The Need for
Entrepreneurial Leadership
Entrepreneurship is not just for startups. It’s a
lens through which all organisations should view strategy and leadership in the
21st century to address societal problems.
Management theories come about in response to
particular problems. At the turn of the 20th century, the most
notable organisations were large and industrialised and carried out routine
tasks to manufacture a variety of products. This led Frederick Taylor to
develop the scientific management theory, which advocated optimising tasks by
breaking big complex jobs into small ones, measuring what workers did and
linking pay to performance.
Management practice of that era was designed to
seek out efficiencies, improve productivity and make “the trains run on time.”
Theory started to evolve by the 1930s, when unions began to reject the
dehumanising effects of earlier practices. This formed the beginning of the
human relations movement when researchers started realising that treating
people nicely was even better for productivity.
These management theories, however, have a
disadvantage in today’s business world. They were founded on the assumption of
stable environments and the preeminence of shareholder value as a central
motivation in business. They work poorly in more dynamic environments where
creating stakeholder value is equally, if not more important.
Filling the gaps
I would posit that entrepreneurial leadership
will (and should) define the next era of management theory. Entrepreneurs have
always existed to improve society by spotting gaps and filling them. Henry
Ford’s mass market automobile made travel exponentially more efficient and
comfortable. The iPhone put a portable computer in our pockets, giving us information
on demand. Entrepreneurs today are going one step further, from addressing
market opportunities to addressing market failures. James Chen’s new venture, Adlens, which aims to provide adjustable and
affordable spectacles to the sight challenged, with goals of eventual
profitability, is one such example. It has a related social venture, Vision for
a Nation, that aims to make the glasses available in the developing world.
Ninie Wang, an INSEAD alum and CEO of Pinetree
Care Group, is another. She addresses the urgent need of home care for the aged
in China who have been left behind by their migrating children and a government
healthcare system starting to feel the strain of an ageing population. Her
latest innovation is automated in-home healthcare systems that can put them in
touch with doctors, nurses, nutritionists and even their own children.
From health care to the environment to
education, governments are facing budget constraints that leave many citizens
underserved. The need for entrepreneurial ideas and strategies to address this
shortfall has never been greater. Furthermore, business leaders already have to
grapple with new strategies for growth, innovation, regeneration and
turnarounds whether they’re in start-ups or multinational companies. Therefore,
all organisations require entrepreneurial mindsets and entrepreneurial leaders.
An executive MBA elective I teach is designed to
demonstrate that start-ups, family businesses, innovation, and social ventures
all fit under the entrepreneurship umbrella. Students wear the shoes of an
entrepreneur growing a venture, a corporate executive faced with innovation challenges
and family business leaders challenged by succession and next generational
issues.
Entrepreneurship as a continuum
Entrepreneurship in its different forms are a
continuum of behaviours related to strategy and leadership often driven by
organisational lifecycles. The challenge for all organisations is
sustainability based on creating value for stakeholders. I teach my
students that there are four entrerpreneurial contexts, which require different
types of entrepreneurial leadership and strategies.
1.
Achieving organisational
innovation:
This requires leaders to strengthen the
alignment between strategy and culture by providing leadership that
enables creativity and change.
2.
Starting a new venture:
Leaders
need to be more hands on, identifying new opportunities and engaging teams and
investors. They have to operate differently to big organisations that have
access to resources by low-cost probes, teams and partnering. They have to be
flexible and closer to customers and aim at ensuring the venture survives.
3.
Social ventures:
The main purpose is meeting the unaddressed
social or economic needs. Leaders in social ventures should spend more time on
partnerships, developing relationships with community, government, NGOs and
foundations. Funding is less conventional, coming from a combination of sources
including sales of products and services, government and NGO grants and project
loans with social impact as the main aim.
4.
Family enterprise:
Leaders in this environment have to focus on the
parallel planning of the family and business to ensure a successful transition
to the next generation. They’re backed by family values and capital and have
the ability to play the long game. Ultimately their aim is grow the family
capital be it economic, emotional, social or spiritual.
The challenge for management educators is to teach managerial
practices that focus on entrepreneurial strategy and leadership that can be
applied across a range of organisational contexts. It’s clear that new
approaches are needed and the evidence suggests that entrepreneurship in most
organisational contexts works. From 3M’s flexible attention policy, allowing
15% of budgets to pursue personal projects, or the Ford family quarterly
shareholders meeting to consider the future, or James Chen’s team
struggling with disruptive technology to improve peoples’ sight,
entrepreneurial leadership is central to growth and social impact in the 21st century.
Randel Carlock, INSEAD Senior Affiliate Professor of Entrepreneurship and Family Enterprise
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more at
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