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Introduction

Research on entrepreneurship has identified a range of psychological attributes that are associated with business success. Being entrepreneurial, together with the nebulous concept of creativity, is seen as both highly desirable in employees, but also for success in life generally. Yet they have proven to be fiendishly hard to measure. Psychological research in these areas have amassed ever growing lists of attributes typically associated with entrepreneurship. Some of this research have used statistical tools such as regression analyses to find optimal mixes of these attributes to predict entrepreneurship.

With the Entrepreneur-Game we have taken a somewhat different approach to measuring someone's entrepreneurial flair. Instead of trying to identify the psychological characteristics or traits associated with success, we looked at how successful entrepreneurs ran their operations. In particular we looked for areas where we could pinpoint contrasting behaviour with unsuccessful or surviving business people (people running enterprises that are not bad enough to fail outright, but that are also not growing or improving). The game is a direct product of this research. It simulates an environment where these identified behaviours could be directly measured. The Entrepreneur-Game therefore gives a picture both of how likely a person is to quickly sum up a business opportunity, and exploit it successfully. In this regard it will also be a indication of past experience and success in running enterprises. It should not necessarily be seen as a replacement of more traditional measures of Psychological attributes of entrepreneurship and creativity, but as a source of supplementary information.

The original research was published in the South African Journal of Science; click here to view.

 

Some of the scores that are generated by the game:

 

END ASSET Score

Research on groups of successful and unsuccessful business people have found that a simple score of the player's assets at the end of the game corresponded substantially with their real-life success or lack thereof. The End-Asset score is therefore the simplest but also the most comprehensive indicator of overall game performance. It is an overview of all the other attributes measured by the game. The End asset score can differentiate between people that are not suited to a business venture, those that need some input and guidance, and those that will make a success of a new venture.

 

Information Processing

One of the key differentiating factors between success and failure in business is the approach or attitude to new information and knowledge. Successful business people are active information seekers. People who are unsuccessful in business, often see a prohibitive cost or other hurdles between them and the information that may be critical to their ventures. In the game information cards are presented. What the cost of accessing these are, are left up the the player to decide. people who are active information gatherers and who are keen to understand the underlying mechanisms of the business in the game, will not see the gathering of information as constituting a cost. Less dynamic players will realise that the game is assessing them in terms of what information they have read. They see the cost of accessing the information as outweighing its usefulness to them. Successful entrepreneurs never stop learning, the depth and width of their knowledge increases right through their lives.

This index takes into account:

  • The number of important information cards that were turned over
  • The Net profit percentage. This gives an overall picture of how well the information was used.

 

Decision Making

Success in business influenced by a range of variables and factors, not least of which is often pure luck or being at the right place at the right time. However, being able to see opportunity where others see hard work, is often the difference between a successful entrepreneur and someone who never seems to get the one lucky break in life. What often spells the difference between success and failure, is the ability to see the lucky break for what it is. Interpreting events correctly and drawing optimal conclusions from lots of often confusing data is the hallmark of the successful entrepreneur. In the Game various scenarios are built in that require bold decisions. In addition some scenarios are presented that at first glance may seem like great opportunities, but they do not contain enough information to enable an informed decision about the level of risk involved to be taken. The successful business person is typically able to differentiate between an opportunity and a long - shot.

This index takes into account:

  • Having enough stock available during strikes
  • Taking advantage of low prices
  • Not making impulsive purchases based on insufficient information

 

Efficiency

Unsuccessful enterprises often have some bottlenecks. They produce more inventory than they can sell, they over or under invest in key departments, or they fail to adapt to a changing world. Failure is often characterised by simply doing more of the same. Success on the other hand is associated with the ability to monitor and adapt to fluctuations in the market, to get the balance between production and demand right, and to avoid wastage and overcapitalising on inventory. In addition success if often determined by how quickly one is able to respond to changing circumstances. Finally, success is also the ability to see when things are running smoothly, and to keep them running like that.

This index takes into account:

  • How closely the player was able to match stocking levels to the actual demands for products
  • The ability to track demand trends
  • The ability to limit wastage; by avoiding spoilage and by avoiding over-stocking
  • The efficiency score is weighted in terms of the value of the shops

 

Delaying of Gratification

The Game presents the player with ongoing opportunities to spend money or items not associated directly with their business. They can buy cars, bakkies and upgrade their house. These are often seen as the trappings of success, and most people would indeed associate luxury item with business success. In the Game as in the real world, money spent on personal gratification, is money that cannot be ploughed back into the business. Successful business people have repeatedly said that they put their profits back into their businesses, while some of the unsuccessful had the acquisition of some or other status symbol as a core the aim of their endeavours. While we do not see the acquisition of luxury items as a negative in its own right, we do give an indication of the proportion of the player's assets that are tied up in luxury items. As long as this proportion remains manageable, it does not really matter how large the person's house is or how many cars they drive. Another possible source of business success or failure is the attitude to the accessing of and responsibility in managing credit. We also track the use and the pay-back of a loan in the game.

This index takes into account:

  • The average monthly proportion of total net assets tied up in personal luxury items such as houses and cars
  • the proportion of total capital that consists of outstanding loans
  • the extent to which the outstanding loan was repayed responsibly

 

Long Term Planning and Decisions

Successful business people typically find something they are good at and then exploit the opportunities it presents to the full. They seldom take large risks on unknowns. Instead they plough their money into manageable expansions of businesses and areas they are familiar with. The game similarly presents the opportunity to expand the starting business fast and to a large extent before additional expansion necessitates going into new areas. The successful business person will see the logic in doing this type of expansion first. The unsuccessful tend to see lots of missed opportunities, and embarks on a more haphazard expansion pattern.

This index takes into account:

  • Consistently spending enough money on expansion
  • Expanding into known areas first
  • Not expanding into new areas too soon
  • Not expanding before having all the information necessary to make an informed decision

In addition the more financially oriented user can also access both an income statement and a balance sheet based on the player's game play.  This allows one to see exactly how they used the opportunities in the game.

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