What are entrepreneurs and business builders made of? Who should you bring to your team at different stages of growth, and why?
The answers, according to venture capitalists and business leaders Anthony K. Tjan, Richard J. Harrington and Tsun-Yan Hsieh, are contained their book “Heart, Smarts, Guts, and Luck: What It Takes to Be an Entrepreneur and Build a Great Business“, or HSGL for short. Tackling the human aspect of entrepreneurship, leadership and management, the book surmised that each of us are biased towards one of four traits – namely heart, smarts, guts, or luck – in our decision-making processes.
Encouraging business leaders to heighten their sense of self-awareness, HSGL blends psychology, entrepreneurship, and business strategy into a compelling new science of entrepreneurial leadership.
The epicenter of its thesis revolves around an Entrepreneurial Aptitude Test (E.A.T.) which determine how much heart, smarts, guts or luck you have. (Try it here – it’s quite fun and illuminating)
To supplement the E.A.T. and HSGL framework, the authors have developed “True North” questions for reflection. Spurring deep personal reflection, these probing questions include the following:
– Do you like your idea, but have no idea how it will make money?
– Are you willing to embrace your own vulnerability and humility?
– What is the most pragmatic way you can attack your business intent?
Let me now highlight the salient points of each attribute.
Three distinguishing traits are found in Heart-driven individuals: purpose (and passion); sacrifice and agape (self-sacrificial love); and nuance (the little actions veering towards obsessive perfection). Idea generators and cultural leaders, these “big picture” individuals have a strong sense of vision and values, helping to differentiate one business from another.
Commonly found in most business founders who take the greatest risks and reap the greatest rewards, Heart-driven individuals are more emotional than logical. They are occasionally blindsided by their obsession for their ideas and need to complement their passion with the right capabilities and market acceptance to succeed. The ultimate True North question here is this: If you have all the money you ever want, what would you choose to do?
Four dimensions of what the authors term “Business Smarts” can be found here, namely:
1) Book Smarts: people like the wizards of Wall Street (or Silicon Valley) who are masters at research, analysis, strategic planning, code and number crunching;
2) Street Smarts: the guy who has risen to success through “experience, tenacity and a few skinned knees”;
3) People Smarts: folks who can intuit how people will react in particular situations, prioritize relationships and develop talent; and
4) Creative Smarts: geniuses who are phenomenal at predicting and sensing patterns, kind of like Guy Laliberte (founder of Cirque du Soleil).
At its core, Smarts is about recognizing patterns and being able to grasp both macro and micro trends earlier and faster than most ordinary humans.
Epitomized by the icon of a lion, Guts is the courage to make things happen with the will to act, particularly in three critical junctures of an enterprise:
1) Guts to initiate: taking a leap of faith into the unknown and starting something new, despite an uncertain future;
2) Guts to endure: persisting and persevering despite the short-term difficulties, with the longer-term end goal in mind;
3) Guts to evolve: having the self-awareness and readiness to pivot, evolve or reset a business.
Restless and relentless, the Guts-dominant folks are not daunted by trials and tribulations. While some are born with it, others can acquire it through the right training and habits that compel one to face one’s fear.
Luck-dominant people embrace a “Lucky Attitude” characterized by humility, intellectual curiosity, and optimism. They also build a “Lucky Network” where they deal openly with people in relationships characterized by vulnerability, authenticity, and generosity.
While dumb luck and constitutional luck (where you’re born, who your parents are, etc) can’t really be controlled, the odds for circumstantial luck can be improved. By adopting the attributes of a lucky attitude and a thoughtful and expansive lucky network, the chances for a lucky outcome are higher. Moreover, a positive disposition is always useful as it increases the likelihood of “surprise” encounters of good fortune while downplaying the effects of bad luck.
Bringing it Together.
To bring it together, the authors introduce us to three business archetypes – founder, scaler and extender. At each inflexion point in the growth of a business (following Peter Drucker’s S-curve), different proportions of HSGL are needed. During the founding and extending stages, Heart and Guts may be more important while the scaling stage of continuous growth may require more Smarts. The book also describes what are known as “iconoclasts” – true geniuses who have it all such as Steve Jobs, Jeff Bezos, and our very own former Minister Mentor Lee Kuan Yew.
Towards the end of “Heart, Smarts, Guts, and Luck“, the authors provide a “bonus tips” section comprising eight Wisdom Manifestos. Culled from their years of experience, they include principles such as “Think big, start small, then scale fast”, “Be the best at something”, and “Accountability makes or breaks your culture”.
Written in an easily digestible format, “Heart, Smarts, Guts, and Luck” captures the essence of personal leadership. Delving deeply into the heart and soul of what true entrepreneurship is about, it questions fundamental tenets of our beliefs as business builders, leaders and managers. Highly recommended reading for anybody keen to understand themselves better.