Enterprise and Small Business Principles

The entrepreneurial leader

There are numerous definitions of what makes an entrepreneurial leader and, with reference to the work of Hitt et al. (1999), Kurakto and Hodgetts (2001: 516) have suggested that ‘entrepreneurial leadership can be defined as the ability to anticipate, envision, maintain flexibility, think strategically and work with others to initiate changes that will create a viable future for the organisation’. While there is much in such a definition that is good, it lacks something of the emotional nature of leadership. As

Figure 15.1 Creating a climate for continuous learning

■ Job assignments that allow people to pursue their interests and learn new skills

■ Work schedules that allow sufficient free time to experiment with new methods

■ Financial support for continuing education

■ Specialist speakers and skill workshops

■ Sabbatical programmes

■ Career and self-awareness counselling

■ Voluntary skill assessment and feedback programmes

■ Pay increases linked to skill development

■ Awards for innovation and improvements

■ Symbols and slogans that embody values such as experimentation, flexibility, adaptation, self-development, continuous learning and innovation

Source: Yukl, Gary A., Leadership in Organizations, 5th Edition, © 2002. Adapted by permission of Pearson Education, Inc., Upper Saddle River, NJ

Tichy and Cohen (1998: 21) have recognised ‘leadership is more about thinking, judg­ing, acting and motivating than about strategies, methodologies and tools’.

Good entrepreneurial leaders care about their organisations and their people. They do not impose their solutions on their teams or exclude or suppress potential. Rather they encourage their staff to be creative and to find their own solutions to problems. In some ways, the modern entrepreneurial leader is like the leader of a jazz band. She decides on the music to be played, gathers around her the musicians to play it and then allows them to improvise and use their creativity to interact with each other to create the required sounds. In the process, they have much fun and it is the role of the band’s leader to bring out the best in the group.

As in the world of jazz, the authority of entrepreneurial leaders comes from their expertise and values rather from their position and they lead by example, empowering their teams and nurturing leaders at all levels. By so doing, they ensure that the organ­isation is successful even when they are not around. They do this in the following way:

■ Having a vision - entrepreneurial leaders constantly challenge the status quo to see whether they are doing the right things or if what they are doing can be done bet­ter or cheaper. They do not just identify the problem, they determine the solution and ensure the required actions are implemented. Thus they see both the problem and the solution.

■ Setting the tone and determining the values of the organisation - they are careful to ensure that everything they do reflects the values they espouse and they encourage their people to examine their own values.

■ Developing others - they have ideas that they can express and teach others about, coupled with well-developed coaching and teaching skills, as well as a willingness to admit to, and learn from, their mistakes.

■ Exhibiting and creating positive energy - they work hard, with a determination that shows they care about the goal the organisation is attempting to achieve. While they never tire, they never use their energy to intimidate. Rather their enthusiasm enthuses others and encourages people to join them. To energise others, leaders:

- create a sense of urgency - the problem is not going to go away unless something is done;

- identify a mission worth achieving - the future looks better than the present;

- set goals that stretch people’s abilities - but are achievable;

- develop a spirit of teamwork - risks are shared;

- engender a realistic expectation that the team can succeed - they build confidence.

■ Facing up to reality and making tough decisions, often with imperfect information. Frequently such decisions are not popular in the short term but the good entrepre­neurial leader does not let the difficulty of the decision deter him from doing that which will improve the organisation, even though it may be frightening or painful.

Thus, they may be regarded as ‘patient leaders, capable of instilling tangible visions and managing for the long haul. The entrepreneur is at once a learner and a teacher, a doer and a visionary’ (Timmons, 1999: 221). However, if there is no immediate problem, entrepreneurial leaders will often ‘stir things up’ by breaking down established bureau­cratic procedures or setting new stretch targets and goals.

According to McGrath and MacMillan (2000), the entrepreneurial leader will know she has succeeded when everyone in the organisation takes it for granted that business success is about a continual search for new opportunities and a continual letting go of

less productive activities; feels that she has not only the right but the obligation to seek

out new opportunities and make them happen; comes to work excited and is proud to be associated with it; and when the value created within the organisation translates into stakeholder wealth.

McGrath and MacMillan suggest that, to facilitate this, the entrepreneur needs to set the work climate, orchestrate the process of seeking and realising opportunities and become actively involved in identifying and developing new ventures. Setting the climate involves creating a pervasive sense of urgency to be working on the next new initiative. To achieve this, the entrepreneur has to model the sort of behaviour she requires ‘consistently, predictably and relentlessly’ and to dedicate a disproportionate share of her time, attention and discretionary resources to creating new business pro­positions. Orchestration involves defining the entrepreneurial directions that can be taken, minimising investment and launch costs until the returns have been fully demon­strated and implanting a discovery-driven philosophy into the organisation by which it is not a crime to fail, only to fail expensively and without learning. Getting involved in identifying and developing new ventures requires that the entrepreneur is not just involved in identifying entrepreneurial insights and converting them into business propositions, but that she:

■ builds resolve (i. e. gets people to commit to the launching of a new initiative);

■ practises leadership by setting realistic but challenging targets, absorbing uncer­tainty, defining what must and cannot be accepted, clearing away any obstacles that may arise and by underwriting the proposition;

■ keeps a finger on the pulse to monitor progress;

■ constantly checks for market acceptance;

■ secures deals with key stakeholders;

■ pushes the team to initiate revenue flows ahead of cost flows and be realistic in iden­tifying skill deficiencies;

■ orchestrates market entry;

■ keeps the focus on learning;

■ makes sure the team continues to monitor critical sensitivities.

Clearly not all initiatives will succeed and the entrepreneurial leader’s role is as critical in failure as it is to success. According to McGrath and MacMillan, the leadership role

in the case of failure is first to conduct constructive postmortems to distinguish projects

that have failed through bad luck from those that have failed because of bad decision making. Second, the entrepreneurial leader needs to recoup all the benefits from the failed initiative, in particular emphasising to the team that it was the venture that failed not them. Finally, he may have to shut down a project if the team is entrapped in a ‘welter of optimism’ that prevents it from seeing that the project is doomed.

15.3 Chapter summary

In this chapter an attempt has been made to consider the relationship between entre­preneurship and leadership in the context of small business. It has been contested that there is a distinction between the owner-manager and the entrepreneur and that in order to deliver their vision, entrepreneurs need to possess the skills of the leader. While the role of the entrepreneurial leader is clearly not easy, it can be developed in small-firm owner-managers and, as a characteristic of the leader is that he develops other leaders, then it might be expected that entrepreneurs, through their networking activities, could be used to help develop leadership in others. Entrepreneurial leaders do not possess all of the answers and they are not dictators. Rather, they:

■ develop their power by making the people around them more powerful;

■ are truthful and sincere, thereby building trust and respect;

■ provide direction, not the precise route;

■ recognise that their colleagues may have some of the best ideas, especially if they are doing the job every day;

■ support their staff when they ‘fail’ and celebrate their achievements when they succeed;

■ learn from failure;

■ facilitate change but protect fundamental values;

■ broker people and harness the ideas that come from such encounters;

■ build relationships through networking;

■ expose their colleagues to reality but protect them from danger;

■ lead by example and never ask their colleagues to do what they would not do themselves;

■ educate and train their staff and create more leaders.

However, as von Bergen and Soper (2002: 71) have suggested, there are really no fixed rules. Rather than relying on one best way at all times, the successful entrepreneurial leader will use ‘management techniques in a selective, situationally appropriate manner’. In other words, successful entrepreneurs adjust their management style to fit the situ­ations in which they find themselves in order to maximise performance and achievement. That is the hallmark of good contigency leadership: knowing, possibly intuitively, how to get people to implement the vision because they want to, and that is precisely what entrepreneurs are good at, whether they are found in large or small organisations, in the private or the public sectors.