The prototypes of these two roles are very different, but there are some key questions to consider.
In what way do the two roles differ, and what do they have in common?
Additionally, should investment companies look for people with a entrepreneurial background or profile?
Portfolio managers are certainly entrepreneurial in some sense, but how are they different from the classic type of entrepreneur if he or she exists? Can you morph from one into the other?
A person’s ability and tendency to engage in entrepreneurial behaviours is what causes businesses to innovate and grow.
A crucial feature of the war for talent is to identify, engage, and retain entrepreneurial people.
If businesses fail to pay attention to these individuals, it is argued they will find it much harder to innovate; and if they fail to innovate they will find it much harder to grow.
Entrepreneurs are people who have the ability to see and evaluate business opportunities; to gather the necessary resources to take advantage of them; and to initiate appropriate action to ensure success.
Some might say that the best portfolio managers are not that wildly different, but that they are just more analytical, less impulsive entrepreneurs.
Opportunities and gaps in the market
According to seasoned psychologists, entrepreneurs are well known for their opportunism, always on the lookout to find and exploit new openings.
They do not like missing out on opportunities when they present themselves.
A crucial feature of the war for talent is to identify, engage, and retain entrepreneurial people.These individuals are capable of seeing potential in a crisis, and see possibilities where others see problems.
At the same time, this sheer enthusiasm about potential ventures may make them overestimate the value of prospective projects.
They are eager to spot trends and new opportunities, keeping up-to-date and ahead of the game with technology, connecting seemingly unrelated events and paying close attention to other businesses, particularly competitors.
As a down side they may over-estimate the value of new opportunities and they can be too excited by technological and other novelty. It could also lead to poor decision-making.
Their optimism means they often believe things are simpler than they really are.
But for the entrepreneur and the portfolio manager, both seek to find that which others overlook.
Drive, energy and ambition
Entrepreneurs are usually visionaries in the sense that they are always future-oriented and strategic.
Most have a restless energy and engagement with all sorts of business.
They are well known for their pro-activity, initiative, assertiveness and being results-orientated.
They do serious business monitoring with great concern for quality and efficiency.
And they do show real commitment to those who are useful to them in the sense that they help deliver their vision; good networkers with political savvy, which is a very desirable characteristic.
Critics would argue that many entrepreneurs are pathologically ambitious.
They will persist in the face of adversity and are not afraid of failure or uncertainty; they are (super) confident and willing to take risks.
They can get frustrated with bureaucracy, lack of support, or sluggishness in colleagues or support.
Entrepreneurs often have the courage to make difficult decisions where others may hesitate.
When it comes to similarities between entrepreneurs and portfolio managers, they often share the energy, confidence and task focus.
But many portfolio manager tasks cannot be hurried. So the detailed data collection and analysis maybe too much for the classic entrepreneur.
Creativity
>Entrepreneurs are usually visionaries in the sense that they are always future-oriented and strategic.
The classic entrepreneur shows potential for generating innovative ideas: to look at business matters in novel ways and find original solutions to problems.
They are divergent thinkers capable of generating imaginative, surprising and inspiring ideas. They prefer to focus on the bigger picture and can bring an original perspective to long-standing business issues.
Most are also excited and energised by new business challenges, even if it means putting in extra work or discretionary effort.
Given their preferences however, creative people often fail to pay attention to detail.
Many are rarely enthused by other people’s approaches and ideas are uninterested in rule-bound problems. Traditionally, they can be unpredictable and hard to manage.
Perhaps this is where entrepreneurs and portfolio managers differ most: a good portfolio manager has bounded creativity and a reliance on algorithmic innovativeness more than wildly enthusiastic intuition.
They need time and careful convergent thinking to really understand the offerings and options.
Big picture
Entrepreneurs say they are driven by the desire to improve things and create things that are valued by other people.
They claim they want their achievements to be useful and to bring about constructive change.
They are likely to believe that they can make a difference in the world and will have a preference for transformational projects.
They also tend to have an optimistic outlook on their future plans.
They can and do sacrifice small short-term incentives for stronger long-term benefits.
Some have views that are often too utopian and unrealistic. As a result they can easily get carried away with over-ambitious projects.
Compared with portfolio managers, entrepreneurs often seem more ideological, as portfolio managers seem content to do a good job for themselves and their clients.
Saying that, both managers both need to be resilient.
A good portfolio manager has bounded creativity and a reliance on algorithmic innovativeness more than wildly enthusiastic intuition.All have tasted the bitter pill of failure but picked themselves up and used it as a learning experience.
They need to be able to cope with ambiguity. So, in our business we are alert to entrepreneurial flare in our portfolio managers, though also aware of the potential problems it brings.
Not surprisingly, most entrepreneurs call themselves ‘serial entrepreneurs’.
This is often because their appetite and temperament make them very good at starting companies, but not running them.
Some make rather poor managers: unforgiving task-masters, profits-obsessed drivers and impatient fidgeters. So the clever ones employ managers for the day-to-day running of the firm,
Many entrepreneurs but fewer portfolio managers perhaps are driven from within: some would say by a ‘monkey-on-your-shoulder’ self-doubt.
It is interesting that they set out to be successful, not rich, although they recognise that you measure the former by the latter.
What is clear is that the entrepreneurial spirit and drive in an individual cannot be taught or diminished.
And no amount of government-sponsored courses can induce it if it isn’t in your blood. But you can learn the skills of a good portfolio manager.
Adrian Furnham is a professor of psychology at the BI Norwegian Business School
