By Anh Dinh, Lehigh@NasdaqCenter Research Fellow; Head of Accreditation, University of Hohenheim, Faculty of Business, Economics, and Social Sciences
As words go, “entrepreneurial mindset” is overused and misunderstood. This confusion surely comes from the multitude of definitions. In a nutshell, the entrepreneurial mindset is a combination of motives, traits, skills, and attitudes.
The entrepreneurial mindset determines both entrepreneurial and intrapreneurial success. Regardless of whether you're in a startup or corporate environment or a freelancer, all problems need to be looked at from an entrepreneurial mindset.
As mentioned in a previous article, we conducted a systematic literature review and applied the Delphi method, inviting experts to respond to questionnaires. Entrepreneurship educators and entrepreneurs participated in our study to provide both academic and practitioner perspectives about the composition of the entrepreneurial mindset. Responses were aggregated into the eleven most mentioned attributes.
Here are the 11 attributes and why each is important:
- Opportunity recognition and exploitation: This is the ability to recognize patterns that represent a valuable entrepreneurial opportunity. It also means staying alert to surroundings and flexible enough to pivot in new directions. For instance, amid the coronavirus pandemic, some liquor companies switched to producing hand sanitizer.
- Risk-taking: No new business comes into existence without someone taking risks. This requires courage and the foresight to assess which potential losses are “affordable” versus unaffordable.
- Uncertainty and ambiguity tolerance: Entrepreneurship is a journey into the unknown. Entrepreneurs neither know the likelihood of success or a failure nor the extent of one or the other. They confront – and must accept – high levels of uncertainty and ambiguity.
- Creativity and imaginativeness: These attributes are the root of invention and innovation. They require “divergent thinking,” also known as thinking outside of the box, to enable the emergence of unconventional ideas. The result is novel discoveries that solve problems.
- Innovative behavior: It can be useful to question the status quo, to rethink how to boost efficiency in current business scenarios, and to anticipate upcoming trends. Netflix is an example. Blockbuster, then dominant, declined to take Netflix seriously. Today Netflix has revolutionized how we consume television.
- Value creation: Entrepreneurship translates into value for society. In devising the printing press, German inventor Johannes Gutenberg brought about not only his own wealth but also benefits for private households and corporations.
- Problem-solving: The mode of thinking known as “convergent” means the use of a linear, in-depth analytical process to generate feasible solutions to a problem. A case in point came during the pandemic from the automotive industry. Car companies such as Daimler and Ford shifted to production of medical equipment such as mechanical ventilators to support hospitals and patients.
- Resilience: The capacity to overcome setbacks and adapt to challenges and bounce back from surprises is instrumental for the emotional rollercoaster we call entrepreneurship.
- Self-efficacy: Whether aspiring entrepreneurs enter the entrepreneurial process in the first place often depends on how much an individual believes in his or her ability to function as an entrepreneur. It’s a form of confidence.
- Proactivity: The true entrepreneur takes matters into his or her own hands and pursues business opportunities rather than expecting miracles to materialize. It calls for a willingness to trigger positive change.
- Mistakes and failure competence: Mistakes and failure in entrepreneurship are unavoidable. More than 80 percent of all start-ups fail in the first three years, other research has found. For instance, the successful online payment company Paypal was founded only after entrepreneur Max Levchin made one attempt after another. This trait, a cousin to resilience, entails the acceptance that mistakes and failures during the venturing process are inevitable – and, equally important, to transform these setbacks into lessons learned.
The good news is that the entrepreneurial mindset typically evolves over time. If you have a growth-mindset, as opposed to a fixed-mindset, you can train yourself, through experience and education, to develop all 11 attributes.
As an entrepreneur from our study told us about having an entrepreneurial mindset, “You must be built to create solutions when everyone else only sees the problem. You must have the spirit to see every opportunity for success before seeing failures.”
# # #
Anh Dinh holds a Ph.D., from TU Dortmund University