Entrepreneurial Leadership Traits

522749680 a5341fbd90 Entrepreneurial Leadership Traits

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Overview. Certain leadership characteristics allow leaders, especially entrepreneurs, to experience greater success. Many of these are psychological chacteristics are innate, not easily observable, but are important none-the-less. This page contains 9 of these Leadership Characteristics

“Success is going from failure to failure without loss of enthusiasm.” — Sir Winston Churchill

To keep going despite set backs, is the hallmark of all successful entrepreneurs and business leaders. While much has been written about the managerial challenges of running a business, less has been written about the characteristics underlying great leadership. This article describes nine psychological characteristics of great leadership.

Leadership Characteristic 1: Self-Esteem

Underlying everything, is a high sense of one’s own self-worth. Without that, individuals will never undertake tough challenges. If one does not have it, it’s important to develop self-esteem.

Leadership Characteristic 2: Need to Achieve

This need has been associated with entrepreneurs and leaders who constantly seek to perform at their best. For example, this leadership characteristic would have described Oliver Cromwell (1599 to 1658) the Lord Protector of England, who once remarked, “He who stops being better, stops being good.” The great Harvard psychologist David McClelland is most associated with need for achievement, a need learned by children primarily from their parents (McClelland, 1965).

Individuals high in this need are open to feedback, are goal oriented, seek to be unique, and strive for accomplishments based on their own efforts—characteristics important to effective leadership. They also take risks, not extreme risks, but moderate ones.

And what is moderate risk? Moderate risk means you have the ability to influence events, but don’t have complete control. The key is that individuals believe they will be successful, but it is not a sure thing.

Leadership Quality 3: Screening For Opportunity.

Like all individuals, leaders screen incoming information to separate the useful from the useless. However, successful entrepreneurs and business leaders screen incoming information to constantly seek new growth opportunities. They act like gold miners who must shift through tons of dirt to find those a few precious golden nuggets.

Unfortunately, the vast majority of business people seem blind to new opportunities and so continually miss new ways to grow the business. Some would argue that it is not really finding opportunity, but getting lucky. Of course there are individuals who seem to have the knack of being in the right place and the time. For example, I have a good friend George who had escaped communist Romania in the early 1960s and made his way to the United States.

After being here for a while, he decided to start a leather goods business. Putting together a few samples, he then went out to talk to buyers about the possibility of getting started. Getting an appointment with the very first buyer, he showed his samples and got this response, “I’ll buy everything you can sell me.” He asked why he was so fortunate and the buyer responded, “I wanted to drop our previous vendor since he was ripping us off” From this “lucky” start, George went on to develop an extremely successful business—becoming a millionaire many times over. One could argue that he was lucky or that he capitalized on an opportunity missed by competitors.

Leadership Characteric 4: Locus of Control

Successful leaders and entrepreneurs typically show a high internal locus of control (Lee, 2001). In many different studies done over the years, those with a high internal locus of control are more likely to experience success, than individuals who are high on the external locus of control. When someone perceives events as under the control of others, fate, luck, the system, their boss, etc. they have an external locus of control. Individuals high on the internal locus of control have a different assumption about how the world works. They assume that any success they experience is due to their personal efforts and that they have the ability to influence events. Interestingly, internal also assume failure was also their fault.

Leadership Characteristic 5: Goal Orientation

Businesses come and go, but those that last always share a common characteristic with their founder—a relentless drive to accomplish goals. They understand what the priorities are and continue to work at toward that goal, day in and day out.

For many, leadership characteristic of staying focused on a goal is a very difficult thing to do since life in the world of business tends to distract us. McKinsie in this book “The Time Trap” put it this way, “A man was struggling to cut down enough trees to build a fence. An old farmer came by, watched for a while, then quietly said, “Saw’s kind of dull, isn’t it?” “I reckon,” said the fence builder. “Hadn’t you better sharpen it? Said the farmer. “Maybe later,” said the man, “I can’t stop now—I got all these trees to cut down.” Our goal should be to continue to perfect ourselves, something we rarely have time for.

Leadership Characteristic 6: Optimism

Underlying successful entrepreneurial leadership is a boundless font of optimism that never seems to end. When faced with a problem, they view it as a challenge. When faced with a setback, they view it as a new direction, when told no, they say, “Maybe not now, but I know you’ll change your mind later.” This characteristic contrasts sharply with the vast majority of people who project a more pessimistic, defeatist quality. It’s this belief in the positive that serves as the foundation for dealing with the many set-backs one will inevitably encounter in the world of business.

Young children naturally have a positive view which seems to turn more negative as they age. Parents can easily test this in children by asking the question, “What will you be when you grow up?” Young children confidently say, exactly what they want to be. However, ask a teenager the same question and they aren’t so sure. 

Leadership Characteristic 7: Courage

Many professors talk about entrepreneurs as risks takers. But this leadeship characteristic is like saying snow is cold—it’s accurate but missing something. Another way is to say the same thing is that one must have guts. It requires a great deal of courage to build a company from the ground up.

Someone once explained that large organizations function like “womb” protecting employees from a harsh and unforgiving environment. It takes a great deal of courage to leave a corporate or government womb and strike out by oneself into the cold, cruel world of business. When one first starts a business, one is alone.

Leadership Characteristic 8: Tolerance to Ambiguity

This term refers to a person’s tolerance to uncertainty and risk. Entrepreneurs generally score high on this scale (Entrailgo, 2000).

As we age, we have a tendency to be more comfortable repeating a relatively small set of behaviors. For example, we eat pretty much the same food, shop in the same stores, watch the same programs, have lunch with the same people, listen to the same music. etc. One may change jobs, but rarely does one change industries. Its’ amazing how many people end up retiring in the same industry in which they got their first job

If one’s tolerance for ambiguity is low, one will gravitate toward large, established organizations—better still, work for the government where things change little if at all. In contrast to older, established organizations, entrepreneurial start-ups exist in an environment where almost everything is new and many things have not been done before. For example, no policies exist to guide action and start-ups typically lack the old timers who serve as the voice of experience.

Leadership Characteristic 9: Strong Internal Motivation—The “Fire Inside”

The motivation that drives our behavior comes from two sources: internal (intrinsic) and external (extrinsic). Intrinsic factors include constructs like needs, desires, motives, and will power. Extrinsic factors include any type of motivational influence from the environment such as rewards and punishments.

For entrepreneurs, the most important motivational factor is the intrinsic one. Entrepreneurs keep going despite the fact that employees tell them they are foolish, friends say they are wasting their time, and family tells them to get a real job. When the intrinsic drive goes away, so does any chance of success.

A few years ago, we put together a 160-hour program to teach very bright scientists and engineers how to put together an investor quality business plan. The thinking was that with the right knowledge and coaching, these future entrepreneurs would be able to get a seed round from investors and go on to build a fast growing organization. However, a number of these individuals never opened the doors. Why you might ask? It wasn’t that they lacked knowledge and brilliance—it was a lack of desire, what we called the “fire inside.”

Wrap-Up

The good news is that many of these leadership characteristics are learnable. For example, one can train the mind to recognize opportunity, optimism is a controllable state of mind (Seligman, 1988), and even the need for achievement can be increased (McClelland, 1983).

The bad news is it’s not easy to do so. After all, one can’t make a house strong with a good foundation and one can’t be successful in business unless one possesses certain personal characteristics. But where there is the will, there will be a way.

References and Resources

Entrialgo, Montserrat, Fermandez, Estaban & Vazquez, Camilo (2000). Characteristics of Managers as Determinants of Entrepreneurial Orientation,Enterprise & Innovation Management Studies, 1(2):187-2005

Lee, Don & Tsang, Eric (2001). The effects of entrepreneurial personality background and network activities on Venture Growth, Journal of Managerial Studies, 38 (4): 583-602.

McClelland, David (1955). Need achievement and entrepreneurship: a longitudinal study, Journal of Personality and Social Psychology. 1:289-392.

McClelland, David (1983). Human Motivation. New York: Addison-Wesley.

Seligman, Martin (1988). Learned Optimism: How To Change Your Mind and Your Life. New York: Pocket Books.


“How Easy to To Do Nothing, How Hard to Do Anything.” — Winston Churchill

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