Enterpreneurs Fool Themselves... and That's a Good Thing

Successful innovators tend to be optimistic. They take on more risk than their peers. But like all of us, they need to manage uncertainty and risk. From on objective standpoint, at least some successful innovators -- academics applying for grants -- don't do that well. In fact, they treat their assumptions -- including assumptions over which they have no control -- as facts. This gives them an illusion of control and can make them overconfident.
One of the highlights of my visit to the Atlanta Conference on Science and Innovation Policy was Dr. Megan Haller's presentation, "Rethinking Academic Entrepreneurship." She surveyed over a thousand academic scientists, asking them questions about the influences of their advice networks and collaborators in their decision making. She had some interesting findings:

• While large, diverse advice networks provide a good reality check, that doesn't translate into more success in getting funding.
• Scientists with large efficacy networks (bigger pools of potential collaborators) are more likely to show an illusion of control (believe they can influence things beyond their actual reach).
• Scientists with more of an illusion of control are more likely to be overconfident.
• The overconfident scientists make fewer applications for grants, but they have higher success rates.

I think the most interesting thing is that an illusion of control leads to fewer attempts. So much for "you have to play to win." This tells me that, though it may take more for these scientists to take a leap of faith, once they do, they are fully, even unrealistically, engaged. And it works out for them.

Another interesting point is that there is such a big difference between the impacts of advice networks and efficacy networks. I think what this boils down is that advice is cheap. The influence of people who have skin in the game is what really matters. This would imply that the wisdom of crowds is more wise when there is an admission charge.

That partners need to have skin in the game was one of the main lessons of FOAK, and I think it is confirmed here (interestingly, in an academic setting). There is also, between the lines, a confirmation of the role of passion. Here we have hundreds of successful scientists grabbing their illusions of control with both hands -- once they believe the work is worth doing.

This is just one jewel from the conference. I'll have some more remarks on what I learned in Atlanta with my next posting.

Peter
(I do not work for IBM and my views do not reflect IBM's views.)