The Entrepreneurial Manager Chapter 7 Dowling BA 560 Fall Term 2006

The Entrepreneurial Manager There are convergent pressures on being an entrepreneur and being a manager as a venture accelerates and grows beyond founder-driven survival. Key to future success is the ability of an entrepreneur to have or develop competencies as an entrepreneurial manager.

BA560 Venture Planning Prof. Dowling 3 The Entrepreneurial Manager Old CW: A good entrepreneur can’t be a good manager. New CW: Ventures that flourish beyond startup can be headed by entrepreneurs who are also effective managers. UnconventionalWisdom?

BA560 Venture Planning Prof. Dowling 4 The Entrepreneurial Manager Founders adapt for three key reasons: Shift from creation to exploitation Shift from passionate commitment to dispassionate objectivity Shift from direct personal control to indirect, impersonal control.

BA560 Venture Planning Prof. Dowling 5 Stages of Growth Startup Stage From 2 to 7 years; most perilous stage, characterized by efforts of lead entrepreneur. High-Growth Stage In this, perhaps the most challenging stage, new ventures fail at 60% rate. ‘Lemons’ ripen. Maturity Stage Key issue is no longer survival. It is steady, profitable growth.

BA560 Venture Planning Prof. Dowling 6 Stages of Growth Startup High Growth Maturity Stability Time (Years) Time (Years) Crucial Transitions: Sales0-$3Million $2-10M $7.5M+ Employees0 to Management ModeDoingManaging Managing Managers ModeDoingManaging Managing Managers $100 M+ $50 M $25M $3 M $1 M

BA560 Venture Planning Prof. Dowling 7 The Entrepreneurial Manager Entrepreneurial Culture A common value system Difficult to measure or articulate Belief in and commitment to growth Team feels they’re “in this thing together” Goals and market determine priorities

BA560 Venture Planning Prof. Dowling 8 The Entrepreneurial Manager The Fit Concept It is important to have a management team whose skills are complementary.

BA560 Venture Planning Prof. Dowling 9 The Entrepreneurial Manager Entrepreneurship Influence Skills Leadership/vision/influence Helping/coaching and conflict management Teamwork and people management

BA560 Venture Planning Prof. Dowling 10 Exhibit 7.1

BA560 Venture Planning Prof. Dowling 11 Exhibit 7.2

BA560 Venture Planning Prof. Dowling 12 Exhibit 7.3

BA560 Venture Planning Prof. Dowling 13 Exhibit 7.4

BA560 Venture Planning Prof. Dowling 14 Exhibit 7.5

BA560 Venture Planning Prof. Dowling 15 Traits Characterizing Rapidly Growing Companies High levels of change, ambiguity, and uncertainty Ongoing succession of nonlinear and nonparametric events Inexperience of management team Counterintuitive, unconventional patterns of decision-making Informality and fluidity of organization structure and procedure

BA560 Venture Planning Prof. Dowling 16 Exhibit 7.6

BA560 Venture Planning Prof. Dowling 17 Entrepreneurial Influence Skills Interpersonal/teamwork skills –Ability to create, through management, a climate and spirit conducive to high performance –Ability to understand the relationships among tasks and between the leader and followers –Ability to lead in those situations where it is appropriate

BA560 Venture Planning Prof. Dowling 18 Characteristics of Successful Managers Managers skilled in leadership, vision, and influence –Skillful in creating clarity out of confusion, ambiguity, and uncertainty –Able to define adroitly and gain agreement on who has what responsibility and authority –Manage in a way that builds motivation and commitment to cross-departmental and corporate goals, not just parochial interests

BA560 Venture Planning Prof. Dowling 19 Characteristics of Successful Managers Managers skilled at helping, coaching, and conflict management –Creatively handle conflicts, generate consensus decisions, and share power and information –Recognize that high-quality decisions require a rapid flow of information in all directions –Accept that knowledge, competence, logic, and evidence need to prevail over official status or formal rank in organization

BA560 Venture Planning Prof. Dowling 20 Characteristics of Successful Managers Managers skilled at teamwork and people management –Encourage innovation and calculated risk rather than by punishing or criticizing whatever is less than perfect –Expect and encourage others to find and correct their own errors and to solve their own problems –Make heroes out of other team members and contributors –Generate trust among colleges and subordinates –Perceived as honest and direct, open and spontaneous

BA560 Venture Planning Prof. Dowling 21 Other Management Competencies Marketing –Market research and evaluation –Marketing planning –Product pricing –Sales management –Direct selling –Service management –Distribution management –Product management –New product planning

BA560 Venture Planning Prof. Dowling 22 Other Management Competencies Operations/Production –Manufacturing management –Inventory control –Cost analysis and control –Quality control –Production scheduling and flow –Purchasing –Job evaluation

BA560 Venture Planning Prof. Dowling 23 Other Management Competencies Finance –Raising capital –Managing cash flow –Credit and collection management –Short-term financing alternatives –Public and private offerings –Bookkeeping, accounting, and control –Other specific skills

BA560 Venture Planning Prof. Dowling 24 Other Management Competencies Entrepreneurial Management –Problem solving –Communications –Planning –Decision-making –Project management –Negotiating –Managing outside professionals –Personnel administration

BA560 Venture Planning Prof. Dowling 25 Other Management Competencies Law and Taxes –Corporate and securities law –Contract law –Law relating to patent and proprietary rights –Tax law –Real estate law –Bankruptcy law

BA560 Venture Planning Prof. Dowling 26 Other Management Competencies Information Technology –Information and management systems tools. –Business to business, business to consumer, business to government, all via the Internet –Sales, marketing, manufacturing, and merchandising tools. –Financial, accounting, and risk analysis and management tools. –Telecommunications and wireless solutions for corporate information, data, and process management.