What are the skills of a successful entrepreneur?

You know the famous ones: Richard Branson, Oprah Winfrey, Steve Jobs etc. And for every famous one there are a thousand less famous aspirers and emulators. As a society, we revere successful entrepreneurs, fascinated by the innovators and creators who pile all they have into the pursuit of their dreams. But what characteristics or abilities facilitate the entrepreneur’s astonishing self-belief and drive? What makes them different from us? What, we might ask, is so unique about the psychology of ‘the entrepreneur’?

Ex-U.S. President George W. Bush once said “the problem with the French is that they don’t have a word for entrepreneur”. He obviously didn’t know what entrepreneur was or where it came from. “Entrepreneur”, coined and popularised in 1800 by the French-Irish economist Jean Baptiste, is a combination of two Latin words: “entre”, to swim out; and “prendes”, to grasp, understand, or capture. It is this double meaning I’d like to emphasise, because the nature of ‘swimming out’ and ‘grasping’ speak to specific psychological qualities of the entrepreneur.

Just as one might swim far from the shore, venturing boldly into unknown or unpopulated waters, the entrepreneur’s tendency to ‘swim out’ signifies their propensity for risk-taking. This propensity, in psychological terms, strongly correlates with a need for high cognitive flexibility.

Cognitive flexibility refers to the brain’s ability to transition from thinking about one concept to another. In essence, it describes the power we have to positively influence our thought patterns and, subsequently, our behavior – an ability which can be learned and enhanced. High cognitive flexibility is the psychological trait that supports many of the qualities successful entrepreneurs display, particularly their openness to experience and tolerance of uncertainty.

The more cognitively flexible we are, the more open to experiences we are. The ability to try new things, listen to new ideas, and diversify our network is vital for entrepreneurship. Stanford University economist Edward Lazear found in a 2005 study that variety in education and work experience was the most important trait that distinguished entrepreneurs from non-entrepreneurs. Furthermore, a 2013 study by Uschi Backes-Gellner of the University of Zurich and Petra Moog of the University of Siegen in Germany found that a diverse social network was also important in distinguishing students who would go on to become entrepreneurs.

The need for network diversity and openness to exploring unconventional collaborations is what, as shown by Alex Pentland’s Social Physics, generates creativity and growth. Not only must these qualities be endemic for the entrepreneur, who needs to ‘swim out’ in order to get their product or idea off the ground, they must also lay at the heart of any organisation’s culture.

High cognitive flexibility also supports another key psychological trait in the entrepreneur: tolerance of uncertainty. When ‘swimming out’ into the unknown, starting a business from scratch and peddling an idea or product, there is obviously a lot of ambiguity surrounding the company’s cash flow, their place in the market, their branding etc. The ability to manage the pressure and stress such uncertainty precipitates while confidently make decisions with incomplete or ambiguous information is crucial for entrepreneurs.

It’s likely that the best and boldest entrepreneurs perceive ambiguous business situations as desirable or enjoyable, seeking out uncertainty and willing themselves to master it like a bungee jumper scouring for higher leaps. The challenge of overcoming ambiguity and precariousness need not be overwhelming or stress inducing, but motivational. It is all about how we perceive a situation, about how we frame and thereby imbue a situation with meaning, understanding that it’s not what happens but the view we take of it that governs our physiological and psychological reaction and subsequent behavior. This requires a high level of cognitive flexibility and – in order to make good decisions – rational optimism, both of which can be learnt and improved with cognitive and behavioural tools and techniques.

Also key to high tolerance of uncertainty, and therefore to the entrepreneur, is an internal locus of control. This also pivots on ‘the view we take’, since internal locus of control refers to an individual’s perception of the causes for events in their life. An internal locus of control means we believe that, within reason, our environment is controlled by our own actions; luck doesn’t determine what happens, while success and failure result from our abilities and experience. This can increase an entrepreneur’s comfort in making business decisions. At times, however, this can have negative consequences since understanding that your actions are the cause of certain effects can increase a sense of personal failure if things don’t turn out the way we imagined or would have liked, even if there are good reasons for this occurring. But this is where resilience – possibly the foremost entrepreneurial trait – comes in.

Resilience feeds into and is supported by all of the aforementioned qualities. It describes the ability to bounce back quickly from adversity. To be highly resilient, it helps to be both cognitively flexible and, importantly for entrepreneurs, to possess a sense of direction and purpose. Setbacks are inevitable, but if we have a strong purpose behind our actions – a core belief in the value of the task at hand – we are more likely to quickly recover from setbacks. This, as Viktor Frankl demonstrates in his seminal work Man’s Search for Meaning, inflects random actions and inclement circumstances with a sense of meaning, placing them within a larger scheme, helping us make sense of complex situations and find solutions.

So, where does this leave us in our analysis of the entrepreneur’s psychology?

Well, the entrepreneur undoubtedly possesses a high level of cognitive flexibility, which feeds into their being open to new experiences, eagerness to overcome challenging circumstances, and their ability to tolerate uncertainty and ambiguity. Supporting all this is their remarkable resilience, which includes an ability to see opportunity in setbacks or in scenarios where others see none, to rationally reassess adverse circumstances, and focus on a clear purpose. Importantly, these are all highly protective traits that buffer the entrepreneur against psychological illness that can burgeon when the stakes are high and they come up short. This protection is necessary to enable them to thrive.

It was thought for a long time that the entrepreneur was an innately unique individual, a psychological übermensch set apart from non-entrepreneurs, those laymen who could only dream of being spurred by such ambition, drive, daring, and resilience. However, developments in psychology and neuroscience have shown that the qualities outlined above can be learnt and developed on an individual and group level, since we all sit on a continuum for each of them. If we are inhibited, it is often due in part to our perception and attitude, our mindset, which can be altered by gaining a greater understanding of the science behind these processes. Thereafter, these abilities will be enhanced and can be applied in all areas of life, benefiting performance, quality of life, and wellbeing.