We've all seen data on the high failure rate for new enterprises. But it's not always external factors that doom an enterprise. Sometimes it's the entrepreneur him or herself. With this in mind, we will focus our blog entries on avoiding classic entrepreneurial mistakes—highlighted by revealing stories and real-world examples. Through it, we will tease out the lessons of entrepreneurial excellence.
The essential traits of an entrepreneur—ambition, optimism, feistiness, confidence, independence, tolerance for risk—have potential downsides that can undermine success. As such, knowing what to avoid is essential.
Based on our research and hard-earned experiences, we offer up the following shortlist of classic pitfalls that sabotage many entrepreneurs.
1. Ego: Believing the world revolves around us and becoming beholden to our image or thirst for self-aggrandizement. This is the biggest trap of all. When Bill George was growing Litton Microwave Cooking Products from $10 million to $200 million in sales, and later leading Honeywell's European division, it all went to his head before he got himself together and became a legendary "authentic" leader.
2. Lack of focus: Moving from project to project without seeing things through, pursuing the latest adrenaline rush. To be successful, we must stay grounded and hire people who can prioritize and execute, avoiding the trap of chasing every opportunity that appears. One entrepreneur we met recently had started 16 companies by age 31—an impressive accomplishment but also a red flag.
3. Excessive drive and competitiveness: Getting lost in work or focusing on winning at all costs, sometimes breaking the rules to prevail. When we interviewed Gerald Chertavian, co-founder of Conduit Communications (one of Britain's fastest-growing companies), he related the story of how he was working so hard that he had a blackout one night at 2 a.m. in London. The will to win is surely magical but not if it kills us or isolates us from our vital support networks.
4. Arrogance: Thinking we have all the answers, blind to our weaknesses. Think Enron, WorldCom, and Global Crossing. According to social entrepreneur Kim Smith, "It's tough for entrepreneurs because I think fundamentally you have to be arrogant to think you can change the world. You just do. So there is definitely some ego involved. At the same time, if what you care about is getting something done in the world, you must also bring humility to it and recognize that it's not all about you. The goal is not self-aggrandizement. The goal is getting this thing you want to do right."
5. Rose-colored glasses: Underestimating challenges through unfounded optimism. Some entrepreneurs live in a dreamworld where they discount potential obstacles and place naïve bets on shallow "hockey stick" profit projections.
Of course, no entrepreneur is perfect. We all have our flaws, but it is essential to recognize and address them. Many of the entrepreneurs we interviewed for our book were intimately familiar with their personal pitfalls and proactively managed them.