The Advantage That Rookies May Have Over Serial Entrepreneurs
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Success can carry intellectual baggage. While having already led a successful venture can bring a businessperson credibility and access to greater resources, relying too much on prior experience can mask a lack of knowledge and impede the ability to learn and perform with a new venture.
A study from the IE Business School in Spain and the NEOMA Business School in France found that CEOs in S&P 500 corporations with former experience as a chief executive performed worse than those without experience. In another study of social-media startups, researchers found that ventures with experienced entrepreneurs onboard accumulated about $66,000 less in revenue and nearly $100,000 less in capital than those led by novices.
The first-time advantage.
First-time players, or rookies, can bring several advantages: They are unencumbered, with no resources to burden them or track record to limit their thinking or aspirations and they operate with a drive that propels them to scramble up steep learning curves, explore new terrain and innovate.
In rookie mode, an entrepreneur is lean and agile: Experimentation and iteration can result in many great ideas, pivots and brilliant moments.
But what happens when an entrepreneur is not longer operating with rookie smarts? As business growth advisor Verne Harnish said in an interview for Rookie Smarts, “In their freshman venture, entrepreneurs know nothing, so they make mistakes and learn. When they win, they win big."
Added Harnish: "This experience kills them the second time around. Confident that they know what needs to be done, they often misread markets and miss important signals.” Experience plus hubris makes for a deadly combination.
Remaining perpetually open.
Entrepreneurs who can sustain their success are perpetual rookies. Despite years of accumulated experience and knowledge, they retain their rookie smarts. They stay curious and draw on the power of learning to solve the new problems they and their firms face.
They don’t jump in impulsively or erratically. Instead they deliberately adopt an open mindset, much like Twitter and Square co-founder Jack Dorsey, who said, "I’m not a serial entrepreneur. I’m not a serial anything." For perpetual rookies, each time is their first; each challenge is unique.
Elon Musk, who founded companies as diverse as PayPal, SolarCity, SpaceX and Tesla Motors, exemplifies this learner’s advantage. Although certainly among the brightest minds of this age, he is not an expert in every field he’s entered. When asked how someone without a degree in aerospace gets away with billing himself as chief technical officer of SpaceX, he told CBS News, "I read a lot of books and talked to a lot of people, and I have a great team.”
One of the reasons Musk is a serial entrepreneur is that he is an obsessive serial learner.
Instead of focusing on their success and experience, perpetual rookies direct themselves toward new problems.
Richard Branson, founder and CEO of Virgin Group and successful serial entrepreneur, described the advantage of operating in the rookie zone: “We have started hundreds of new businesses, in most cases knowing next to nothing about the industries we were moving into. And our inexperience has always allowed us to focus on how we can do things differently, rather than on the reasons we cannot."
Added Branson: "This gives us freedoms that other businesses don’t have, constrained as they are by past lessons and industry history.”
Fortunately, rookie smarts are learnable. Whether someone is an experienced entrepreneur or a first-time innovator, rookie smarts can be sharpened with any of the strategies below:
1. Audit assumptions.
Revisit assumptions to find ones that might be holding the company back. Make a list of all the assumptions about the current venture. After listing them, review them and look for evidence to the contrary. Dump any assumptions that are obsolete.
2. Pose naive questions.
Ask questions that cut to the core and reveal fundamental objectives or needs. Pretend to learn an entirely new field (even if this is not so) and ask questions like an outsider.
3. Multiply expertise.
When faced with a challenge that falls in an area of personal expertise, avoid the temptation to jump right in. Reach out to at least five other experts with questions and keep digging and listening, until new patterns or possibilities are found.
4. Build a playground.
Create space for risk taking. Define two categories of work: tasks whose success must be ensured and those activities such that a possible failure could be recovered from. Let the team attempt the second tasks as if they were in a playground for experimentation for trying out rookie moves.
The best serial entrepreneurs are serial learners who can fend off hubris despite repeated success and mastery. So when moving on to a new venture, take the benefit of hard-won savvy. Just don’t forget to pack the traits that led to initial success.