Entrepreneurial Leadership The Organizational Life Cycle and the Entrepreneurial Process by Professor Clarence S Bayne

Leadership and Context Leadership has meaning in a visioning, creative and organizing context The organizational context must be embedded in the mission and mandate implicitly or explicitly. The leader creates and implements the strategic plan as a means to achieve the mission and purposes set out for the organization. The leader through a set of entrepreneurial acts seek to achieve objectives intended to realize the mission and mandate The mission and mandate derive meaning from satisfying outcomes: utilitarian, hedonic, symbolic, spiritual (ultimate meaning).

Leadership Means and Meaning There are many types of leadership. Leadership: man exercising the will to attain life meaning by commitment to cause(s): avoiding meaninglessness or the existential gap. Man organizing and using resources for the provision of needs(utilitarian, hedonic and symbolic). Man acting to satisfy the needs of the social collective: creating and sustaining a socially cohesive society. Man seeking a balance between individual and societal needs satisfaction.

Leadership and Responsibility Personal or existential responsibility: provision of security, food, clothing, shelter, a sense of belonging or community. Spiritual and religious being. Collective action: community participation, government and social intervention and regulations Corporate action and corporate citizenship bound by a shared ethic and values.

Instruments of Leadership Action Households: Individual creative response to needs, opportunity, necessity. NGOs: community based organizations, citizen participation, and social enterprise, well being and conscience. For profit corporations: production, distribution, economic and environmental sustainability Government: creating and sustaining community; regulations, the social costs of consumption and production. Social cohesion, preserving environments Markets: dynamic forces of market demand and supply in the factor and goods markets.

Leaders Organizations and Decision Making Leaders are decision makers in the public and private spheres. Leaders make decisions about how to use scarce resources effectively and efficiently for the provision of the needs of society/community and individuals living within communities In an organizational context a leader makes decisions for the organization: the major function of the leader is to think and plan for the organization. Community or Public Sphere: Leaders shape and reshape society by their vision and strategic actions

Organizational versus Private Needs Leaders in their search for a meaningful existence create mechanisms(organizations) that transform resources into the means(goods and services) that satisfy fundamental needs. Organizations frequently need to take actions (make choices and operate ) that are independent of actions dictated by the psychological predispositions of the decision maker (entrepreneur /leader). Leaders need to be creative and innovative (entrepreneurial) in the face of constraints set by scarce resources, market competition, and socially acceptable values.

Leaders and Entrepreneurs Entrepreneurs must have certain leadership characteristics, such as: A passionate faith and belief in the vision of the product or service idea of the organization or agency The capability to give direction and to motivate others through his/her vision The capacity to mobilize resources and apply knowledge to the transformation of those resources into goods and services that provide the greatest benefits to society. A sense of social justice in terms of the distribution of wealth, freedom and rights in society.

The Entrepreneur Peter Drucker: almost anyone can be an entrepreneur, if the organization is structured to encourage entrepreneurship. Conversely, almost any entrepreneur can turn into a bureaucrat: cause the organization to stagnate and decline. According to J.B. Says (19 th Century classical economist), an entrepreneur uses resources in new ways to maximize productivity and effectiveness. Leaders make these decisions on behalf of the organization, whether that organization is a public or private sector institution. The leader may choose to act as a positive or a negative entrepreneur

Entrepreneurship:A Process Entrepreneurship is not a one shot act Entrepreneurship is a process Entrepreneurship is closely associated with quality management process It is an attitude that starts with the leader who encourages the continuous search to find new ways to do things better; to find new and better products and services which does not simply satisfy, but may even delight clients. Entrepreneurship is the chain of responses to identifiable individual and community needs, and to environmental and organizational change.

Entrepreneur ship : Economic and Social Entity Growth in population creates a necessity and opportunity for entrepreneurial action. Entrepreneurship creates opportunity to maximize profits for stakeholders and the satisfaction of clients. Social entrepreneurs engage in activity that helps others and maximize benefits to society as a whole: action of social enterprises and NGOs. Self actualization: creating meaning in life by commitment to a cause that helps someone or community; or something that one has a passion for. Responding to opportunity and or necessity through action in the market.

Organizational Change Leaders and Entrepreneurial Action Changes in organizations take place for a number of complex reasons(internal and external to the organization). Changes in organizations make special demands on leaders and their capacity for entrepreneurial action No single person may have all the skills and personality traits that are needed at any given stage in the life cycle of the organization This shortage of skills and creative capacity poses a problem for sustainable growth and community development.

Entrepreneurial Action to Deal with Absence of Leadership Traits Growth/change often requires specialization and division of human labour skills Prime Minister may create a Cabinet or caucus consisting of members with varied skills, ministers Shuffle cabinet periodically within its mandate to ensure appropriate skills match the needs of the situation. Organization: create Boards having members of varied and appropriate skills. Change Boards and skill-sets periodically. Create management teams and encourage cross- functional decision-making Practice Strategic Planning

Life Cycle of Organization All organizations have a life cycle analogous to human beings Causes of organizational life cycle not inherent to the aging process asobservable in the human life cycle. The organizational life cycle depends on the capacity of leadership to reinvent the organization when needed: perhaps on a continuous basis. This capacity is limited by the knowledge and personality traits of the entrepreneurial leader. What are the critical phases in the organizational life cycle? and what kinds of skill-sets are best suited to the continuous success of the organization?

Stages of the Life cycle Infancy Exploration and start-up Expansion and growth Maturity Stagnation and Decline Reinventing or re-engineering the organization

Leadership Types Prophets or visionaries Barbarian Builders, creators Professionals, Administrators Bureaucrats The Ideal is postulated as a “Synergist”.

Life Cycle and Leadership Type The sustainability of an organization(private and public) is dependent on the type and quality of leadership that is available to the organization at the various stages of the life cycle, from infancy to stagnation and decline.

Leadership Type and the Market The innovating visionary seizes the opportunity to enter the market to benefit from risk/uncertainty. Risk may be economic( business cycles: boom, bust), social ( O. J. Simpson, riots), man made(“ shock therapy” doctrine), or natural disaster(Tsunami, Katrina). A continuous entrepreneurial spirit is essential in order to avoid stagnation and decline; redesign or re-engineer the declining organization; to create a new vision of community/country and restructure its institutions

Links Between Organizational Culture and Leadership Personalities Different types of Organizational Cultures: positive to negative Optimal type organizational culture is one committed to continuous quality management in which the satisfaction of the client-citizen is the central focus ( within the constraints of a sustainable world) A successful quality environment is dependent on leadership type. And the maintenance of the entrepreneurial spirit in the face of dynamic external and internal change The ideal leadership type is synergistic. But this presupposes a super knowledgeable entrepreneur.

It can be shown that Pareto Optimality (P.O.) is not a sufficient condition for a socially cohesive society requiring social justice and sustainable environments Any distribution of wealth is consistent with Pareto optimality provided that the poor is willing to accept their lot. Any improvement in the position of the poor requires a redistribution of wealth. This is a point of conflict between rich and poor. Redistribution from any given equilibrium negates P.O. : creates dissatisfaction. Requires Government and social agencies Intervention: Taxes, subsidies, regulations, etc The Dilemma of Profit and Social Welfare