A new Cambridge University study suggests that entrepreneurs differ from standard managers because they’re more inclined to take risky decisions – or at least, they’re more willing to tolerate the accompanying risks when they decide to do something. And it argues this kind of decision-making under pressure can not only be taught, but also (possibly) stimulated by particular drugs. If so, that would suggest that entrepreneurs aren’t just born – they can also be made...
According to the study, entrepreneurs contravene a widely-held assumption: that risk-taking is actually an abnormal expression of behaviour, hence its association with substance abuse and mental illness (in other words: that risk-taking is characteristic of people who aren’t functioning properly). In fact, the Cambridge research found that entrepreneurs’ 'highly adaptive risk-taking behaviour', i.e. the ability to solve problems and make decisions under stress, could be of real value in our stressful and ever-changing times. So in fact, in certain circumstances, risk-taking might actually give people an evolutionary advantage.
To test their thesis about what makes these people tick, the boffins experimented on a mixed group of entrepreneurs and managers. On ‘cold’ decision-making tasks, both groups performed similarly. But on ‘hot’ tasks, where the consequences of failure were much greater, entrepreneurs were far more likely to take the risky option. They also showed ‘superior cognitive flexibility’ and scored higher on ‘impulsivity’. And the good news is that this kind of hot decision-making can be taught (and practised).
As far as Cambridge is concerned, this could affect the way it teaches students. ‘This research suggests that when engaged in teaching entrepreneurship, the focus should be on risk tolerance as opposed to the more traditional focus on risk mitigation,’ says Dr Shai Vyakarnam of the Judge Business School. ‘If we train potential entrepreneurs to reframe their decisions this may in turn encourage greater entrepreneurial activity’. It would also help, he says, to place them in an environment that normalises ‘a more risk-tolerant type of decision making’ – like Silicon Valley for instance, or Cambridge’s own Silicon Fen cluster.
One fascinating aspect of the research is that the skills commonly found in entrepreneurs are intimately linked to brain neurochemistry – and in particular, the production of the hormone dopamine, which many scientists think teaches the brain about the risks attached to particular behaviours. So it’s possible that by using drugs to control dopamine levels, scientists can help the rest of us make decisions like entrepreneurs. An intriguing, if slightly scary prospect...
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