What qualities does it take to build a great business?
According to Hsieh Tsun-yan, a former senior director at McKinsey, counsellor to global CEOs and now author, it takes a combination of four things: heart, smarts, guts and luck.
His book, a New York Times bestseller which takes these four elements as its title, says the key to success is for leaders to be “willing to make ourselves vulnerable, generous, open and authentic.”
Looking at his home nation of Singapore, he says Singaporeans as a whole are two and a half times less likely than the global average to start their own business and only one per cent of would-be entrepreneurs actually gets their business idea off the ground.
It’s time for Singaporeans to gain more guts, he told a recent forum. “When in doubt, do something!” he urged the audience.
“It’s not that we don’t have money,” Hsieh said, speaking at a gathering organised by the American Chamber of Commerce in Singapore to publicise his book.
“Our would-be entrepreneurs’ biggest stumbling block, even among those who profess to be seriously thinking about it…is the failure to start.”
He said extensive research had shown that successful entrepreneurs and business builders understand that they cannot just sit back content with the status quo.
“When it ain’t broken, break it anyway and fix it,” Hsieh said, noting that in too many cases leaders fail to evolve their business model.
“It takes courage to tamper with the well-spring of success.”
Hsieh was with McKinsey for more than three decades before leaving to set up his own management advisory firm, the Linhart Group. He is also on the Management Advisory Board of the National University of Singapore Business School.
His book is co-authored with two other experienced business leaders, Richard Harrington, former president and CEO of Thomson Corporation, and Anthony Tjan, managing partner of venture capital firm Cue Ball.
Between them, they surveyed more than a thousand entrepreneurs and business builders to uncover what motivates them and how they make decisions. They found that both entrepreneurs and leaders who build, expand and evolve big businesses share a combination of these four key factors.
The first, heart, “is about passion”, he told the audience. Successful entrepreneurs set aside other things to fulfil their dreams and push through challenges, for example, when pushy Singaporean parents ask: “When are you going to get a real job?”
The second element, smarts, he said, has nothing to do with books. Instead, Hsieh said, he sees two critical components of smarts: pattern recognition and judgment. The first is about being able to connect the dots and see things in alternative arenas. The second, judgment, is crucial when entrepreneurs are choosing business partners. Going into business with your friends, while possibly fun, isn’t always smart he said.
Luck, the third element, “is about attitude,” Hsieh said. He told the audience that luck in the business context means a combination of humility, optimism and networking.
Humility, he said, came from understanding that you may not know something, but you may be able to find others who are experts. Optimism was about retaining a positive outlook, while networking – as well as being a crucial business skill – means spending time with people who are different and who may bring different perspectives and talents.
Guts, the final element in the quartet, also breaks down into three parts, Hsieh said: “guts to start, guts to persevere and guts to evolve”.
All three, he told the audience, were critical in the different stages of business building.
Finally Hsieh shared the key learnings he said were important for a Singapore audience. Young entrepreneurs he said needed more guts to start their own businesses and he challenged them with six questions:
- “What terrifies you? Gutsy people are not fearless. They have the ability to turn negative energy or fear into the positive energy of action.”
- “What is the worst that can happen? What have you got to lose? The best time to start is when you are young because you can lose.”
- “Are you truly and madly in love with the business you are trying to build?” Those are the businesses that succeed.
- “Which risk are you better positioned to take? There are two kinds of gutsy people, one who are high in tolerating risk for long periods of time,” Mr Hsieh said. The other kind occasionally step up for “the risks that they are uniquely positioned to take.”
- “How can I experience and learn from crisis? Most people think about it as a thinking exercise, contingency planning…That’s all wonderful but crisis management is experiential. It’s not a thinking exercise.”
- “How would you team up to compliment your leadership qualities?” Mr Hsieh said the best leaders know they aren’t dominant in every aspect of business. “They team up with people who compliment them.”