A number of factors dictate the success or failure of a business startup, as has been understood for some time now. But what role does the actual personality of the business founder play? And how can this role be defined? Are you born an entrepreneur or is it something one can learn? This and many other questions have been examined as part of research carried out by Prof. Dr. Werner G. Faix and Jens Mergenthaler at the School of International Business and Entrepreneurship (SIBE) at Steinbeis University Berlin.
The research uncovered four key factors that are central to the success of a startup:
Research and business practice have underscored time and again just how important founder personality is as a key success factor. As a result, considering the personality of the founder is a core part of business planning. For Werner G. Faix and Jens Mergenthaler, this key success factor is actually pivotal to successful startups. Somebody may have identified a great opportunity or come up with a big idea, all the preparation can be right, external business conditions may be ideal – but without a go-getter, someone with the magic touch, and the sheer drive of an entrepreneur to make things happen, an opportunity remains an opportunity and an idea is simply that: an idea. More than anything, business founders need an entrepreneurial personality, the ability to create things – creativity itself – to translate ideas into reality and add value.
People often talk about personality and they have a lot to say about the issue, so there are countless definitions of the term. Faix and Mergenthaler see the term in its narrowest sense as an aspect of human behavior. On the one hand, personality is something that underlies everything we do; on the other, everything we do, agree to, and desist from doing is a visible reflection of what and who we are. Personality is thus a collective term for the entirety of our inclinations, our qualities, our abilities, and our intentions, and these are all portrayed through our specific actions.
The German language uses the term personality in a pragmatic sense that has two distinctions. On the one hand, personality is about something people have (“having”), on the other, it’s something they are (“being”). The having aspect is seen in the fact that people can work on their personality and develop it. This aspect is also seen when something expresses (or is a product of) their personality. Personality thus appears to be a deep-seated attribute that belongs to people, something they can (re)shape. It is also a basis for their behavior and interactions.
Personality in terms of what people are (“being”) is reflected in German in saying things like “He is an amazing personality [character],” or “She’s a leading personality in sport/politics/business/society/the arts etc.” Personality is used in this sense to refer to a person who plays a particular role in society. In other words, the being part of a personality represents the result of a complex social process in which a community apportions value to the standing/significance/influence etc. of a person on that community. So in a general sense, German describes people as “having” a personality and “being” a personality. According to this definition, we could therefore take a pragmatic view that personality is Personality-Having and Personality-Being. Personality-Having is about possessing a host of attributes that make a person unique and make them an identifiable individual. This having consists of a deep-seated individual totality which includes the following: knowledge, virtues and values, skills, identity, temperament, and character.
When all these elements come together they are reflected in our actions, what we do, agree to, or desist from doing. The fact that we do things and how we do them subsequently results in others seeing us in a certain way. Ultimately, this social estimation process is intimately linked to what we call Personality-Being. This is because it’s our actions that cause others to see in us whether we’re a personality in the eyes of others, and what kind of personality that is: A person who “is” a personality, is – in the eyes of others – attributed a reputation, authority, and charisma.
There is ongoing discussion in startup research about whether you’re a founder by nature or whether founders can be nurtured. The debate revolves around whether founders have this or other characteristics (in the sense of personality traits) in their genes, or whether there is a way to train such things. There is still no clear answer to this question, and there (probably) never will be. Nonetheless, there is a clear tendency showing that even the deepest layers of personality can be influenced by education. There are dynamic interactions between knowledge and competence acquisition on the one hand, and character on the other. However, changing the deepest layers of personality is a long-term process. As a result, if people want to develop their potential to become an “entrepreneurial personality,” they should start as early as possible.
Ideally, the “life phases” companies go through can be divided into different stages. During each of these stages, founders face different challenges and are required to make different decisions. Before the startup stage, the main priority is to have an inspiring idea and decide whether to set up a company in the first place. During the startup stage, it’s about strategic considerations, lining up finance, and even dealing with red tape. At this point, a decision is made as to whether to enter the market or not. During the consolidation stage, it is about everyday operations within the company and possibly even first management responsibilities. Assuming this goes well, the next decision is how to keep the company going (sell, set up another company, just maintain course, expansion etc.). As things start to grow, the priority is to set new targets for oneself and the company. The decisions made at this point depend largely on the role played within the company (manager or entrepreneur).
Each of these phases requires the entrepreneur to think carefully about their own personality and even decide if and how they should work on their personality. At every phase of the company, the entrepreneur has to ask the following questions: What do I know? What am I capable of? Who am I? What do I want? Also, what do I need to know, what should I be capable of, what do I need to be and what must I want in order to make it through this stage successfully? How the startup develops is thus closely linked to the development of the personality of the business founder. In other words: the company is a reflection of the personality of the entrepreneur.
Prof. Dr. Werner G. Faix is holder of the chair for Business and HR Management at Steinbeis University Berlin and founder/Managing Director of the School of International Business and Entrepreneurship (SIBE) at Steinbeis University Berlin. Jens Mergenthaler MBA is a personal scientific assistant to the management of SIBE. SIBE stands for successful knowledge sharing and the systematic development of skills in the world of science and business, with a focus on companies, organizations, and public administration on the one hand, and competent, entrepreneurial, “high potentials” on the other, who think and act globally.
Prof. Dr. Werner G. Faix
School of International Business and Entrepreneurship (SIBE) at Steinbeis University Berlin (Herrenberg)