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Sustaining Chapter Entrepreneurial Performance in the 21st Century Organization
Copyright (c) 2007 by Donald F. Kuratko All rights reserved.
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Introduction
The true value of entrepreneurship as a
managerial concept lies in the extent to which it helps organizations create sustainable competitive advantage. advantage While some companies struggle to muster even a minimal amount of entrepreneurial activity, all companies battle mightily to sustain entrepreneurship over time.
E Developing a Personal Approach to the
Entrepreneurial Process
There are certain principles to which the individual entrepreneur or champion may always want to adhere:
Solidify a relationship with a sponsor Build a flexible team structure Insulate the project and keep it quiet as long as possible Become a guerrilla
E Developing a Personal Approach to the
Entrepreneurial Process
Promise less but deliver more Experiment and produce early wins Manage project momentum Attempt to set the parameters
E 15.1 Table
The Decision-making Styles of Corporate Entrepreneurs (Biases)
Overconfidence The tendency for a decision-maker to be overly optimistic in their initial assessment of a situation Representativeness A willingness to generalize about a person or phenomenon based on only a few attributes of that person or only a few observations of a specified phenomenon
E Developing a Personal Approach to the
Entrepreneurial Process
Another aspect of the entrepreneur's
model or approach to projects concerns the management of expectations. The rule here is simple: under-promise and over-deliver. over-deliver The earlier the champion can show progress, the better.
E Developing a Personal Approach to the
Entrepreneurial Process
The champion should have in mind an
overall time horizon over which a project will unfold. Expectations are managed across this time horizon and are steadily raised. Similarly, small wins evolve into more significant accomplishments. accomplishments
E Developing a Personal Approach to the
Entrepreneurial Process
Finally, the entrepreneur must have an
approach for influencing the rules of the game. Champions should look for ways to set or negotiate the parameters under which the venture team operates The Ten Commandments of a Corporate Entrepreneur (Table 15.2)
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2. 3. 4. 5.
The 10 Commandments
be fired. Circumvent any orders aimed at stopping your dream. Do any job needed to make your project work, regardless of your job description. Build a network of good people to assist you. Develop a spirited team; choose and work with only the best.
1. Come to work each day willing to
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1. 2. 3. 4. 5.
The 10 Commandments
Work underground as longs as you can publicity triggers the corporate immune mechanism. Be loyal and truthful to your sponsor. Remember that it is easier to ask for forgiveness than for permission. Be true to your goals, but be realistic about the ways to achieve them. Be thoroughly engaged, take ownership, and persevere.
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The Importance of Sponsors
Below are some questions to ask when attempting to identify a sponsor: Has this person been challenged and yet proceeded anyway? Is the person willing to handle controversy? Does the person have a deep personal commitment to innovation and innovate people? Can you gain the respect of this person?
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The Importance of Sponsors
How important is another step up the corporate
ladder to this person? Does this person know when to fight, when to give up gracefully, and when it really does not matter? Does the person understand clearly the corporate decision-making structure? Does this person have the respect of other key corporate decision makers and have access to them?
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The Dark Side of Entrepreneurship
A potentially destructive element resides within the energetic drive of successful entrepreneurs 1. The Confrontation with Risk Financial risk Career risk Family and social risk Psychic risk
The Dark Side of Entrepreneurship Cont.
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2. Entrepreneurial stress Role overload
The Dark Side of Entrepreneurship Cont.
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3. The entrepreneurial ego
An overbearing need for control A sense of distrust An overriding desire for success Unrealistic Optimism
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Managing the Triggering Events
The trigger provides the impetus to behave
entrepreneurially when other conditions are conducive to such behavior. For example, it appears that the positive relationship between the entrepreneurial orientation of a company its bottom-line performance is especially strong when it must come with a dynamic, threatening, and complex external environment.
Managing the Triggering Events
5 key ways for grouping triggers
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Internal/external source Opportunity-driven/threat-driven Technology push/market-pull Top-down/bottom-up Systematic or deliberate search/chance or opportunism
Examples of "Triggering" Events for CE
(Table 15.3)
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Competitor threat or action Declining market share Senior management initiative Personal initiative on the part of one or
more employees Vertical integration Rising costs Supplier requests
Managing the Triggering Events
One exploratory survey directed at a
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sample of 20 large companies, Morris et al. (2000) attempted to discern the relative reliance on the triggers identified in Table 15.3 Senior executives were asked to identify up to 5 entrepreneurial initiatives that has been pursued within their companies in the past 3 years.
Managing the Triggering Events
A total of 82 entrepreneurial initiatives were identified. Internal factors were surprisingly prevalent among the most frequently mentioned triggers: Employee initiative A strategic program A new growth target A new marketing initiative Public relations/image
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Managing the Triggering Events
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The principal external triggers were:
specific customer request competitor threat change in people's lifestyles or expectations
Managing the Triggering Events
By studying the triggering process in
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their organizations, managers can gain insights regarding the triggers to be emphasized under a given set of circumstances, how resources and incentives should be allocated to facilitate certain triggers, and ways in which the organization should be structured so as to take maximum advantage of particular types of triggers.
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Creating a Sense of Urgency
The problem is sustainable innovation
making innovation happen on an ongoing basis and throughout the company. The reality is that employees are always capable of entrepreneurial behavior, but most of the time they and their bosses do not perceive the need for innovation and change.
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Creating a Sense of Urgency
Further, innovation is disruptive, and
managers have a natural tendency to exalt in past accomplishments and reputation of the firm. The great challenge for any company wishing to achieve sustainable entrepreneurship is creating an ongoing sense of urgency throughout the organization.
ECreating a Sense of Urgency
Management must create an environment
where urgency is felt all the time. Urgency in this context refers to a compelling that sense organizational survival depends on change. Entrepreneurial companies instill in their employees a burning desire to make things better. People demonstrate a combination of paranoia, competitiveness, pride, and obsession.
E the Company Have a Sense of Does
Urgency? (Table 15.4)
How big is the comfort zone surrounding
managers at each level in the organization? Does the company measure itself against the best, but even more so against itself? If a customer complains or is not satisfied, does the company measure how quickly the situation is rectified, and has that time been reduced by at least 10% in the past year?
E the Company Have a Sense of Does
Urgency? (Table 15.4)
Do managers in the company want to
change the world? How much of a sense of regret do mangers feel for missed opportunities and missed targets?
E The Adaptive Organization
Underlying the learning process is the
organization's ability to find or generate information, organize or code it, process it, store it, generate reports from it, interpret it, share it, and act on it. Concern lies with the company's ability to learn in ways that facilitate entrepreneurship, and this is a notable area of weakness in companies.
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The Adaptive Organization
Most companies do not have systematic methods to ensure learning because: Key people involved with the project may have left the firm The champion responsible for the project may have been reassigned to a distant location
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The Adaptive Organization
Most companies do not have systematic methods to ensure learning because:
A number of individuals may have participated, with each having been involved with a different aspect of the experience at a different time
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The Adaptive Organization
Most companies do not have systematic methods to ensure learning because:
Few records may have been kept Accounting figures are not always consolidated and readily accessible
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The Adaptive Organization
10 Critical Areas that should be the focus of learning efforts within a given company: 1. Champion styles that work and do not work 2. Venture team structures that are most effective for certain types of innovation projects
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The Adaptive Organization
10 Critical Areas that should be the focus of learning efforts within a given company: 3. Models of successful projects in terms of key steps or stages and the identification of the models that best fit different types of projects 4. Approaches to goal setting and monitoring that keep projects on track
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The Adaptive Organization
10 Critical Areas that should be the focus of learning efforts within a given company:
5. Methods of opportunity identification that are especially productive given the nature of the company, industry, and market 6. Ways of achieving the appropriate balance between autonomy and control on innovation projects
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The Adaptive Organization
10 Critical Areas that should be the focus of learning efforts within a given company:
7. Venture funding approaches that encourage successful projects 8. Human resource management policies that encourage individual initiative and group collaboration around innovation projects
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The Adaptive Organization
10 Critical Areas that should be the focus of learning efforts within a given company:
9. Techniques for optimally managing the timing and allocation of resources (funds, functional specialists, staff people, facilities, and equipment) across the stages of a project 10. Effective means of getting mainstream units in the company to adopt or assume ownership of projects developed by venture teams
EThe Adaptive Organization
Entrepreneurial managers can enhance a venture's chance of remaining adaptive and innovative by: Share the entrepreneurial vision Increase the perception of opportunity Institutionalize change as the goal Instill the desire to be innovative
Reward system An environment that allows for failure Flexible operations Development of V-Teams
E New Strategic Imperatives: The
Embracing Paradoxes
The entrepreneurial organization of tomorrow will be one filled with paradoxes and will require managers who are adept at managing them:
The paradox of size and scope The paradox of risk and return The paradox of the individual and the team
E New Strategic Imperatives: The
Embracing Paradoxes
The entrepreneurial organization of tomorrow will be one filled with paradoxes and will require managers who are adept at managing them:
The paradox of flexibility and control The paradox of constructive and destructive behavior The paradox of success and failure
The New Strategic Imperatives Table 15.6
1. Increase strategic clock speed 2. Focus portfolios with various business models 3. Abbreviated strategic life cycles 4. Create "go-to-market" flexibility 5. Enhance competitive innovation 6. Manage intra-enterprise cannibalism
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E Entrepreneurial Mindset The
Framework
Future Goals
Change/Innovation Status Quo
Possible
Entrepren Satisfied eur manager Frustrate d manager Classic bureaucra t
Perceived Capability to Achieve
Blocked
Entrepreneurial & Strategic Actions
To create wealth, firms will need to establish linkages between entrepreneurial actions and strategic actions within 6 dominant domains: Innovation Networks Internationalization Organizational learning Top management team Growth opportunities
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Entrepreneurial & Strategic Actions
al ri Innovation eu n re Networks p re s Globalization nt on E ti Learning c A Top mgt. Teams
& governance Growth
Strategic Actions
Wealth Creation
E Entrepreneurial Firm: The
A Dynamic Incubator
Consider the findings of a recent study.
Researchers examined 1,435 companies that had been listed among the 500 largest any time since 1965. They sought to identify companies that were able to make a shift from good to great performance (defined as having generated cumulative shareholder returns greater than 3x the market average over 15 years). Only 11 of the companies showed a sustained and verifiable shift from good to great.
E Entrepreneurial Firm: The
A Dynamic Incubator
Portfolio thinking is about a strategic balance in which the firm balances a mix of objectives such as risk vs. return, income vs. growth, and short vs. long term performance. 4 major portfolios The portfolio of competencies The portfolio of resources The portfolio of innovations The portfolio of ventures and small businesses
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Conclusions
Corporate entrepreneurship is not a fad, fad
and it does not produce instant success. It requires considerable time and investment, and there must be continual reinforcement. A sustainable entrepreneurial orientation will drive organizations to new heights in the 21st century.
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Final Thoughts
To Achieve Entrepreneurial Excellence:
Expect more than others think is practical Dare more than others think is wise Risk more than others think is safe Dream more than others think is possible
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Final Thoughts
The future belongs to those who dream, believe in, and pursue entrepreneurial excellence!