To make it, entrepreneurs have to believe in their abilities, their companies and in their products or services. Confidence can help them achieve their goals and entice others -- be it customers, investors or team members -- to join the cause. However, entrepreneurs also must be self-critical, both in private and public, to build successful, sustainable companies.
Yet, learning the balance between being sure of yourself and being honest with yourself about your limitations is a critical lesson for all founders. Here are a few pieces of advice.
The perils of overconfidence.
Being an entrepreneur requires confidence. Overconfidence, however, is something to guard against. Harvard Business School’s Noam Wasserman points out that overconfidence often can cause entrepreneurs to, among other things, overestimate the likelihood of their success over competitors, underestimate resource needs and ignore needed course corrections.
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In their book, Invisible Gorillas, Christopher Chabris and Daniel Simons drive home this point with the concept “illusion of confidence,” which can cause us to overestimate our own abilities. And, they note, the worst kind of overconfidence comes when we are relatively unskilled at a task (as a first-time entrepreneur might be at starting a company). This is the problem, as they put it, of being “unskilled and unaware of it.”
Pay close attention to where your confidence comes from and ensure that you are not assuming skill where you don’t have it.
Using self-criticism to your advantage.
Self-criticism can be a powerful way to guard against the blind spots of overconfidence. Here are some ways you can use it as a tool for success.
Honestly assess your skills. Engaging in an honest assessment of your skills and circumstances, particular in the early stages of building your company (perhaps even before founding), can help you assess whether you’re ready to start up and, if so, with whom you should found. An entrepreneur whose financial or personal circumstances make founding difficult may choose to delay starting the business, with a strategy in mind for achieving stability. One who lacks industry experience or connections, or who finds it difficult to talk to investors or customers, might seek co-founders to fill those shortcomings. Being honest about your strengths, and more importantly, your weaknesses, can ensure that you make a sound founding decision in more ways than one.
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Acknowledge and fill knowledge gaps. Insights into your strengths and weaknesses can help you in other ways, too. There undoubtedly are many things you know about your industry and the challenges ahead. But ask yourself: Where are the gaps in my knowledge? For example, do you understand the necessary aspects of intellectual property? What about the habits of your customer? Who are the partners you might need? Are you good at selling? Marketing? Identify your weaknesses and seek education that can help you enhance your knowledge. Doing so can help you get off to a strong start. Continuing to grow and learn can help you stay with your venture through the search phase to the build and execution of your company, advises startup expert Steve Blank.
Make your failures work for you. Paying attention to your shortcomings can help you make your failures work for you. Reflecting on and gathering your “failure stories” can help you assess where you’ve made mistakes, understand the steps you’ve taken to correct them and plan ways to avoid similar missteps in the future. Moreover, the right opportunity may arise to share these failure stories more publicly. A failure story, says Chicago Booth School’s Craig Wortmann, strategically told, could be compelling to customers and employees. Failure stories can demonstrate adaptability and a willingness to respond to setbacks.
Maintain a balance. When faced with the choice of emphasizing accomplishments or admitting shortcomings, most people would choose to highlight the positive. Generating a compelling career trajectory, demonstrating growth and creating a track record of success is important in just about any profession. For entrepreneurs, this also is important. But paying heed to overconfidence, identifying weaknesses and reflecting on instances of failure can help you to be a stronger founder.
Wendy E.F. Torrance, Ph.D, is director of entrepreneurship at the Ewing Marion Kauffman Foundation in Kansas City, Mo. where she leads the development of the recently launched Kauffman Founders School. Prior to joining the Kauffman Foundation, Torrance was assistant dean of freshmen and lecturer on social studies at Harvard University, where she also was appointed director of undergraduate student programs at the Weatherhead Center for International Affairs.