Statistics show that approximately 90% of startup companies fail within the first five years, and that 90% of the remaining companies fail during the second five years. What makes the difference between the entrepreneurs that make it and those who don’t?
If you want to be an entrepreneur, there are two types of problems you need to learn to overcome. The first type is called technical problems, and the second type is called adaptive challenges. Overcoming each requires a different set of skills, and you need to overcome both in order to build a successful business.
If you only know how to overcome technical problems, you will often feel stuck in your business and not know what to do. On the other hand, if you only know how to deal with adaptive challenges, you are doing things the hard way and wasting time trying to figure everything out yourself. So what are the differences between a technical problem and an adaptive challenge?
A technical problem, as the name suggests, is technical in nature. You can go to school, read a book, or attend a seminar to learn about the technical aspects of running a business. For instance, if you are writing a business plan, there are technical guidelines as to how to format it, what goes first, and how to calculate your financial projections, etc. If you are trying to determine how much taxes you should pay, a CPA (Certified Public Accountant) can show you the tax laws. If you are trying to get intellectual property protection, an IP (Intellectual Property) attorney can show you the steps.
In general, a technical problem has a right answer. If you want to know what the right answer is, just go ask the expert. An expert can show you what to do and often times cut your learning curve in half, if not more. In order to be a successful business owner, there is a set of technical knowledge you need to acquire. How do you market your business? How do you provide good customer service? How do you hire good employees? How do you determine the financial health of your company? Obtaining the technical skills required to run a business is why people go to seminars, read books, or attend business school.
However, acquiring the technical knowledge is only half the equation. If building a successful company were as simple as acquiring the technical know-how, then the college professors should be the ones who build the most successful companies. No offense to the college professors, but the most admired entrepreneurs such as Steve Jobs, Bill Gates, Michael Dell, and Oprah Winfrey are not college professors. In fact, many of them have not finished college. So what’s missing here?
What’s missing is one’s ability to deal with the second type of problems — adaptive challenges. An adaptive challenge doesn’t have a right answer. In fact, sometimes multiple answers can all be correct. Sometimes, no one knows what the right answer is. Adaptive challenges are messy. There are many moving parts, and everything is connected to everything else. Sometimes, trying to fix one thing here will just create another problem somewhere else. A solution that worked last time may not work this time.
The inability to handle adaptive challenges effectively is many entrepreneurs’ downfall. Just because one gets an “A” in business school doesn’t mean one can run a successful business. In contrast to carefully controlled classroom environments, the real world is messy. Most real world problems are adaptive challenges. How do you find the business idea that’s right for you? How do you spot an opportunity at just the right time? How do you make the right decision when important people think you are nuts for doing it? How do you handle a situation when no one knows what to do? What do you do when you feel discouraged and things are not happening the way you want them to? What do you do when life throws you a curveball? What do you do when you feel stuck?
If you think of treating technical problems as a science, then treating adaptive challenges is more of an art. Technical problems are usually black and white, while adaptive challenges are the gray areas in between. Many people go to seminars on business, marketing, and wealth creation. But after they come home and start to apply the business strategies they’ve learned, things often get muddled and confusing. Just because one learns the “step-by-step system” to become a millionaire doesn’t mean one can follow each step and become a millionaire by this date and this time.
Building a great business is in large an adaptive challenge. There are technical aspects to running a great business, but learning the technical skills is only half the equation. I would argue that learning the skills to deal with adaptive challenges is just as important, if not more, than learning the technical elements of running a business.
Can the skills to deal with adaptive challenges be taught? Well, yes and no. Just like any art, some people are naturally more talented. You can’t teach everybody to be a concert pianist, but with enough practice and instruction, everyone can achieve a fair level of competency.
If you want to be a successful entrepreneur, remember to learn the technical aspects of running a business as well as develop the skills to handle adaptive challenges. Until next time, do something small that will move you forward today!