Do entrepreneurs think differently?

The question of whether entrepreneurs are born or made seems an increasingly common one.  Some believe that anyone can be an entrepreneur if they put the hard graft into it, whilst others believe that only a particular type of individual is cut out for the cut and thrust of the entrepreneurial jungle.

Saras Sarasvathy of the University of Virginia has joined the debate recently by comparing types of business person with chefs.  What exactly is it that makes entrepreneurs entrepreneurial?  Sarasvathy is one of the leading experts on entrepreneurialism and is the author of Effectuation: Elements of Entrepreneurial Expertise.

Together with Herbert Simon, her dissertation supervisor, she set out to eavesdrop on the thinking of the country's most successful entrepreneurs as they grappled with business problems.  The full thesis is included at the end of this blog, but for now lets investigate how she went about things.

After interviewing 45 leading entrepreneurs at length she believed she had stumbled upon a clear differential between them and other management professionals.

Sarasvathy concluded that master entrepreneurs rely on what she calls effectual reasoning. Brilliant improvisers, the entrepreneurs don't start out with concrete goals.  Rather they have a clear understanding of their personal strengths and the resources available, and use this information to develop goals on the move whilst reacting to any hiccups as they arise.

Corporate executives by contrast use causal reasoning.  They set clear goals and then seek the best ways of achieving that goal.  

Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible.

So are you an Iron Chef or a Swedish Chef?

ps, here's the full paper I promised earlier.

What Makes Entrepreneurs Entrepreneurial by Saras D Sarasvathy