Entrepreneurial leadership: Key to create successful startups and businesses
The word Entrepreneur is actually derived from the french word Entreprendre – meaning “to undertake” and English word Enterprise. Steve Jobs, Bill Gates, Mark Zuckerberg, Jeff Bezos, Warren Buffet and Richard Branson – these are a few of the most successful and popular examples of entrepreneurs in the business world. Every entrepreneur wishes and works really hard to create a successful business worth billions like theirs. But after overcoming bureaucracy and obtaining funds, a majority of entrepreneurs and startups struggle to sustain and fail due to the lack of one common attribute – building the team and managing their people.
But how were successful entrepreneurs able to get through this challenge while others couldn’t?
The secret of successful entrepreneurs has always been their lifestyle & expertise in leveraging their available potentials, and inculcating the ability to self-generate, self-reflect, and self-correct in their employees in order to create value for the organization – briefly known as Entrepreneurial Leadership.
Today, I’m going to unveil a few unknown personality traits & secrets of Entrepreneurial Leadership and its significance for entrepreneurs and startups. Through this post, you will learn:
- The key principles of Entrepreneurial Leadership.
- Why choose Entrepreneurial leadership over Entrepreneurship?
- How to make a cultural transformation in an organization using Entrepreneurial Leadership?
The word Entrepreneur was first studied in the early 19th century by a French economist and businessman named Jean-Baptiste Say, who conceptualized entrepreneurs as organizers and leaders of the economy, because existing businesses may remain confined to their markets and eventually hit an income ceiling, but new products or technologies create new markets and new wealth for any nation.
But, What is Entrepreneurial Leadership and how it’s different from entrepreneurship?
The skills and attributes of Entrepreneurial Leadership are a fusion and overlap between those of “Entrepreneurship” and “Leadership”. Here, Entrepreneurship refers to the attributes and capabilities of an entrepreneur to initiate a business venture, organizing the necessary resources and managing it along with risks to make a profit whereas Leadership is defined as strategic visioning and influential ability to motivate people through culture, system, and process of the organization.
Let’s understand it better through a few common predefined parameters of Entrepreneurs and leaders:
To be a successful entrepreneurial leader, here are three key principles to follow:
- Cognitive Ambidexterity
1. Cognitive Ambidexterity
The first principle of Entrepreneurial Leadership revolves around the decision-making approach of Entrepreneurs known as the prediction and creation logic.
The prediction logic approach can be defined as “analysis followed by action”. It’s a method of thinking, analysis and planning the business strategies based on the data, information, and experiences available.
On the other hand, the creation logic approach is explained as “action followed by analysis”. It is required while dealing with unknown situations. It helps entrepreneurs to observe and study the ongoing situations, and strategize to find new opportunities to test and explore (in case of any disastrous situation)for the current situation.
Being cognitive ambidextrous makes an Entrepreneurial leader capable of deciding when to rely on data and when to be creative. It also helps entrepreneurs to construct present and future strategies with a balanced understanding & coordinating of prediction and creation logics, against any unpredictable or unusual situations.
This principle of Entrepreneurial leadership allows and helps organizations to have a competitive advantage to be flexible and adapt to the changing business environment and demands as well.
2. SEERS: Social, Environmental, Economic Responsibility, and Sustainability
All the existing businesses in the world have their share of impact on society, environment, and economy.
SEERS stands for Social, Environmental, Economic Responsibility, and Sustainability. This principle of Entrepreneurial Leadership makes entrepreneurs more accountable and responsible for their impact on different aspects of society.
It focuses on demonstrating and ensuring sustainable growth through the commitment and contribution of entrepreneurial leaders towards the society and the environment as well.
CSR popularly known as Corporate Social Responsibility is one of the most suitable examples to understand how organizations/companies contribute towards the growth of society and the environment.
The SEERS teaches Entrepreneurial leaders to navigate and identify environmental, social, and economic value creation opportunities simultaneously rather than sequentially.
3. SSA: Social and Self-Awareness
The third principle of Entrepreneurial leadership focuses on developing a sense of self-awareness and social Awareness within an entrepreneurial leader.
Self-assessment is really essential for Entrepreneurs to have a strong and realistic understanding of their own values, background, capabilities, and limitations.
Why do Entrepreneurial leaders require self-assessment?
Major reasons for entrepreneurs to self-assess themselves are:
- to come aware of their blind spots, background, capabilities, and limitations,
- to understand and control emotions before it distorts thinking and mindset,
- to have a better understanding of where they are, where do they want to go, and where do they need to go.
Being self-aware will always benefit an entrepreneurial leader with certainty while tough decision-making situations. It also provides entrepreneurs with an ability to align & shape the social and economic opportunities that excite and connect themselves to their background or strength, to achieve the business goals.
Why choose Entrepreneurial leadership over Entrepreneurship?
The corporate and startup culture has completely turned around in the past 10 years.
You’ll see that the majority of the organizations or entrepreneurs are pushing themselves and their team round the clock really hard, with the aim to beat their competitive brands, capture the present market, and generate maximum revenue & profit.
At present, the majority of the corporate cultures and workspaces are more leaned towards encouraging competitive work culture within the organization to hit bigger numbers.
The companies with a competitive culture have been seen facing many situations leading to the conflict between the management and employees.
You would have come across a few similar stories or situations wherein a company,
- Employees were being forced to achieve targets at any cost,
- Employees suffered from work overload and overtime,
- Employees were being fired due to low performance,
- Employees leaving the company due to the lack of support.
There had been many other similar scenarios about the corporate culture and the problems are not caused due to ethics or goals here, it’s simply the lack or absence of Entrepreneurial leadership in the organizations.
Every entrepreneur knows that if you want to create a successful startup/business, you can’t do it without setting up the business goals and hitting the targets periodically. But it’s also true that if you don’t utilize your resources carefully, then you might not even have a business to set up the goals and only entrepreneurial leaders realize and understand it.
Entrepreneurial leaders know that the game of business is an infinite game and entrepreneurial leadership trains entrepreneurs to have an infinite business mindset, who understands the course of changes with time and accepts the reality that sometimes you are ahead of your competition and sometimes you are behind, sometimes your products are the best sometimes they are worst. With a finite business mindset, you can never create a successful business.
The decision making, problem-solving, and infinite business mindset of Entrepreneurial leaders always help organizations to get through the situations to unite, positively influence and motivate their team players towards the accomplishment of a goal and the vision of the organization/business.
How to make a cultural transformation using Entrepreneurial Leadership?
Vision and goal are two aspects that differentiate any business or businessman from others. The major difference between an entrepreneur and an entrepreneurial leader is their understanding of the distinction between vision and goal.
What is the difference between vision and goal?
Simon Sinek, an American motivational speaker and the author of books “Start With Why”, “Leaders Eat Last”, said in one of his interviews that “the actual difference between vision and goal is the finish line”. He added, “ a goal can be measured by counting metrics, whereas a vision is a crystal clear sense of what the finish line looks line but, with no idea how far it is”.
According to him, a true vision inside a company has nothing to do with the product or services, it is about something that advances your idealism through your company, with your products. It’s true that you’ll never achieve your vision but you’ll never stop trying either.
With every milestone you achieve during the journey, it will give you – happiness, this is what gives – meaning to our work and our lives.
“A true success is not a list of checkboxes, it’s a feeling ”.
Let’s learn about a few attributes of entrepreneurial leadership through examples:
1. Motivate through Circle of safety:
Nextjump, a US-based organization run by Charlie Kim has a lifetime employment policy. It is really tough to get a job at Nextjump but if you have a career at Nextjump, you will never get fired for low-performance reasons.Especially, if you are performing low at Nextjump, you’ll be coached and guided to perform better. The company places the personal growth of employees and company culture above revenue and everything elseMaking your employees feel psychologically safer self-generates a workspace with a learning culture where employees don’t hide their mistakes, lie, or fake their jobs. Here, team players are never hesitant to raise hands and accept whenever they make mistakes or require more training. They ask for help whenever they need it to perform better. They don’t consider it as a part of weakness, it’s a strength.
2. Multiply knowledge:
Jack Stack, writer of the book “The Great Game of Business” and the founder of Springfield ReManufacturing Corp (SRC), took over and reestablished SRC in 1983. SRC was nearly bankrupt when 13 employees of International Harvester purchased a part of that company with the goal of saving 119 jobs. Initially, SRC rebuilt truck engines with 8. million dollars loan and half-million-dollar(100,000) money of their own.
But when Jack took over, he was just aware of the principles of democracy and athletic competition but he was no expert at managing a company. He just knew a few things – providing choice, playing fair, and having a voice. With these basic principles, he created Open book management where all the employees get to vote on the company’s matters & financial decisions. At SRC, everyone learned to read a profit & loss statement, even those who are without any high school education – to understand all the expenses and revenue of the company.
SRC’s debt to equity ratio went down to 1 by the year 1988 with a business worth 43 million dollars. The stock price of Springfield ReManufacturing Corp was 0.10 dollars per share in 1983, whereas by 2015 their stock worth increased to 199 dollars per share.
3. Help others to succeed:
At the United States Marine Corps, young recruits are taught to be interdependent on each other to become a Marine. Trainers at Marine purposely put young recruits into situations where they have to ask for help and help others to succeed or else they will fail by themselves. Eventually, over the course of time and training, the young recruits started helping, cheering, rooting, and caring about the success of each other. Leaders and trainers at Marine want their recruits to learn and realize that irrespective of the differences, their success is dependent on each other, and mostly if they don’t help each other, nobody will help them and they’ll not succeed or graduate as a Marine.
4. Player with Infinite mindset:
Simon spoke during the education summits at Apple as well as Microsoft. He shared that during the education summit at Microsoft, around 70% of their executives spent around 70% of their presentation talking – how to beat Apple. Whereas at the Apple summit, 100% of the executives spent 100% of their presentation talking – how to help teachers teach how to help students learn.
He explained the reason that one was obsessed with their competition while the other was obsessed with what they do, why they do and where they are going.
The infinite mindset wakes up every single morning to compete against themselves – how do I make my products better than they were yesterday, how do I take care of our customers better than we did yesterday, how do we find new solutions to advance our cause, our purpose, and our belief more efficiently & productively than we did yesterday or any other day.
Those who play the infinite game understand that it’s not about the battle, it’s about the war and that’s the reason why Apple does not compete against any brand. Apple is not playing to be number one every day with every product, they are playing the infinite game to frustrate and outlast their competition until their competition drops out of the game.
It’s not about outdoing everyone, it’s about outdoing yourselves, you are your competition.
5. Mission and Vision:
Phil Knight had seen during his graduation from Stanford, how Japanese cameras had replaced the dominant German cameras in the American market and he wondered if Japanese shoes could also do the same to shoe brands like Puma and Adidas in the American market. After graduating from Stanford in 1962, Phil knew that to make it happen he would have to establish contact with a Japanese company and negotiate to import their products to America. With zero experience in any of these areas, he flew over to Japan the same year. There he stumbled upon a shoe store named Onitsuka Tiger and he arranged a meeting with the company’s founder and proposed to be a distributor of their shoes in the American market. The owner accepted the proposal and Phil became the exclusive distributor of Onitsuka Tiger shoes in the USA. Phil was a distance runner back in University and he didn’t have any experience in any of these areas and he realized that his strategy is not scalable. So he went to his coach – Bill Bowerman, the only person he knew who understands more about shoes than him and Bill liked the Tiger shoes.
Later in 1964, Phil Knight and Bill Bowerman incorporated Blue Ribbon Sports (BRS) with each investing 500 dollars in it. In 1965, BRS’s revenue increased to 20000 dollars and they opened their first store in Santa Monica, US.
While Phil was scaling the business, Bill was taking care of innovation in the company. Phil and Bill rebranded Blue Ribbon Sports in 1971, with an effort to manufacture and distribute their own shoes under their own brand. Nike is the present name of the new venture by Phil and Bill – an iconic sports brand with the vision to “Bring innovation to every athlete in the world”. Nike believes, “If you have a body, you are an athlete” and at Nike, people work with a mission to “do everything possible to expand human potential.”
According to the Bureau of Labor Statistics, about 20% of small enterprises fail in the first year, whereas around 50% of startups fail in the fifth year of their business.
In this era of competitive business world, either it’s a startup or an established company, running an organization is a really tough job. Building your startup or company culture and goals should never be based on the grounds to beat the competition. Because when you organize your startup or business or team to win, then the scores become paramount than inspiration, motivation, and vision.
Money and people are the two basic and major requirements of any business or startup, and there are going to be situations where you will have to choose one and the other one has to be sacrificed. The point is which will you prioritize?
It is never going to be tough if you just put your people and vision above money and self-interest.
Of course, money matters but people who give their sweat, blood, & tears for your business matter more.