2014 03-07-jade- the entrepreneurial manager (witmeur)

The Entrepreneurial Manager

(Short Version)

JADE Spring Conference

Olivier Witmeur

March 7th, 2014

Desired Outcomes of the Workshop

• Who is the entrepreneur?

• What are the differences between entrepreneur and manager?

• Does it matter?

1. Why entrepreneurshipmatters

2. About entrepreneurs

3. Introduction to effectuation

4. Case study: Wafles and Dinges

5. Introduction to intrapreneurship

6. Conclusion

• What makes entrepreneurs entrepreneurial (Sarasvathy)

07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

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Olivier Witmeur (Belgian, 46)

• A real passion for entrepreneurship education and entrepreneurs.

• Student entrepreneurs: 2x

• Full time entrepreneur: once, in a team of 5

• Coach: 500+ projects over the last 20 years

• (Advisory) Board member in multiple new ventures

• Policy making: 2x

• PhD in entrepreneurship in 2008

• … never as an investor

• My wife (as Colombo), no kids, one dog (Vicky).


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WHY ENTREPRENEURSHIP MATTERS

Did you know one of the largest and most profitable businesses during the late 1800s and early 1900s was ice harvesting?


5

Jump to the next curve.

Temps

Rule #1The dominant players on curve #1 are

not likely to jump to the curve #2…

1

2


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Again!

Today’s businesses, especially the large ones, simply will not survive in this period of rapid change and innovation unless they acquire entrepreneurial competences.

Peter Drucker

1985 (!) 2005


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Strategy Entrepreneurial Orientation

“An entrepreneurial firm is one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with ‘proactive’ innovations, beating competitors to the punch.A non-entrepreneurial firm is one that innovates very little, is highly risk averse, and imitates the moves of competitors instead of leading the way.”

• Entrepreneurial Orientation (EO) =

– Risk Taking

– Proactiveness

– Innovativeness

• EO Performance

(The relation is stronger in turbulent environments)

Danny MILLER (Canada)


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Towards ‘Entrepreneurism’

• Y= f ( L, C ) … Capitalism and Socialism

• Y = f ( L, C, K ) … The Knowledge Economy

• Y = f ( L, C, K, E ) ... The Entrepreneurial Society?


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Global Entrepreneurship MonitorTotal Entrepreneurial Activity Level


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How To Navigate In Turbulent Times?

VOLATILITYNature, dynamics and speed of change.

UNCERTAINTYLack of predictability and prospects for surprises.

V

U

COMPLEXITYMultiplex of forces, confounding of issues and causes-and-effects confusion.

C

AMBIGUITYHaziness of reality, potential for misreads, and the mixed meanings of conditions.

A


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ABOUT ENTREPRENEURS

Different views on the entrepreneur

1. As a revolutionary ‘Entrepreneurial leadership’

2. As a manager ‘Entrepreneurial management’

3. As a salesman

4. As a team player Entrepreneurial team


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Traits approach: Classical variables

Need for achievement (N-Ach) refers to an individual's desire for significant accomplishment, mastering of skills, control, or high standards.

Locus of control refers to how much individuals believe they can control events that affect them.

Need for achievement

Locus of control

Ambiguity tolerance is the ability to perceive ambiguity in information and behavior in a neutral and open way

Tolerance for ambiguity

Self-efficacy is the extent or strength of one's belief in one's own ability to complete tasks and reach goals

Self efficacy


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About Entrepreneurs (a personal view)

Network & Social Capital

Knowledge &Expertise

Tolerance for Ambiguity

Commitment& Courage

Passion & Values

07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur 15

ELEMENTS OF ENTREPRENEURIAL LOGIC:INTRODUCTION TO EFFECTUATION

Managerial Approach based on optimizationSelecting between given means to achieve a predefined goal

How to optimizethe use of the

resources?

Given Goal

Resource 1

Resource 2

Resource 3

Resource 4

Resource 5

Typical tools & techniques: project management, leadership, controlling, quantitative methods…


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A more creative approach based on planningGenerating new means to achieve pre-determined goals

How to write a ‘case’ or a plan to ask for

more resources.

Resource 1

Resource 2

Resource 3

(needed)

(needed)

Typical tools & techniques: strategic and financial planning

Given Goals


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Entrepreneurial ThinkingImagining possible new ends using a given set of means

How to exploit one opportunity inside the

opportunity space?

Resource 1

Resource 2

Resource 3

Resource 4

Resource 5

Possible goal 1

Possible goal 2

Possible goal 3

…

…

Opportunity Space

Typical tools & techniques: co-creation, creativity, enrolment, lean entrepreneurship, bootstrapping….


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Introducing Effectuation: The logic of expert entrepreneurs.

The word effectual (entrepreneurial approach) is the inverse of causal (managerial approach).

In general, in MBA programs across the world, students are taught causal or predictive reasoning in every functional area of business.

Saras SarasvathyIndia


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Causation vs. Effectuation

Causation Effectuation (Cre-Action)

• Planned approach

• Top-Down

• Managerial logic

• Prediction based: To the extent we can predict the future, we can control it.

For predictable situations

• Emergent approach

• Bottom-up

• Entrepreneurial logic

• Control based: To the extent we can control the future, we don’t need to predict it.

For uncertain situations

Effects are predicted

Need to manage

the causes

Causes are given

Need to manage

the effects


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Principle #1: Bird in Hand

Start with who you are, what you know and whom you know… Not with pre-set/given goals (based on prediction)

• Typical entrepreneurial resources:

– Expertize, skills…

– Social capital

– Psychological capital: hope, optimism, self efficacy and resilience


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Principle #2: Affordable loss

Invest what you can afford to lose (extreme case = 0€)

… Not expected (risk adjusted) return


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Principle #3: Crazy Quilt

Build a network of self-selected stakeholders

… Not competitive analysis and transactional relationships with first-best partners.

Co-CreationCustomersSuppliersChannels

Financial partnersEmployeesSponsors

…

Committed stakeholders

network

Crazy quilt, not puzzle.


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Principle #4: Lemonade principle

Embrace and leverage surprises (they can present new opportunities)

…Not avoid them


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Nils Bergvist

Question:

• What would you do?


About Nils

• Swedish

• Environmental engineer

• Worked 8 years in the mining industry in Kiruna (in Northern Sweden)

• Passion for wildlife and sports


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Ice Hotel


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Principle #5: Pilot-in-the-plane

The future comes from what people do

… No inevitable trends

Control vs Plan


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The Dynamics of the Entrepreneurial Network

Who I am? What I can do? Whom I know?

My affordable loss?

Who may be involved?

Additionalresources

Iterative opportunityco-construction

New GoalsThe venture grows

step by step.

Dead end

My Goals?

Multiple techniques help to deal with these cycles: Design Thinking, Lean Startup, Business Model Generation, Staged Financing…

To be continued.


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Managerial vs. Entrepreneurial Thinking (stylized facts)

Effectual

CausalLow

Low High

High ExpertEntrepreneurs

ExperiencedVCs

Angels

CorporateManagers

NoviceVCs

Bankers

Noviceentrepreneurs


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From Causation to Effectuation…and vice-versa

TIME AND EXPERIENCE

LOGIC

Causal

Effectual

Novice entrepreneur

Expert entrepreneur

Start-upfirm

Largefirm

Shift in logic necessitated byfirm growth

Entrepreneurs do not alwaysmanage to bridge this gap

Moderatingeffect of

resources


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Wafels & Dinges

Questions:

• What would you do next?

• What is your logic?


Don’t wait/look for the perfect opportunity.

Just start!

INTRODUCTION TO INTRAPRENEURSHIP

Entrepreneurs and Intrapreneurs

Owner-Manager

in Small Firms

Managers

in Large Firms

Entrepreneurs

Lifestyle

Entrepreneurs

Intrapreneurs


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Entrepreneurs vs Intrapreneurs

ENTREPRENEUR INTRAPRENEUR

Ownership Yes No (employee)

Decision power Unlimited as long as shareholders agree

Hierarchy

Incentive Overall Limited: Bonus, SOP…

Risk Large, i.e. may include personal assets

Job reputation

Strategic Freedom Full To be aligned with the corporate agenda

Type of activity Ex-nihilo creation Strat with existing organizational support

Sponsors Stakeholders Corporate Management

• Adapted from Basso, 2004


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Corporate Entrepreneurship Challenges

• Entrepreneurial culture / values

• Recruit, Develop & Retain entrepreneurial people

• Leadership skills

• Pace of change is accelerating Need to renew

• Core vs non-core activities

• Breakthrough innovation

• Develop an organization that is entrepreneurship friendly

CULTURE

STRATEGY(Vision)

ORGANIZATION(Tactics)


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Entrepreneurial Values and Behaviours

• Adapted from Burns, 2008

Change is normal

‘Can do’

Trials & Errors

Opportunistic

‘Work is Fun’ Celebrate Success

CreatityInnovation

Self confidence

Network and Sharing

Learn frommistakes

Optimism

Long term impacts

AchievementMulti-

disciplinarityTeam


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Organizational framework for Internal Venturing

Strategic Importance

Very important Uncertain Not important

Operational relatedness

Unrelated Special BU Special BU Spin-off

Partly related New department New department Contracting

Strongly related Direct Integration New department Contracting

Adapted from Burns, 2008


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CONCLUSION

Traditional vs Entrepreneurial Management (Adapted from H. Stevenson)

ENTREPRENEURIAL TRADITIONAL

Strategic Orientation

Driven by perception of opportunity

Driven by resources currently controlled

Commitment to opportunity

Revolutionary with shortduration

Evolutionary of long duration

Commitment of resources

Multistaged with minimal exposure at each stage

Single-staged with complete commitment upon decision

Control of resources

Episodic use of rent of required resources

Ownership or employment of required resources

Management structure

Flat with multiple informal networks

Formalized hierarchy

Reward philosophy Value-drivenPerformance-basedTeam-oriented

Security-drivenResource-basedPromotion-oriented


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Entrepreneurship and ManagementEN

TREP

REN

EUR

SHIP M

AN

AG

EMEN

T

Initialdiscovery

Opportunityrefinement

Marketmaking

Resourceacquisition

(New) co-ordination of

(new) resources

Co-ordinationof old

resources/on-going activityDiscovery process

Exploitation process


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The test of a first-rate intelligence is the ability to hold two opposed ideas in the

mind at the same time, and still retain the ability to function.

F. Scott Fitzgerald

Entrepreneur vs. Manager is the wrong question.

Act like Lionel Messi; ie be good at everything and know what tool/logic to

use at the right time


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It doesn’t matter whether you are a lion or a gazelle.When the sun comes up, you better start running.

Thomas L. Friedman in “The World Is Flat”

Every morning in Africa, a gazelle wakes up.

It knows it must run faster than the fastest lion or it will be killed.

Every morning a lion wakes up.It knows it must run faster than the

slowest gazelle or it will starve to death.


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Never Stop Wondering and Asking

[email protected]

T. +32.2.650.41.60 – M. +32.475.68.62.50 if important and urgent

For visitors: 48 avenue F. Roosevelt (Janson Building) – Room J1-117, 1050 Brussels

Postal address: 50 avenue F. Roosevelt – CP 141, 1050 Brussels, Belgium


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mailto:[email protected]

BACK UP

WHAT IS ENTREPRENEURSHIP?

Definition 1: The HBS working definition

The pursuit of opportunity beyond the resources you currently control.

H. StevensonUSA


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Definition 2: The classical academic definition

We define the field of entrepreneurship as the scholarly examination of how, by whom and with what effects opportunities to create future goods and services are discovered, evaluatedand exploited.

Academy of Management Review, 2000, vol. 25, n°1, 217-226

S. Shane S. Venkataraman


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Definition 3: Degree of entrepreneurship?

New to founders

FranchiseeShops

Take-overBuy Out

CorporateSpin-offs

Innovation

Lawyers,Doctors,

….

Ch

ange

New to market

High tech& Social start-ups

Ch. Bruyat A. Fayolle

Adapted from C. Bruyat (1993) & A. Fayolle


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Definition 4: A classical definition

A way of thinking and acting that is opportunity obsessed,

holistic in approach & leadership balanced

for the purpose of value creation

J. TimmonsUSA

Thinking and acting = There is a “method”

Central role of the opportunity

(but found or made?)

Take all aspects into consideration

Need to be managed There are best practices

Value for the stakeholders, i.e. founders, team, investors,

customers, society…


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