Financial Personality

Leadership

11 Leadership Styles That Shape A Winning Organization

Building and shaping the culture of an organization begins with the behavior of the leaders. When leaders are behaviorally smart, and understand their leadership and communication style, they are more likely to set the kind of example they want everyone to follow.

There is no one leadership style fits all. The key, through self-awareness, is to find the balance that works with the teams you lead.

The Fast-Paced Leader

A leader who is fast paced, logical, challenging and tends to be critical may well deliver results, but can damage the talent they are responsible for leading. This style of leadership births a culture of stress, staff turnover and unwillingness to want to work under their leadership.

The Analytical Leader

The analytical, systematic, rigid, work by the rules, style of leadership may be a gatekeeper in terms of the processes of the organization, but can shut down innovation, spontaneity and the kind of creative approach to decision making required when things go wrong. This inflexible and rigid style of leadership does not inspire a culture of shared goals, thoughts and ideas.

The Skeptical Leader

In today’s rapidly changing market, businesses need innovation to survive. A skeptical leader who is not open to ideas, continually questions, is guarded and fails to build trust with their teams, will not create the kind of innovative culture that breeds success. Finding a successful balance between trust and a healthy skepticism that protects the business is tough.

The Competitive Leader

Similarly, leaders whose focus is solely on results, who is very competitive and wants always to be the one who sets the agenda, can push teams too hard to achieve goals. If these leaders see targets slipping away they can become manipulative and assume a driven style of leading that causes teams to crash and burn. This approach leads to a toxic culture – very difficult to recover from.

The Peoples Leader

Leaders who are highly people focused and expressive, can inspire passion and purpose, but if this style of leadership is not based on a foundation of a clearly articulated vision and mission, the culture they create is one of chaos and confusion – but fun. Leaders such as this need strong boundaries and need to learn to focus on one goal at a time.

The Risk-Taking Leader

Some leaders are comfortable with taking risks. They know their limitations and are comfortable with managing failure. However, when risk taking leads to over confidence, leaders will cut corners placing the business in jeopardy. Further, team members assume the culture of risk extends to them. This can lead to outlier behavior as they take inappropriate risk that undermines the organization.

The Creative Leader

The highly creative leader embraces new ideas, can be quite abstract in their thinking and open to imaginative approaches to decision making. However, such creative ideas need to have value, they can’t be random as this leads to a culture of anything goes. Creativity in leadership works when it’s part of a culture that is sensitive to teams, colleagues and the overall needs of the business.

The Cooperative Leader

Not many organizations survive on a cooperative style of decision making. When a leader is seen to be compliant others very quickly take advantage of them. They may well be able to communicate the vision and encourage input from teams, but without their own understanding of how to be behaviourally smart, this style of leaderships leads to the loudest voice getting their way. Further, it can lead to a culture of frustration as the leader seeks everyone’s opinion before making a call.

The Reserved Leader

Generally, the reserved, reflective leader tends to be a loner. They do not have an open-door policy and can be withdrawn. This style of leadership breeds a culture of suspicion and can lead to more outgoing team members driving the culture and making decisions that are inappropriate. However, when the leader understands the importance of building relationships, this style of leader is likely to be much more accurate in their instructions. They prefer to get things right first time and will reflect and focus on this.

The Patient Leader

When a leader is overly understanding and tolerant there will always be others who will take advantage of this. A culture of leniency will prevail and mistakes will be repeated leading to frustration and discontent from team members. Generally, this leader tries to create a culture of stability, believing that everyone will function more effectively within the environment. This approach only works when everyone has knowledge of each other’s preferred environment for working, otherwise the culture will be too relaxed.

The Spontaneous Leader

Spontaneity challenges many people who prefer leadership to be structured and predictable. A spontaneous leader creates a culture of impulsiveness and lack of planning and forethought. Spontaneity panics some people and can lead to disruption and stress in the workplace.

A Leader who can create a successful organization culture will not only understand their own natural behavior and how to manage it, they will invest time gaining insight into the behaviors of their teams. When they achieve this balance, the culture they create looks like this:

  • There is a shared vision – communicated in a way that everyone feels valued in role for delivering it
  • There are high levels of personal confidence
  • Everyone has a can-do attitude
  • Teams collectively look for solutions
  • The leaders listen to other ideas and suggestions
  • The individuals feel motivated
  • Attrition is low
  • There are clear goals and everyone knows where they fit in delivering them
  • Success is shared
  • Trust goes both ways
  • There are quantifiable measurable outcomes that demonstrate the culture of the organization

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

As a Financial Advisor, how do you advise Entrepreneurs

Advising Entrepreneurs, as a Financial Advisor

A good idea, a solid strategy, an understanding of clients genetic makeup could be a ticket to their success. But without this insight – failure is more likely both for you as an advisor and for the client who wants to be an entrepreneur.

DNA Behavior International’s extensive research from recent academic research and studies supports the findings that a person is born with entrepreneurial genes. Providing advice to a client like this could be tricky.

A key for financial advisors is to understand the genetic makeup of an entrepreneur. What makes them tick. All entrepreneurs have similar characteristics. Their minds are genetically wired in the same way. In other words, they tend to depart from established patterns of thinking. Their resilience and appetite for risk are inherent qualities. The more mindful financial advisors are in their understanding of the entrepreneurial mind, the greater the chances of success in delivering sound targeted advice.

The Business DNA research concludes that entrepreneurs have the following genes in descending order of dominance:

  1. Resilience (Measured by the Fast-Paced trait) – they achieve results, manage setbacks and rationally take quick action.
  2. Risk Taker (Measured by the Risk trait) – confidently take risks and tolerant of losses.
  3. Creativity (Measured by the Creative trait) – innovative with ideas and seeks to differentiate.
  4. Work Ethic and Focus (Measured by the Pioneering trait) – pursues goals and is often ambitious and competitive.
  5. Charisma (Measured by the Outgoing trait) – outgoing, connects with a lot of people and influences people to follow them.

Entrepreneurs are confident, passionate and determined to succeed. They are comfortable taking the risk and will invest heavily in their business venture, maybe to the detriment of other areas of their life.

However, being genetically predisposed towards entrepreneurialism doesn’t guarantee that an individual will become an entrepreneur and then whether they will succeed. It is not just enough to be born with the entrepreneurial gene, people must do something with it. Financial advisors need to be able to dig below the surface to understand the dynamics of the entrepreneurial client and then can target advice.

Behaviorally smart financial advisors should be:

  • Comfortable being a user to test the financial validity of an opportunity.
  • Confident enough to challenge ideas and ask questions.
  • Trustworthy enough to encourage yet confront when the entrepreneur’s ideas are spinning out of control.

When financial advisors understand that Entrepreneurs are driven by the need to succeed and control their own destiny, they are less likely to put them in a client box. They won’t deliver mundane advice but will recognize the importance of getting inside the mind and genetics of an entrepreneur.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

Entrepreneurs Cant be Lone Wolves and be Successful

Entrepreneurial Lone Wolves Can’t Be Successful

Entrepreneurs can’t do it alone. From start-up, the entrepreneur has many roles and will not have the skill set for all of them. Building the right team around them is critical to building a successful business.

Sir Richard Branson makes the following observation:
People tend to think of entrepreneurs as lone heroes, but this isn’t how it works in real life. Many live up to their reputation as risk-takers and some remain outsiders, but despite this outlier status, entrepreneurs need support to be successful. In fact, were a lot like Formula 1 race-car drivers: The person in the cockpit gets all the glory since fans tend to forget about the pit crew and the behind-the-scenes effort it takes to keep the driver on the track. Business is no different; an entrepreneur does not succeed alone.

Behaviorally smart entrepreneurs, who know their limitations, are more likely to have conversations about the skills they lack and reach out to others to fill the gaps.

Those individuals who have completed the DNA Behavior Natural Discovery process and read our significant research into Mastering your Entrepreneurial Style understand their genetics as outlined below:

1. Resilience (Measured by the Fast-Paced trait) – they achieve results, manage setbacks and rationally take quick action.
2. Risk Taker (Measured by the Risk trait) – confidently take risks and tolerant of losses.
3. Creativity (Measured by the Creative trait) – innovative with ideas and seeks to differentiate.
4. Work Ethic and Focus (Measured by the Pioneering trait) – pursues goals and is often ambitious and competitive.
5. Charisma (Measured by the Outgoing trait) – outgoing, connects with a lot of people and influences people to follow them.

 

Key TraitsSource: DNA Behavior International

More importantly, they will have a deeper insight into their entrepreneurial genes and feel empowered, through this knowledge, to bring others on board to take up some of the heavy-lifting.

As the business grows, entrepreneurs tend to feel besieged by the day to day workload. The appointment of someone, we will refer to as an Integrator, is a key first hire. Integrators should have the experience, skills, and temperament to manage the day to day business operations and understand how the entrepreneur ticks. This will ensure the business has a strong foundation. Further, it releases the entrepreneur to focus on building the business and using their entrepreneurial talents to do so.

Generally speaking, the talents are:

  • Big picture thinking
  • Creatively solve problems
  • Sees opportunities to go to market
  • Manage the pressure and risk
  • Has little patience for the day to day minutia

When the Entrepreneur and the Integrator have insight into their own and each other’s personalities, their communication style, and their decision-making approach, they understand where and when they need to modify their behavior to be a successful team.

Here are a few keys to building the Entrepreneur/Integrator relationship:

  1. Mutual respect
  2. Both passionate and driven to build the business
  3. Communicate directly
  4. Clear on boundaries
  5. Open to learning from each other
  6. Trust built on transparency and openness

Understanding each other’s strengths and limitations ensures the gaps’ are filled, and the business can move forward.

When an entrepreneur has no insight into their personality, hitting a no man’s land,’ such as dealing with day to day issues, managing 10-30 people and still trying to envision the business, they need to understand that failure is a very real possibility.

If there is no Integrator introduced, the next phase, when the business is getting off the ground and showing signs of success, will stall because:

  • It hasn’t the people to grow sales
  • It hasn’t got the innovation to keep growing.
  • It hasn’t the problem-solving capabilities

Once success is on the horizon, 30 employees can quickly become 50, 100, 500. This stage, moving into a sales organization, requiring sales systems and customer relationship management systems/processes, is where many entrepreneurs struggle. Such a level of hands-on day-to-day minutia (their interpretation) to grow can frustrate them.

This is where an Integrator and Entrepreneur working well together can take a vision to market.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior.

 

 

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Are Entrepreneurs Born or Made?

Like me, many of you instinctively knew that you had a strong desire to start a business and then at some point, the right innovative idea came along and in you jumped. Then along the way, the entrepreneurial journey turned out much harder than you had expected – both emotionally and financially.

Having built five different businesses over the past 21 years, one principle I stick to is the ability to manage my own behavior. Then add managing the behavior of the team, and you have the primary difference between success and failure. Did I always just know this, or where did I learn it? It begs the question of are entrepreneurs born or made?

At DNA Behavior International we extensively researched the subject of Entrepreneurial Genetics using our validated Business DNA Natural Behavior Discovery Process as the foundation. Our analysis that a person is born with entrepreneurial genes is supported by other similar findings in academic research and studies. However, being genetically predisposed towards entrepreneurialism doesn’t guarantee that an entrepreneur’s journey won’t be without challenges.

Our research concludes that entrepreneurs who have built a business with over $1m in turnover will have the following genes (natural hard-wired behavioral traits) in descending order of dominance:

  1. Resilience – achieves results, manages setbacks and rationally takes quick action.
  2. Risk Taker – confidently takes risks and tolerant of losses.
  3. Creativity – innovative with ideas and seeks to differentiate.
  4. Work Ethic and Focus – pursues goals and is often ambitious and competitive.
  5. Charisma – the ability to influence people to follow them, often having a balance between being outgoing and reserved.

These genes are more pronounced for those entrepreneurs who have built businesses with a turnover of more than $10m. And for the fast-growing number of women who are becoming entrepreneurs, the tendency for them is to be more moderate in the above-listed traits. However, they compensate with their natural ability to build stronger relationships.

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Entrepreneurs must be multifaceted and dynamic, yet be laser sharp and narrowly focused. Their many duties require a uniquely talented character, but differences in personality and perspective can determine success or failure. It is not surprising, therefore, that the number one genetic trait of an entrepreneur is resilience as this is foundational to survival in life and business.

Regardless of where you are on the entrepreneurial journey, there will be challenges. Without personal self-awareness of the above five key traits, even the most gifted entrepreneur will crash and burn. Whilst a strong sense of purpose will keep entrepreneurs motivated during challenging times, behaviorally smart individuals face challenges knowing that through them, they will learn and grow.

Look again at the five entrepreneurial genes and ask yourself these questions:

  1. Which of the above entrepreneurial genetic traits am I most dominant?
  2. Am I leveraging the dominant one? If not, why not?
  3. Who is alongside me as a partner or integrator (master key executive) to bridge the gap between the less dominant genes? And is that support successful?
  4. Who else do I need on the team and in what roles?
  5. Resilience is an essential quality to succeeding in any business, but how is my work/life balance?

Understanding the genes that make you a successful entrepreneur is very empowering. These insights provoke deeper thinking about the essential success factors and to consider how to activate your underused talents for building a business, and life, with meaning.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit Communication DNA.

 

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Today I’m Going to be an Entrepreneur!

 

DNA blog

Yes, there are times individuals wake up with an amazing idea and are convinced they are the next Sir Richard Branson, Bill Gates or Mark Zuckerberg. They persuade themselves that they are an entrepreneur. They may even attract investment for their idea. The market might be excited by this new offering BUT the truth is that most entrepreneurs fail to get their businesses off the ground. Even if they do, building and sustaining a successful business is rare.

The 2015 US Census Bureau reports that 400,000 new businesses are started every year in the USA but that 470,000 are dying, a worrying statistic.

John Chambers, Cisco’s CEO of 20 years, says this – More than one-third of businesses today will not survive the next 10 years. Shikhar Ghos, in his recent Harvard University study, claimed that three out of every four venture-backed firms fail.

The strengths that make people entrepreneurs are counterbalanced by struggles that can get in the way of success. Without this self-understanding, decisions will be made that can cause the enterprises to fail.

Much research exists now to confirm that entrepreneurs are born and not made. Having conducted extensive research to validate these findings, DNA Behavior International has identified the top five (5) genetic traits that are to be found in entrepreneurs.

  1. Resilience (Measured by the Fast-Paced trait) – they achieve results, manage setbacks and rationally take quick action.
  2. Risk Taker (Measured by the Risk trait) – confidently take risks and tolerant of losses.
  3. Creativity (Measured by the Creative trait) – innovative with ideas and seeks to differentiate.
  4. Work Ethic and Focus (Measured by the Pioneering trait) – pursues goals and is often ambitious and competitive.
  5. Charisma (Measured by the Outgoing trait) – outgoing, connects with a lot of people and influences people to follow them.

Having these genetic traits does not guarantee success for entrepreneurs. Learning to be behaviourally smart in using the powerful genetic ingredients they were born with is more likely to deliver success.

Of the 5 identified entrepreneurial traits listed above – resilience leads the pack. Building a business, handling the enormous pressure of setbacks, rejection of ideas, sustaining a business, managing staff, and dealing with market expectations, will never be plain sailing. If you are ever to see blue water, understanding the importance of resilience is a key factor.

Through their DNA Behavior Natural Discovery Process, the entrepreneurial genetic traits can be measured. The graphic below highlights, in order of strength, from the top down the behavioral factors (genes) which an entrepreneur exhibits:

FactorsPerformance

 

The resilience gene is measured by the fast-paced trait. When this trait measures more than 55 – results will be achieved, setbacks will be managed and the individual will be able to rationally take quick action in any given circumstance.

Success in business is rarely about how many challenges you face so much as it is a matter of how you respond to the challenges. Entrepreneurs who are behaviorally smart, and understand their personality and genetic makeup, will have a level of resilience which allows them to face an almost constant barrage of challenges without ever weakening their resolve or losing their passion.

Interestingly the DNA Behavior Research program found that when comparing entrepreneurs who had built a $10 million turnover business as against a $1 million turnover business, that all the key DNA factors do not measure differences in an overall sense, but they do measure stronger.

Do you see yourself as an entrepreneur? Are you heading up a business you founded? Have you taken over a family business? Whatever the situation that brought you to this season of life, if you don’t know your entrepreneurial traits and understand how to manage them, and perhaps more importantly, how to fill the gaps in your talent, you may be heading for the failure statistic graveyard.

To learn more, please speak with one of our DNA Behavior Specialists (LiveChat), email inquiries@dnabehavior.com, or visit DNA Behavior

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Solving The Dangerous Voids in Risk Profiling

No doubt, intense discussions surrounding risk tolerance and behavioral finance are on the rise. Michael Kitces, who writes the Nerds Eye View Blog, has written a very good summary on the state of play regarding risk tolerance questionnaires in his article: The Sorry State of Risk Profiling Questionnaires for Advisors.

Michael articulates various risk factors in distinguishing between tolerance, capacity and perception. Likewise, for advisors using Financial DNA, addressing the differences between tolerance, capacity and perception is very clear. And these users are provided with the structured framework in which to do it.

Then there is how the risk profile is used. In goals-based planning, where the client has a portfolio designed to achieve buckets of goals, there may be multiple risk profiles. Given that there are different goals, the risk tolerance of the client must be known and the framework outlined and applied.

Many advisors believe that risk tolerance can be determined by observation or casual interaction. However, these methods are neither objective nor validated. Relying on the advisor’s perception of the client under preset circumstances (in a comfortable office or out for a meal) opens the door to a myriad of pitfalls. The advisor is influenced by their own risk profile and biases, which removes objectivity. The client, while self-reporting, may not be faced with the pressures of considering a volatile market or other life-changing event, which would alter decision making or goal-setting, again removing objectivity from the equation. Also, not using a validated psychometric risk profiling process means that the advisor does not have a consistent process for handling the risk conversation with the client. This further leads to discolored results, and not just for a given client, but across the entire firm.

While current regulations do not specify that a validated psychometric process must be used, it is the direction in which we’re headed. If the firm wants to have a robust process of mitigating client complaints and maintaining compliance, these tools provide the solution. Plus, as Kitces points out, it is not just the tool itself, but also the planner’s behavior and skill in deploying the tool that is important.

Conversely, some advisors state that they do not wish to bother a client with more paperwork, so they do not have them complete a risk questionnaire. But experience shows that the addition helps keep the focus client centered during the planning process, plus the client feels more engaged because they’ve participated at a higher level. So it becomes a service quality enhancement, which deepens the advisor / client relationship and ultimately leads to greater revenue.

Next, the discussion turns to the design of the actual risk tolerance questionnaire – “right data in, right data out”. Kitces is right (as is Plan Plus), most tools are inherently flawed for many reasons, and many purport to be something they are not. The questionnaire structure is important to the outcome, and must follow an accepted psychometric model.

Our view is that all of the risk profiles (even the validated ones) use situational based questions – that is, the client could respond to the questions differently depending on any one (or combination of) market or personal events, attitudes, feelings, perceptions, education etc. While this template provides a basic baseline profile, it does not provide the most accurate or effective insights as to the emotional state of a client. Daniel Kahneman, psychologist known for his extensive work in behavioral finance and decision making, details our “Level 1″ automatic decision-making style as when we are under pressure or how our baseline, “hard-wired” instincts will drive decision-making. So unless a clients (or your own) Level 1 style is known, it is impossible to build a long-term portfolio, as it will be emotionally incompatible. So the questionnaire has to be designed to uncover this Level 1 behavior – free from personal or situational bias. The Financial DNA design does just this and the validated results are accurate and constant over time.

Whats missed in all of this is risk tolerance being only 1 dimension of a clients financial personality. There are several more factors to consider within the broader field of behavioral finance in order to fully understand the decision-making biases of both the client and advisor. Not communicating these biases only creates more risk to the client / advisor relationship, decision-making, goal-setting and overall compliance. So, the risk discussion is not complete without knowing the clients full set of behavioral biases and knowing how to communicate on the client’s terms. And this is why it is so important that the questionnaire design must be objective, robust and validated.

One thing for sure is, the regulatory process will not go backwards. And in today’s competitive and complex world, costly client complaints will not go away. But, on the positive side, those advisors who are investing in building client centered and compliant processes have the upper hand. So, invest in a stronger “Know Your Client” process, as what is good for the client will be much better for the advisor and firm too.

 

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