8 Traits of the Entrepreneur
The role of the entrepreneur is central to Austrian economics. Entrepreneurs are the coordinators of individual human action in the context of subjective knowledge and dispersed information.
There are two critical individual roles for economic dynamism. The first is consumer sovereignty: the consumer is boss, because they determine what is produced by deciding what to buy and not to buy. The decision is subjective, emotional, idiosyncratic, inconsistent, and unpredictable. The consumer lives in a permanent state of dissatisfaction, believing things could be better and seeking to make decisions that improve their circumstances. The second is the individual entrepreneur who serves the consumer, attempting to identify solutions to this dissatisfaction, and sacrificing time, capital assets and current income to the production of that solution, having made the economic calculation that the net present value of the future revenue streams that will result is greater than the current cost of production. The entrepreneur bears the uncertainty of this process.
With that as context, is it possible to identify those traits — and combinations of traits — that are associated with the entrepreneurial role, and that may point toward the best execution of the role? To investigate, we have developed a survey that explores these traits. Please, take a few minutes to help us gather information.
Empathy is the primary skill for the entrepreneur as service innovator and service provider. Since the service customer’s perceived need is subjective, emotional, and idiosyncratic, the service designer must “put themselves inside the customer’s head” to try to understand the service need from the customer’s subjective perspective. In the entrepreneurial process of developing new services, the entrepreneur must be able to transfer this empathetic understanding to implementers, such as those designing and writing code for apps. This is sometimes referred to as empathetic engineering.
The answers to the entrepreneur’s self-assessment questions “Who Do I Know?” and “What Do I Know?” hinge on interconnection. Building a network of collaborators and customers is an act of interconnection, as is connection to knowledge in all its forms. Dr Cristina Mele of the University of Naples has conducted research that indicates that, in the digital era, interconnection IS entrepreneurship. You can read about Dr. Mele’s research here.
Austrian economics defines the efficiency of the entrepreneurial order as an adaptive efficiency, capable of responding to new knowledge and new market signals to co-ordinate the needs of consumers and suppliers. Service science emphasizes a process of dynamic innovation, whereby the service provider makes an offering to a service customer, who provides feedback, whether positive or negative, to which the provider adapts by changing the offering to match the content of the feedback. To maintain this adaptive process, the entrepreneur must be able to cross disciplines, communicate well with collaborators, and keep up with changing information streams from customers, all of which is summed up in the term “adaptive.” (Agility often means the same thing, but is less specific than adaptive.)
4. Time Preference
The entrepreneurial process takes time. Once an opportunity to serve customers in new ways is identified, resources must be assembled and/or rearranged to develop the new service or product. During this time, the entrepreneur typically uses savings, and sacrifices current income, in the anticipation of future profits. The entrepreneur is said to have a low time preference, which indicates a willingness to forego satisfactions and benefits today, in order to experience improved benefits in the future. The opposite attitude, high time preference, can be summarized in the phrase “I want it now” — i.e., an unwillingness to sacrifice current satisfactions. The entrepreneur lives in the future more than the present. Low time preference is associated with a long-term perspective rather than a short-term one, and is also associated with ethics and morality in decision-making.
5. Lifelong Learning
Lifelong learning is an expression of individual commitment to the economic model of entrepreneurial dynamic efficiency, and it is a social concept and educational concept that has garnered more attention as the static institutional model of educating youth for an extended career based on the learning they receive in school has shifted to the dynamic one of accumulating skills and new knowledge throughout adult life. There is an element of boundary crossing in lifelong learning, since a lifelong learner might accumulate skills in mechanical sciences (like coding) as well as social sciences (like economics), as well as crossing cultures in order to operate globally, and crossing physical/digital barriers to deliver services digitally and physically.
Co-creation is a concept specific to consumer sovereignty. The innovator deduces the needs of consumers from their expressions of dissatisfaction, and designs a possible solution. The consumer gives feedback, initially via research or trial, and ultimately by buying or not buying. The entrepreneur receives the feedback and adjust accordingly. In this way, all consumer products and services, as well as producer goods and services, are co-created by producer and customer. Collaborative traits are important to the success of the co-creation process.
Grit is a term to denote the personality trait required to deal with continuous learning from market feedback, which often comes in the form of negative feedback, sometimes referred to as “failure,” and to keep going by processing that feedback and eventually achieving success. There was a popular book of this title, defining it as passion plus perseverance.
Entrepreneurs should seek unique knowledge, make a unique benefit promise to customers, identify a niche that no-one else has identified, and generally be comfortable with being the only occupier of a commercial space. Initially they might be viewed as crazy or taking excessive risk or out on a limb. Individualism makes them comfortable with that situation. Individualism doesn’t mean they are not collaborative; in fact quite the opposite. They will assemble a team, hire vendors and co-create with customers. Individualism embraces the self-confidence to originate and create differentiation.
We have designed a survey to investigate these 8 traits, using a combination of proven research scales from psychological testing. The first draft of the survey is 194 questions long, so when we ask you to respond, we are asking for 25 minutes of your time. Your commitment will help us to refine the research instrument and we hope to get to a 100-question survey.