Self-efficacy and not Confidence
Most rags to riches stories are stories of entrepreneurship; Larry Ellison - Oracle, Oprah Winfrey – Harpo, Jan Koum – WhatsApp, Bill Gates – Microsoft, Steve Jobs - Apple . . . the list is long. At the root of the journey, even if it was mostly luck that led to success, was the perseverance of the entrepreneur (or team) who had the faith and confidence to work to build something big!
The commonly held view is that self-confidence is necessary for an entrepreneur. It all begins with the faith that the entrepreneur has . . . to face the challenges and naysayers, to take the risk and to persist. Yet the term confidence is too generic and ill-defined. After all one can have confidence but no ability to execute and that’s not going to be of much use. In short, it really doesn’t tell the story accurately.
We prefer the term efficacy, or self-efficacy to be precise. Less similar, but better defined. The concept has been developed by Prof. Albert Bandura of Stanford University. Efficacy means the ability to produce a desired or intended result. Self-efficacy then means one’s personal conviction about one’s ability – and that’s the key point. The ability to perform, either as an individual, team, or a company.
Perhaps the greatest power of self-efficacy lies in the fact that it is more “data-based” than merely “inborn”. This is what psychologists say are the four factors that affect self-efficacy;
Experiences – previous successes build and failures diminish self-efficacy based on what the person ascribes that result.
Social modelling – effort, successes of others become sources of motivation. All successful sportspersons will talk about their role model and a few get to actually compete and win.
Social persuasion – an empowering environment builds self-efficacy. This can happen to entrepreneurs starting out, or companies that are experimenting with new products or services. Hence, the positive impact that incubators and accelerators have on entrepreneurs working there.
Physiological factors – psychosomatic states affect our ability to perform. As the saying goes, “if you think you can do it, you can”. Otherwise, one can point to the “Imposter Syndrome” – we are in positions that perhaps we are initially not qualified or experienced in but we push on believing we will “get it”.
Ben Horowitz of Netscape fame, speaking to the 2015 graduating class at Columbia University advised them to pursue their competencies and not their passion. Simple but important advice. After all, what graduates are passionate about this age will change. Hence we continue to advocate self-efficacy, for individuals and companies. Self-efficacy is very much at the root of entrepreneurship. It qualifies to be the first among the nine equal Entrepreneurisms. In this VUCA world, companies need to understand their competencies, what it is they are “really good at”.