We applaud and emulate those with the commitment to have tunnel vision, risking everything for the chance to achieve greatness with no Plan B in sight.
After all, that’s really what it takes to reach your audacious business goals, right?
Well, maybe not.
It turns out, all of our perceptions of the unblinking, steely-willed entrepreneur are completely wrong.
In fact, new research shows that quite the opposite is true!
It’s not the ultra-committed huge risk takers that make it big when starting a new business, but those that play it safe, effectively mitigating and managing risk along the way.
Management researchers Joseph Raffiee and Jie Feng tested that hypothesis with their study that asked one simple question: When people start a business, are they better off keeping or quitting their day jobs?
The study tracked a representative group from the U.S. in the 20-60 age range who became entrepreneurs. They removed anyone from the study that was financially independent (or didn’t need their day job to pay bills), etc.
In doing personality surveys on the participants, Raffiee and Feng found that most of the entrepreneurs that quit their day jobs to focus 100% on their passion were “risk takers with spades of confidence.” Conversely, the entrepreneurs who hedged their bets by keeping their stable day jobs while starting their new companies were “far more risk adverse and unsure of themselves.”
So which group came out on top?
We’d almost certainly think it was the big dreamers and risk takers who quit their jobs to give their new company their all, right?
Actually, quite the opposite. The study proved that entrepreneurs who kept their day jobs had a 33% lower rate of failure than those who quit and went “all-in.”
It turns out, being hesitant, cautious, risk-adverse, and hedging your bets is actually smart – and healthy for the success of any new venture.
Phil Knight, founder of Nike, sold running shoes out of the trunk of his car in 1964, but kept his day job as an accountant until 1969.
Steve Wozniak started Apple with Steve Jobs in 1976, but kept earning a paycheck as an engineer for HP until 1977.
Google founders Larry Page and Sergey Brinn started Google in 1968, but didn’t leave their Stanford University graduate studies until 1998.
Pierre Omidyar built eBay as a hobby, but kept working as a programmer for almost a year after it’s success took off.
Stephen King kept working as a janitor, teacher, and gas station attendant for seven years after publishing his first story.
Dilbert author Scott Adams kept his day job at Pacific Bell even seven years after his comic strip was syndicated in newspapers.
Singer John Legend released his first album in 2000, but kept his day job as a management consultant making power point presentations until 2002.
This list of "overnight successes" that really toiled away for years or even decades, playing it safe so they could make a living AND pursue their new passion project is long.
The truth is, ultimate conviction and commitment are not the hallmarks of successful entrepreneurs any more than blind faith is.
Sure, it takes a healthy does of bold risk-taking to see any new company grow, but the foundation of that is clinical assessment, strategizing, and consistent work – not burning your ships once you hit shore. Decisions made with long-term goals in mind, not immediate financial pressure, are healthiest for companies.
This phenomenon is akin to investments, where a high-risk stock may reap high rewards, but is balanced out by many other low-risk and safe funds.
As a chiropractor, how might this knowledge impact you?
Before you expand your practice, invest in that new expensive technology, expand into a new line of business or release that new product, make sure you keep Raffiee and Feng’s study in mind, remembering that it’s consistent, smart planning and execution that builds successful businesses.
We'd love to hear your thoughts and reaction this this topic!