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Chapter 3

Assessing Your Entrepreneurial CapabilityBy Nancy Parsons

Nancy Parsons is president of Tulsa-based CDR Assessments Group, Inc., which offers breakthrough leadership development and talent management assessments and services for global clients. Nancy provides coaching services for C-suite executives and key leaders, facilitates strategic executive team development and custom authentic leadership workshops, and trains and mentors executive coaches. In 1998, Nancy and co-founder Kimberly Leverage, PhD, developed CDR 3-D, which reveals insights about leaders, character-risk factors for derailment, and drivers/reward needs. The suite is in five languages and is used for coaching, development succession, custom training, teams, staffing decisions, research, diversity, and more. Nancy can be reached at nparsons@CDRAssessmentGroup.com.

Tou may be surprised to learn the real reason that only about 10 percent of entrepreneurs succeed is because very few people have the hard wiring to succeed. Many people have some of the inherent capabilities needed, but very few have the whole package. Before investing your life savings and your blood, sweat, and tears in a new venture, consider two things: 1) your inherent suitability as an entrepreneur and 2) your team’s make-up and balance.

Your entrepreneurial capability cannot be evaluated by considering your educational pedigree, skills, and experience as sufficient data for this all-consuming business leap.

Whether someone is the “right person” has more to do with character traits and innate capabilities than with specific knowledge, background or skills.

— Jim Collins, Good to Great

In addition, no matter how amazing and scalable your business idea may be, the sad truth is that most terrific ideas become mired into the quicksand of human failure or inherent shortcomings.

MUST HAVES

A would-be entrepreneur’s capability is best evaluated with psychometric measures, including a scientifically validated character (personality), risks for derailment, and motivational assessment instruments. It is important to note that personality characteristics are firmly rooted by the time an individual reaches adulthood. We develop these ingrained traits from infancy on up, based on our social/family environment and experiences on top of predispositions at birth. Once one reaches working age or adulthood, these character traits are fairly well set. Short of a mind-altering accident or injury, longevity studies of ten, twenty, and thirty years show that our character traits do not change in any marked way. That is why measuring character traits to determine entrepreneurial-fitness is the first hurdle to identify the “must haves.”

The myth espoused by many educators and consultants—that you can be anything you want to if you put your mind to it—is simply not true. We cannot teach fish to fly. So you need to find out what you are inherently well suited to do and then do (or develop) that.

Entrepreneurial leader profile ranges in Figure 3.1 highlight characteristics for success. The stars indicate where in the competency range a successful entrepreneur should be according to CDR Assessment Group’s research and profile studies.

Entrepreneurial Leadership Character and Competency Profile Ranges

Figure 3.1. The stars indicate the position a successful entrepreneur should hold for that characteristic. (Source: N. E. Parsons, CDR Leader & Entrepreneurial Character Profile Ranges (2002 Rev. 2014), CDR Assessment Group, Inc., Tulsa, OK.)

The most important character strengths for a successful entrepreneur are:

 Leadership energy: natural leader, aggressiveness, confidence, achievement, and goal-drive

 Intensity: burn in belly

 Innovative, strategic, and clever

 Compelling communicator: leader voice, initiator

 Courageous: bold

 Tough: indifferent to others

 Risk taker

 Adaptable: flexible, resilient

 Quick study: resourceful

 Moderately practical: logical

Many of these traits are obvious. However, what makes the entrepreneurial success profile so unique is that there are some unusual combinations or trait configurations needed that are not typical among leaders in general.

Clearly, you need to be a person who is leader-like. Being aggressive or pushy, having a sense of urgency, being confident as a decision maker, pushing ideas fervently, and being able to inspire others to act are part of the package. Achievement and goal drive are imperative too.

While having natural confidence as a leader and not regularly second-guessing decisions is important, having an “edge” on what is called the “adjustment” trait is critical. People with lower adjustment tend to have high levels of “burn in the belly” and tend to be self-critical, which provides them with extra intensity to out-perform. They dig deeper and are relentless in pursuit to prove themselves successful. So, achievement and goal drive alone fall short. A strong dose of intensity is required too.

The downside of lower adjustment is that people who are edgy and intense tend to be less stress tolerant. Therefore, they are prone to crack or become emotionally volatile. So, it is a fine line for the entrepreneur to maneuver. This is why having life balance and some productive outlets to relieve stress for the start-up entrepreneur can be pivotal to success. Since you will be on a tightrope in many ways, having a fair degree of life balance, support on the home front, and outlets for stress are needed. Undoubtedly, being innovative, seeing the future, and having the knack for creativity and cleverness are required to succeed. This is why the wannabe entrepreneur is moving forward in the first place— for the excitement of idea, the novelty, and the thrill of the chase. Risk taking is also second nature with the ability to turn on a dime to adapt to changing conditions or competitive forces.

Your leadership voice and talent as a compelling communicator can make or break the deal. This is where scientists, technology experts, and financial types often fall short. Being able to tell a story in a way that is convincing can be a tall order yet is essential for the entrepreneur. Being able to sell the idea and get the support of others—investors, customers, employees, and other stakeholders or contributors are musts. This character trait is called “high sociability,” and sub-factors of this trait that equip the entrepreneur well are known as “exhibitionist” and “entertaining.” Welcoming opportunities to be in the limelight, along with having the charm and the wittiness factor, will go a long way. If you are slightly lacking in this trait, you can develop some improved skills and techniques. However, if this is a sheer gap for you or sends shivers up your spine, another career path may be in order.

Being able to nurture, support, build, and sustain relationships and help others, on the surface, may seem like a reasonable trait for an entrepreneur. The truth is the highly successful entrepreneurs are not warm and sensitive. They tend to be tough, indifferent to the needs of others, and make difficult decisions on the fly. An example of one such leader with low interpersonal sensitivity advised me that, when it comes to tough people decisions, you just need to “rip them off like a Band-Aid.”

Be careful not to confuse warmth with charm. You need a leader voice with charm and charisma-like energy that pulls people towards your message. The positive, persuasive communications skills are like those exhibited by many politicians and trial lawyers. For the entrepreneur, having a deep sense of warmth, empathy, and caring tendencies towards others can easily thwart success.

People that care too much, often give too much. For example, they help others to the extent that it takes away from their own goals and time. Kind people struggle being direct. They hang onto problem employees too long before letting them go. Perhaps most injurious to the wannabe entrepreneurs who have a big heart is that they have difficulty making quick, objective, and sometime harsh people decisions. At times, entrepreneurs need to be pretty ruthless in their quest to succeed. It is far easier if they lack strong feelings or emotions for others that would become distractions or impediments to their goals. So, having a bit of the hard-ass factor (without being a total jerk) is more of an asset than a liability for the entrepreneur— providing you have the ability to communicate in a compelling way. You must be able to sell your vision and ideas. Frequently, charm is mistaken for caring. Entrepreneurs need the former.

The CDR Leadership Character Assessment is used for leader and employee selection, development, succession, team review, and more. This measures the “must haves” or inherent characteristics essential for success. Figure 3.2 is a graphic display of a candidate that, from this bright-side measure of strengths and acumen, appears to have potential to be a successful entrepreneur. Potential does not equal success, but at least the door is open.

CDR Character Assessment—Entrepreneur Suitability Score Ranges

Figure 3.2. This CDR Leadership Character Assessment is for a particular individual. The boxes represent the area within which the ideal candidate’s characteristics would fall. The diamonds represent this person’s results, all clearly within the boxes and thus, from this standpoint, having the potential of success in entrepreneurship. (Source: N. E. Parsons, CDR Leadership Character Assessment— Selection Report (1998, Rev. 2002, 2014), Tulsa, OK: CDR Assessment Group. Inc.)

CDR CHARACTER ASSESSMENT SCALE DEFINITIONS1

Adjustment

Calm, self-assured, and steady under pressure versus being self-critical, edgy, and intense performer.

Leadership Energy

Inclined to take charge, be leader-like, be interested in upward career mobility, and be highly competitive versus tendencies to avoid leadership roles, not to direct others, and to be unconcerned with upward mobility as a measure for success.

Sociability

Outgoing, enjoys social interaction, is extraverted, is stimulated by dialoging with others versus having more introversion tendencies such as preferring less social interaction, maintaining a lower profile, keeping to oneself, being quiet and perhaps shy.

Interpersonal Sensitivity

Warm, caring, sensitive towards the needs of others, interpersonally skilled, and perceptive versus being task focused, hard-nosed, and apathetic towards the needs of others.

Prudence

Practical, conscientious, self-controlled, disciplined, steady, reliable, stable, and logical in a steadfast way versus being spontaneous, risk taking, adventurous, potentially creative, adaptable, and inventive.

Inquisitive

Adventurous, clever, original, creative, imaginative, and curious versus being practical, task and process focused, detail oriented, and more down to earth.

Learning Approach

Typically seeking learning for the sake of personal enrichment and having academic interests versus being more interested in practical educational approaches, such as on-the-job training and hands-on learning.

If someone scores slightly outside of the ranges of the solid boxes above, then it is important for other leadership team members to have character profiles that shore up the gaps.

Entrepreneurial quests are not for the light-hearted, and a multifaceted, objective review is essential before moving forward. Fitting into the entrepreneurial character profile is step one. Obviously, if your character traits are clearly outside the ranges above, this would be a deal breaker, and you’d be well advised to pursue a different dream or quest. Keep in mind, from a character-trait standpoint, the above graphic is a narrowly found profile. In fact, this is not too far from a “delinquent profile” so all the more reason to analyze the propensity for success.²

There is more to consider too. Your motivation and inherent risk factors for derailment can make or break success as well.

MOTIVATION AND STAYING FOCUSED

Are you intrinsically motivated or driven to succeed as an entrepreneur? Following are ten “drivers and reward” facets. Of these, the first two with two asterisks (**) are key drivers to propel performance and perseverance to achieve the entrepreneurial goals; the next four with a single asterisk (*) are also very important. Lacking these, you may wander off course, lose interest, become more prone to frustration, or give up when things get tough.

CDR DRIVERS AND REWARD FACETS THAT DRIVE ENTREPRENEURS3

**Power and Competition

Indicative of a strong interest in goal attainment, pursuit of excellence, achieving status, strategic career planning, and being the best at any activity.

**Business and Finance

Interests in commerce and industry, especially budget and financial performance.

*Scientific Reasoning

Interests in scientific analysis and discovery, fascination with technology, and a lifestyle organized around the pursuit of knowledge concerning how things work.

*Fame and Feedback

Need for recognition and fame, receiving credit for ideas and accomplishments, and being well respected within one’s profession.

*Artistic Endeavors

A passion for the arts, strong interests in working in artistic fields, and a lifestyle organized around opportunities for creative self-expression.

*Amusement and Hedonism

Need for fun, personal indulgence, freedom to spend time in ways that are entertaining, and an overall philosophy of enjoying life to the fullest.

Humanitarian Efforts

Interested in helping the less fortunate and promoting social justice; having a lifestyle organized around a commitment to making a positive difference in society.

Companionship and Affiliation

Need for friendship, camaraderie, social interaction; the enjoyment of working closely with others in a team environment.

Moral Platform

Unwavering concern for moral standards, strong interests in spiritual matters, and a lifestyle organized around virtue and traditional values.

Safety and Security

Need for long-term financial and employment stability, insulation from harm, and avoiding or minimizing externally directed change and the unpredictable.

Most important are “power and competition” and “business and finance.” Being goal driven, pushing to win, and eagerness to compete can provide the energy to push forward, despite setbacks. Winning is not an option; it is an imperative. Having a good eye on the financials at all times is crucial. If you lack quantitative interest or financial focus, this can undermine your success.

One or more of the following drivers may also be beneficial, depending on the product or service the entrepreneur is launching:

 Scientific Reasoning – if your product is highly technical or medically or scientifically oriented.

 Fame and Feedback – welcoming the visibility and opportunities to shine in public.

 Artistic Endeavors – typically found with highly creative people.

 Amusement and Hedonism – having a sense of humor; having fun can impact the communications approach and relaxed presence of an entrepreneur. Also, having a sense of humor or a good belly laugh now and then can be a great help in minimizing stress.

An Entrepreneur’s CDR Drivers and Rewards Assessment Graph

Figure 3.3. (Source: K. R. (Brinkmeyer) Leverage and N. E. Parsons, CDR Drivers & Rewards Assessment Report, Tulsa, OK: CDR Assessment Group (1999).)

DON’T HAVES AND DEAL BREAKERS FOR ENTREPRENEURIAL SUCCESS

A high need for safety and security would be a pure deal breaker. Risk taking is essential. High humanitarian efforts likely is not a fit, as this could impinge on one’s ability to be tough and direct as needed.

RISK FACTORS THAT CAN DERAIL SUCCESS

Everyone has inherent risk factors, or ineffective coping strategies, that can undermine or sabotage success. These show under stress, conflict, and adversity. Frequently, entrepreneurs’ risk factors run amok due to the constant pressure they are under. These, gone unchecked, can throw even the most promising entrepreneurial venture off track. Also, certain risks are more acceptable, or less disruptive, than others. A 2013 Gallup study demonstrated how destructive these inherent risks are. They reported that 450 to 550 billion dollars are wasted annually due to leadership derailment behaviors.

The first five CDR leadership risk factors below in the list following are common traits that can interfere with success for the entrepreneur. While they may seem to go with the territory, some of these can cause the best business plans to crash. The other six risk factors may also contribute to problematic behaviors but are not as common. Of these, the last four high-risk factors may especially make the journey frustrating or impossible, as these traits may tend to inhibit a successful path.

Most entrepreneurs love pushing the limits, testing boundaries, and going outside the field of play regularly (rule breaker). They sell their ideas and push their solutions until well past the time when audiences’ eyes have glazed over (upstage). They are often odd, unusual in their thinking, and march to their own beat (eccentric). They may be overly self-confident, arrogant, full of themselves, and dismiss feedback since no one is as smart as they are (egotist). Many are mistrustful of others’ work or intentions and simply ask too many questions (cynics.)

INHERENT RISK FACTORS TYPICAL OF AN ENTREPRENEURIAL PROFILE4

1 Rule Breaker: Ignores rules, tests the limits, does what feels good, risks company resources, does not think through consequences.

2 Upstager: Excessively dramatic and histrionic, dominates meetings and airtime, constantly selling a personal vision and viewpoint, demonstrates inability to go with the tide.

3 Eccentric: Quite unusual in their thinking and behaving, perhaps whimsical, weird, out of social step or norms, peculiar in some ways.

4 Egotist: Self-centered, has sense of entitlement and superiority, takes credit for others’ accomplishments, hard-nosed competitor.

5 Cynic: Skeptical, mistrustful, pessimistic, always looking for problems, constantly questions decisions, resists innovation.

6 Hyper-moody: Unpredictable emotional swings, moodiness, volatility, potentially explosive outbursts, and vacillation of focus or interest.

7 False advocate: Passive-aggressive tendencies; appears outwardly supportive while covertly resisting.

8 Worrier: Unwillingness to make decisions due to fear of failure or criticism.

9 Perfectionist: Micromanages, clings to details, has high need to control, has compulsive tendencies, sets unreasonably high standards.

10 Pleaser: Depends on others for feedback and approval, is eager to please the boss, avoids making decisions alone, won’t challenge status quo, refuses to rock the boat.

11 Detached: Withdraws, fades away, fails to communicate, avoids confrontation, is aloof, tunes out others.

TEAM BALANCE AND ALIGNMENT

Clearly, fitting perfectly within the ideal entrepreneurial profile is a tough hurdle. Smashing entrepreneurial success, as noted in Chapter 1, is extremely rare too. What is essential for you as the emerging entrepreneur is having the self-awareness of your own propensities for success before making the leap and commitment. Do you understand your character traits, risk factors, and motivational drivers?

As mentioned before, it is important to have team members with the inherent attributes to make up the deficiencies in your traits. Your leadership team, or general management team, needs to be diverse in their personality characteristics on key leadership competencies. So, someone who has a true entrepreneurial profile needs a person with higher prudence on the leadership team to focus on process, implementation, regulatory issues, practical and administrative matters, and the like. Also, having a leadership team member with a bit more interpersonal sensitivity may be helpful to attract and keep top talent as well as tolerate the difficult or intense personality of the entrepreneur.

LEADERSHIP TEAM DIVERSITY5

 Homogeneous leadership teams fail more often than those with divergent capabilities.

 Talent balance should be aligned with business strategy and values.

 Talent cloning (often in one’s own image or comfort zone) is detrimental to business performance results.

 Talent gaps cause blind spots, competitive disadvantages, and performance weaknesses.

 When leadership teams lack broad-based inherent competencies, staffs frequently suffer from similar gaps.

 Nearly 70 percent of executives have egotist tendencies making them reluctant to agree to objective analysis that might reveal talent vulnerabilities

Be sure to gain a clear understanding of your inherent talents, risks, and motivators before investing your time, energy, and passion into what seems to be a tremendous business venture. Undoubtedly, you will analyze the business, technical, marketing, and financial aspects of opportunity carefully. However, keep in mind you are the most important factor to the business venture—so take time to assess your capability to succeed.

Last, by undergoing this rigorous entrepreneurial assessment of your inherent suitability and the leadership team analysis, you will have procured a scientifically validated evaluation and report that predicts success. Therefore, this up-front due diligence can add to the appeal of your deal for the serious investor. Moreover, this thorough review will give you the added confidence and performance and development insights to help you assure your venture is a huge success.

NOTES

¹ K. R. (Brinkmeyer) Leverage and N. E. Parsons, “Definitions Summary,” CDR Leadership Character Assessment Report, Tulsa, OK: CDR Assessment Group (1998).

² N. E. Parsons, “The Real Enron Risk: Energy Traders,” Risk Management Magazine Letters, August & November Issues (2002).

³ K. R. (Brinkmeyer) Leverage and N. E. Parsons, CDR Drivers & Rewards Assessment Report, Tulsa, OK: CDR Assessment Group (1999).

⁴ K. R. (Brinkmeyer) Leverage and N. E. Parsons, CDR Leadership Risk Assessment Report, Tulsa, OK: CDR Assessment Group (1998).

⁵ N. E. Parsons, Executive Team Performance Forecast, Tulsa, OK: CDR Assessment Group, Inc. (2009).