frauke schorr mindsets of successful entrepreneurs - aom publication 2010

Frauke Schorr, Ph.D.

MINDSETS OF SUCCESSFUL ENTREPRENEURS –

AN EXPLORATORY STUDY

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MINDSETS OF SUCCESSFUL ENTREPRENEURS –

AN EXPLORATORY STUDY

ABSTRACT

Learning from the experience of accomplished entrepreneurs helps aspiring entrepreneurs

and researchers alike to gain new insights into successful entrepreneurship factors. In a two-fold

research process we first explored the experience of becoming successful in entrepreneurship,

interviewing accomplished entrepreneurs on their journey of becoming successful. “What is the

experience of becoming a successful entrepreneur?” was the leading question of the first portion

of this study. This led to a second step, in which new insights emerged about how successful

entrepreneurs perceive, interpret, and make sense of situations and experiences. The main

question here was “What are some essential thinking and behavior patterns that accompanied

these entrepreneurs in becoming successful?” We categorized the mindsets of the research

participants into four distinct different groups: The Satisfied and Dissatisfied Grower mindsets

and the Satisfied and Dissatisfied Maintainer mindsets. In this paper, we introduce these

research-based mindset categories and suggest ways these can be used by the entrepreneurial

community.

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If one lives in Silicon Valley, Boston, Hong Kong, or Tel Aviv, one is surrounded by

people whose lives are implicitly or explicitly touched by entrepreneurs. Many have started a

company, been part of a start-up, or are thinking about pursuing an entrepreneurial career in the

future. Researchers agree that entrepreneurship plays a significant role in economic

development both locally and globally (Dobrev & Barnett, 2005; Farrell, 2001; Gakiya, 2004). It

is often viewed as the driver of the Unites States economy since “our economy is actually based

upon entrepreneurship, and history has proven that with each economic downturn, it is the

entrepreneurial drive and persistence that brings us back” (Kuratko, 2006: 483). This is in large

part the case because “entrepreneurs continue to spur new innovation and create employment”

(Small Business Administration, 2009: 8).

However, most entrepreneurs do not succeed in building businesses that create

sustainable growth. In 2008, the Small Business Administration estimated that while 627,200

new firms were established, 585,600 firms closed down their business the same year (Small

Business Administration, 2009).

Considering the significant impact entrepreneurship has on the well-being of the

economy, the need to understand entrepreneurial success factors is vital. It is particularly

valuable to study the entrepreneurial journey, including the development and growth of

entrepreneurs, because “studying a successful entrepreneurial process as such allows for a better

understanding of actual successful venturing processes” (Bouchikhi, 1993: 567). The

psychological make-up of entrepreneurs often takes center stage in such research since

“individuals are, after all, the energizers of the entrepreneurial process” (Johnson, 1990: 48).

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Thus, understanding the mindsets of successful entrepreneurs, including the “distinctive

viewpoints, needs, and agendas that determine how an individual views and engages categories

of events at work” (Culbert, 1996: 330) is a key to supporting entrepreneurs on their path so they

can create sustainable success.

Previous research exploring such aspects included the evolution of entrepreneurs from

novice to expert entrepreneurs (Ericsson & Charness, 1994; Krueger, 2007), noting that while

some individuals move from novice to expert, others do not. Those who evolved were able to

“connect the dots” in a more effective manner (Baron, 2006; Baron & Ensley, 2006) as their

experience increased. Other researchers investigated the influence of values, beliefs, attitudes,

and leadership during the entrepreneurial journey (Bann, 2007), or focused on how entrepreneurs

recognize opportunities, the role passion and obsession plays, how they use intuition and

improvisational behavior, and how they address inner development (Herriott, 2000; Hmieleski &

Corbett, 2008; Lander, 1999; Langenfeld, 1999; Taylor, 1999).

As Wadhwa, Aggarwal, Holly, and Salkever (2009: 4) wrote: “By understanding what

entrepreneurs think and believe, we hope to provide more insights into how to better support

entrepreneurs and create societal, political, and economic conditions that can more efficiently

foster entrepreneurship.” Focusing on the developmental and growth aspects of entrepreneurs

and investigating entrepreneurs’ essential mindset, including their attitude, beliefs, and

perceptions, is still a relatively new approach for research.

To contribute to the understanding of the process of successful entrepreneurship, we

explored entrepreneurial development in a two-fold research process. In the following section,

we provide an overview to the first part of the process, a phenomenological investigation of the

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experience of becoming a successful entrepreneur, using as a core question: “What is the

experience of becoming a successful entrepreneur?” The main focus of this paper is the second

portion of our research effort, which involved developing a new entrepreneurial mindset matrix

based on a heuristic research methodology that used as its core question: “What are some

essential thinking and behavior patterns that accompanied these entrepreneurs in becoming

successful?”

THE RESEARCH METHODOLOGIES

In this section we discuss the participant sample, selection criteria, age range, industries

the entrepreneurs worked in, and interview participation. We continue with an overview of the

transcendental phenomenological research process used for the first part of the research and

introduce the research findings. We then move to the second part of the research process to

discuss the heuristic research methodology we used and present the new entrepreneurial mindset

matrix that emerged as a result of the study.

Participant Selection and Sample

Our interest lay in interviewing individuals who had founded multiple businesses, of

which at least one survived the startup stage. Thus, our research focuses only on successful

entrepreneurs. Successful entrepreneurship was defined as being owner or co-owner of at least

one business at the time of the interview. Ownership was demonstrated by owning a significant

percentage of the business. Furthermore, several of the participants had businesses which had

shown consistent growth for at least 3 years, either in terms of revenue, profit, and/or in the

number of employees.

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Participants were selected via convenience and snowball sampling. Ten successful

entrepreneurs (according to our definition of “success”) agreed to spend at least one hour

participating in semi-structured interviews. They also agreed to review and approve the verbatim

transcriptions of the interviews, as well as to participate in possible follow-up interviews. The

interviews lasted between one and four hours. Most participants were interviewed face-to-face.

One was interviewed by phone.

Nine male and one female entrepreneur participated in this study. The age range was

diverse, as the youngest participant was 23 years old, and the oldest was 67. All participants

were serial entrepreneurs and founders of their entrepreneurial ventures. The number of

businesses owned by the 10 participants over the course of their professional lives ranged from 2

to 42. Participants pointed to an increase in employees and revenues during ownership of their

companies as the measurement of their entrepreneurial success.

The types of businesses represented were quite diverse, including business consulting,

communication training and seminar businesses, a capital investment company, a web

technology appliances venture, a technology appliances company, a photography business, a

telecommunications company, a biometric services company, a boutique hotel chain, and a

biotechnology company.

Transcendental Phenomenological Process

We selected Moustakes (1994) transcendental phenomenological approach, which

allowed us to investigate the experience of becoming a successful entrepreneur through the

subjective lenses of the participants. We assumed that the unique perspectives of the

entrepreneurs would shed new light on the evolution of successful entrepreneurship. Moustakas’

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approach was compelling, because of the way it established conditions for “disciplined and

systematic efforts to set aside prejudgments regarding the phenomenon being investigated… to

launch the study as far as possible free of preconception, beliefs and knowledge of the

phenomenon from prior experience and professional studies” (Moustakas, 1994: 22). Using the

transcendental frame helped us uncover the meaning and essence of the lived experience of

becoming a successful entrepreneur. Moustakas’ modified version of van Kaam's (1966) seven-

step analysis process provided the guiding frame for conducting the data collection and analysis.

The final themes that emerged from the participant group as a whole provided new perspectives

for understanding the experience and meaning of becoming a successful entrepreneur. Table 1

provides a visual representation of these final themes.

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Insert Table 1 about here

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The research process began with self-search, self-dialogue, and self-discovery, focused

on consciously receiving, accepting, and supporting what comes to the researcher as

“fundamental awareness” at this stage of reflection. The second phase of immersion draws from

experiences surrounding the core question of the phenomenological research: “What is the

experience of becoming a successful entrepreneur?” Based on the insights drawn from the first

core question, we wanted to explore the question: “What are some essential thinking and

behavior patterns that accompanied these entrepreneurs in becoming successful?”

During the initial portion of the research process, Author1 (who conducted the

interviews) noticed that the entrepreneurs seemed to employ several distinctly different thinking

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and behavior patterns – an insight that did not fit neatly into the phenomenological research

paradigm.

The notion that there might be distinctly different mindsets among the successful

entrepreneurs of this group presented a perspective on entrepreneurial success that was not found

in previous studies. In order to capture these new insights, the original phenomenological

research method was enriched with an additional frame that provided the methodological

foundation for the second part of the study: a heuristic research analysis as suggested by

Moustakas (1990, 2001) in order to explore and describe the mindset patterns perceived among

the participants.

Heuristic research process

Moustakas’ heuristic analysis process is comprised of the following seven phases that

unfold in an informal, intuitive manner: 1) Initial engagement; 2) Immersion; 3) Incubation; 4)

Illumination; 5) Explication; 6) Creative synthesis; and 7) Validation of heuristic research.

In alignment with Moustakas (1990), this second step should include interactions with

people, hunches, dreams, intuition, and a self-dialogue. Following this phase, when no further

significant new information emerges, the third phase of incubation takes place. In this phase,

Author1 utilized intuition and tacit knowledge, defined as “the deep structure that contains the

unique perceptions, feelings, intuitions, beliefs, and judgments housed in the internal frame of

reference of a person that governs behavior and determines how we interpret experience”

(Moustakas, 1990: 32) to make connections between the data derived from the

phenomenological analysis process and the main research question of “What is the experience of

becoming a successful entrepreneur?”

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This led to the next stage: illumination. In this stage, new understandings of the

phenomenon emerged, which were then envisioned as holistically as possible in the explication

stage. The final portion involved expressing insights in a creative synthesis of the data, which

led to the distinctions that we labeled the Grower and Maintainer mindsets. We approached the

data using Moustakas (1990: 24) notion of indwelling, described as “conscious and deliberate,

yet it is not lineal or logical. It follows clues wherever they appear; one dwells inside them and

expands their meanings and associations until a fundamental insight is achieved.”

In the next section, we introduce a matrix that characterizes four distinct mindsets that

emerged from the patterns we observed. We conclude with suggestions for future research.

FOUR MINDSETS OF SUCCESSFUL ENTREPRENEURS

As we analyzed the interview data, we began to perceive distinct patterns among the

entrepreneurs’ reflections on their paths. The best term for describing what we saw is that of a

mindset, defined as “distinctive viewpoints, needs, and agendas that determine how an individual

views and engages categories of events at work” (Culbert, 1996: 330). We found that there

seemed to be common mindset themes according to which the entrepreneurs perceived,

interpreted, and responded to situations and experiences.

We coined the term Growers for those entrepreneurs who perceived their path as an ever-

evolving, continuous process. In their reflections on their entrepreneurial path, these

entrepreneurs described how they utilized achievements as stepping stones for new endeavors.

As they explained it, reaching certain success “plateaus” allowed them to access “more possible

resources” and “more foundation” from which they could “widen the bandwidth” and grow and

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involve to the next level. They accepted and actively sought new roles, most often in leadership,

and evolved in their current roles, always seeking a new level.

On the other hand, Maintainers described their achievements as plateaus that they sought

to preserve. Through their reflections of their entrepreneurial journey it became apparent that

they were mainly concerned with sustaining a certain level of success. Their businesses might

have shown growth comparable to those of the Growers, but the concern of these entrepreneurs

was to maintain the already achieved success rather than to expand their business. For example,

one entrepreneur in the Maintainer mindset recalled a situation where the current success level

was threatened by someone trying to steal intellectual property. This entrepreneur put

considerable energy into preserving and protecting the existing achievements to maintain the

current level of success.

Many entrepreneurs in the Maintainer mindset refrained from taking on new roles or

considering other people’s opinions for business advice. One entrepreneur with this mindset

stated: “I do not take the expert opinion” in order to remain “in charge of what I do with nobody

telling me what to do.” Another added that being in the role of an industry expert allowed him to

stay in complete control of interaction with clients, ensuring that business was conducted exactly

how he envisioned it. Instead of seeking new challenges, entrepreneurs in the Maintainer

mindset preserved their original roles of industry expert and entrepreneur.

Table 2 highlights the insights of these Grower and Maintainer mindset categories.

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We perceived sub-categories within the Grower and Maintainer mindsets as well. An

attitude of satisfaction versus dissatisfaction appeared to impact how these entrepreneurs

experienced becoming successful, especially regarding their own role, perception of control on

their business, and motivation. Some entrepreneurs felt satisfied and content with their

entrepreneurial journey. The satisfied Growers and Maintainers seemed somewhat detached

from success, per se, not experiencing the achievement of success as a main focus of their

actions or part of their identity. While acknowledging previous achievements, entrepreneurs

with this attitude seemed either to enjoy challenging themselves continuously with further

growth, focused mainly on the present moment (Growers), or they enjoyed maintaining their

current level of achievement (Maintainers). As they reflected on their journey, their focus was

predominantly on the present time. For example, one entrepreneur in the satisfied mindset

recalled that he was driven by “being challenged and finding solutions to challenges and being

passionate and happy and satisfied.” Another said that his achievements made him feel like he

did “something useful.”

The dissatisfied Growers and Maintainers on the other hand seemed more attached to

achieving success. They often had difficulty acknowledging their existing achievements as

successes and pointed out things they still needed to achieve. Dissatisfied Growers talked about

needing to challenge themselves towards further success by continuously staying “on the edge”

and focusing on future steps, outlining the urgency of continuous self-challenge: “I think that if I

stop taking risks then I start to die.” Dissatisfied Maintainers focused on past achievements with

a desire to either gain back such success levels or maintain the level of achievement. In neither

case did they focus on the present in the same way as the satisfied Growers and Maintainers.

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The process of intuitive heuristic analysis enabled us to develop these distinctions which

in turn helped us to perceive key differences among the participants with regard to how they

attributed meaning to success. The Entrepreneurial Mindset Matrix highlights how entrepreneurs

with a Grower and a Maintainer mindset were split into subgroups of satisfied and dissatisfied

attitudes, based on the focus of their attention and appreciation of their achievements. Table 3

provides a visual representation of this phenomenon.

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The most successful entrepreneurs tended to be Satisfied Growers. A distinct “in-the-

moment” focus became apparent as they reflected on different situations, learnings, and

experiences of their entrepreneurial path. This seemed to be paired with general contentment

with their entrepreneurial past and present, combined with continuous curiosity and drive to find

positive challenges to grow and develop themselves and their companies in new and meaningful

ways in the future. Satisfied Growers generally had the most successful entrepreneurial careers

in terms of business growth and number of businesses owned out of the entire participant group.

It is interesting to note that age did not seem to be an indicator for any of the mindset

categories. For instance, some younger as well as older participants displayed Maintainer

characteristics (satisfied as well as dissatisfied), while others were found in the Grower

categories.

IMPLICATIONS AND FUTURE RESEARCH

More research is needed to understand the journey of successful entrepreneurs and in

particular their mindset – how they perceive, interpret, and make sense of situations and

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experiences as they grow and expand their businesses. We are interested in further developing

the initial insights presented in this paper on the Grower and Maintainer mindsets and their sub-

categories of satisfied and dissatisfied attitudes. Further exploration using a larger group is a

natural first step. Exploring the mindset themes in more depth could help both scholars and

entrepreneurs to better understand what is involved in becoming successful in entrepreneurship.

It would be useful to explore the level of success entrepreneurs reached within the

different mindsets, since there was a tendency for the most successful in terms of asset growth to

be Satisfied Growers. This would provide valuable knowledge for researchers and aspiring

entrepreneurs alike. Utilizing research methodologies such as grounded theory, portraiture, case

studies, or ethnography could bring different perspectives to the topic, focusing on alternate

aspects of the entrepreneurial experience.

A further study of thinking and behavioral patterns of successful entrepreneurs with a

Satisfied Grower mindset could provide new insights to questions that are valuable in

understanding the journey of successful entrepreneurs better: With what kind of attitude did

these entrepreneurs start their journey? How did the attitude shift over time? Did some

entrepreneurs always have a Satisfied Grower mindset? If they adopted it over time – how did

they experience the shift? What are entrepreneurs’ beliefs about their mindset and attitude

towards their entrepreneurial success? Do entrepreneurs themselves perceive their mindset as a

crucial support to becoming successful?

A research study that focuses on the thinking and behavioral patterns of successful

entrepreneurs in a Satisfied Grower mindset could help to develop a modeling process based on

people who possess such a mindset. Such insights could support aspiring entrepreneurs to

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transfer distinct elements into their own situation, adopting a Satisfied Grower mindset

themselves. Investors may also find it useful to learn more about the Satisfied Grower mindset

given that the Satisfied Grower entrepreneurs in this study were financially more successful than

entrepreneurs with other mindsets. This might contribute to decisions as to which entrepreneurs

to support financially.

CONCLUDING REMARKS

Previous researchers have provided considerable information about the behavioral

aspects of successful entrepreneurs: skill sets that matched specific market needs (Slaughter,

1996); a need for achievement (McClelland, 1987; Stewart, Carland, Carland, Watson, & Sweo,

2003); a desire to take risks (McClelland, 1987; Stewart, Carland, Carland, Watson, & Sweo,

2003) for establishing, sustaining, and growing a business based on opportunistic (Baron, 2006;

Berglund, 2006; Slaughter, 1996; Timmons, 1994), innovative ideas (Stewart, Carland, Carland,

Watson, & Sweo, 2003; Monaughan, 2000); and the goal of striving for maximum profit

(Schutjens & Wever, 2000). As a result we have gained an understanding of what behavioral

patterns comprise a successful entrepreneur.

We suggest that an exploration of the mindset patterns of entrepreneurs on the journey of

becoming successful provides additional insights that can be linked with such behavioral

information. When we learn about the internal processing of successful entrepreneurs, how they

view and think about behavioral aspects such as decision-making or risk-taking, we gain new

knowledge about what precedes the actions that lead to success in entrepreneurship. In other

words, by investigating the mindset of successful entrepreneurs we are eventually able to get to

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the source of what translates into the measurable and observable aspects that are identified as

successful entrepreneurs’ behavioral patterns.

When we began to distinguish what we call the Grower and Maintainer mindsets, we

were able to identify what made some entrepreneurs in this study more successful than others.

Additional research applying these concepts may help to further decipher the complex process of

becoming a successful entrepreneur.

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TABLE 1

Main Themes among All 10 Successful Entrepreneurs

Item Description

1 Gaining direction and purpose through emotional connections with supporters

2 Creating commonly shared visions and values to align self, business, and

stakeholders

3 Embracing and fostering new roles, skills, and resources to develop the business

4 Active self-development through self-challenge and self-reflection

5 Making unique contributions by continuously linking entrepreneurial actions to

own values, beliefs, and interest areas

6 Achieving long-term goals by continuously identifying, reflecting, and

adjusting short-term goals

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TABLE 2

Grower and Maintainer Mindsets

Growers Maintainers

Success is perceived as a continuum Success is attributed to specific moments

in time

Becoming continues Becoming ends, being starts

Success evolves

Success is attained

Achievements serve as stepping stone for

new endeavors

Achievements are perceived as plateaus

that need to be preserved

Evolve with new roles, grow into roles Stay within original roles, refrain from

new roles

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TABLE 3

Entrepreneurial Mindset Matrix:

Experiencing Satisfaction or Dissatisfaction as Growers and Maintainers

Satisfied Dissatisfied

Growers Focus on present Focus on the future

Somewhat detached from success,

not part of identity

Attached to success, part of identity

Motivated by internal drive Motivated by internal pressure

Maintainers Focus on present Focus on the past

Somewhat detached from success,

not part of identity

Attached to success, part of identity

Motivated by internal drive Motivated by internal need

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