Original appeared on LinkedIn January 11, 2016
Scale Up mindset and Scale Up ambition are important. I recently read an important study reporting a meta-analysis of many studies in a variety of countries. The researchers from the ERC in the UK looked at the relationship between entrepreneurs’ expectations for their upcoming growth, and their actual subsequent growth. The conclusion: actual subsequent growth (revenues) is predicted by intentions or expectations of growth, in particular when the motivation of the entrepreneurs is to generate wealth, that is, be successful as a business (as opposed to becoming one’s own boss). In other words, those entrepreneurs who want to and expect to scale up, have a higher probability of doing so, all else being equal. The predictive correlation is in the .25-.35 range. I have little doubt that there are mediating variables (such as awareness of one’s own skills and assets) which may lead to both ambition and outcomes. But it is an intriguing finding, particularly as it is a summary of numerous studies.
By coincidence we just happened to have completed a mid-term survey of the growth expectations of our current Scalers in the Scalerator program (this is one of the many programs in our Scale Up Milwaukee initiative). The current cohort of Scalers consists of 18 companies with combined revenues of about $100 million, and median revenues of about $5 million. They started Scalerator3 in October 2015, and will finish in March 2016. 33% of the Scalers expect to have increased their run rate by 25% or higher by the end of the Scalerator. 72% expect to increase their run rate by 25% or more by the end of 2016. The qualitative feedback we are getting from the Scalers is that the Scalerator program, including the co-Scalers, has been an important stimulus of their ambition.
By the way, this is all reminiscent of work done 50 years ago by one of my Harvard teachers, David McClelland, a pioneer in the use of motivation theory. McClelland showed that it was possible to measure and, more importantly, to intentionally stimulate peoples’ need for achievement, or nAch. In other words, people could learn to be ambitious. He also showed that achievement imagery in children’s stories in a given country (think: The Little Engine That Could) predicted economic growth a generation later (not surprisingly, there were healthy debates about the research’s general applicability). But the more general point is worth noting, that psych0logy does impact economy.
Takeaway: Stimulating ambition is in the critical path to economic success.