The Psychology of Success
They're hyperconfident risk-takers. They make big decisions on the fly but often fail to see the big picture. They're charismatic visionaries who don't play well with others. That's the stereotype of successful entrepreneurs. But how accurate is it? To find out, I administered the Test of Attentional and Interpersonal Style, or TAIS--a 144-question personality exam used by the U.S. military, big corporations, and Olympic athletic squads to help high performers hone their competitive edge--to 250 former and current leaders of Inc. 500 companies. Entrepreneurs, it turns out, are indeed a breed apart--but not for the reasons everyone thinks.
Myth: They thrive on risk
Successful entrepreneurs are the business world's ballsiest risk-takers, right? Not necessarily. Our study found that Inc. 500 CEOs are distributed across the entire spectrum for risk tolerance. What makes them different is the way they respond to stress. They score in the 83rd percentile on what TAIS calls "performance under pressure." That's 45% higher than CEOs in general. Such high scores, usually found only among top athletes and elite military units, suggest that fast-growth CEOs actually enjoy facing adversity--but most of them also manage and mitigate their risk.
Myth: They're control freaks
Inc. 500 CEOs score in the 91st percentile on their need to control things. But that's not much different from all chief executives. Where Inc. 500 leaders score significantly higher than CEOs in general is on something TAIS calls "focus over time"--essentially, willingness to sacrifice anything necessary to achieve a goal. Here again, Inc. 500 CEOs have more in common with military commandos and athletes than with other business executives.
Myth: They're lousy at strategy
According to the stereotypes, successful entrepreneurs are quick on their feet, great at making quick decisions in the heat of the moment, but not much good at long-term strategic thinking. Not so, according to the TAIS results.
The test divides people into three "attentional styles"--basically how they see the world, process information, and come up with new ideas and solutions to problems. People high in "awareness" read people and situations and respond based on intuition. People high in "analysis" see the world as problems to be solved, and tend to think strategically. "Action" people focus their attention narrowly on getting things done.
You'd think Inc. 500 CEOs would fall into the "action" category. In fact, their dominant attentional style is analysis--the group scores in the 92nd percentile on the ability to think strategically. Another surprise: The Inc. 500 group also scores 25% higher than chief executives in general on awareness, or the ability to read a situation. But that doesn't mean they're slow to act. Inc. 500 leaders score higher than 84% of test-takers on decision-making speed.
Myth: They're bullies
It's no secret that the founders of start-ups are great persuaders who somehow manage to convince attorneys and accountants to cut fees, get vendors to offer special terms, and assure employees that low salaries now will pay off later. I call it the ability to "recruit the world." What is surprising is how they pull it off. It's not how you might think.
To assess communication skills, TAIS puts people into three categories based on whether their primary means of persuasion is to express ideas, criticism, or support. You'd think that the Inc. 500 group would fall into the ideas camp; successful entrepreneurs, after all, are often characterized as bold visionaries who lead by getting people to buy into their ambitious new ideas. You'd also expect them to be highly critical of those who fail to deliver.
In fact, the Inc. 500 CEOs score higher than 82% of the population on their ability to express support and encouragement--higher than any other group except high-performing salespeople. It also suggests that rather than conforming to the stereotype of the hard-charging, bullying entrepreneur, Inc. 500 CEOs succeed by helping other people--their employees, partners, investors, suppliers--become successful themselves.
Take the Test:
For a more detailed look at McFarland's findings, and to test your own entrepreneurial aptitude, go to inc.com/inc500.
Keith McFarland, a former two-time Inc. 500 CEO, is founder of McFarland Strategy Partners in Sandy, Utah. Funding for his research was provided by the private equity group FdG Associates and the investment bank NewCap Partners.