*ENTREPRENEURIAL LEADERSHIP: CERTAINLY A TOOL;
NOT A MEANS TO ORGANIZATIONAL SUCCESS
Vikrant Singh Tomar
Maharaja Institute of Information Technology
e-mail id: [email protected]
Abstract
Entrepreneurship refers to the ability to apply innovative ideas and unexplored perspectives to
business processes. Entrepreneurial leadership is vital to an individual and to a corporation’s
success. But rarely can entrepreneurs make a company succeed by themselves. This is much like
the fact that the greatest athlete doesn't ensure that their team will win if the other players cannot
perform. As such, entrepreneurs need to be able to identify staffing needs, expertly fill them, and
lead the team to success. To be an effective leader, an entrepreneur must build trust and
confidence among employees, and communicate effectively with them. The keys to achieving
acceptable levels of excellence involve four key entrepreneurial leadership strategies. At the
heart of successful leadership strategies rest a concern for people. These values provide a new
paradigm of interactive cues and a foundational core for the successful fulfillment of those key
strategies.
INTRODUCTION
"It is a constant struggle to find people who can be both entrepreneurial and conventional
leaders... Finding them is the fundamental issue in any company that wants to grow."
– Roger Ackerman, Chairman and CEO, Corning, a Fortune 50 company
The contemporary business arena continues to hold great promise for dramatic innovational
developments unheard of in previous eras. In the new era of rapid changes and knowledge-based
enterprises, managerial work becomes increasingly a leadership task. Leadership is the primary
force behind successful change. Leaders empower employees to act on the vision. They execute
through inspiration and develop implementation capacity networks through a complex web of
aligned relationships.
In the increasingly turbulent and competitive environment business firms face today, a new type
of "entrepreneurial" leader distinct from other behavioral forms of managerial leadership is
required. Entrepreneurship refers to the ability to apply innovative ideas and unexplored
perspectives to business processes. The entrepreneurial ability ensures long-term success of the
business enterprise. An entrepreneurial organization is always ahead of its times and has efficient
processes and systems in place. The role of the entrepreneurial leader in organizations is
changing. His/her role, today, calls for engaging each employee in the entrepreneurial process
and taking all ahead at the same time.
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Peter Drucker (1985) states in his article, A Prescription for entrepreneurial management”, “
Leadership does not necessarily mean bigger; it means being accepted as the leader, recognized
as the standard setter. Above all, it means having the freedom to lead rather than being obliged to
follow” (p.36). In looking at these definitions it can be seen that there are many different types of
leadership. Several examples might be transformational, charismatic, and entrepreneurial
leadership. Entrepreneurial leadership is vital to an individual and to a corporation’s success.
Entrepreneurial firms are a major source of innovation and change. They create jobs, new tax
revenues, and other transfers of money.
Entrepreneurial leadership is leadership that is based on the attitude that the leader is selfemployed. Leaders of this type:
• take initiative and act as if they are playing a critical role in the organization rather than a
mostly important one and energize their people,
• demonstrate entrepreneurial creativity, search continuously for new opportunities and
pursue them,
• take risk, venture into new areas and provide strategic direction and inspiration to their
people,
• take responsibility for the failures of their team, learn from these failures and use them as a
step to ultimate success and strategic achievement
Entrepreneurial leadership involves instilling the confidence to think, behave and act with
entrepreneurship in the interests of fully realizing the intended purpose of the organization to the
beneficial growth of all stakeholders involved.
FOUR STEPS TO ENTREPRENEURSHIP
As more and more people start or consider starting their own business, it is important that they
understand the core steps that are required to launch successful ventures. These steps include
spotting, assessing, selecting and executing upon opportunities.
• Spotting Opportunities: The first step to entrepreneurship is identifying opportunities. The
entrepreneur must be able to spot an unmet need. Oftentimes this need is seen through
inefficiency in the market - something that doesn't work quite the way the entrepreneur
would like it to. As a result, the entrepreneur figures out a potential solution and the
opportunity is born.
• Assessing Opportunities: Many entrepreneurs keep a journal that details the myriad of
opportunities they come across each day. While it takes a creative skill set to identify
opportunities, it takes an analytical skill set to assess them. Each opportunity should be
assessed to, among others, determine its likelihood of success and the financial and human
resources required to execute upon it.
• Selecting Opportunities: One of the biggest risks in selecting the wrong opportunity is
opportunity cost; that is, the cost of having to forego another opportunity that may have been
wildly successful. Entrepreneurs should assess their potential opportunities and come to a
firm decision regarding which one to execute upon. Once selected, the entrepreneurs cannot
second-guess themselves. To do so would lessen their focus and drive towards the selected
opportunity, both of which are critical in achieving success.
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•
Executing Upon Opportunities: Execution, or the ability to generate the most value out of an
opportunity, requires a unique combination of creativity, passion, persistence, focus,
responsibility, intelligence, planning and energy. The entrepreneur needs to know what tasks
must be accomplished and be the main driver in seeing that these tasks are completed in an
appropriate manner.
Understanding the four steps to entrepreneurship enables entrepreneurs to better understand the
path that they are embarking upon. It is a path filled with potential pitfalls, but also filled with
tremendous excitement, satisfaction and potential to build enormous value.
DOES IT LEAD TO SUCCESS?
Rarely can entrepreneurs make a company succeed by themselves. This is much like the fact that
the greatest athlete doesn't ensure that their team will win if the other players cannot perform. As
such, entrepreneurs need to be able to identify staffing needs, expertly fill them, and lead the
team to success.
Leadership is the process through which an entrepreneur is able to influence employees to
achieve the objectives of the organization. To be an effective leader, an entrepreneur must:
• Build trust and confidence among employees
• Communicate effectively with them
Leaders can build trust in many ways. They can achieve it by working hard, maintaining a
constant message and/or being available to solve employees' problems among others. By
showing employees that they are fully committed to achieving the vision, entrepreneurial leaders
build trust and confidence in employees. This in turn yields high employee satisfaction and
commitment.
Effective communication is equally critical to successful leadership. If employees are unclear
about the company's vision, and/or receive mixed messages over time, they will be unable to
focus all of their efforts on achieving the company's goals. Conversely, by delineating the
company's vision and goals, and reinforcing them over time with the same message, the
company's goals become engrained in its employees.
In addition to building trust and effective communications, other keys to entrepreneurial
leadership include the following:
• Seeking self-improvement: A great leader always seeks to become even better.
• Possessing technical skills: While the leader may not need to have the greatest technical
skills in their organizations, they need to be savvy enough to lead the team.
• Accepting responsibility for actions: Leaders and companies always make mistakes. Great
leaders don't place blame on others.
• Making decisions: Good leaders must make good and timely decisions.
• Being a role model: A leader must set an example to employees and guide them to excel.
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WHO IS AN ENTREPRENEURIAL LEADER?
An entrepreneurial leader is said to be one who possess following characteristics:
• Self-Esteem: Underlying everything, is a high sense of one's own self-worth. Without that,
individuals will never undertake tough challenges. If one does not have it, it's important to
develop self-esteem.
•
Need to Achieve: This need has been associated with entrepreneurs and leaders who
constantly seek to perform at their best. For example, this leadership quality would have
described Oliver Cromwell (1599 to 1658) the Lord Protector of England, who once
remarked, “He who stops being better, stops being good.” The great Harvard psychologist
David McClelland is most associated with need for achievement, a need learned by children
primarily from their parents (McClelland, 1965). Individuals high in this need are open to
feedback, are goal oriented, seek to be unique, and strive for accomplishments based on their
own efforts—characteristics important to effective leadership. They also take risks, not
extreme risks, but moderate ones.
•
Screening For Opportunity: Like all individuals, leaders screen incoming information to
separate the useful from the useless. However, successful entrepreneurs and business leaders
screen incoming information to constantly seek new growth opportunities. They act like gold
miners who must shift through tons of dirt to find those a few precious golden nuggets.
•
Locus of Control: Successful leaders and entrepreneurs typically show a high internal locus
of control (Lee, 2001).. When someone perceives events as under the control of others, fate,
luck, the system, their boss, etc. they have an external locus of control. Individuals high on
the internal locus of control have a different assumption about how the world works. They
assume that any success they experience is due to their personal efforts and that they have the
ability to influence events. Interestingly, internal also assume failure was also their fault.
Goal Orientation: Businesses come and go, but those that last always share a common
characteristic with their founder—a relentless drive to accomplish goals. They understand
what the priorities are and continue to work at toward that goal, day in and day out. For
many, leadership quality of staying focused on a goal is a very difficult thing to do since life
in the world of business tends to distract us. McKinsie in this book “The Time Trap” put it
this way, “A man was struggling to cut down enough trees to build a fence. An old farmer
came by, watched for a while, then quietly said, “Saw’s kind of dull, isn’t it?” “I reckon,”
said the fence builder. “Hadn’t you better sharpen it? Said the farmer. “Maybe later," said the
man, "I can’t stop now—I got all these trees to cut down.” Our goal should be to continue to
perfect ourselves, something we rarely have time for.
•
•
Optimism: Underlying successful entrepreneurial leadership is a boundless font of optimism
that never seems to end. When faced with a problem, they view it as a challenge. When faced
with a setback, they view it as a new direction, when told no, they say, “Maybe not now, but
I know you’ll change your mind later.” This characteristic contrasts sharply with the vast
majority of people who project a more pessimistic, defeatist quality. It’s this belief in the
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positive that serves as the foundation for dealing with the many set-backs one will inevitably
encounter in the world of business.
•
Courage: Many professors talk about entrepreneurs as risks takers. But this leadership
quality is like saying snow is cold—it's accurate but missing something. Another way is to
say the same thing is that one must have guts. It requires a great deal of courage to build a
company from the ground up. When one first starts a business, one is alone.
•
Tolerance to Ambiguity: This term refers to a person’s tolerance to uncertainty and risk.
Entrepreneurs generally score high on this scale (Entrailgo, 2000). If one’s tolerance for
ambiguity is low, one will gravitate toward large, established organizations—better still,
work for the government where things change little if at all. In contrast to older, established
organizations, entrepreneurial start-ups exist in an environment where almost everything is
new and many things have not been done before. For example, no policies exist to guide
action and start-ups typically lack the old timers who serve as the voice of experience.
•
Strong Internal Motivation: The “Fire Inside”: The motivation that drives our behavior
comes from two sources: internal (intrinsic) and external (extrinsic). Intrinsic factors include
constructs like needs, desires, motives, and will power. Extrinsic factors include any type of
motivational influence from the environment such as rewards and punishments. For
entrepreneurs, the most important motivational factor is the intrinsic one.
WHAT AN ENTREPRENEURIAL LEADER DOES?
Focus, focus, focus, focus, focus: The word "focus" simply cannot be said enough. When
launching and growing a venture, tons of opportunities and obstacles arise. They consider new
opportunities, but also note that pursuing them often takes them away from accomplishing what
they set out to do.
Vision: Entrepreneurs must have a vision of where they want their company to be in the future.
In addition, the entrepreneur must be able to communicate this vision in an exciting manner to
employees and investors, so that they share the vision and are motivated to help achieve it.
Leadership: Rarely can entrepreneurs make a company succeed by themselves. This is much like
the fact that the greatest athlete doesn't ensure that their team will win if the other players cannot
perform. As such, entrepreneurs need to be able to identify staffing needs, expertly fill them, and
lead the team to success.
Persistence & Passion: An entrepreneur must be passionate about what they are trying to
accomplish. Likewise, they must be willing to commit whatever is needed of them. They must
persist through trying times, since there are always bad times, and fight as much as needed to
achieve the goals they have set.
Technical skills: While entreprene
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urs may not need to have the greatest technical skill sets in their organizations; they need to be
savvy enough to lead the technical team. They need to understand the technical team's language
and have a general understanding of the challenges they face in order to effectively lead them.
Flexibility: Successful entrepreneurs understand that the world and the environment in which
they operate are constantly changing. While they must focus on the end game, they must adapt
their strategies and offerings to meet changing market conditions.
Hire smart: Companies succeed based on the people that comprise them. Virtually all people in a
small, growing entrepreneurial company make key decisions and take actions that can
significantly impact the success of the venture. As such, the people that are hired must be hired
with care. They must be intelligent, responsible, and equally importantly, have the enthusiasm to
succeed and the ability to work in a fast-paced, rapidly changing entrepreneurial environment.
Communicate: You have set company goals and remain focused on achieving them. You have
hired great people. Now, it is important to effectively communicate. The laser-sharp focus and
goals must be communicated to the great team. Management must share information, instill
company values and vision, discuss each employee's performance with them, and make
employees feel that they are the company and that the company is them.
Never blame: At least, don’t blame an employee in front of another. If you have to reprimand, do
it in private. This sets a bad tone, and you lose respect with all employees, as such things will get
around like bad gossip.
Don’t create adversarial situations: Don’t pit employees against each other or ask them to
snitch. Healthy competition is fine. Back-stabbing is like a smile, but only in that it carries a long
way through the company morale, and not in a good way.
Understand the work: Be a constant learner. Have at least a fundamental understanding of the
work you’re expecting your employees to do. It makes it easier on everyone when the try to tell
you why something can’t be done, or that it will cost more.
Don’t put square pegs in round holes: Basically, assign the right work to the right people, to
allow them to work optimally. Don’t be like those companies that shall remain nameless that
give you a job you can’t do and beat down your spirit. You wouldn’t want that and neither would
your employees.
Lead by example: If the company approaches a problem that covers new ground, don’t expect
your employees to know how to solve it. If you know how, give them a crash course and let them
take it from there. And by leading, I don’t mean leading employees like a puppy.
Brainstorm: If they still have trouble solving a new problem, brainstorm with them. Proper
brainstorming requires that at least the moderator of the meeting does some legwork beforehand.
Record all ideas without censorship, or you might miss the best solution, which might be
unfamiliar and thus seem odd.
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Ask, don’t tell: Communicate well and clearly. In a startup company with a positive environment
and healthy competitive spirit, most people want to be asked, want to be challenged. Offer up the
day’s or week’s “assignments” and let people pick. That is, if you’re not such a big company yet
that you need to structure everyone’s roles. Don’t count anyone out. You might be suprised
about who’s capable of what. Challenges also weed out the lazybones.
Be decisive: Have a strategy ready. If business problems crop up and employees are aware of
them, they’ll be thinking about their bills, their mortgages, etc., not yours. (Possibly unless
you’re giving them incentives.) So be the decision-maker, indicate what needs to be done, then
ask for volunteers or assign tasks if necessary.
Consider profit-sharing: Bonuses go a long way towards employee loyalty, passion and
creativity. Sure, there’ll still be stragglers, but a creative bonus “matrix” weeds them out. If your
company is young, there’s only so far you can go with bonuses, so also consider profit-sharing/
private shares. Talk to a good accountant about the best way to implement these incentives.
Be sympathetic- Or at least courteous: It’s only human to not always be in top form, even with
incentives. Talk to your employees, understand them and give them some leeway when possible.
Have some redunancy in job descriptions, right from the beginning, to allow someone to
temporarily take up the slack.
Be firm: Being sympathetic is all well and good, but you do have a business to run. Be firm
when it’s necessary.
Win: Entrepreneurship, like basketball or football, is a game. There are winners and losers.
There are narrow victories and landslides. There are Davids and Goliaths. Competition should be
hard work, but it should also be fun. The company should be instilled with competitive spirit and
be committed to winning. Winning may take many forms, such as hitting sales goals or turning a
profit by a set date. Regardless of how winning is defined, it should be clearly articulated and
everyone in the company should have a competitive, winner spirit instilled within them.
The above lessons can help entrepreneurial ventures edge out their competition and enjoy the
financial and emotional success that such ventures are capable of generating.
HOW TO BUILT EFFECTIVE ENTREPRENEURIAL TEAM?
So what are the characteristics of highly effective "Right Stuff" entrepreneurial employees?
Here are a few to keep in mind as you interview potential new hires, you probably can think of
others.
Ability to Deal With Risk: An entrepreneur has to operate effectively in an environment filled
with risk. The Right Stuff Employee can deal with risk and uncertainty. He is able to make
progress towards goals and is able to make decisions when lacking one or several critical
resources or data.
Results Oriented: The Right Stuff Employee is results oriented, she takes ownership to get the
task done. She is a "can do" person who demonstrates common sense in her decision and actions
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and is able to cut through and resolve problems that divert others. Her business judgment is
sound and becomes stronger with each experience, decision or recommendation. While
supervisors and managers may disagree with her ultimate recommendation, they usually agree
that the alternatives she presents are reasonable for the situation at hand.
Energy: The Right Stuff Employee has high levels of enthusiasm and energy; he consistently
generates output that is higher than could be reasonably expected. He is fully committed to the
organization, its goals and overall success. Not only does he desire to make a contribution to
results, he needs to see the results of his contributions quickly, not measured in years! He will
seek out an organization that solicits and acts upon his ideas, gives credit where credit is due and
points out errors and poor decisions quickly and clearly. He performs effectively with limited
supervision and is able to self-motivate and set priorities with minimal guidance.
Growth Potential: The Right Stuff Employee's reach exceeds her grasp today. Today's Right
Stuff Employee is often next year's supervisor and a department manager soon thereafter. She is
willing to accept much higher levels of responsibility that is the norm for her position, title,
experience level or salary. She acts as a strong role model, trains and coaches others, and soon
begins to assume supervisory responsibilities, again much earlier than would be expected in a
normal corporate environment.
Team Player: The Right Stuff Employee is a true team player, she recognizes how her role
contributes to the overall effort and success of the organization. She accepts accountability and
ownership for her area of responsibility and expects others on the team to do the same. She also
recognizes the roles and contributions of others and applauds their efforts sincerely.
Multitasking Ability: The Right Stuff Employee is flexible to accept new duties, assignments
and responsibilities. He can perform more than one role until the incremental duties and
functions assumed can be assigned to co-workers in newly defined roles. He is also willing to
dig in and do grunt work tasks which eventually will be performed by lower level employees.
Improvement Oriented: The Right Stuff Employee is more than willing to challenge in a
constructive way existing procedures and systems; to her the status quo is temporary. She
suggests changes and improvements frequently and encourages others to do so also.
PROFESSIONAL MANAGEMENT vs. ENTREPRENEURIAL MANAGEMENT
An entrepreneur has a dream. Skill, hard work, and luck turn that dream into a business success.
At some point, as the company grows and matures, the founder faces a decision - should he/she
continue to manage the company or stay with the dream. Should the founder continue with
entrepreneurial management or is it time to engage professional managers so the founder can
devote more time to the company's core idea? It is a question that must continue to be faced as
the company continues to grow.
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When To Give Up Control: When is the right time for the founder to relinquish control of his
dream to a professional? Some would have you believe it has to happen as soon as the founder
begins to look for outside capital. Others would have you believe it is never the right time.
The Merriam-Webster dictionary defines entrepreneur as "one who organizes, manages, and
assumes the risks of a business or enterprise" and manager as "one that manages: as a : a person
who conducts business or household affairs or b : a person whose work or profession is
management". As you can see from those definitions, there is a lot of overlap between the two.
That's what makes the decision so hard. Many entrepreneurs are excellent managers. Often the
founder's decision to manage the company or "manage the dream" is a win in either case for the
company. In many cases, the decision hinges on the founder's definition of success. Does the
founder want to grow the company into the biggest enterprise in its industry? Or would the
founder rather limit growth to something that provides simply a good income and allows him/her
to retain full control of the company and its goals and direction?
A tough choice: It is tough for any entrepreneur to decide when, or whether, to relinquish control
of their dream for the growth and freedom a professional management team can bring to their
company. If you have made the choice, let us know how you decided, and when. If you are
facing the decision, post your situation on our Management Forum, and see what guidance your
peers can give you. The current decade has produced a wave of activity in corporations to initiate
or reinvigorate innovative thinking. While numerous authors advanced the notion of "visionary
leadership" during the past twenty years, the concept of "entrepreneurial leadership" has emerged
as the solution for the 21st century.
Determinants of business venture growth are generally not discussed from a dynamic
perspective, especially not entrepreneurial vis-a-vis managerial growth. A firm can grow
entrepreneurially and a firm can grow managerially, but not at the same time. Furthermore, we
associate entrepreneurial growth with leadership, imaginary organisations, explorative learning,
relationship marketing and value constellations. Similarly, we associate managerial growth with
management, focal organisations, exploitative learning and transactional marketing. For a firm to
grow successfully, it requires a proper mix of the above aspects. This mix will vary and the
important implication is to recognise and apply the relevant mix during the firm's various
development periods, in order to achieve long-term growth.
CONCLUSION
The keys to achieving acceptable levels of excellence involve four key entrepreneurial leadership
strategies: attention through vision, meaning through communication, trust through positioning
and confidence through respect. At the heart of successful leadership strategies rest a concern for
people and the interpersonal values of joy, hope, charity and peace. These values provide a new
paradigm of interactive cues and a foundational core for the successful fulfillment of those key
strategies.
Certain leadership characteristics and qualities allow leaders, especially entrepreneurs, to
experience greater success. Many of these are psychological qualities and innate characteristics
not easily observable, but are important none-the-less
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The good news is that many of these leadership characteristics and qualities are learnable. For
example, one can train the mind to recognize opportunity, optimism is a controllable state of
mind (Seligman, 1988), and even the need for achievement can be increased (McClelland, 1983).
The bad news is it’s not easy to do so. After all, one can’t make a house strong with a good
foundation and one can’t be successful in business unless one possesses certain personal
characteristics. But where there is the will, there will be a way.
References:
McClelland, David (1983). Human Motivation. New York: Addison-Wesley.
International Journal of Innovation and Learning 2003 - Vol. 1, No.1 pp. 72 – 93
Burgelman, R. A. (1983). Corporate entrepreneurship and strategic management: Insights from
a process study. Management Science, 29(2): 1349-1363.
Brainyquote.com. [On-line]. Available: http://www . brainyquo te. com/quotes/
Google.com
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