchain entrepreneurs; media and entertainment disruptors; solar equipment developers; and telecom equipment manufacturers. Hardware and software are well represented.

We looked at the data based on the sole criteria that they must be a founder, and they must be successful. However, we only included one entrepreneur from each technology group so that no one particular group could bias the aggregate outcome.

We eliminated the billionaires from the data since we wanted to study what we called the aspirational layer – the level that an aspiring founder is aiming at. The billionaire may be completely different in their personality, a category of their own. We also know that profiles can vary and adapt over time. (Unlike many psychometric profiles we know that particular behavioural profiles can change and are influenced by personal choice – after all, we can all choose how we behave if we want to. This is why the Humantelligence profile we used is a three-in-one methodology, including personal motivators and priorities which are much more comprehensive in explaining one’s drivers and personality traits than simply behaviours.

Eye opening insights

When we looked at the profiles across the successful tech entrepreneurs something very interesting occurred. They varied across many personality traits, (we tested 14 different traits), but were remarkably similar and consistent in some key characteristics.

Not natural leaders

When we aggregated the motivators of the successful founders we found that as a group they did not exhibit natural leadership tendencies, which surprised us. They erred towards helping and supporting others, but not so strongly that they could not step into a leadership role if required. They showed no propensity for putting their own needs first. This is a trait at odds with many career CEOs, who do show a desire for leadership (it matters less to them what they lead – and more to them that they are leading something). This may give an insight into why founders of tech companies often don’t make great CEOs. They are in an uncomfortable place when asked to be out and out leaders – particularly of people.

Motivated by knowledge

They also showed a high motivation for knowledge – this is the desire to get completely into and solve a problem, rather than develop a solution only to a practical level. They exhaust the problem, which gives a deeper level of understanding, and therefore a better solution than others might offer.

What is interesting is that they showed no motivation for money. That may be because once you have achieved a goal it ceases to be a motivation. However, we are not so sure it is that easy to debunk the lack of relevance of this insight, but more about that later.

Hand in hand with their “Knowledge” trait, they also showed a high motivation for “Freedom and Uniqueness.” They do not like rules – or being told what to do.

Thrive on change

When we moved on to examining their behaviours we saw very clear trends. They were decisive and spontaneous to a high degree, and showed little signs of caution in their behaviours. In short, they thrive in a rapidly changing environment, and were strong change agents. However, whilst these behaviours often point toward an outgoing personality, in fact they were only slightly biased that way.

When we then examine the preferred working environments of the successful entrepreneurs we found they had a very strong bias on working on new solutions over proven methods, with a high degree of variety and flexibility in their work processes. Ask them to carry out established processes, doing the same thing day in day out in a structured workflow pattern and it will likely not end well.

The entrepreneurial personality profile

So, we now have a working hypothesis for the personality of a successful tech entrepreneur they are not motivated by leadership or money, but instead by getting deep into a problem going well beyond the practical solution level, with a strong sense of freedom and uniqueness. They have a high level of decisiveness and spontaneity in their behaviours, and their preferred environment to work in requires new solutions and variety without rules and structure.

Whilst many will feel that they could have deduced much of that profile, what we also know are the metrics of each trait. We know exactly how decisive they are. We have a score. Same for their Knowledge characteristics. We know how spontaneous they are. We know how much freedom matters to them. For every one of 14 characteristic continuums, we have the metric. And the insight is in that detail.

The ‘successfuls’ vs. the ‘aspirationals’

Now that we have the data on successful entrepreneurs we looked to compare it with a group of aspiring entrepreneurs. This might give us that elusive insight we were looking for.

We had the opportunity to run an event with a number of budding tech entrepreneurs and founders. Hopeful, committed, energetic people taking a big risk. Every one was pursuing a great idea. Healthcare, construction, and tech support were amongst those fields where these entrepreneurs were hoping to make their mark. They are at the start of their journey, one in which we all hope for their success. Unfortunately, that is unlikely to be the case for the vast majority of them. That is the nature of a 90% plus failure rate.

A number of them completed their profiles in the same way as the successful tech entrepreneurs and we were able to compare them as a group to see if the make up was the same, or different.

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The similarities

Overlay the profiles of the aspirational group (let’s call them “the Aspirants”) onto the already successful group (let’s call them “the Successful”) and the areas of commonality jump out. They had very similar profiles in terms of their direction and trait descriptions. Like the founders they were not motivated to seek out leadership, were focused on getting deep into a problem and highly valued freedom and uniqueness. On the behavioural side they were decisive, spontaneous and had no preference for being either reflective or outgoing. They also preferred creativity, focussing on new solutions and variety.

With these common features you can see why a person with a certain personality type is naturally attracted to being a tech entrepreneur and has the belief that they can succeed. There is a lot of common ground – they see a lot of themselves in those who have already succeeded. You can completely understand them wanting to give it a go.

The differences

But that is just the start. The similarities are a help. But what about the differences? What we noticed is that there were a number of traits, which whilst the Aspirants possessed them, they were present in less significant amounts than in the Successful.

Both groups had the solving of the problem – the acquisition of deeper knowledge as a trait, but the Successful had much more of it. The Aspirants were decisive, but the successful group were more decisive by some margin. The Aspirants were spontaneous, but nowhere near what the Successful were. And whilst the Aspirants leaned towards new solutions, they were more accepting of the status quo, and they had less flexibility.

The importance of the differences

Why do we think these differences are important enough to highlight? Well, let us go back to the reasons why tech companies fail. Remember, high on the list were reasons such as failing to realise that the market doesn’t want your product. There was a failure to pivot. There was disharmony in the team, and with their investors. They fell out. When you take those reasons and put them next to deficiencies in knowledge, decisiveness, spontaneity, new solutions and flexibility then the reasons why decisions were poorly made become clearer. Not reacting to data quick enough. Not being prepared to change their company, and hanging on too long to a belief that things will turn around are all present in their profiles. They disagreed, and held their position when others wanted to do something different.

Is financial indifference the secret?

I also want to come back and discuss the financial motivation side. The Successful, as we pointed out, were not motivated by money. The Aspirants certainly were. It was the only significant trait that the Aspirants had more of than the Successful.

When you look at this trait alongside less of a bias towards deep and full problem solving, and therefore easier acceptance of a practical solution, plus a greater willingness to accept the status quo, then the financial motivator could very easily be detrimental. Acquisition of a better, more developed solution costs more and takes longer. It’s cheaper to adapt a solution rather than develop something completely new from scratch. That motivator for money might well be terminal, unless it is balanced by the other success motivator of knowledge acquisition for its own sake.

In this context it could be that freedom from financial motivation is a persuasive ingredient for success, freeing up decision-making. It prioritises learning over commercial constraints; orients behaviour towards the acquisition of knowledge over paying the bills, and ultimately gives a better environment for success.

The role of ‘life priorities’

We also surveyed the life priorities of the two groups. There was a marked difference. The entrepreneurs had a strong preference, in broadly equal measures for “Achievement,” “Freedom,” “Creativity,” “Adventure” and “Friendship.” In the aspiring entrepreneur group, not a single person picked out achievement, adventure or friendship. Instead, they went for “Personal Development,” “Wealth” and “Pleasure,” although they did have freedom and creativity in common.

The life priorities are self-reported. They are not scientifically tested for. So, if the life priorities are not aligned with the why, what, and how of success then there should be some self examination to see if they can re-prioritise. In this case the Aspirants may be on the wrong track – but they could choose the right one.

For example, during the development of their company they will likely be severely tested. Unless they have a focus on an end result and are willing to do whatever it takes to get there, having personal development over achievement as a priority may not give them sufficient reserves to carry things through. Once they have learned what they feel is enough, that might be the point of quitting. They have not seen it through to the end. Unless it is fun, then those who select personal pleasure in their priority list are likely to be some of the first to decide that the going is just too tough to be worth it.

Without more, grit is a ‘no go’

So, here are the signs that grit, resilience and determination are important. However, grit has to be placed in its right context. Grit, in the absence of enough knowledge, decisiveness, spontaneity and flexibility is a no go. Grit alongside those characteristics for success is a useful trait, not a detrimental one.

Applying the hypothesis

From these profiles, do we have predictive success? We don’t claim that this is an extensive scientific test, but we do have a working hypothesis for success, with common themes that give solid intuitive guidance.

Entrepreneurs considering embarking on the treacherous start-up journey where only a few will survive would be wise to understand their deficiencies in a precise way. Know whether you are decisive enough, committed to the acquisition of knowledge enough, spontaneous enough, flexible and free thinking enough. And understand that the pursuit of riches may well be your downfall. In addition, maybe ask yourself “Are your priorities truly aligned with success?”

Once the budding tech entrepreneur understands themselves they can also understand the consequences of their decision-making style — where their inner motivations will affect their decisions, recognising when they are for the better or worse and know when they should defer to others in their team who possess more of the right characteristics for a decision, and listen less to those with characteristics that may push them away from success.

They should take steps – get a coach to develop those areas of deficiency or find a mentor with those skill sets to check their decision making. Would they pivot earlier? Would they look at things differently? Would they invest more into the exploration, investigation and understanding of a problem?

But for sure, even if you do not agree with the specific advice of each characteristic, then having at least a better and fuller understanding of themselves and their team motivators, behaviours, work preferences and priorities (let’s call that their culture) can only set themselves up for a better chance of success.

If you are a tech entrepreneur and would like to contribute to the body of work in the field please contact the author.

Martin Lister is an investor and partner in Humantelligence Inc. Humantelligence is the leading cloud-based culture analytics platform for recruiting, talent development and engagement that leverages break-through Artificial Intelligence and talent analytics to measure team culture and hire for culture fit and predictive success.

Contact him at martin.lister@humantelligence.com