By Greg Warnock

When I first became identified with entrepreneurship and investment, it didn’t take long for CEO’s to begin asking me about the path to successful entrepreneurship. They were interested in understanding what distinguishes a successful entrepreneur from a mere mortal.

In the early days, my response involved some mix of courage, risk tolerance, and a bias to act. Since then, I have come to realize that, while necessary, those conditions may be insufficient.

Can I Persuade You It’s Persuasion?

Over the subsequent decade, I was privileged to watch, at close range, a large number of entrepreneurs and CEOs plying their trades. They each had an approach as unique as a fingerprint, and each approach brought varying results. With observation, my thinking about entrepreneurial and CEO success became much more nuanced. I began to see a common thread — one related to persuasion.

Entrepreneurs are often operating in resource-constrained circumstances. As a result, their ability to persuade becomes paramount. They need to attract high-quality employees to whom they cannot afford to pay market rates. They need to recruit mentors and board members whom they cannot compensate, and who — to be frank — should probably never take on the personal liability. They must sell to customers when they are not the stronger incumbent, but rather an unproven alternative. They must secure credit from vendors when they are not credit-worthy.

There are an endless number of examples in which persuasion unlocks doors to opportunity and helps entrepreneurs amass the resources required for success. Does that mean persuasion is the necessary and sufficient attribute required for entrepreneurial or CEO success?

I’m afraid not. Persuasion is just another piece of the entrepreneurial puzzle.

Studying the Nuances

My experience and observations have led me to conclude that, most likely, no single attribute or factor leads to entrepreneurial or CEO success. In fact, the elusive nature of this question may have led me to re-enroll in the PhD program at the University of Utah.

The title of my PhD thesis is “The Adaptive Behavior of Entrepreneurs and Entrepreneurial Success.” It’s my contribution to chipping away at the edges of this complicated and multidimensional question. But here’s what I’ve learned in the course of putting it together: A close read of all the academic research on the matter only confirms the difficulty of reducing the issue down to discrete, accurate, and actionable factors that lead to entrepreneurial success.

More recently, I have begun to see the entrepreneur and CEO in the context of the many roles they occupy. These roles include leader, inspirer, accountant, fundraiser, recruiter, inventor, planner, and decision maker. I recently spoke to a group of students about this role-based context.

Off the cuff, I asked them the following question: “Of all the skills and roles that an entrepreneur/CEO might possess, which is most important?” I later posed it a little differently, saying, “If you had a magic wand and could tap an entrepreneur/CEO on the forehead — and from that moment forward, their judgment and execution would be perfect in one area, and in all other areas they would be average — number one, would you tap a forehead? And number two, what area of expertise or role would you promote to perfection?”

That line of questioning has been central to helping me identify a possible answer to this central question. Over the subsequent few months, with my focus framed in this way, I began to hone in on one thing that to me feels the most essential, most irreplaceable, and most unteachable. At last, I thought I might have a simple, compelling answer about the single area of expertise most valuable to the entrepreneur/CEO.

My Best Answer: The Ability to Predict Buyer Behavior

Ultimately, my clarity came from thinking about my friend Rick Alden, the founder and CEO of Skullcandy. Like all of us, Rick has strengths and weaknesses as an entrepreneur/CEO. But he is truly remarkable at one thing: He seems to have the ability to identify with his target audience.

Indeed, Rick is aware of this. He sometimes refers to himself as the best example of the Skullcandy buyer. He has lived the problems that are solved by the products his company creates. He identifies with the brand ethos. He has the ability to predict how buyers will respond to product design, packaging, and messaging. In short, he can accurately predict buyer behavior.

This, in my view, is the most important skill set, attribute, or expertise that an entrepreneur/CEO can possess. This is the area in which a gift of perfection, in exchange for average performance in all other areas, would be worth the trade.

It’s the most difficult knowledge to gain, as well as the most difficult to teach. It’s the most subtle, but also the most valuable. Simply said, it is the ability to accurately predict buyer behavior in the addressed market. How exactly will buyers respond to a new feature release, a price change, a packaging change, a partnership, a branding message, or a new channel? Entrepreneurs/CEOs would be well served to focus on gaining this knowledge in as direct and unfiltered a way as possible.

Certainly, other skills and expertise can be helpful and valuable. But knowing your customer is essential, because all business planning pivots around an accurate understanding of buyer behavior. Generally speaking, most other parts of a business can be outsourced or insourced. Since business planning, organizational structure, and forecasting are all dependent on knowing your customer, it’s the CEO knowledge that matters most.

As a final aside: On the off chance anyone is giving out magical taps on the forehead, let’s talk. I have a feeling we could find more than a few takers.

 

Greg Warnock is Managing Director at Mercato Partners