The Difference Between Business Smarts and Book Smarts

People tend to be driven or inspired by one of four modalities of decision-making and self-awareness. You could be driven by heart; you could be driven by smarts; you could be driven by guts, or luck.

In terms of the smarts-dominant trait, these are really people that are not necessarily book smart.  In fact, if you are out there and you are wondering, “Boy, my book IQ is not necessarily at the top one percent of one percent you have very little to worry about. The threshold and base line for book IQ smarts is actually fairly low for entrepreneurial ventures.

What you need in terms of smarts is great pattern recognition.  Pattern recognition is how we define smarts in our research that we did at Heart, Smarts, Guts & Luck, and you can test for your quality of smarts at www.HSGL.com. And who are people who really exemplify that? Think of people like Jeff Bezos, or think of someone like Warren Buffett.

When Jeff was starting to market his company Amazon, he asked himself, “What is really working out there in the direct marketing side?”  And books seemed to be a pretty good category.  So it wasn’t necessarily this maniacal pouring over spreadsheet after spreadsheet but really the pattern recognition in an analogous industry applied to the industry he was trying to transform.

Consider someone like Warren Buffett. Think about where Buffett makes his money.  He takes it to very simple principles of good business modeling and good people.  And he talks a lot about codifying his decision-making and really great smart driven people and really great successful entrepreneurs in general have that self-awareness to write down the reasons that they’re making a decision and go back and reflect on it.