"It's not what you know, it's who you know."
This well-known recipe for success, as it turns out, might be missing the single most valuable ingredient of all, at least that's what a meta-analysis of over 65,000 entrepreneurs revealed.
I recently sat down with Jared Allen, a researcher from Texas Tech, and his team who set out to answer the one question pestering every founder, "How do I succeed at running a successful business?"
"Literature showed in traditional organizations that what we call cognitive intelligence was the number one predictor of performance," Jared tells me on our video conference. "But at a gut level we felt like that wasn't the case [for entrepreneurs]."
Cognitive intelligence, I learn, is essentially mental horsepower. It's a person's ability to process information quickly, digest complex datasets, and leverage past experience from their larger-than-average working memory. In other words, it's the "what you know," piece of the equation.
I imagine most entrepreneurs would agree with Jared and his team that cognitive abilities, while certainly useful, aren't indicative of the success of a new venture. Haven't we all witnessed someone we regard as "smarter than me" fail in their new endeavor?
But the research found an alternative trait as being the pinnacle predictor of venture success. What was it?
"Emotional intelligence," Jared says, "is two times more likely to correlate with entrepreneurial success than the next closest trait."
But for me, understanding what this means in a practical sense required that we were speaking the same language and it starts with defining "success" for an entrepreneur.
And while it's complicated, because the measurements of success can be highly subjective for example, super car founders), success in my mind and that of Jared and his team included several key dimensions, including personal satisfaction, financial success, business growth, and staff size.
Accept that definition of success? This is where emotional intelligence really comes into play.
"Emotional intelligence is really divided into two dimensions," Jared says, "The first is self. That is, self-awareness or your ability to regulate your emotions and your inner life. And the second is others, which is a high-level awareness for how others are feeling and how it relates to your ability to influence others."
In effect, emotional intelligence is a combination of your resilience and ability to adapt to failure. Layer on top of this your ability to perceive others' emotions effectively and you may begin to see the results in your sales, fundraising, recruiting, networking, etc.
"Emotional intelligence allows entrepreneurs to maintain motivation and persistence," Jared explains. This in turn makes people with high emotional intelligence, "more resilient and more adaptable to very rapid change." In a world where we must pivot or die, the summation of these traits is crucial to success.
And because of that adaptability, Jared shares that entrepreneurs with high emotional intelligence were also, "more satisfied with the grueling process of entrepreneurship." That satisfaction also "gives longevity which, in turn, translates to success," he adds.
In other words, the bigger the window of opportunity you give yourself, the more opportunity you'll have to use trial and error until you catch your big break. And I'm a first-hand testament to this.
When Travis Chambers and I started our digital advertising agency, Chamber Media, it wasn't lost on us that we were entering an insanely saturated market. They talk about blue ocean business ideas? Ours was more of a blue bumper car idea.
So how do entrepreneurs really succeed?
You outlast everyone. You ride those massive waves longer than others are prepared to or capable of and you pray for the big break, case study, marquee client, massive purchase order (PO), viral video, or whatever it is that gets you to the next milestone or beyond. Brains alone can't substitute for that kind of brawn.
But all founders also know starting a new venture isn't just about grit and mettle, it still is also about "who you know."
And emotional intelligence is ideal for that as well it turns out The ability to perceive others emotions and react to it becomes critical in an industry that's all about resources.
"One of the main reasons for failure in new ventures is that they simply run out of resources. But having a high emotional intelligence is directly related to a founder's ability to gain those precious resources, be that financial capital, human capital, or just generally building legitimacy."
And this becomes hugely important when considering the question, "Who should start a business?"
"The beauty is that emotional intelligence is 100 percent trainable," Jared says. "Someone can go from really low to really high on the emotional intelligence scale in a relatively short period of time."
Which means that entrepreneurship truly is an equal opportunity employer. "Anybody can be a successful entrepreneur," Jared says. "[And] if you've contemplated starting a business but thought, 'that's for other people,' the data is saying you're wrong."
Referenced article: https://doi.org/10.1002/sej.1377