Entrepreneurial Leadership

Presentation to:

Leadership SymposiumKU Edwards Campus

Wally MeyerNovember 19, 2008

PremisePremise

Entrepreneurial leadership will accelerate achievement of

organizational goals, enhance organizational performance

ProofProof At one time or another, all successful

organizations were new ventures New ventures, to succeed, must surpass

the most arduous hurdles: mortality rates of 65%+

New venture success is largely dependent on entrepreneurial leadership

And if that impeccable logic doesn’t convince you….

How would you like to have the net worth or How would you like to have the net worth or track record of these entrepreneurs?track record of these entrepreneurs?

http://www.youtube.com/watch?v=5xNA8seaqGQ

Was the Scarecrow an entrepreneur?Was the Scarecrow an entrepreneur?

What do each of these successful What do each of these successful entrepreneurial leaders have in common?entrepreneurial leaders have in common?

Entrepreneurial leadership starts with having Entrepreneurial leadership starts with having an entrepreneurial mindset.an entrepreneurial mindset.

AgendaAgenda Entrepreneurial Mindset

Characteristics of Entrepreneurial Leaders Entrepreneurial Mindset Scorecard

Leadership Types Transactional Transformational Entrepreneurial Entrepreneurial Leadership Behavior Checklist

Leadership Values Leadership Success: Measuring Self Performance

Entrepreneurial MindsetEntrepreneurial Mindset

Leading like an entrepreneur requires: Internal locus of control Tolerance for ambiguity Willingness to hire people smarter than oneself Consistent drive to create, build or change things Passion for an opportunity Sense of urgency Perseverance Resilience Optimism Sense of humor about oneself

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial LeadersInternal Locus of Control

“In the hands of the Gods”

Fate is in charge

“Go with the flow”

More in control than controlled

Leadership of the self

Tolerance for Ambiguity

Leading in the midst of chaos and uncertainty

See opportunities others don’t see Offsets:

Knowing the process Knowing which way is north Embracing the vision

Opportunity identification, development and capturing a new venture concept = messy affair

Chaos ≠ problem; chaos = fun.

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial Leaders

Willingness to Hire Smarter People

Hire to complement self identified weaknesses

Challenge to accept ‘outside’ leadership

McDonald’s as franchisor

Kim Smith: New Schools Venture Fund Manager

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=615&fileID=2473

Consistent Drive

Set the pace for leading the business Energy to change (not invent) things:

Most entrepreneurial leaders change, not invent, things

Change requires motivation and leadership

Self imposed momentum Mailbox money

Kim Smith, Co-Founder and CEO New Schools Venture Fund (educational venture investments) on working with smart people.

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial Leaders

Willingness to Hire Smarter People

Hire to complement self identified weaknesses

Challenge to accept ‘outside’ leadership

McDonald’s as franchisor

Kim Smith: New Schools Venture Fund Manager

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=615&fileID=2473

Consistent Drive

Set the pace for leading the business Energy to change (not invent) things:

Most entrepreneurial leaders change, not invent, things

Change requires motivation and leadership

Self imposed momentum Mailbox money

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial Leaders

Passion

Not so much mindset as emotional setup

Missing full objectivity; but energizes others with demonstration of devotion

Natured or nurtured?

Sense of Urgency

Impatience/wanting to ‘just do it’.

Self imposed deadlines Cash flow Equity ownership

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial Leaders

Perseverance

Freebie: generally a by-product of: passion sense of urgency fear the consequences

Henry Ford: 6X attempts to start Intel: 14X attempts to fund

Resilience

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial Leaders

Optimism Sense of Humor

Did you hear the one about the two businessmen and the entrepreneur?

http://eclips.cornell.edu/search?querytext=optimism&id=id&clipID=8465&tab=TabClipPage

Source: Jeff Timmons, New Venture Creation

Daniel Stein, President JDS Capital (venture capital investments) on entrepreneurial leadership optimism

Characteristics of Characteristics of Entrepreneurial LeadersEntrepreneurial Leaders

Optimism Sense of Humor

Did you hear the one about the two businessmen and the entrepreneur?

http://eclips.cornell.edu/search?querytext=optimism&id=id&clipID=8465&tab=TabClipPage

Source: Jeff Timmons, New Venture Creation

Entrepreneurial Mindset ScorecardEntrepreneurial Mindset Scorecard1

(FugetaboutIt)2

(Sometimes)3

(Metza Metz)4

(It’s Me Baby)5

(Da Man!)

Control

Ambiguity

Hiring

Drive

Passion

Urgency

Perseverance

Resilience

Optimism

Humor

Totals

• Rate yourself on each key entrepreneurial mindset component• Develop an action plan to help improve self assessed areas of opportunity

Leading Like an Entrepreneur

Leadership vs. Management Leadership Types

Entrepreneurial LeadershipEntrepreneurial Leadership

Leading like an entrepreneur:Always involves creation of value through

change of assets to develop a new businessAlways involves inspiring employees to capture

that business opportunity “Employees won’t be managed, but they can be led.”

Ewing Kauffman

Management or Leadership?Management or Leadership?

Management = Administration Leadership = Change and Transformation

J. Kotter, ‘What Effective Managers Really Do/ (HBR, 1999)

Management Leadership

Stay on course Totally different direction

Smooth operations Changing crew

Even keel Refitting ship

Leadership TypesLeadership Types

Leadership Type Organization Level Function

Technical 1st Level Supervisor Fix it

Transactional Middle Management Motivate it (behavioral)

Transformational Senior Managers Create it or Change it

Entrepreneurial Senior Managers Create it or Change it

Transformational vs. Transformational vs. Entrepreneurial LeadershipEntrepreneurial Leadership Transformational:

Bring about a change in existing order Change is the key

Entrepreneurial:Bring about a new order

Create something which did not exist before New learning is always involved

Destroy, disrupt, reinvent

Differences in Leadership Types

Difference in Leadership Styles

Transactional Transformational Entrepreneurial

Focus Day-to-day

activities

Organization Change

Opportunity Building/creating

Approach Development

of tasks

A stake in the ground Creative rearrangement

A moving stake Creative destruction then

rearrangement

Investment Immediate

payback

Committed investment Staged investment

Communications As

conditions

demand

Symbolic Intimate, personal

Strategy Situational

analysis

Long term, stay the

course

Medium term, exit strategy

Transformational and Transformational and Entrepreneurial LeadershipEntrepreneurial LeadershipBut: Transformational leaders and entrepreneurial leaders

are linked in leadership qualities: passion vision stubbornness

Transformational leadership may become entrepreneurial leaders

Transformational leaders productively co-exist with entrepreneurial leaders, particularly in corporate environments

Transforming into an Transforming into an Entrepreneurial LeaderEntrepreneurial Leader

Corporate Case Study

Large southeastern utility Privatization forced adoption of new

approaches by transformational leadership to:Reverse inefficiencies Improve customer satisfaction ratings

Source: Journal of Business Venturing, 1997

Corporate Case StudyCorporate Case Study

Pre-privatization:Change is externally achieved:

“If we need more revenue, we’ll raise the rates.”

Post-privatization:Change must be internally generatedTransformational managers asked

subordinates to adopt entrepreneurial leadership behaviors

Corporate Entrepreneurial Corporate Entrepreneurial Leadership BehaviorsLeadership Behaviors Overcomes

bureaucracy Displays enthusiasm Changes course quickly

when needed Encourages others’

initiatives Inspires others to

pursue own ideas

Devotes time to help others

Supports others’ good ideas

Moves boldly ahead with new ideas

Futuristic vision Rallies others efforts to

meet challenges

Case Study ResultsCase Study Results

Achieved: Increased customer satisfaction Improved operating profit margins Higher employee satisfaction

Particularly among those implementing the behaviors

Put the research to work for you:Put the research to work for you:Entrepreneurial Leadership ChecklistEntrepreneurial Leadership Checklist

Adopt and apply the entrepreneurial leadership behaviors:

Behavior Date When Applied

Situation

Overcome bureaucracy, implemented changes

Display enthusiasm for acquiring skills

Change course as needed

Encourage others’ initiatives

Inspire others to pursue own ideas

Devote time to help others’ develop new ideas

Support others’ new ideas

Move boldly ahead with new ideas

Demonstrate futuristic vision

Rallies others to meet new challenges

Leadership Values

Value Centered Organizations

Start at the Top

Leadership ValuesLeadership Values

Financial performance of companies with defined value statements: net income 23X vs. GDP 2.5X over same 10 years (Garfield, Peak Performers, 1986)

“Management values are primary source of corporate identity (Jack Welch) (Nanus, Visionary Leadership, 1992)

“Single most important factor in organization’s success is leaders’ adherence to core values (Thomas Watson, Ideas That Helped Build IBM, 1986)

Leadership ValuesLeadership Values

Leaders may be forgiven for inefficiencies, lack of accomplishment, missing the business marks

Leaders will not be forgiven for immorality and lack of principles

Entrepreneurial environments need well defined values; entrepreneurial led organizations are: Opportunity based Structure evolving Resource challenged

Leadership ValuesLeadership Values Honesty:

knowing oneself; in dealing with others Consideration:

‘ treating others as you would want to be treated’ (Ewing Kauffman)

Responsibility: life is what you make it, choosing to make a difference

Persistence: tenacity for repeated attempts

Excellence: ‘anything worth doing is worth doing right’

Commitment: essentials of life are someone to love and something to do

(Bertrand Russell, What I Have Lived For)

(Source: Sagie and Elizur, Journal of Organizational Behavior17, 1996)

Leadership ValuesLeadership Values Lack of leadership value red flags:

Members lack clear understanding regarding how to meet organizational goals

Different individual/groups have different value systems

Top leaders send mixed messages Day-to-day life is disorganized Members complain about organization to family,

friends Organization has values, even written, but doesn’t

practice them

Leadership Success:Measuring Self Performance

How do you know when

you’ve arrived?

Leadership Success:Leadership Success:Measuring Self PerformanceMeasuring Self Performance Leadership requires competency in three

overall areas:Statesmanship:

Ability to work with and through other peopleEntrepreneurship:

Ability to achieve results, regardless of obstacles Innovation:

Ability to generate new and usable ideas

StatesmanshipStatesmanship

Ability to work with and through other people

Rx:Let people know where they standGive credit where dueTell people as soon as possible about

changes that will effect themMake the best use of each person’s ability

EntrepreneurshipEntrepreneurship

Ability to achieve results, regardless of obstacles

You know you’re an entrepreneur when: You’re one of the top producers of results Most jobs you have worked on have resulted in

significant contributions You will gamble on good odds anytime You plan work and hold performance to schedule If you want something done, you find a way to get it

done.

InnovationInnovation

Ability to generate new and usable ideas Keep an open mind Have a questioning attitude Use a new-ideas system

Ask six simple questions: I keep six honest serving men;

They taught me all I knew;

Their names are What and Where and When,

And How and Why and Who.

Rudyard Kipling

Answers to six simple questions, applied creatively, usually identify the solutions to most challenges

Leadership Success:Leadership Success:Measuring Self PerformanceMeasuring Self Performance

Conduct self appraisal

Evaluate results Develop

improvement plan Execute

Source MaterialsSource Materials

Richard Huges, Robert Ginnett, Gordon Curphy: Leadership, Enhancing the Lessons of Experience, McGraw-Hill, NY 2009

George Manning, Kent Curtis, The Art of Leadership, McGraw-Hill, NY 2007

Neal Thornberry, Lead Like An Entrepreneur, McGraw-Hill, NY 2006 Richard Daft, The Leadership Experience, Thompson South-

Western, Mason, OH 2008 Jeffrey Timmons, Steve Spinelli, New Venture Creation, McGraw-

Hill, 2007

‘Live what you talk, make your actions match your words. You must live what you preach and do it right and do it often.

As an entrepreneur, you really need to develop a code of ethics, a code of relationships with your people because it’s the people who come and join you. They have dreams of their own. You have a dream of the company. They must mesh somewhat.’

Ewing Marion Kauffman

For every person who’s a manager and wants to know how to manage people, there are 10 people who are being managed and would like to figure out how to make it stop.

Scott Adams, creator of Dilbert

Entrepreneurial Leadership

Presentation to:

Leadership SymposiumKU Edwards Campus

Wally MeyerNovember 19, 2008