innovate arkansas

Most people today understand the key role of a robust entrepreneurial environment in promoting economic development, in creating new jobs and new wealth, not to mention staving off, to a degree, global threats to the U.S. economy. 

Such awareness has focused attention on entrepreneurship and how it can be encouraged. Efforts to support entrepreneurship were made manifest on Oct. 2 when Accelerate Arkansas was unveiled in a series of concurrent meetings across the state (focused in large measure on building the state's knowledge-based economy).

More than 50 years ago, identifying personality attributes that are predictors of who would (and would not) be likely to become a successful entrepreneur became the objective of academic research. By the 1990s, a general consensus emerged around the characteristics of entrepreneurs: commitment and determination; leadership; opportunity obsession; tolerance of risk, ambiguity and uncertainty; creativity; self-reliance; the ability to adapt; and an innate motivation to excel.

Later research examined how individual demographic and cultural backgrounds affect the chances that someone might become a successful entrepreneur. Some of these factors are unsurprising (being a college graduate), but others are almost counter-intuitive (having been fired from more than one job).

It may be that individual entrepreneurs receive too much credit or excessive blame for the success or failure of new businesses. In fact, it increasingly appears that successful entrepreneurs are those who can develop the right kinds of business and professional relationships.

Rather than focusing on characteristics of individual founders while trying to predict which new enterprises will succeed or fail, we might be wiser to consider the network of other people with whom the entrepreneur works and collaborates. If this supposition is correct, among key attributes for successful entrepreneurs would be communication and interpersonal relationship skills - but these are attributes for which many, if not most, technical gurus are not well known.

Attributes of scientists and engineers, particularly in academia, that point to success in research and discovery may be substantially different from attributes that point to the likelihood of success in conceiving and developing a superior commercializable technology.

Seasoned business executives and managers - people who have had success in growing a business from concept or seed stage to a substantive liquidity event (sale, IPO) - typically have experientially gained skills, a degree from the "School of Hard Knocks," rather than or in addition to conventional sheepskins. There are clearly pitfalls in not appreciating the differences between technology-driven entrepreneurs and effective business executives and then, even when fully understood, in being unwilling to make organizational changes necessary to avoid these pitfalls.

While I am less than an admirer of the attitudes of certain venture capitalists, they may have a valid point when they pronounce that a change in management in a technology entrepreneur-driven enterprise will be needed for the enterprise to succeed in late funding rounds. Personal aspirations (and sometimes egos) of technology-driven entrepreneurs aside, it is likely to be the exception rather than the rule that a first-timer will have the personal attributes, business knowledge, skill set, experience and credibility to manage a company to substantial value growth or to a liquidity event.

To improve the odds of success, it is likely better to embrace bringing into the enterprise some qualified senior executives and for the technologist/scientist/engineer-founder(s) to move to the supportive but entirely critical role of chief technology officer or the equivalent. Good people in both roles can serve an enterprise with complementary and synergistic relationships and the CTO can acquire new management executive skills.                

(R.R. Goforth, Ph.D., is CEO of EquityNet LLC and president of Beta-Rubicon Inc., both of Fayetteville. Contact him through their Web sites, www.equitynet.com and www.beta-rubicon.com.)