Inc. Magazine recently released the Inc. 5000, the magazine’s annual list of the fastest-growing private companies in America. As part of the list’s release, the magazine published an article titled “Inside the Mind of the Entrepreneur,” a piece that explains what sets the CEOs of the top 500 of those 5000 companies apart from the pack.
For the article, Inc. 500 CEOs were invited to take the Entrepreneurial StrengthsFinder assessment, a test developed by global research and consulting firm Gallup to measure 10 significant talents in individuals that foster business creation and growth.
Over 30 percent of the Inc. 500 leaders took the test and, unsurprisingly, scored very highly. Compared with a national sample of entrepreneurs, Inc. 500 CEOs were particularly dominant in risk-taking, business focus and determination, three areas universally associated with business starts, survival and scaling.
While Inc. 500 CEOs are unquestionably great at quickly taking their companies to new heights, the article indicates that they’re not as talented at maintaining strong results over the long-term. From the piece:
In 2011, the Kauffman Foundation, the world’s largest organization devoted to entrepreneurship, investigated the fates of 1,300 companies that appeared on the Inc. 500 from 2000 to 2006. Kauffman found that in 2010, 40 percent to 50 percent of those businesses had generated less revenue than in the year they made the list. Five percent were on the slab. The economic downturn obviously contributed to those outcomes. But Kauffman’s findings suggest that, over time, the things entrepreneurs do to propel their companies onto the 500 may not prevent their decline.
What’s making these hot companies burnout in the long run? The article turns to Gallup’s three defined entrepreneurial “styles” – the way individual entrepreneurs prefer to operate – for an answer.
According to Gallup, Activation entrepreneurs are very action-oriented, focused on results, unafraid of risk, forceful and are constantly pushing people to improve. Strategic entrepreneurs take a more long-term approach, are highly creative and often question the status quo. Relational entrepreneurs are people-oriented, they have high social awareness, build mutually beneficial relationships and get to know their customers and employees on personal and professional levels.
Inc. 500 CEOs are overwhelmingly in the Activation camp. The article posits that this style, while a boon in the short-term, can hurt companies in the long-run. Broadly speaking, the forceful characteristics prevalent in the Activation style can hinder entrepreneurs from building the lasting, beneficial relationships so common for those with a more Relational style.
At First Flight, we understand how important it is to cultivate strong business relationships. There’s a lot to be said for getting off to a flying start, but if you don’t have the relationships in place to continue to grow your company 5, 10 or 20 years down the road, then that fast beginning doesn’t really count for much.
As a founder, it’s critical that you develop strong relationships to help your company. If you’re more in line with the Activation style, that’s ok. Just recognize it, and make a true effort to recruit people to your company capable of building lasting connections.
We’ve all seen our fair share of companies start quick, only to crash and burn. Avoid that fate. Be smart with your style.