INTUITIVE INTELLIGENCE

For me, business is a ‘gut feeling’ and if it ever ceased to be so, I think I would give it up tomorrow.

It wasn’t always a success story for billionaire Richard Branson, but as he describes his past mistakes in his 1998 autobiography, Losing My Virginity, he recalls the invaluable lessons he learned about life and business. His mistakes led to innovations that would later become the experience necessary for the “gut feelings” that would lead him to greater business success.

“By ‘gut feeling’, I mean that I believe I’ve developed a natural aptitude, tempered by huge amounts of experience that tends to point me in the right direction rather than the wrong one.” (Branson, 2011)

One of the most distinctive features of money-makers is the “gut feeling.” Virtually all highly successful people talk about trusting their instincts over the complicated analysis of an idea.

In a 2012 interview, Lauren Lyster from the Daily Ticker asked Jimmy Choo co-founder Tamara Mellon, “What is the most important lesson you’ve learned in business.” Mellon said, “The most important thing is instinct, you have to trust your gut. Every time I’ve gone against my instinct it’s been a mistake.”

However, upon further investigation, the gut feeling is NOT what sets apart the successful entrepreneur from the struggling entrepreneur, but rather, the distinctive factor is the ability to monetize gut level experiences. Money makers are not merely throwing the dice on a hunch that double sixes will turn up. Both billionaires and zeroaries have the same chance of success apart from experience.  

Financial entrepreneur, Warren Buffett, heavily relies upon at least two helpful emotional brain processes: intuition and empathy. He also utilizes gut instincts with position sizing, overall market exposure, and in sensing danger. (Revee Mehta)

What is the advantage that an experienced money maker has over other, less successful entrepreneurs? It has been shown that money makers use a complex information processing system of pattern recognition that most people use for recognizing faces in a crowd or avoiding a potentially dangerous situation (Kirzner, 1985; Baron & Ensley, 2005). A money maker is like a chess grand master that can make a move on a chess board in less than 30 seconds, because he recognizes a pattern from thousands of hours of playing chess.

The probability of making an error in judgment when relying on gut feelings greatly decreases with experience, because decisions for money makers is more about recognizing opportunity than throwing the dice on a bet.

SIDES OF A CIRCLE

If people aren't calling you crazy, you aren't thinking big enough. Richard Branson

In 1967 Rollin king approached a Texas attorney with an idea for starting an interstate airline. It was an idea that someone crazy enough to understand the potential could actually make it happen. That person was Herb Kelleher, one of the most innovative entrepreneurs of our time, who turned Southwest Airlines into the most profitable Airline in the world. When Kelleher was asked in a 2009 interview at Stanford University, “Is there anything about the spirit of innovation, that can be taught and learned or do you think it is congenital, that you’re born with it?” Kelleher replied, “I think you have to have that spark in your DNA to start. You’re a little bit of a risk taker, you’re a little bit of a visionary, and you’re a little bit of an idealist.”

Thinking big is only a small part of the strategy that money makers implement into their business plan, but a closer look at the strategy reveals a unique and enduring trait that is matched to money makers (Rauch and Frese, 2007). Some may call it innovation and others identify it as out-of-the-box thinking. Edward De Bono (1967) described the trait as something more than mere innovation. He coined the term, “Lateral thinking,” which was not only manipulating existing pieces, but seeking to change those very pieces. It focuses on the perceptual part of thinking. (De Bono,1969).

Lateral thinking is not a natural way to think. Our brains make sense of new experiences by relating it to meaningful patterns. Furthermore, Gestalt psychologists suggest that cognitive processes begins with innate patterns of sensory information and we relate new sensory input to fit our mental patterns. Our brains tend to be self-regulating mechanisms, so when sensory input doesn’t appear to fit mental patterns we adjust the information. Some people will adjust a picture that is slightly crooked, even in a stranger’s house, to fit their perceptual patterns of what they consider normal. Lateral thinkers naturally perceive the world from a different perspective. Perhaps it’s a preference for right hemisphere processing or an innate cognitive structure that causes them to adapt existing information to fit their worldview.

Lateral thinking often presents us with solutions to problems that is not initially appreciated by the general public. Only when the idea “works” and sometimes revolutionizes the industry is it recognized as useful. Education tends to follow cultural trends, and lateral thinking leads the trends, so for this reason, lateral thinkers often struggle in higher education. According to Pauwe and Williams (2001) Higher education inadvertently suppresses intuitive, creative, lateral, emotional, and other dimensions of nonlinear thinking, suppressing the innovative nature of aspiring entrepreneurs.

How many sides to a circle? It depends on how you see the world. In most people’s minds the cognitive structure of a circle has no sides, but to a person who thinks laterally a circle has an inside and an outside.

THE MISTAKE WE MAKE: EXTRAVERSION AS A MONEY MAKING TRAIT

           I remember my conversation with a bar tender in a Mexican restaurant in 2006. I was planning to rent my house and a real Estate agent overheard what we were talking about. Her voice cut through the conversation like a knife, “If you are interested in selling, it’s a really good time right now.” She handed me her business card and continued to tell me more about the real estate market than I was interested to hear. She is an extravert and most people would agree that it takes an outgoing person to succeed in business. However, there is no evidence to show that an extravert will succeed any better in business than an introvert.

           It is so widely accepted that extraverts make great sales people that few people have stopped to look at the evidence. Extraverts are talkative, gregarious, optimistic, confident, and social; however, the extravert may appear to customers as insincere, shallow, unrealistic, hypocritical, and unwilling to listen.  Customers may be put-off by the negative characteristics of the personality trait. As the saying goes, people love to buy, but they hate to be sold.

           The evidence for money making and extraversion is contrary to the popular perspective. In other words, most people would assume that extraverts would make great sales personnel. Barrick, Mount & judge (2001) gathered trait results from job performance studies, isolating a correlation between extraversion and successful sales personnel. They concluded that there is nearly no correlation (.07) between extraversion and making money. Andreas, Rauch & Frese (2007)  conducted a meta-analysis of 104 separate studies of nascent entrepreneurs, an overall 26,700 subjects, and concluded that extraversion is not matched to entrepreneurial success (inter-rater agreement of .73). In a recent study, Grant (2013) showed that extraverts and introverts performed daily sales averages almost evenly, with the extravert coming out on top, resulting in a five dollar a day difference between the two traits.

           What may we conclude from recent research that contradicts commonly held beliefs regarding money making traits? First, we should check our biases regarding individual personality behaviors and money-making success. Second, we should not only identify a trait through an assessment, but we should observe how the person displays the trait. “Extraverted salespeople may focus more heavily on their own perspectives than on customers’ perspectives. As a result of these tendencies, extraverted salespeople may spend too much time delivering assertive, enthusiastic pitches and too little time asking questions and listening to customers’ answers.” (Ames & Flynn, 2007; Judge et al., 2009). Third, if an extraverted salesperson is not performing as well as expected, he or she may benefit from trait research that identifies the Ambivert, the middle ground between the Introvert and Extravert, as the real money maker.