A study out of Harvard University found that first time entrepreneurs have only a 22% chance of succeeding. This likely won’t surprise many people unless of course you are one of the countless dreamers who parade their sure-fire business plans on CBC’s Dragon’s Den each and every week. Simply stated, an awful lot of things have to go right for an entrepreneurial endeavor to be successful, however success is defined.
What might be a little surprising is that second time entrepreneurs, those whose first companies succeeded, have only a 34% chance of succeeding. In other words, of those who triumphantly navigated the business maze the first time, only one in three will be able to do it again a second time. Though such odds do not inspire confidence, in the hiring game that I play in, companies in the market for an entrepreneurial CEO or senior executive will usually take those extra ten percentage points and pick the one-time winner over the no-time winner almost every time.
And what about those entrepreneurs whose first time endeavors fail? Turns out their chances are not much better than the first time entrepreneurs. The Harvard study pegs their chances of success at 23% only a single percentage point greater than the neophyte entrepreneur. This runs contrary to the pervasive view that failure is as formative or instructive as victory. It suggests that many entrepreneurs in fact learn little from their setbacks.
Most individuals that I interview have tasted a combination of success and failure in their careers and so evaluating their likelihood of future success is more than a game of probabilities. I have to admit that I am wary of those who claim to have never failed as they are often dishonest, untested or blinded by hubris. Similarly those who have never tasted success must, after a while, be evaluated for the extent to which these consistent outcomes point to something in them. But for the vast majority of others, including one-time winners and one time losers, the key consideration is the interaction between how these individuals went about their business, why they went about it in that manner, how the outside world interacted with their best-laid plans, what they learned, and how those lessons will be applied going forward.
I am not suggesting that the willingness to reflect and learn is more important than talent, specific experience or intellect in differentiating candidates. What I am suggesting is that evaluating candidates on the basis of whether they won or lost in their last endeavor is unfair. Success or failure bears witness to the fact that the entrepreneur played the game. And while that experience alone may improve their game going forward, it is those individuals who take the learning most seriously who will benefit most. Those are the same qualities coincidentally that pull certain first time entrepreneurs to surround themselves with mentors, coaches, advisors and others to bridge the knowledge gaps thus enhancing the likelihood of success.
Success and failure are good teachers only if you listen to the lessons, make meaning of them and apply them going forward. Prior success is no more a guarantee of future success than failure condemns you to continually lose. It is what you make of those experiences that counts and when I interview people this is what interests me the most.
Robert Hebert is Managing Partner of Toronto-based executive search firm StoneWood Group (https://www.stonewoodgroup.com). He can be reached [email protected] or call (1) 416-365-9494 EXT 777