The explosive growth that occurs when entrepreneurs apply their ingenuity to shape our world is what makes these brave men and women a vital economic force. But these inspired business leaders aren’t easily categorized. They come from all walks of life and a variety of educational and economic backgrounds and launched companies in every industry. Yet they, along with most successful founders, share a number of traits, values and talents.
We know this because EY has been celebrating entrepreneurs for the past 30 years. Our EY Entrepreneur Of The Year® Award has honored more than 9,200 of the most outstanding entrepreneurs in America for their vision, passion, courage and leadership in establishing and growing successful companies. Based on our research, we project that companies led by these business leaders from the past three decades would be responsible for approximately $1 trillion of revenue and more than 14 million employees in 2015*.
Seventy-five percent of their companies are still operating, outperforming the US market in revenue growth, job creation and longevity. Companies founded by Entrepreneur Of The Year Award winners also go public at three times the rate of US private companies overall.
What sets them apart?
Now, for the first time, we’ve quantified the accomplishments of these winners and identified some of the traits that set them — and their businesses — apart.
To understand their impact, EY conducted an extensive data analysis of past Entrepreneur Of The Year Award winners via quantitative analysis and surveys, then engaged Harvard Business Review Analytic Services to interview some of the alumni and summarize the cumulative findings. The results, published in The entrepreneur’s purpose, looks at what these successful founders have achieved and how they did it. And it provides valuable insights for entrepreneurs trying to grow and evolve their own companies.
Through the research we learned that successful entrepreneurs have several traits in common. For starters, tenacity. They stick with the companies they founded — 64% stayed 5–10 years, compared to 39% of non-award winners; 53% stayed 10–15 years, compared to 22%. In fact, our findings challenge the notion of “founder’s syndrome,” which refers to a founder who outstays his or her usefulness and winds up inhibiting the company’s progress.
Entrepreneur Of The Year Award winners also do something others often don’t — they learn from their past efforts and mistakes. In fact, for 46% of these entrepreneurs, this was not their first startup.
That quality was also described by Amy Wilkinson, a lecturer at Stanford Graduate School of Business and who studies entrepreneurship. She calls it “failing wisely.” Wilkinson found successful entrepreneurs avoid catastrophic mistakes by making a series of smaller errors instead, gathering information from those failures and figuring out what works (and what doesn’t).
De-risking risk
Although the popular image of entrepreneurs has them staring down risk with unshakable courage, these award winners actually take risk quite seriously. They are more likely to iterate many ideas quickly, see what works and then move ahead with the best concepts or approaches. And many winners have implemented sophisticated risk monitoring systems so they can identify and discuss what may be on the horizon. Perhaps more significant is the way these winners face those risks. They assess their opportunities based on knowledge of the risks each opportunity poses. Because these entrepreneurs both monitor and manage risk, they report that risk wasn’t a top challenge when founding their companies, and today, less than 15% say it is a major concern.
What is a concern, and has been from the moment they founded their companies, is finding the right talent. These entrepreneurs say it remains their top challenge, as the markets for talent tighten. Our award winners tend to build a company culture that is appealing because it is welcoming, but also imbued with values of integrity and accountability. Founders often personally meet every employee to ensure they understand they are important to the company.
The power of purpose
Yet one of the biggest takeaways from our research was how pivotal it is for entrepreneurs to see themselves as agents of growth and change, both in their companies and in the larger community. When we asked entrepreneurs to name one of their most important roles as founders, they said driving economic growth to create jobs. And what fuels that drive is purpose.
As Entrepreneur Of The Year Award winners demonstrate, a well-articulated and integrated purpose engages and empowers employees. Having a clear purpose helps businesses build a customer base, increase brand loyalty and drive revenue. Sixty-four percent of the 500 award winners we surveyed for this report have a defined purpose that has been critical to their success.
Take Ben Cohen and Jerry Greenfield, the creators of Ben & Jerry’s ice cream, who were named Entrepreneur Of The Year Award winners in 1991. They started their company with the belief that business should have a purpose beyond just profit. As the company grew, Cohen and Greenfield established a “mission” department to oversee their social efforts and make sure all areas within the company were living up to that corporate purpose. That purpose, filtered through all levels of the company, helps employees stay engaged with their work and invested in the company’s success because they are part of something bigger than themselves (or their next paycheck).
The lesson here? Pay attention to what’s worked for thousands of the world’s most successful entrepreneurs. Take the long view of your company and manage it that way. Learn from those small mistakes. Don’t make profit the goal, but rather one of many measurable metrics. Above all, be a purposeful entrepreneur. Knowing why you’re doing what you’re doing — and infusing that vision into every management decision you make — will allow you to navigate today’s challenges effectively and build a lasting legacy.
Mike Kacsmar is EY Entrepreneur Of The Year Americas Program Director.
*These 2015 figures were calculated by Parthenon-EY using average CAGRs for each respective 5-year award period. Because data was not available on all winners, some projections on company performances were made based on averages from those participants for which data was available.