Chapter 05 - Decision Making, Learning, Creativity, and Entrepreneurship
Chapter 05
Decision Making, Learning, Creativity, and
Entrepreneurship
CHAPTER CONTENTS
Learning Objectives
Key Definitions/Terms
Chapter Overview
Lecture Outline
Lecture Enhancers
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Chapter 05 - Decision Making, Learning, Creativity, and Entrepreneurship
LEARNING OBJECTIVES
LO 5-1 Understand the nature of managerial decision making, differentiate
between programmed and non-programmed decisions, and explain
why non-programmed decision making is a complex, uncertain
process.
LO 5-2 Describe the six steps that managers should take to make the best
decisions.
LO 5-3 Identify the advantages and disadvantages of group decision
making, and describe techniques that can improve it.
LO 5-4 Explain the role that organizational learning and creativity play in
helping managers to improve their decisions.
LO 5-5 Describe how managers can encourage and promote
entrepreneurship to create a learning organization, and
differentiate between entrepreneurs and intrapreneurs.
KEY DEFINITIONS/TERMS
administrative model: An approach to decision
making that explains why decision making is
inherently uncertain and risky and why managers
usually make satisfactory rather than optimum
decisions.
classical decision-making model: A prescriptive
approach to decision making based on the assumption
that the decision maker can identify and evaluate all
possible alternatives and their consequences and
rationally choose the most appropriate course of
action.
ambiguous information: Information that can be
interpreted in multiple and often conflicting ways.
creativity: A decision maker’s ability to discover
original and novel ideas that lead to feasible
alternative courses of action.
bounded rationality: Cognitive limitations that
constrain one’s ability to interpret, process, and act
on information.
delphi technique: A decision-making technique in
which group members do not meet face-to-face but
respond in writing to questions posed by the group
leader.
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decision making: The process by which managers
respond to opportunities and threats by analyzing
options and making determinations about specific
organizational goals and courses of action.
optimum decision: The most appropriate decision in
light of what managers believe to be the most
desirable future consequences for the organization.
devil’s advocacy: Critical analysis of a preferred
alternative, made in response to challenges raised by
a group member who, playing the role of devil’s
advocate, defends unpopular or opposing alternatives
for the sake of argument.
organizational learning: The process through which
managers seek to improve employees’ desire and
ability to understand and manage the organization
and its task environment.
entrepreneur: An individual who notices
opportunities and decides how to mobilize the
resources necessary to produce new and improved
goods and services.
product champion: A manager who takes
“ownership” of a project and provides the leadership
and vision that take a product from the idea stage to
the final customer.
entrepreneurship: The mobilization of resources to
take advantage of an opportunity to provide
customers with new or improved goods and services.
production blocking: A loss of productivity in
brainstorming sessions due to the unstructured nature
of brainstorming.
groupthink: A pattern of faulty and biased decision
making that occurs in groups whose members strive
for agreement among themselves at the expense of
accurately assessing information relevant to a
decision.
programmed decision making: Routine, virtually
automatic decision making that follows established
rules or guidelines.
innovation: The implementation of creative ideas in
an organization.
reasoned judgment: A decision that requires time
and effort and results from careful information
gathering, generation of alternatives, and evaluation
of alternatives.
intrapreneur: A manager, scientist, or researcher
who works inside an organization and notices
opportunities to develop new or improved products
and better ways to make them.
.risk: The degree of probability that the possible
outcomes of a particular course of action will occur.
satisficing: Searching for and choosing an
acceptable, or satisfactory, response to problems and
opportunities, rather than trying to make the best
decision.
intuition: Feelings, beliefs, and hunches that come
readily to mind, require little effort and information
gathering, and result in on-the-spot decisions.
learning organization: An organization in which
managers try to maximize the ability of individuals
and groups to think and behave creatively and thus
maximize the potential for organizational learning to
take place.
skunkworks: A group of intrapreneurs who are
deliberately separated from the normal operation of
an organization to encourage them to devote all their
attention to developing new products.
social entrepreneur: An individual who pursues
initiatives and opportunities and mobilizes resources
to address social problems and needs in order to
improve society and well-being through creative
solutions.
nominal group technique: A decision-making
technique in which group members write down ideas
and solutions, read their suggestions to the whole
group, and discuss and then rank the alternatives.
nonprogrammed decision making: Nonroutine
decision making that occurs in response to unusual,
unpredictable opportunities and threats.
uncertainty: Unpredictability.
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Chapter 05 - Decision Making, Learning, Creativity, and Entrepreneurship
Chapter Summary
In this chapter, we examine how managers make decisions and explore how individual, group, and
organizational factors affect the quality of the decisions they make. We discuss the nature of managerial
decision-making and examine the models of the decision-making process that help reveal its complexities.
The main steps of the decision-making process and the biases that may cause managers to make poor
decisions are explored. Also, how managers can promote organizational learning and creativity and
improve the quality of decision making throughout an organization is explored. Finally, the role of both
the entrepreneur and the intrapreneur are examined.
LECTURE OUTLINE
Management Snapshot (pp. 147-148 of text)
Decision Making and Learning at GarageTek
Why Are Decision Making and Learning of Utmost Importance for Entrepreneurs and Managers?
Highly effective managers can sometimes make bad decisions. Moreover, unexpected changes in the environment
can result in good decisions. Decision making has been an ongoing challenge for Marc Shuman, founder and
president of GarageTek. Since founding his company 14 years ago, he has recognized the need for decisions and
learnt from prior decisions. Garagetek is involved in designing and installing custom garage systems to organize and
maximize storage capacities. Shuman decided to franchise the idea to minimize competition. He observed that some
of his franchises were having serious problems. With the help of a consulting company, Shuman and his managers
set about to figure out the reason for the failure of some of his franchises. He discovered that the struggling
franchises either had low levels of investment or were managed by non-owners. Having learnt from this experience,
he has improved decision criteria to accept new franchisees and decided to give them more training and support.
For Shuman, making good decisions and learning from prior ones are still an ongoing challenge. GarageTek
currently has over 60 franchises in the world.
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I. The Nature of Managerial Decision Making
A. Decision making is the process by which managers respond to
opportunities and threats by analyzing the options and making
determinations, or decisions about specific organizational goals and
courses of action.
1. A good decision results in the selection of appropriate goals
and courses of action that increase organizational performance.
Bad decisions result in lower performance.
2. Decision making in response to opportunities occurs when
managers search for ways to improve organizational performance.
Decision-making in response to threats occurs when events
adversely affect organizational performance and managers search
for ways to increase performance.
3. Decision making is central to being a manager, and whenever
managers engage in planning, organizing, leading, and
controlling, they are constantly making decisions.
4. Managers are always searching for ways to make better
decisions in order to improve organizational performance.
B. Programmed and Non-programmed Decision Making
1. Programmed decision-making is a routine, virtually
automatic process. These decisions have been made so many
times in the past that managers have developed rules or guidelines
to be applied when certain situations inevitably occur.
2. Most decision-making that relates to the day-to-day running of
an organization is programmed decision making. It occurs when
managers have the information they need to create rules that will
guide decision-making.
3. Non-programmed decision-making is required for nonroutine decisions. Non-programmed decisions are decisions that
are made in response to unusual or novel opportunities and
threats. These occur when there are no ready-made decision rules
that managers can apply to a situation.
4. To make decisions in the absence of decision rules, managers
may rely upon their intuition or they may make reasoned
judgments. When using intuition, managers rely upon feelings,
beliefs, and hunches that come readily to mind, require little
effort and information gathering, and result in on-the-spot
decisions. Reasoned judgments are decisions that take time and
effort and result from careful information gathering, generation of
alternatives, and evaluation of alternatives.
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5. Although “exercising” one’s judgment is a more rational
process than “going with” one’s intuition, both processes are
often flawed and can result in poor decision making. Thus, the
likelihood of error is much greater in non-programmed decision
making than in programmed decision making.
6. Sometimes managers have to make rapid decisions and don’t
have time to carefully consider the issues involved, while in other
cases, they do have the time available to make reasoned
judgments.
C. The Classical Model
1. The classical model is prescriptive, that is, it specifies how
decisions should be made. Managers using this model make a
series of simplifying assumptions about the nature of the
decision-making process.
2. The model’s premise is that managers have access to all the
information they need to make the optimum decision. It also
assumes that managers can easily list and rank each alternative
from least to most preferred to make the optimum decision.
D. The Administrative Model
1. The administrative model explains why decision making is
always inherently risky and uncertain. It is based upon three
important concepts: bounded rationality, incomplete information,
and satisficing.
2. Bounded rationality describes the situation in which the
number of alternatives a manager must identify is so great and the
amount of information so vast that it is difficult to evaluate.
3. Information is incomplete because in most cases, the full
range of decision-making alternatives is unknown and the
consequences associated with known alternatives are uncertain. In
other words, information is incomplete because of risk and
uncertainty, ambiguity, and time constraints.
a. Risk is present when managers know the possible
outcomes of a particular course of action and can assign
probabilities to them. Uncertainty exists when the
probabilities of alternative outcomes cannot be determined,
and future outcomes are unknown.
b. Much of the information managers have at their disposal is
ambiguous information, which can be interpreted in
multiple and often conflicting ways.
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c. Due to time constraints and information costs, managers
are unable to search for all possible alternatives and evaluate
all the potential consequences.
4. Due to the limitations mentioned above, managers do not
attempt to discover every alternative in an attempt to reach the
optimum decision. Instead, they search for and choose an
acceptable or satisfactory response to problems from a limited
sample of all potential alternatives. This strategy is called
satisficing.
II. Steps in the Decision-Making Process
A. Using the work of March and Simon as a basis, researchers
developed a step-by-step model of the decision-making process.
There are six steps that managers should consciously follow to make
a good decision.
1. Recognize the Need for a Decision
Some stimuli usually spark the realization that a decision needs to
be made. The stimuli may originate from the actions of managers
inside an organization or from changes in the external
environment. Be it proactive or reactive, it is imperative that
managers recognize this need and respond in a timely and
appropriate manner.
2. Generate Alternatives
A manager must generate a set of feasible alternative courses of
action to take in response to the opportunity or threat. Failure to
properly generate and consider different alternatives can result in
bad decisions. Sometimes managers find it difficult to generate
creative, alternative solutions to specific problems. Generating
creative alternatives may require that we abandon our existing
mid-sets and develop new ones.
3. Assess Alternatives
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Once managers have generated a set of alternatives, they must
evaluate the advantages and disadvantages of each one.
Successful managers use four criteria to evaluate the pros and
cons of alternative courses of action. Often a manager must
consider these four criteria simultaneously. Some of the worst
managerial decisions can be traced to poor assessment of the
alternatives.
a. Legality: Managers must ensure that a possible course of
action is legal.
b. Ethicalness: Managers must ensure that a possible course
of action is ethical and will not unnecessarily harm any
stakeholder group.
c. Economic feasibility: Managers must decide whether the
alternatives can be accomplished, given the organization’s
performance goals.
d. Practicality: Managers must decide whether they have the
capabilities and resources required to implement the
alternative.
4. Choose Among Alternatives
The next step is to rank the various alternatives, using the criteria
listed above, in order to make a decision. Managers must be sure
that all information available is used. Sometimes managers have a
tendency to ignore critical information, even when it is available.
5. Implement the Chosen Alternative
Once a decision has been made, it must be implemented. Many
managers make a decision and then fail to act on it. To ensure that
implementation occurs, top managers must assign to middle
managers the responsibility for making follow-up decisions, give
them sufficient resources required achieve the goal, and hold
them accountable for their performance.
6. Learn from Feedback
Effective managers always conduct a retrospective analysis in
order to learn from past successes or failures. To ensure that they
learn from experience, managers should establish a formal
procedure that includes the following steps:
a. Compare what actually happened to what was expected to
happen as a result of the decision.
b. Explore why any expectations for the decision were not
met.
c. Develop guidelines that will help in future decision making
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III. Group Decision Making
When managers work as a team, their choices of alternatives are less
likely to suffer from biases. They are able to draw on the group’s
combined skills and accumulated knowledge. Group decision-making
allows managers to process more information and correct each other’s
errors. Managers included in the decision-making process will most
likely cooperate with its implementation. When a group makes a
decision, the likelihood of its successful implementation increases.
The disadvantages of group decision making include the long time it
often takes and the possibility of being undermined by biases.
A. The Perils of Groupthink
1. Groupthink is a pattern of faulty and biased decision making
that occurs in groups whose members strive for agreement within
the group at the expense of accurately assessing information.
2. When managers are subject to groupthink, they collectively
embark on a course of action without developing appropriate
criteria to evaluate alternatives. Typically, the group rallies
around one central manager and becomes blindly committed to
that manager’s preferred course of action without evaluating its
merits.
3. Pressures for harmony and agreement have the unintended
effect of discouraging individuals from raising issues that counter
the majority opinion.
B. Devil's Advocacy
1. Devil’s advocacy is a technique used to counteract groupthink.
It involves a critical analysis of the group’s preferred alternative
in order to ascertain its strengths and weaknesses before
implementation. One member of the decision-making group plays
the role of devil’s advocate by critiquing and challenging the way
in which the group evaluated alternatives and selected one
alternative over the other.
2. The purpose of devil’s advocacy is to identify all the reasons
that might make the preferred alternative unacceptable.
C. Diversity among Decision Makers
1. Promoting diversity within decision-making groups improves
group decision making by broadening the range of experiences
and opinions that the group members can draw from as they
generate, assess, and choose among alternatives.
2. Diverse groups are less prone to groupthink because of the
differences that already exist among them.
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IV. Organizational Learning and Creativity
A. The quality of managerial decision making ultimately depends on
innovative responses to opportunities and threats.
1. Organizational learning is the process through which
managers seek to improve employees’ desire and ability to
understand and manage the organization.
2. A learning organization is one in which managers do
everything possible to maximize the thinking ability of groups
and individuals and thus maximize the potential for
organizational learning to take place.
3. At the heart of every learning organization is creativity, the
ability of a decision maker to discover original and novel ideas
that lead to feasible alternative courses of action. When new and
useful ideas are implemented, innovation takes place.
B. Creating a Learning Organization: Peter Senge developed five
principles for creating a learning organization.
1. Top managers must allow every person in the organization to
develop a sense of personal mastery.
2. Organizations need to encourage employees to develop and use
complex mental models.
3. Managers must do everything they can to promote group
creativity and team learning.
4. Managers must emphasis the importance of building a shared
vision.
5. Managers must encourage systems thinking.
C. Promoting Individual Creativity: Research indicates that when
certain conditions are met, managers are more likely to be creative.
1. Employees must be provided the opportunity and freedom to
generate new ideas.
2. The employees have an opportunity to experiment, to take
risks, and to make mistakes and learn from them.
3. Employees must not fear that they will be penalized or looked
down upon for ideas that at first seem outlandish.
4. Individual creativity can be promoted by providing
constructive feedback so that employees will know how they are
doing and visibly rewarding creative employees.
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D. Promoting Group Creativity
1. Brainstorming is a group problem-solving technique in which
managers meet face-to-face to generate and debate a wide variety
of alternatives from which to make a decision. This technique is
very useful in some situations but at other times can result in a
loss of productivity due to production blocking. A brainstorming
session is conducted as follows:
a. One manager describes the problem in broad outline.
b. Group members share their ideas and generate alternative
courses of action.
c. Group members are not allowed to criticize each
alternative until all have been heard.
d. Group members are encouraged to be as innovative and
radical as possible. Anything goes, and the greater the
number of ideas put forth, the better.
e. When all alternatives have been generated, the group
members debate the pros and cons of each and develop a list
of the best alternatives.
2. The Nominal Group Technique The nominal group technique
is more structured way of generating alternatives. It avoids
production blocking and is especially useful when an issue is
controversial. A nominal group technique session is conducted as
follows:
a. One manager outlines the problem to be addressed and
group members write down ideas and solutions.
b. Managers read their suggestions to the group. Criticism is
not allowed until all the alternatives have been read.
c. The alternatives are discussed, and group members can
critique to identify its pros and cons.
d. Each member ranks all the alternatives, and the highestranking alternative is selected.
3. The Delphi Technique: The Delphi Technique is a written
approach to creative problem solving. It works as follows:
a. The group leader writers a statement of the problem and a
series of questions to which participating managers are to
respond.
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b. The questionnaire is sent to the managers and departmental
experts who are most knowledgeable about the problem.
They are asked to generate solutions and mail the
questionnaire back to the group leader.
c. A team of top managers records and summarizes the
responses. The results are then sent back to the participants,
with additional questions to be answered before a decision
can be made.
d. The process is repeated until a consensus is reached and
the most suitable course of action is apparent.
V. Entrepreneurship and Creativity
A. Entrepreneurs are individuals who notice opportunities and
decide how to mobilize the resources necessary to produce new and
improved goods and services. Thus, entrepreneurs are a very
important source of creativity.
1. Social entrepreneurs are individuals who pursue initiatives and
opportunities to address social problems and needs in order to
improve society and well-being.
2. An intrapreneur is an employee of an existing organization
who notices opportunities for either quantum or incremental
product improvements and is responsible for managing the
product development process.
3. Many intrapreneurs become dissatisfied when their superiors
decide neither to support nor to fund their new product ideas and
development efforts and, as a result, sometimes decide to leave
their employer to start their own organization.
B. Entrepreneurship and New Ventures
1. Characteristics of Entrepreneurs: Entrepreneurs are likely to
be high on the personality trait of openness to experience. They
also are likely to have an internal locus of control and believe that
they are responsible for what happens to them.
2. Entrepreneurs are likely to have a high level of self-esteem, a
high need for achievement, and a strong desire to perform
challenging tasks and meet high personal standards of excellence.
3. Entrepreneurship and Management: One way people
become involved in entrepreneurial ventures is to start a business
from scratch. When people who start solo ventures succeed, they
frequently need to hire other people to help them run the business.
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a. Entrepreneurship is noticing the opportunity to satisfy a
customer need and deciding how to use the resources to make
a product that satisfies the need.
b. Some entrepreneurs find it hard to delegate authority. As a
result they become overloaded, and the quality of their
decision making declines. Others lack the detailed knowledge
necessary to establish state-of-the-art information systems
and technology or to create the operations management
procedures that are critical to increasing organizational
efficiency.
c. Thus, to succeed, it is necessary to do more than create a
new product. An entrepreneur must hire managers who can
create an operating system that will let the new venture
survive and prosper.
C. Intrapreneurship and Organizational Learning : The intensity
of competition today has made it increasingly important to promote
intrapreneurship to raise the level of innovation and organizational
learning. The higher the level of intrapreneurship, the higher will be
the level of learning and innovation. The ways to increase
intrapreneurship within an organization are:
1. Product Champions: A product champion is a manager who
takes “ownership” of a project and provides the leadership and
vision that takes a product from the idea stage to the final
customer. Product champions become responsible for developing
a business plan for the product. If the plan is accepted, the
production champion assumes responsibility for product
development.
2. Skunkworks: A skunkworks is a group of intrapreneurs who
are deliberately separated from the normal operation of an
organization. By being isolated, these employees become
intensely involved in the project.
a. Development time is shortened and the quality of the final
product is enhanced.
b. The term skunkworks was coined at the Lockheed
Corporation, which formed a team of design engineers to
develop special aircraft, such as the U2 spy plane. The
secrecy of this unit and the speculation about its goals led
others to refer to it as “the skunkworks.”
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3. Rewards for Innovation: To encourage managers to bear risk
and uncertainty, it is necessary to link performance to rewards.
a. Increasingly, companies are rewarding intrapreneurs on the
basis of the outcome of the product development process by
granting them large bonuses and stock options if their
products sell. In addition to money, they often receive
promotion to the ranks of top management.
b. Organizations must reward intrapreneurs equitably if they
wish to prevent them from leaving to become outside
entrepreneurs who might form a competitive new venture.
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LECTURE ENHANCERS
Lecturer Enhancer 5.1
WORLD-CLASS BAD DECISIONS
In the Decision Making Hall of Fame, one room should be reserved for truly bad decisions. One of the
classics, already mentioned in an earlier chapter, was Hewlett-Packard’s decision not to develop a product
created by an employee. The employee, Steve Wozniak then co-founded Apple Computer.
Some rejected ideas have involved whole industries. When Alexander Graham Bell invented the
telephone in 1876, he had a hard time attracting backers. President Rutherford B. Hayes used a prototype
telephone and remarked, “That’s an amazing invention, but who would ever want to use one of them?”
Bell approached Western Union Telegraph Company and offered to sell them the patents. Their decision:
they had no use for an electrical toy.
A young inventor, Chester Carlson, took his idea to twenty corporations, all of whom turned him down.
He finally got a small New York company named Haloid Co. to purchase the rights to his electrostatic
paper-copying process. Haloid became Xerox Corporation, and Carlson’s process made both Xerox and
Carlson very rich.
In 1962 four musicians played for executives of Decca Recording Company. One executive later
explained that they just didn’t like the group’s sound, noting that guitar groups were on their way out.
Four other record companies turned them down. The Decision Making Hall of Fame will have a special
place for Decca, who turned down the Beatles.
Lecture Enhancer 5.2
TEACHING CREATIVITY TO BUSINESS STUDENTS
Jeff Skoll, a vice president of eBay whose net worth is $2.16 billion, says one of the most valuable
courses he took at Stanford’s Graduate School of Business was Dr. Michael L. Ray’s “Personal Creativity
in Business.” Dr. Ray has been teaching this course for 21 years, and although it is unlike anything else
the business school offers, it fills up quickly each quarter. It would be unimaginable in most other
business schools, yet it has inspired numerous Stanford graduates to become Internet entrepreneurs.
“The course enabled me to step back and look at what I wanted to accomplish in my life.” says Skoll, who
received his MBA in 1995 and became eBay’s first president the following year. He is now vice president
for strategic planning at the online auction site.
Dr. Ray began teaching the course after a trip to India, where he discovered that everyone, even the
shopkeepers, seemed motivated by a higher purpose and often starting their workday with prayer. The
goal of the course, he says, is to motivate business students to look inside themselves, trust their intuition,
and silence the annoying voice that discourages them from taking chances. “This kind of creativity is in
all of us but we don’t always see it,” says the professor. “It’s often covered by the fear of judgment and
the chattering mind.”
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Some of the techniques he uses to unleash the creative powers of students seem out of place in a business
school. The course is built around nine assignments, in which students choose a specific strategy for
coping with contemporary challenges, such as “destroy judgment, create curiosity,” “live with it,” “do
what is easy, effortless, and enjoyable,” or “ask dumb questions.” Each strategy relates to five challenges:
purpose and career, time and stress, relationships, balance, and finding true prosperity. Students choose a
form of creative expression, such as dance or poetry reading, and to loosen their inhibitions, they may
meditate in the dark or create “mood doodles” with crayons in their journals. To deal with stress, they
might record their anxieties in journals or limit their fretting to a designated “worry time.”
Another one of Dr. Ray’s successful alums is Jim Collins, an educator, business consultant, and author of
two best-selling management books, Good to Great and Built to Last: Successful Habits of Visionary
Companies. “I almost dropped the course after the first few weeks. It was just too weird,” says Collins.
“The last thing I expected when I entered business school was to be sitting on the floor in the dark,
listening to a tape of an Indian spiritual leader and chanting ”Om.” In retrospect, however, Collins
realizes that the course had a profound impact upon his life. He says it was this creativity class that
propelled him into a career as both an entrepreneurship professor and author.
What stimulated Dr. Ray, who holds a doctorate in social psychology, to teach a course in creativity to
soon-to-be corporate executives and entrepreneurs? Ray says, “People were coming here and getting
technologically trained but nowhere did they stop and ask, who am I, at essence, and why am I here?
What is the purpose of all of this? People need to take the risk of being vulnerable, and when they do,
they are not only accepted, but applauded.”
Taken from “Michael Ray: Teaching Entrepreneurs How to Cut Loose,” by Katherine Mangan, published
in The Chronicle of Higher Education, October 20, 2000.
Lecture Enhancer 5.3
BUREAUCRACY STRANGLES INTRAPRENEURSHIP
In the 1980s “intrapreneurship” became a buzzword among managers who wanted to introduce smallbusiness fervor into lumbering corporations. The idea was that the parent company would provide seed
money to employees, who would gain the satisfaction of running their own shop while producing
products that benefited their corporate sponsor.
The ventures did produce some successes. IBM developed its IBM Personal Computer through such a
venture. At Xerox Corporation, about half dozen successful companies have been created. Most, though,
have fallen flat. Companies like Control Data Corporation and Northwestern Bell Telephone Co. have
ended their programs. So did IBM, which says the program was unnecessary after the company
decentralized. Of the fourteen ventures Eastman Kodak created, six have been shut down, three have been
sold, four have been merged into the company, and only one still operates independently. One of Kodak’s
projects was canceled because the company didn’t like the unit’s logo, a Cheshire cat, considering it too
frivolous for a serious organization.
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The problem, management experts say, is that a go-go small business culture can’t easily be grafted onto
a deliberate corporate giant. The practices that make corporations successful—training procedures,
personnel policies, and hierarchical management structures—are incompatible with risk-taking
entrepreneurs. In addition, employees-turned-entrepreneurs are often ill-prepared for their new roles.
Researchers, for example, who have spent their careers in the lab are unfamiliar with the rigors of the
marketplace.
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