Successful entrepreneurship and business requires four qualities: heart, smarts, guts, and luck. I've previously written about heart-dominant entrepreneurs, who bring purpose and passion in the business world, and smarts-dominant entrepreneurs who apply rationality and facts to build their business. Today, we'll discover another important trait that defines entrepreneurs: guts.

It takes guts to act, accept a risk, try something new. If the world were full of the most passionate and purposeful people with the brightest minds and the luckiest personalities but no guts to act, there would be no progress.

Nothing would happen. We might still be living in hovels and trying to catch fish with pointy sticks.

That's why guts-dominant people are all about sustainable action.

Two breeds of guts-dominant people

There are two basic breeds of guts-dominance.

The first is an actual propensity for risk-taking. These people derive excitement and engagement from being in a situation laden with meaningful uncertainty. Many of the entrepreneurs we have spoken to refer to the dramatic emotional shifts of their "above-average" jobs -- the higher highs and lower lows. (They love it that way, too.)

The second breed of guts is one we dub risk toleration. Unlike the members of the first group, people with this type of guts do not yearn for risk, yet willingly pursue their goals by understanding and accepting the risks inherent in a given decision.

This stoicism explains the heroic decisions of Polish Christians to shelter Jews in their homes during the Holocaust. In the end, these risk-tolerant individuals confront fear just as risk-seekers do, not with the risk-seeker's defiant smile but with grim determination.

The guts hierarchy

Guts on its own has an important hierarchy. It starts with the "guts to initiate": a certain threshold of guts to just start, even if logic and reason may suggest otherwise. This often stems from heart-guided vision and passion, and is felt through confidence and conviction.

The next layer we call the "guts to endure." This type of guts is about withstanding the test of time and persevering in the face of difficulty. It is a fine line between stubbornness and relentlessness.

At the peak of the guts hierarchy are the "guts to evolve." It's about the self-awareness and courage to look deep at who you are and what your business is, not letting ego get in the way of facts and being willing to reset and truly change the game if that's what the facts call for.

Guts also reveal themselves differently over the different time frames we call longitudinal and episodic. The longitudinal type of guts requires resilience and perseverance.

The late magazine publisher and Swedish journalist Stieg Larsson wrote three volumes of what he hoped someday would be a 10-part series without having first secured a publisher, leading off with "The Girl with the Dragon Tattoo." Ralph Lauren, the Bronx-born teenaged son of Ashkenazi Jews from Belarus, sold neckties to his classmates in middle school, worked after school to buy suits, and parlayed his vision and resilience into a business with 2010 revenues of $5 billion.

Every one of these entrepreneurs demonstrated guts over the long term. Each dealt with setbacks, solitude, derision, uncertainty, and opposition.

The crowning example of longitudinal guts may well be Nelson Mandela who, after being held captive for twenty-seven years as a political prisoner, spent the following five decades battling Apartheid in his native South Africa.

The guts we term "episodic" is about making tough decisions on your feet -- and confronting risks and challenging situations for the right cause and purpose. Guts-dominant show what they're made of when crisis times ask them to react quickly and conclusively.

Guts shows its face at those moments when a company announces layoffs, when a potential Bill Gates drops out of Harvard to follow his dream, or when a business builder commits to hiring people despite knowing he might not make payroll unless a contract that's currently pending comes through.

Military leaders have long defined guts not as blind fearlessness, but as the ability to put fear into perspective. General George S. Patton once said, bluntly, "All men are frightened. The more intelligent they are, the more they are frightened. The courageous man is the man who forces himself, in spite of his fear, to carry on."

In the business world, it takes guts to start an initiative, refuse to settle, and retain the courage of what you believe even when others don't. Pick your analogy: learning to fly while you're building a plane, jumping off a cliff while hoping to grab a parachute along the way, driving cross-country with the lights off.

Guts ask for a similar bull-headed conviction in the face of uncertainty.