1. Virtualities vs. Realities in Digital Times - a Leadership Challenge in SMEs Bengt Johannisson, professor Linnaeus University/Jönköping University Presentation at Det Danske Ledelseakademi 2011 Conference, Copenhagen Business School, December 5-6, 2011

2. Agenda Points of departure – Leadership and SMEs Family-Business characteristics for all times? Organizing in digital times Lessons for stakeholder management Conclusion

3. How it used to be Entrepreneurship carried by strong-willed individuals (men!) running businesses Organizations structured as hierarchies with distinct boundaries and strong legal defence Uncertain environments due to lack of information but regulated by strong institutions

4. How it is becoming Entrepreneurship carried by the many in all sectors of society Organizing in constellations for firms with fuzzy boundaries Ambiguous environments that are out of control, enacted through social media that construct realities out of coincidences and stories

5. Leadership is about Envisioning new futures Making sense in ambiguous times Controlling by creating a sense of community that breeds commitment Bringing out and amplifying the capabilities of followers Epitomizing the need for recognizing change as a natural state

6. Featuring SMEs Almost all firms are small family businesses Running a business is an existential challenge Most small firms are not radical innovators, that is do not remain entrepreneurial in the traditional sense People are close in SMEs and SMEs are close to their (local) communities

7. The Family Business Logic Active and visible ownership Stable ownership and leadership An long-term focus on doing business Multiple objectives also including community Independence against financial institutions A flexible government Owners identify with the busines and the business is identified with the owners

8. Strengths of SME/FBs Feed families, places and economies Has a potential for strategic awareness Increased standardization and customization call for more improvisation Help societies to make adaptation to a changing world smooth Nurture familiness as a unique resource

9. SME/FBs as Gazelles Turn Weaknesses into Strengths Existential motivation, not profit orientation, crafts familiness and creates persistence Alert and frequent actions but humble visions replace irrelevant plans Human and social capital reduce dependence on financial capital Dialogue and interactivity, not pro-action, mean co-creating own development conditions

10. Familiness - Combining Business, Family and Community Concerns Motivates and turns tensions between business and social considerations into sources of energy Facilitates concerted action among owners, management and employees Builds a bridge between the firm and the local community

11. In Digitial Times Entrepreneuring SME Dresses Differently Any initiative, commercial or social, is invited The web offers an arena for experimenting Barriers to entry and exit are reduced A U-shaped founder profile emerges Running a business may appear as a temporary commitment independent of way of life – crafting mixed careers

12. The Return of Papierlöst ledarskap Digital dialoguing replaces documents Networking instead of formal negotiations Personal trust replaces impersonal contracts Swift trust needed to deal with emerging opportunities

13. Digital Times Enforces Personal Networking that Breeds new and feeds existing firms Crafts the identity of the founder/leader and builds the legitimacy of the firm Organizes social learning and brings resources to the firm Informs when there is a need for a new mindset and a re-orientation of the firm

14. Running a Firm is a Passion that Calls for Human Encounters Digital relating is like love without kisses Trust is embodied and based on personal chemistry that fits Joint intuitive decision-making calls for total presence, genuine dialogue and a confirming handshake

15. Proximities in a Digitalized and Globalized World Synchronicity becomes both a necessity and an opportunity – kairos rules Demand and supply are neighbours Diffusion and materialization of ideas are immediate Social media make new communities – personal, as well as national or global movements – emerge over night

16. Virtual Organizing Challenges Formal Structures The globalization of the market has enforced the role of branding and the need for outsourcing beyond cost-efficiency Changing logics – from the value-chain to the value-star call for new roadmaps Turbulent times call for new modes of organizing: bunsha, adhocracy and heterarchy

17. Message for SME Leaders: Entrepreneurship is Genuinely Collective The family is a basic social unit in business life as well as in everyday life. The main source of product development is the dialogue with critical customers In locations such as Herning individual firms are seldom entrepreneurial As natural born entrepreneurs children play together

18. Leadership Challenges in SME Operations Mobilize the digitial natives within and outside the family Recognize the experience of those who have been dwelling in the business context Build an absorptive capacity for user-driven and open innovation Invest as much in building legitimacy as in creating uniqueness

19. Leadership Challenges beyond SME Business Operations Replace a paternalistic outlook with a perspective that makes the women visible and generally facilitates succession Establish a dialogue with not only commer- cial stakeholders but with societal a well Pay special attention to the local schools in order to preserve an entrepreneurial attitude Realize that social media may amplify any coincidence inte a major threat

20. Conclusions The edge of chaos is everywhere SME familiness appears as an energizer and a stabilizer in a turbulent world In SMEs leadership means orchestrating internal commitment and external involvement Increasing global visibility of any firm means that both economic and social issues have to be considered