Study – That’s why managers are more successful than experts

Most startups fail

However, founding a startup requires a lot of courage. According to expert estimates, 80 to 90 percent of young companies fail on the market. The US data analysis company CB Insights asked 101 startups why they failed and found that 42 percent of the companies surveyed had released a product for which there was no market demand. According to the startups, the second most common reason for failure was financing problems.

Study examines the influence of founder personality on company success

However, if a startup is successful, a large number of factors are usually responsible for it. A study by the BSP Business School Berlin, in cooperation with the Goethe University Frankfurt, has now examined the extent to which the self-image of the company founders influences the success of the young companies. As part of an online survey, almost 600 company founders were asked whether they see themselves more as a “manager” or as a “technical expert”.

Managers more active than management

The result was relatively clear: 60.7 percent of those questioned stated that they were more of a “manager”; 39.3 percent of the participating company founders, on the other hand, described themselves as more of a “technical expert”. This self-image correlates closely with the areas of activity that the founders take on in their respective companies. 95 percent of the self-appointed “managers” act in the management; with the “technical experts” it is only 86 percent. The remaining 14 percent have handed over management of the business to someone else.

According to the results of the study, the departments of strategy, sales and human resources are taken on by “managers” and “experts” with approximately equal frequency. However, there are significant differences in other sub-areas: “Technical experts” are much more frequently active in the business areas of marketing, purchasing, IT and production, while “managers” often seem to give up these tasks much earlier.

Startups run by managers are more successful

But to what extent is this self-image related to the success of the company?

To answer this question, the average sales growth of all companies was first determined, which increased by an average of 77.3 percent per year for the startups surveyed.

However, looking at the “manager” startups separately from the “professionals” shows that the companies of “managers” have a 24.5 percent higher annual revenue growth than those of “professionals”. The sales of the self-appointed “managers” grew by an average of 88.1 percent, while for the “technical experts” it was only 63.6 percent per year. With an annual turnover of three million euros, this results in a difference in growth of 735,000 euros for the following financial year; in the years to come this difference will become even clearer.

Reasons for differences in success

But why are the startups run by “managers” more successful than those run by “experts”?

Lucas Fichter, business psychologist at the Goethe University Frankfurt, and Charlotte von Bernstorff, personnel psychologist at the BSP Business School Berlin, try to explain these sales differences between the startups with the different working methods of the founders. According to the experts, the “experts” focus too much on “perfecting” all areas of their startup’s activities. As a result, they only hand over little responsibility in the specialist departments and, as a result, have less time to concentrate on managing and growing their company.

According to the experts, the self-image of the founders also says a lot about their personality. Founders who feel like “managers” are usually much more extroverted in their way. As a result, “managers” are generally much more assertive and outgoing than the introverted “experts”. Apart from that, the experts point out that “managers” have been proven to be more successful in contact with other market participants, since so-called networking is much easier for them.

Pauline Breitner / Editor finanzen.net