entrepreneuria

crea
The only sc

28 2007 Vol 2 Iss 2

 THUMBNAIL New research has found that, of all the
factors that influence the success of an entrepreneurial
company, there is one that dominates: the creativity of the
entrepreneur driving the company. Why? Because many
times along its journey, an entrepreneurial company finds
itself stuck between a rock and hard place, and it takes
a lot of creativity to figure its way out. Entrepreneurial
creativity has several dimensions that we touch on briefly.
Surprisingly, there is currently
no conclusive evidence that business education, best
practices and business plans are significant determinants

al
in entrepreneurial success.

tivity
cientific predictor of your success
Content by Dr. Ed McMullan • Interviewed and edited by Claudia Sammer

2007 Vol 2 Iss 2 29

What does it take to make a
company successful?
The list of possibilities is long – good products, customer relations,
financing, experience, best practices, management education, creativ-
ity, luck, partnerships, visionary thinking to name a few –but each
entrepreneurial situation is different, so it is a complex challenge to
figure out what really makes a difference.
The answer itself may actually be simple; the best substantial scientific
answer available so far is:
The man who can explain this answer is Canada’s Dr. Ed McMullan,
Professor of Innovation and Entrepreneurship at the University of
Calgary’s Haskayne School of Business. Dr. McMullan has also been an
entrepreneur himself, twice. This article is a précis of our interview with
him.
According to Dr. McMullan: The creativity of the lead entrepreneur —
one person — is the factor most likely to determine the outcome of
entrepreneurial ventures. This insight is based on scientific evidence

THE SINGLE DOMINANT

derived from, not a single study, but a hundred or so related studies
in the area of business and psychology. Only by looking at the studies
all together can you derive their cumulative message — so it’s a very
FACTOR PREDICTING THE powerful conclusion. And, creativity isn’t just explaining company suc-
cess, it’s PREDICITING it! Very few factors in business have this power.

ENTREPRENEURIAL {How much creativity do you need?} The way I look at it, it depends on
your aspirations. If your aspiration is to paint houses, your demand for

SUCCESS OF A creativity is probably not very high. If your aspiration is to develop a

$100 million high-tech firm, your demand for entrepreneurial creativ-

COMPANY IS THE ENTRE- ity is very high. And it’s especially high for high tech because there is a
demand for innovation as well.

PRENEURIAL

CREATIVITY
OF THE PERSON LEADING
THE COMPANY.
WE ALSO FOUND THAT
• People who start (a company) are more creative
than the ones who don’t start
(they buy or inherit)

• People who survive are more creative than the

ones who don’t survive

• People who grow are more creative than the

ones who don’t grow

• People who grow at very fast growth rates

are more creative than ones who grow at slower
rates

30 2007 Vol 2 Iss 2

 What else impacts ������

entrepreneurial success?
?
������
?
We asked Dr. Ed McMullan to grade other possible factors contributing to entrepreneurial success:

General education makes Business education doesn’t help

a difference startups and small companies
������ “Entrepreneurs don’t seem to benefit from business education….
“You don’t have to have education to be creative, but entrepre-
neurs benefit from education in general. Knowledge is important and is the medium entrepreneurs deal
{It can be in anything!} There was one study of US census ? data in. It’s hard to be a creative artist if you don’t know how to paint
that showed that entrepreneurs and or sculpt or something. But what we understand to be business is
self-employed people have a 50% higher payoff for education an exception… Entrepreneurship education could be an influ-
compared to employed people....There are all kinds of interest- ence on entrepreneurship but the way to do it hasn’t been figured
������ing counter examples (of successful entrepreneurs without out yet.”
? education) and I think creativity would explain a lot of it.
Entrepreneurial creativity is a much more powerful variable
than education (and at the moment anything else).”
������ Good business practices are not a
? factor with small companies
Business education is good for me- “There is reasonable doubt that good business practices – what
the text books are advocating and what the experts are saying
������dium and larger companies you need to do – are all that important. Just find a system that
? “It would appear that at some point (as a guess, around 50
������ works for you.”
employees) business education starts to
pay off.” ?
Business plans are not a vital factor
for a small company
Good business practices are “The evidence overwhelmingly is that if there is anything of
important for bigger companies
������value there, it’s very small.”
������“You can live with bad business practices until you have about
? 50 or 100 employees, and then the complexity of business is?
such that you better clean up your act.” Business experience
is not a factor
������Mentors are good “From what we can see, business experience doesn’t seem to
make much difference… It is not as surprising as you might
? “I would say creative people in any discipline can benefit from think that people don’t learn well from experience.”
interaction with a mentor.”

Entrepreneurs talking to other en-

Professional outside trepreneurs – unknown impact
assistance makes a difference “There’s nothing in the literature on that.”
“Especially in the startup stage. You can make a relatively
large impact on a firm with a relatively small amount of
professional quality counseling.”

2007 Vol 2 Iss 2 31

 What is
entr
In Dr. Ed McMullan’s description1 there are 5 differ-
ent personal resources that contribute to entrepre-
neurial creativity: motivation, personality, thinking

creati
style, intelligence and knowledge. Dr. McMullan
describes the complex idea of entrepreneurial
creativity in his new book for business academics;
here is the simplified description.

Motivation

12
It’s NOT about the money. Entrepreneurs are achievement- oriented.
They want to build a company and witness the benefits its products
and services provide to customers. Their motivation comes from
passion and love for what they are doing, and it’s an intrinsic part of
who they are.
In China the stress to make money is extreme. But, there was a study
in China on Chinese entrepreneurs that found that people who were
more money-oriented were actually less successful in building a
business, even in China.
It is counterintuitive, but it is understandable if you think of entre-
preneurs as achievement-oriented. They are like athletes trying to
win races. They want it for their own sake as an achievement.
Personality
Creative entrepreneurs
•

•
tend to be extroverts, which means they are revved up by inter-
actions and exchanges of ideas with other people.
have perseverance; most companies need years to find their
groove before they can take off. If they don’t give it that time,
they are likely to fail.
are self-assured people who don’t feel obliged to try to “fit in”;
they enjoy thinking independently; they want personal control.
People who are friendly, socially conforming, compliant, flex-
ible, trusting, cooperative, forgiving, tolerant, soft-hearted and
courteous are likely to have less entrepreneurial creativity. Less
obviously, the research shows that people who have a greater
desire for independence actually perform worse at entrepre-
neurial activities; it requires a happy combination -- entrepre-
neurs with a need to act collaboratively are probably most
successful.
take sensible risks.
• have a high tolerance for ambiguity.
• have high self-efficacy, which means that they do well with
most new entrepreneurship tasks.
• are attracted to complexity.
• will use the best ideas available to solve a problem; they don’t
care whose idea it is.

1
Dr. McMullan has taken the theoretical framework on creativity from leading psychologist Robert Sternberg and related it to the evidence on entrepreneurial success.
Dr.McMullan’s book is called A General Scientific Theory of Entrepreneurship

Source: Gary Will, Waterloo Tech Digest

32 2007 Vol 2 Iss 2
repreneurial
ivity?
•
•
•

•
34
Thinking Style Intelligence
Creative entrepreneurs
have an orientation toward innovation.
are more likely to rely on their intuition.
use deferred judgment, which means when someone tells them
about something, instead of just dismissing it because they
have no immediate need of it, they are able to play around with
the idea in their minds. They might find a good use for that idea
later on, so they keep it stored in their
back pocket.
are good at contrary thinking, which means when people tell
them something, they give due consideration to the opposite
opinion. Their minds are always questioning.
are good at analogical thinking, which means they can see
analogies between different, but roughly comparable, situa-
tions and, by comparing these relationships, they sometimes
get an insight others don’t see.
A person with high entrepreneurial creativity will have the following
types of intelligence that are not currently measured on IQ tests:
•
•
•

•
persuasive ability.
improvisational ability.
collaborative ability; the ability to form trust-based strategic al-
liances and partnerships is one of the things that distinguishes
entrepreneurial creativity from artistic creativity and scientific
creativity.
opportunistic imagination — it’s easy for them to imagine new
opportunities; it’s a muscle that continues to grow stronger the
more it’s used.

• don’t usually try to immediately solve a problem in the context

in which the problem is presented. Instead, they think about
the problem and see if it can be reformulated. Their experience
has shown that engaging in problem formulation increases the
quality and originality of their solutions — defining the prob-
lem itself becomes part of the problem’s solution.
• are good at brainstorming.

2007 Vol 2 Iss 2 33

 What do
venture
capitalists

do?
Knowledge

•
•
•
•
5
There are 5 specific types of knowledge that are probably useful
underpinnings for entrepreneurial creativity. It is interesting that
other types of business knowledge are not on this list and therefore
not important. They are:
• selling know-how
negotiation know-how
knowledge of the competition
knowledge of the industry
core technology know-how
All the deals that venture capitalists (VCs)
invest in have a highly select sample of very strong
entrepreneurs. However, the fact remains that only
2 in 10 deals typically become very big winners.
There was a study2 that took a look at finding a
way to improve the odds. It involved 36 venture
capitalists based in Texas and 68 investments
they made. The VCs gave 6 factors, based on
their experience that they thought distinguished
successful ventures from non-successful ventures,
and influenced their selection of deals: (1) the
entrepreneur’s desire for success, (2) creativity and
ingenuity, (3) courage, (4) enthusiasm and capacity
for work, (5) confidence in the field of the venture,
and (6) uniqueness of product or service relative to
the competition.
You would think that all these factors would be
important. However, after using a mathematical
model to look at the performance of the investments,
only one factor – the entrepreneur’s creativity and
ingenuity – could explain 71% of the variance in
performance in the startup ventures and 59% of
the performance of all the investments (startups and
ongoing ventures). In other words, the entrepreneurs
whose companies did exceptionally well could be
distinguished on the basis of having a high degree of
entrepreneurial creativity. This study was repeated
using different data and produced a similar result.
Another interesting result of the study was that
VCs predominantly only used 2 of those 6 factors
when selecting deals: “the entrepreneur’s desire for
success” and “the uniqueness of the product”.

2
Arshad Khan 1987, Arshad Khan and Ian MacMillan 1988

34 2007 Vol 2 Iss 2

No Fluff, Just the Real Stuff
W E S T E R N C A N A D A 2 0 0 7 S T R A T E G I E S F O R E N T R E P R E N E U R S B Y E N T R E P R E N E U R S strate g ies f o r entrepreneurs b y entrepreneurs
Volume 2 Issue 1 Western Canada 2007 Volume 2 Issue 2 Canada

Strategies For Entrepreneurs

by Entrepreneurs TM.

When entrepreneurs get together, they don’t typically talk about

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W E S T E R N
We declare that Cool Companies is now For
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MISSION-
we will help build the momentum in Canada for Canadians to embrace
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growth stage?
Profit-driven is s “must”; mission-driven

DRIVEN
is a higher goal (page 34)
Entrepreneurial
2 0 0 7

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is a higher goal

Entrepreneurial
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Walk the talk on CSR

Creativity
Communication with the front line (page 34)
Is the crash coming?
The Enrepreneur Interview with Evan Chrapko, The only substantial
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5 innovative companies scientific predictor
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www.coolcompanies.com Interview: Evan Chrapko,
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Cool Companies magazine gets into the heads of

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• incorporating values into daily business living

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F o r E n t r e p r e n e u r s B y E n t r e p r e n e u r s TM l i k e y o u
2007 Vol 2 Iss 2 35