Why Do Entrepreneurs Innovate Better Than Managers? 134
netbuzz writes "New research from MIT suggests that entrepreneurs innovate better than managers not because they try more often but rather because when they do try they apply more of their available brainpower to the task. 'We found, somewhat surprisingly, that managers and entrepreneurs did not differ in the probability with which they would undertake explorative (potentially innovative) courses of action. But when entrepreneurs did select explorative tasks, they used both the left and right sides of the frontal cortex of their brain whereas managers only used their left parts of the frontal cortex,' says the lead researcher, MIT Sloan School of Management Visiting Prof. Maurizio Zollo. This is an important difference, he notes, 'because the right side of the frontal cortex is associated with creative thinking, involving to a larger extent emotional processes, whereas the left side is associated with rational decision-making and logic.'"
Re:Obvious (Score:4, Informative)
As an entrepreneur who just finished raising a series a, I half agree with you.
It does take money to be an entrepreneur especially if you aren't getting paid. You need cash to live while you build the company and even extra cash incase it all fails and you need to get another job.
But it does not require one to be rich. Whats actually most important is access to people with money. In the form of professional acquaintances or friends. Be it personal wealth or corporate wealth.
People with money actually have a very series problem they are always trying to solve. How do I make more money with the money I have? Or at a minimum, keep the money I have safe.
Entrepreneurs offer people with money answers to both of these problems. A million dollars isn't going to 10x on its own in 12 months, but if my company works it does. That an entrepreneurs offer people with money something to be part of. Most of the high net-worth people investing in our company are excited to have something new to do. The money is just a technicality, they want to be part of seeing our idea succeed. They want to be that person that says, "ohh ___ company, ya I invested in them early on. It was clear they were going to win".
Re:Obvious (Score:2, Informative)
The investors (angels, VC, and institutional) I know — and I have known a few both down in Silicon Valley and up here in the Pacific Northwest — won't invest unless the entrepreneur is all in. As one of them said to me once "I a mortgage isn't on the line, they aren't worth investing in".
As to the main question Entrepreneurs take more risks, experiment with more wild and oddball ideas, and work well without a lot of structure. Which is also why most entrepreneurs make horrible managers. Once a startup passes a certain size the traits that were needed to get started become counterproductive to running and (more importantly) growing the company.
Some entrepreneurs can make the transition, but most can't. They tend to move on and start their next thing.
Actually, it's because (Score:2, Informative)
Re:coz they get more excited? (Score:5, Informative)
My father was an executive in a Fortune 5 corporation.
His most telling advice about managing was that the easiest answer for a manager was "no." His explanation was that as a manager charged with running a 4+billion (1960's) dollar operation, his first responsibility was to NOTlose the company's money; therefore risk avoidance was paramount. His advice for me when I was working in a company developing new processes to manage quality, was to explain to the managers how the process (or products, no difference) would LOWER the risks and enhance the manageability of the process. Thus, I would be communicating to the concerns of the managers.
Entrepreneurs on the other hand, he explained, are willing to take the risks to develop a new way to do something (or better, something to create an entirely new market or niche.) Thus, they judge the reward/risk ratio, rather than the other way around, and need to be communicated to in the engineer/developer style they need to be assured that theirs is the right path.
In time, each specialty needs the other. As the project becomes a product, and accrues the necessary infrastructure for support (not only technical) the entrepreneur needs to have managers used to ferreting out those risky aspects of running a mature business; capable of assuring the owners (not just the stockholders, but the process owners also) that their investment isn't in vain.