By Charles Braley and Gabe Koch
Starting and building a successful business is a bet against the odds. Faced with a stacked deck, entrepreneurs need to draw on all the self-confidence they can muster. And, for those who succeed, that faith in themselves often serves them well as they build their companies. Paradoxically, this very self-assuredness that has led them to success can also cause the entrepreneur to be overly confident, to their detriment. How the entrepreneur retains confidence in his or her ability to overcome obstacles while at the same time recognizing there are some obstacles ability and acumen alone can’t overcome is what we term “The Success Paradox.”
The common thread in companies facing the Success Paradox is an over-reliance on the confidence and foresight that helped the entrepreneur become successful in the first place. This can manifest itself in a variety of ways:
The Tribe of True Believers: Entrepreneurs often want to surround themselves with people who are as positive and optimistic as they are. This ”tribe of true believers” reinforces the entrepreneur’s confidence and can help propel the company through periods of difficulty. The downside to this is that an executive team of true believers might, with their optimism, fail to recognize risks that are best avoided in the first place or prepare for challenges that may arise.
Playing-a-Hunch: Entrepreneurs are famously instinct-oriented. Trusting their “gut” – that blend of experience and intuition– can lead to some great decisions. Unfortunately, the “playing-a-hunch” approach can also cause entrepreneurs to ignore evidence suggesting their decision might be wrong, or require course adjustments.
Just Around the Corner-ism: Sometimes success is achieved by holding on just a little longer. However, this same attitude can also cause the entrepreneur to continue to hang on to ideas that are not working out. In other words, sometimes the light at the end of the tunnel is the proverbial oncoming train.
Blood, Sweat and Tears Syndrome: This investment of the entrepreneur’s passion – “blood, sweat and tears” – can help make up for a lack of resources. Unfortunately, it can also lead the entrepreneur to continue to invest in ideas that are proving unsuccessful precisely because of how much effort they already have put into those ideas. Walking away from “sunk costs” is difficult, even when the investment is as simple as just dollars. When such costs represent countless hours and loss of time with family and friends, walking away can be the emotional challenge of a lifetime.
Working through the Success Paradox
Company owners caught in the Success Paradox can take a number of actions to help them improve their decision-making, all without losing the passion and uniqueness that brought their business to life in the first place:
Cultivate Doubting Thomases: While it is important to have positive, “can-do” people on the management team, it is equally as important that these managers have the willingness – and the encouragement – to share concerns about potential challenges facing the business.
Get Unbiased Perspectives: People who work for entrepreneurs often buy-into their “program,” especially if they are working alongside the entrepreneur day-in and day-out. This can lead to a lack of perspective. Routinely bringing in a “fresh set of eyes” with an unbiased perspective can help the entrepreneur see opportunities and challenges that might be missed. One of our clients routinely hosts an after-hours event with local business leaders and advisors: “It keeps things fresh and helps uncover opportunities and risks as well as potential solutions people may not come up with themselves.
Get Data, and Understand It: Gut instinct (something most successful entrepreneurs have) is great – but it is rarely a consistent substitute for good data, and good data analytics. Understanding what information is available – and what it can mean to the business – often is the difference between an entrepreneur who is thriving and one who is merely surviving. Combing through what can be huge amounts of data can be seen as a daunting task, but these days there are a number of tools and services that entrepreneurs can draw on to help them quickly and cost effectively turn mountains of data into high-quality insights to drive their decisions.
Have a Plan to Walk Away, and Be Willing to Stick with It: Successful gamblers usually have a plan on when they will keep playing and when they will walk away – and they stick to it. As one client who built his business into a leader in construction put it: “You don’t make it in this business by letting your losses build.” Our experience working with entrepreneurs suggests that to be truly successful in starting and building a business, one has to be both ‘arrogant’ and ‘humble’. The ‘arrogance’ is necessary to believe that one can do something others see as impossible. The ‘humility’ is critical because most great – and consistent – achievements require a willingness to listen to others and accept that one doesn’t have all the answers.
Encouraging team members to speak out about concerns, getting unbiased outside perspectives, utilizing data, and having a plan and sticking to it can all help the entrepreneur cope with the Success Paradox and soar to even greater heights of achievement.
Charles Braley is a director at AlixPartners, a leading global business-advisory firm. Gabe Koch is a vice president with AlixPartners. The opinions expressed are those of the author and do not necessarily reflect the views of AlixPartners, LLP, its affiliates, or any of its or their respective other professionals or clients. Stay connected at @.