Entrepreneurs, like other managers, have different management and leadership styles. Many entrepreneurs make their decisions based primarily upon their “gut”, their intuitive feeling about what the best choice should be. On the other end of the spectrum, some work off of data points and metrics, trying to get as much data as they can to best predict the outcome of a given choice to maximize benefit and minimize risk.
I think the most effective management style is a combination of the two, but a balanced combination is a rare trait, and I’ve observed more entrepreneurs of the “seat of the pants” management style than metrics driven management style. Of the two characteristics, I think it’s easier to teach the ability to gather, analyze, and use metrics to make solid decisions than it is to teach intuition. The ability to look at a multitude of obvious and hidden data points and put those together into actionable conclusions that are more often right than wrong is uncommon and difficult to teach. There are many people who tend to think in this way that often have a hard time explaining their positions to those who need the solid data in front of them to reach the same conclusion.
The Myers and Briggs Type Indicator personality test does a decent job of capturing this specific trait in the Sensing vs. Intuition portion of their four category model. This specific dichotomous trait is described as: “Individuals who prefer sensing are more likely to trust information that is in the present, tangible, and concrete: that is, information that can be understood by the five senses. They tend to distrust hunches, which seem to come “out of nowhere.”:2 They prefer to look for details and facts. For them, the meaning is in the data. On the other hand, those who prefer intuition tend to trust information that is more abstract or theoretical, that can be associated with other information (either remembered or discovered by seeking a wider context or pattern). They may be more interested in future possibilities. For them, the meaning is in the underlying theory and principles which are manifested in the data.” This appears to capture the distinction between those who prefer to have solid metrics and data from which to base their decisions, and those who are more likely to prefer to take intuitive leaps in order to get to a conclusion that the data may not obviously present to the casual observer.
A perfect example of a successful entrepreneur who used intuition successfully is Steve Jobs from Apple AAPL +0.29%. Jobs developed and launched the iPad in the face of withering industry critiques including that it was neither a laptop nor a PDA, and that there was no market demand for the form factor that was offered. Despite those (mostly true) critiques, the iPad became a phenomenal success, spawning a new category of portable devices and changing the way in which millions of people conduct their daily lives.
Although a gut feel may be the driver for the creation of a new product, at some point a successful product driven business will require metrics to be able to manage the production, logistics, and profitable production of the product. examples of how entrepreneurs’ businesses will grow out of the ability to manage on intuition alone. At some point the tens of millions of iPads sold require solid tracking, marketing etc, rather than just a gut feel as to who will buy and how much they will pay. At this point managers who understand how to collect, understand and manage metrics are key to growing an innovative idea into a billion dollar business.
So for the entrepreneur who thrives on flying by the seat of his or her pants and has made enough successful leaps of faith to build a successful business but realizes their business is now too big to run on intuition alone, what to do? As I’ve mentioned in previous columns, hire to compensate for your weaknesses. If you a a big picture, strategic guru but can’t track your calendar to save your life, then hire attention to detail oriented managers who understand how to collect metrics and manage to them. The balanced management style of a cohesive team of these diverse personalities will lead to greater success than a management team that leans too far in either direction.