Many attorneys are trained to work with corporate executives. However, working with entrepreneurs can be very different. The entrepreneurial mindset is typically different than that of a corporate executive. This is manifested in their approach to risk, decision making, failure, and ambiguity. This difference can be confusing or challenging for attorneys and may create difficulties in effective communication. This article will discuss these differences and suggest some techniques to help attorneys be more effective when working with entrepreneurs.
Entrepreneurial mindset
Understanding the entrepreneurial mindset can be helpful to become more effective in working with entrepreneurs. Cognitive psychology and social psychology can help us understand the differences between entrepreneurs and corporate executives. Specifically, it is important to understand psychological constructs such as risk taking, tolerance for ambiguity, optimism bias, locus of control, and tolerance for failure.
A myth about entrepreneurs is that they are big risk takers. In fact, they are not; for the most part they are calculated risk takers. However, the media tends to focus on the big risk takers like Richard Branson, which make a much more interesting story than the entrepreneur who has toiled quietly for 20 years building a successful company. Richard Branson takes big business risks and big personal risks such as flying balloons around the world. Culturally we can become biased that most entrepreneurs are big risk takers since our media sensationalizes the big risk takers. Often entrepreneurs want as much data as possible to understand the risk-to-reward ratio. They are willing to take a risk if they understand the likelihood of the corresponding rewards. In other words, they are calculated risk takers.
The next important characteristic is tolerance for ambiguity. Most entrepreneurs have a higher than average tolerance for ambiguity. For instance, they will not stress as much as the typical executive about whether the product will work, if they will make payroll, or if they will land the clients they need to be successful. It is not that they don’t stress about this stuff, it is that they have a higher tolerance for these ambiguities. Think of your peers when you graduated from college, did some want the security of a big company versus a smaller company that might provide more learning opportunity? Most corporations take measures to reduce ambiguity by putting in procedures and processes that remove risk and ambiguity. Entrepreneurs see ambiguity as opportunity.
Another important psychological characteristic is optimism bias. In this context a bias is an inclination to see the world in a predetermined manner. Most entrepreneurs are higher in optimism bias than non-entrepreneurs. This is the bias that things will work out. They will figure out the product problems, fix the client problems, or work cash flow enough to survive. Obviously this has advantages and disadvantages. When an entrepreneur is launching a company, optimism bias can be very helpful. For instance, if every entrepreneur sat down and listed all the reasons why a startup could not work they would never launch. A common saying of successful entrepreneurs who started their companies when young is, “I was not smart enough to know I could not do it when I started,” or “If I knew what I know now, I would never have started this company.” Not knowing all of the things that can go wrong can help an entrepreneur to be less distracted and focus on success. However, being too optimistic can blind an entrepreneur and lead to failure. Although experience is almost always helpful, it can bias one into not doing things. It really comes down to a choice if you allow yourself to focus on why a startup will not work or how you can make it work. Entrepreneurs focus on how to make it work.
Entrepreneurs have been found to have a higher than average internal locus of control. Locus of control is a psychological continuum. On one end, there are those who feel they have little control of their life and career. In other words, their success at work is dependent on their boss or peers. People on this end have an external locus of control, or they believe control of their lives is dictated by others. People who believe they can control most things in their life are said to have a high internal locus of control. For instance, when they run into a barrier, they find a way to get around it; in fact they might simply ignore the rules and get “around the system.” When someone with a high external locus of control runs into a barrier, they quit. Entrepreneurs have been found to have a high internal locus of control. They attack barriers and find ways around them. Often, they simply ignore the rules and procedures, which they see as guidelines to utilize when convenient, rather than something rigid that they have to abide by every time.
Failure is a part of entrepreneurship. Entrepreneurs have been found to have higher tolerance for failure than average. They see failure as a learning experience. I am not suggesting they enjoy or seek failure. However, many entrepreneurs accept failure as part of the process. This is connected to calculated risk taking as mentioned earlier; most entrepreneurs calculate how much risk reward each action involves. They are willing to take the risk if the rewards appear to outweigh the risk. When you combine tolerance for ambiguity, optimism bias, and internal locus of control, you can imagine why entrepreneurs in general appear to be big risk takers. In reality, they are wired differently. They see the world differently and they focus on how to accomplish something, rather than why it cannot be done.
For those attorneys reading the portion on the entrepreneurial mindset, did you find yourself saying something to the effect, “Yes, but what if they don’t think of this, or miss that.” If so, you have confirmed that you have a different mindset than your entrepreneurial client. You are wired to look for what can go wrong; an entrepreneur is wired to look at what can go right. Attorneys are trained to avoid risk, remove all or most mistakes, and anticipate the things that can go wrong. They are focused on an external locus of control. They focus on how others, whether the law or other organizations, can negatively impact their client. In addition, attorneys are trained that failure, in a legal sense, is client and career failure. Although entrepreneurs want their attorney to be focused on what can go wrong, it is helpful to remember they look at the world differently. These differences can lead to a disconnect when communicating with entrepreneurs.
Tips for Attorneys Working with Entrepreneurs
Often when communicating with a client, style differences can create disconnects within the communication. It is important for attorneys to uncover the style your entrepreneur client prefers before you launch into a detailed conversation about legal issues. It is easy to let the training received in law school be the default style of communication. Few of us are trained to really understand what is going on in conversations. Uncovering what is unsaid is often much more important than what is being said. Until we have developed a trusting relationship with someone, we might skirt around the issues, not wanting to expose our weakness or ignorance about a particular issue. This can happen when an entrepreneur is embarrassed they did something that might be illegal or on shaky grounds in a legal sense. On the other side, some attorneys may be insecure about their lack of business knowledge or general understanding of entrepreneurs.
Consider how your clients want to interact and communicate risks and detailed data around those risks. Some like a summary up front and the data later, some like a build-up to the conclusion. It is important to uncover the style of your client to understand the most effective way to communicate.
Simply ask your client how they prefer to have a specific discussion. You can do this by asking them how much detail they want, if they would prefer you to start with a summary, or build the detail up to the conclusion. Be sure you are not doing too much talking without stopping to listen and ask questions. Find ways to probe your clients to see if they understand what you are explaining without embarrassing them. This can be done by putting the issue back on you rather than asking them. For instance, if you are not sure if they understand a particular issue, ask them if you are being clear or if they would like to go over the issue again. Stopping, probing and listening are crucial to building a good client relationship.
In summary, entrepreneurs are different. They see opportunity where you may see risk and ambiguity. The more you can understand their mindset and their desired communication style, the more effective you can be in helping them.
From Orange County Register
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