Kinds of Entrepreneurial Leaders
There are two common kinds of Entrepreneurial Leaders. The term entrepreneurial
leader can refer to two different groups of people, with two distinct roles in
the organization.
The first kind of entrepreneurial leader is familiar to most of us: The people
who reside at the top of the organization chart and who have broad
responsibilities across an organizational unit, or perhaps even the entire
organization. The key roles of these leaders include setting the organization's
vision and then creating the space, systems, procedures, and culture that free
others: at all levels of the organization to take responsible initiative
to achieve the vision.
These leaders must be skilled at mobilizing other strong people who can share
responsibility at the top; solo versions of leadership no longer work very well.
The second kind of entrepreneurial leader can reside at any level of the
organization, working to uncover and pursue opportunities for
constructive change. These opportunities for change include new products,
processes, services, markets, organizational approaches, and more. They may
identify a broken process that wastes resources or delays service, learn of a
new procedure for building customer loyalty, or use careful analysis to spot a
new market segment and then figure out how to implement a solution. Both kinds
of leaders are desperately needed in today' organizations, and both are
essential for their future.
There is no doubt that leaders can foster a culture of entrepreneurial
leadership within their organizations. The challenge is to make this culture
will take root and spread.
Topeka, Kansas, is the unlikely home of one particular
experiment in entrepreneurial leadership
an experiment that has survived a succession of different corporate owners,
benign neglect, and some not-so-benign attempts to kill it off. Three decades
ago, due to fast growth of its Gaines brand dog food, General Foods decided to
build a new manufacturing plant in Topeka. General Foods manager Ed Dulworth was
selected as project manager, and he was given a mandate to design an
organization that would accomplish two specific goals: Achieve the lowest
possible operating costs with no compromise in product quality, and Avoid the
problems of employee alienation that traditionally plagued many manufacturing
plants, leading to a variety of problems including absenteeism, product waste,
and work stoppages.
In response to the General Foods mandate, Dulworth and his project team
established a manufacturing
plant built on a number of innovative and forward-looking policies and
procedures. Rather than using
the traditional, hierarchical structures that were the norm at the time, the
Topeka plant was specifically organized to promote employee engagement,
initiative, and innovation. Dubbed the " System," this
approach included the following key features: semiautonomous work groups as the
basic work unit there were no supervisors; the role of team leaders was to act
as a resource to members of the team,
support functions integrated into the work teams. Teams hired their own
employees, made work assignments, and set plant hours, set challenging work
assignments for every employee, rotation of employees among a wide variety of
assignments, rewards for continuous learning, facilitative leadership,
management information and financials open to all employees, and the
minimization of differential status symbols.
This approach has aspects that would be considered routine in many organizations
today, was radical for its time, but so were its results. Over the course of 20
years, the plant exceeded all standards of performance improved every year
except one, overhead costs were lower than comparable manufacturing plants, and
absenteeism remained at a rate of less than 2 percent while turnover settled in
at a rate of less than 1 percent. The new plant experienced a dramatically
reduced start-up time, generating greater productivity with fewer people than
any comparable General Foods unit. By every measure, the Topeka experiment was
an unqualified success. Not only did it prove that entrepreneurial leaders can
have a direct and positive impact on the work environment, it clearly showed the
power that could be unleashed when regular employees were encouraged to take
initiative. An educational video of the story, "Topeka Pride: Twenty Years
of Teamwork", is still being used today.
Creating a New Leadership Culture
Creating an organization of entrepreneurial leaders at every level takes a
focused, concerted, and
long-term effort to shape the organizational structures and processes. If the
systems and processes
that support initiative are not in place, then it will never take root. One of
these is a clear entrepreneurial
vision, reinforced constantly. Company leaders need to articulate an inspiring
future in which the organization makes an important difference for customers or
community, and then use that vision repeatedly to guide decisions, inspire
commitment, and motivate action. Emphasis only on monetary goals, control, or
preserving a protected position inhibits rather than inspires initiative, but so
does an empty, unused vision statement posted on the wall.
Another important factor is ample rewards and recognition, including stock
options. In many organizations, people have a perception (often very real) that
rewards and recognition are limited resources, given out only on rare occasions,
such as an annual awards ceremony. Entrepreneurial leaders freely and frequently
reward and recognize their employees in many ways, encouraging them to take even
more initiative. Most effective are rewards that are investment oriented, not
just performance oriented. Many organizations reward in some form the most
successful achievers, but to foster initiative there must be advance rewards for
innovative people who propose new ideas, so they have some resources to work
with and are seen as worthy of the organization' support of their efforts. This
is part of a "execution and-risk-taking" mindset.
There is no faster way to stop employee initiative dead in its tracks than to
punish employees who make honest mistakes when they try something new or run
into unforeseeable barriers. Failure should have no penalty, unless it is
repeated. As long as they do their homework, use sound business
reasoning, and try to benefit the organization, people shouldn't be penalized
for taking risks on new things— should be supported and applauded.
Reduced hierarchy, flatter organizations, and reduced segmentation of units all
contribute to increasing employee initiative. Each of these organizational
structures results in leaders who are responsible for a
broader range of work activities, while giving them increased authority to make
decisions within their areas of influence. Freed of the constraints of hierarchy
and artificial boundaries among functions,
people act more entrepreneurially.
Small units with cross-functional teams are much more flexible and can act more
quickly than large units; cross-functional teams draw on the experience and
knowledge of employees from throughout the
organization, bringing new ideas, new perspectives, new experiences and often
new attitudes along with them. At the same time, broad assignments and education
encouraging initiative and experimentation will improve performance.
People who move across functions, geographies, products, and lines of business
are exposed to many different perspectives and experiences, units;
cross-functional teams draw on the experience and knowledge of employees from
throughout the organization, bringing new ideas, new perspectives, new
experiences and often new attitudes along with them. At the same time, broad
assignments and education encouraging initiative and experimentation will
improve performance.
People who move across functions, geographies, products, and lines of business
are exposed to many different perspectives and experiences, which makes them far
more likely to be innovative compared to those who spend long stretches of their
careers in one spot. The chance to learn about responsible initiative outside
one's area, with people from different parts of the organization, supports the
ability to see new possibilities.
Perhaps the ultimate expression of entrepreneurial leadership is to enable
employees to establish new
ventures within the organization when they have fundable proposals, providing
discretionary venture
funds specifically set aside to support these efforts. If the venture succeeds
on its own merits, then it can
be retained within the organization, spun off, or even sold. Outside investments
supporting entrepreneurial businesses can also be made. Intel, for example, has
done this incredibly profitably over the years.
Ultimately, the company exists to serve its customers. Finding ways for those
not usually in contact with
customers to hear directly from them— the voice of the customer inside the
organization can shake loose resistance to needed change and serve as a stimulus
to developing new products and services. For example, 3M is encouraging early
researcher interaction with marketing, a way of also adding the customer's voice
inside.
Defending Against a Return to the Status Quo
All too often, efforts to promote fundamental change and encourage the
development of entrepreneurial
leadership are actively sabotaged by those who have the most to gain: the
leaders who will be rewarded
for taking initiative within their organizations. In general, we know that when
resources are scarce, people tend to expend a lot of effort to keep their peers
from getting ahead. So when one department does something terrific, instead of
creating a model for other departments or other leaders to follow, it creates
jealousy, or it simply gets written off. Let's return, for a moment, to the
example of the General Foods pet food manufacturing plant in Topeka, Kansas.
Although by every measure the Topeka Experiment was an unqualified success, the
idea never caught on outside the plant' walls, never spread into other parts of
the company. Instead of embracing these new ideas, the rest of the company
roundly rejected them. "' just Topeka," the common refrain of managers who felt
threatened by new ideas that violated the way they had learned to do things.
Even though their more rigid, hierarchical methods led to problems, they
couldn't let go of their beliefs, despite the evidence from one of their own
plants. " It won't work here" is a battle cry heard too often in
hidebound organizations. And while the plant managed to retain its unique
operating style through a succession of owners from General Foods to Anderson
Clayton to Quaker Oats to H.J. Heinz and Del Monte it remained as company's
best-kept secret.
Entrepreneurial leadership is not contagious
It is often rejected by the larger organization in much
the same way that the human body can reject a transplanted organ. The General
Foods response of sequestering innovation is all too common. Top leaders need to
ensure that the entire organization is open to the promise of creating leaders
at all levels and in celebrating the people at every level who are able to make
things happen. When people see that the organization supports them, this leads
to a variety of important currencies that at least some of them value:
visibility, recognition, reputation, monetary rewards of various kinds - options
or bonuses or new challenges, and the chance to work on more difficult things.
Create the right climate, and you' unleash the behavior that your organization
needs to succeed today.
Even at GE, where Jeff Immelt, the new CEO, is working to reinvent the company
yet again, renewal needs to be continuous process. It takes entrepreneurial
leadership to sustain entrepreneurial leadership!
Create the wrong environment and not only will you be planting your organization
firmly in the status
quo, your employees will become resentful of others, inflaming organizational
politics in the process while giving employees an incentive to pull one another
down.
The pain of constant opportunity seeking and the resultant changes cannot be
worse than the pain of
stagnation and infighting.
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