Entrepreneurial Leadership

Prof. Dr. Zaidatol Akmaliah Lope Pihie.Faculty of Educational Studies

University Putra Malaysia

1

Transformational Leadership

Transformational

Transactional

Technical

Emphasis shifts to different leadership capabilities as individuals move up the organizational hierarchy

2

Critical DifferencesTransactional/ Situational

Transformational

• Leader adapts to various situations

• Organization adapts

• Focus is on day-to-day activities

• Focus is on the organization, not the individual

• Development of task and people behaviors

• Consistency, not adaptability

• Situational analysis decides emphasis

• Symbolic influence

• Strategic emphasis

Transactional/situational versus transformational leadership 3

Visionary Leadership • Transformational • Entrepreneurial

• Focus on the organization

• Focus on the opportunity

• Changing attitudes • Finding like-minded people

• Focus on change • Focus on building/creating

• Passion • Passion

• A stake in the ground • A moving stake

• Creative rearrangement • Creative destruction/rearrangement

• Committed investment • Staged investment

• Symbolic communications

• Intimate, personal communications

• Long-term, stay the course

• Medium-term, exit strategy

Similarities and differences between transformational and entrepreneurial leadership

4

Corporate Entrepreneurship Behaviors

Efficiently gets proposed actions into practice

Devotes time to helping others to find ways to improve products and services

• Displays an enthusiasm for acquiring skills

• Goes to bat for the good ideas of others

• Quickly changes course of action when results aren't being achieved.

• Boldly moves ahead with a promising new approach when others might be more cautious

• Encourages other to take the initiative for their own ideas

• Vividly describes how things could be in the future and what is needed to get there

• Inspires other to think about their work in new and stimulating ways

• Gets people to rally together to meet a challenge

• Creates an environment where people get excited about making improvementsEntrepreneurial leadership qualities identified

5

The Entrepreneurial Mindset (involved 10 qualities) Internal locus of controlTolerance for ambiguity Willingness to hire people smarter than

oneselfA consistent drive to create, build or

change thingsPassion for an opportunityA sense of urgency PerseveranceResilience Optimism Sense of humor about oneself

6

Internal Locus Of ControlFancy term often used by psychologist to describe a

person’s attitude towards his external environment.

Most successful entrepreneurial leaders have a strong internal locus control.

They see themselves, rightly or wrongly, as determining much of their own fate.

This internal locus control lead them to believe that they can make things happen, that they can overcome obstacles and convince or neutralize naysayers.

7

An internal locus control is not the same thing as personal confidence

This mindset extremely functional for entrepreneurial leaders in large organizations, since it causes them to believe that they can outwit, outsmart, outmaneuver, and outrun their own organization’s bureaucracy.

Most successful entrepreneurial leaders have a strong internal locus of control. They have the power to make things happen, that they are more in control then controlled.

8

Tolerance for Ambiguity Opportunity identification, development, and

capturing a significant new business opportunity is a messy affair.

Some people would have been unable to cope with this kind of chaos and uncertainty.

The old saying “If you can’t handle the heat, stay out of the kitchen” is aptly restated for entrepreneurial leaders.

For the right person, this is the fun, it’s the adrenaline rush that causes the entrepreneurial leader to seek out new opportunity time after time.

9

Willingness to Hire People Smarter Than Oneself

It is the willingness of successful entrepreneurs to hire people smarter than themselves.

By smarter, not necessarily mean people with higher IQs, but rather that this trait encompasses and ability to recognize personal limitations and a willingness to bring in people who are much more knowledgeable about different aspects of the business.

Many people in existing organizations are frightened or intimidated by having people working for them who know more than they do.

The business would never grow beyond their own capabilities if they did not “hire higher”.

10

A Consistent Drive to Create, Build or Change Things

Notice that “love of money” is not one of the aspects of an entrepreneurial mindset.

Money is important, but the real drive is the creation of something that is a reflection of the individual and his or her potential legacy. If it works well, the money follows.

Many entrepreneurial leaders succeed not by building or creating things from scratch but from changing things.

They see opportunities to make existing products, services, or companies better.

They can be more innovators than creators, but they are not satisfied with the status quo.

11

Passion for an OpportunityPerhaps the most enigmatic characteristic of the

entrepreneurial mindset may not be a characteristic or mindset at all, but an “emotional” set.

Entrepreneurial leaders have a strong passion for their idea or opportunity.

In large corporations, it is quite usual to find unimpassioned managers who often shepherd the desires and wishes of others.

The development of this passion is one of the biggest challenges that large companies face in trying to rekindle their entrepreneurial spirit.

12

A sense of Urgency Sometimes described as impatience, also

accompanies the entrepreneurial mindset.

Entrepreneurial leaders are described as wanting to get on with it. They push to meet or beat deadlines.

This sense of urgency is driven by both the desire to see their idea come to fruition and a fear that, if they don’t act first, they miss their window of opportunity-a competitor or rival might get there first and end their dream.

The entrepreneurial leader’s sense of urgency is born from an inward drive. Their deadline are self-imposed: the cash might run out, a customer might be lost, someone has to constantly mind the store 13

Perseverance Perseverance is a by-product of some of the other mindset

characteristics. If you love your idea, then it is likely that you will have the drive to see it through. If you have a sense of urgency, and fear the consequences of not getting there first , then you will be spurred to stay the course.

Perseverance is also a by-product of having an internal locus of control.

Because successful entrepreneurial leaders believe they can make it happen, they believe that all they have to do is stick to it long enough and they will realize their dream.

This perseverance is not generalized, but rather opportunity-specific. They may not persevere in all aspects of their life, but they certainly do so with ideas about which they feel passionate.

Many entrepreneurial leaders with whom we have worked can be nonfinishers in other aspects of their lives, but they are typically slaves to their beloved business ideas.

14

Resilience Many entrepreneurial leaders fail in their first

attempts to sell the organization on their ideas but they keep going.

This resilience factor is very important.

People who take themselves too seriously, are perfectionists to a fault, and beat themselves mercilessly for making a minor mistake don’t usually make good entrepreneurial leaders.

Leading like an entrepreneur requires an acceptance for making mistakes- but not for making the same mistake twice. 15

Optimism Successful entrepreneurial leaders are

optimistic about their potential success of their opportunity.

They truly believe in it, they don’t think

anything will stop them, and they know they are resilient enough to overcome obstacles and setbacks.

The optimism is a very valuable currency when selling their ideas to others.

16

Sense of Humor about Oneself Most of us enjoy someone with a sense of humor, but this

trait is extremely important and functional for entrepreneurial leaders. Following the opportunity process is messy. We don’t know if an idea is an opportunity until we dig into it. As we dig, we learn. We realize that what we though we knew about the opportunity isn’t quite accurate.

We make mistakes, take wrong turns, back up and take another direction, and often have to admit our own mistakes and omissions.

If entrepreneurial leaders take themselves too seriously, then they don’t recover well emotionally from these missteps.

They need a healthy ability to fall down, get up, dust themselves off, look in the mirror, and have a good laugh at how silly they look.

17

Focusing Entrepreneurial Energy

Miners (Operational)

Explorers(Market)

Accelerators(Unit)

Integrators (Enterprise)

Internal External

Activist

Catalyst

Entrepreneurial leadership focus and roles

18

Explorers: Market-focused leadership Explorers are involved in value-creating events and

activities that are aimed primarily at the development of new markets, new products and services, or both.

They also can be involved in creating a new business model for delivering current products and services that is so unique that it results in significant growth and profitability for their company.

As mention earlier, we call them explorers because they often are working in uncharted territory, which has an inherently higher risk profile than the base business.

Since the risk of failure is higher, the organization expects either higher returns or tries to manage risks appropriately by using a staged, rather than capital investment approach.

19

Focusing Entrepreneurial Energy

Miners (Operational)

Explorers(Market)

Accelerators(Unit)

Integrators (Enterprise)

Internal External

Activist

Catalyst

Explorers are often the most sought-after type of entrepreneurial leader.

20

Miners: Operationally Focused Entrepreneurial Leaders

They demonstrate the same kind of leadership, but they typically focus their entrepreneurial energy on internal operations.

They reconfigure current assets in ways that create new value propositions for the company’s customers, thus resulting in growth of the business.

Operationally focused miners enjoy the shell game. They like to creatively move assets around or out of the organization. they do not see the ownership or increase of assets necessarily as a good thing. They actually like doing more with less to prove their cleverness.

Many good examples exits of entrepreneurial leaders rearranging their organization’s value chain to create significant new value – while along the way also changing the rules of competitive engagement in ways that give the innovative company significant competitive advantage. IKEA’s founder, Ingvar Kampsraad, is one such example.

21

Focusing Entrepreneurial Energy

Miners (Operation

al)

Explorers(Market)

Accelerators(Unit)

Integrators (Enterprise)

Internal External

Activist

Catalyst

Miners- operationally focused entrepreneurial leaders.

22

Accelerators: Unit-Focused Entrepreneurial Leaders

“Accelerators” are generally internally focused and catalytic, and they usually manage a unit, division, or branch of the business.

Accelerators wants their employees to argue with them and to challenge current ways of doing business. Their goal is to literally accelerate innovation in their particular area or department.

They look to their employees for the development of novel ideas, and try to create a culture in which people are rewarded for trying new and different things, not punished for making mistakes in the learning process.

Accelerators are focused on two types of value creation, so they try hard to engage their employees in the process. They focus on economic value creation , as do all our entrepreneurial leaders but, more important, they focus on the creation of the human value and behaviors that lead to economic value.

23

They encourage their people to learn new skills and try different things-knowing that mistakes always happen in the learning process. Acceleration often shield their people from the bureaucracy, knowing that they themselves are taking a personal risk in the process.

Acceleration view their roles as coaches and catalysts in freeing the creative potential of their employees. They are not afraid to hire people who are smarter than themselves and even perhaps somewhat rebellious, thus allowing for the possibility of quantum leaps in their department or area. Although they are good coaches, they are also very good at getting their employees to accept both responsibility. They know that getting their people to act in more entrepreneurial ways requires both support and personal accountability.

Because acceleration are often unit heads, they can be found in line or staff positions. They don’t focus on specific opportunities, as explorers and miners do. Rather, they focus on a long-term approach to fostering a climate of innovation and entrepreneurial thinking that they believe will provide the seedbed for identifying, developing, and capturing serial opportunities. 24

Focusing Entrepreneurial Energy

Miners (Operational)

Explorers(Market)

Accelerators

(Unit)

Integrators (Enterprise)

Internal External

Activist

Catalyst

Accelerators are internally focused catalysts for change.

25

Integrators: Enterprise-Focused Entrepreneurial Leadership

Integrators are entrepreneurial leaders at the enterprise level who focus on the total organization or a major part of it. Their goal is to not only create an entrepreneurial strategy for the business but to develop the people, structures, processes, and culture that support this strategy. They are highly focused on the marketplace, yet also create the organizational architecture for opportunism.

These structures can stay informal or, over time, can become formalized. Creating this type of architecture typically helps the integrator bypass the unnecessary rules, regulations, and bureaucratic nonsense that inhibit creative thinking and acting from an enterprise-wide perspective. They understand the important of procuring funds and other resources outside the normal channels.

Integrators also look for individuals like themselves, who have either latent or obvious entrepreneurial characteristics.

They tend to hire or connect to key players as much on personality as on credentials or resumes. They know that all opportunities require learning and that mistakes always happen during the learning process.

26

Focusing Entrepreneurial Energy

Miners (Operational)

Explorers(Market)

Accelerators(Unit)

Integrators (Enterprise)

Internal External

Activist

Catalyst

Integrators are externally focused catalysts for change within the enterprise

27

POWER

28

Prof. Dr. Zaidatol Akmaliah Lope Pihie.

Faculty of Educational Studies University Putra Malaysia

Bases of PowerLegitimate Power

Is power that is granted by virtue of one’s position in the organization

Reward Power◦Is the extent to which a person

controls rewards that another person values

29

Coercive Power◦Is the extent to which a person has

the ability to punish or physically or psychologically harm someone else.

Expert Power◦Is the extent to which a person

controls information that is valuable to someone else.

Referent Power◦Exists when one person wants to be

like or imitates someone else.30

Position Versus Personal PowerPosition Power

◦Resides in the position, regardless of who is filling that position.

Personal Power◦Resides in the person, regardless of

the position being filled.

31

Position Power and Personal Power

Moderate Overall Power

Strongest Overall Power

Weakest Overall Power

Moderate Overall Power

High

Low Personal Power

High

Position Power

32

Uses and Outcomes of PowerSource of Leader Influence

Types of Outcome

Commitment Compliance Resistance

Referent Power

Likely – if request is believed to be important to leader.

Possible – if request is perceived to be unimportant to leader.

Possible – if request is for something that will bring harm to leader

Expert Power Likely – if request is persuasive and subordinates share leader’s task goals

Possible – if request is persuasive but subordinates are apathetic about leader’s task goals

Possible – if leader is arrogant and insulting, or subordinates oppose task goals

33

Source of Leader Influence

Types of Outcome

Commitment Compliance Resistance

Legitimate Power

Possible – if request is polite and very appropriate

Likely – if request or order is seen as legitimate

Possible – if arrogant demands are made or request does not appear proper

Reward Power

Possible – if used in a subtle, very personal way

Likely – if used in a mechanical, impersonal way

Possible – if used in a manipulative, arrogant way

Coercive Power

Very unlikely Possible – if used in a helpful, nonpunitive way

Likely – if used in a hostile or manipulative way

34

Guidelines for Using Power • Treat subordinate fairly

• Defend subordinates’ interests• Be sensitive to subordinates’ needs,

feelings• Select subordinates similar to oneself• Engage in role modeling

Referent Power

• Promote image of expertise• Maintain credibility• Act confident and decisive• Keep informed • Recognize employee concerns• Avoid threatening subordinates’ self-esteem

Expert Power

• Be cordial and polite• Be confident• Be clear and follow up to verify understanding• Make sure request is appropriate • Explain reasons for request • Follow proper channels• Exercise power regularly • Enforce compliance• Be sensitive to subordinates‘ concerns

Legitimate Power

35

• Verify compliance• Make feasible, reasonable requests• Make only ethical, proper requests• Offer rewards desire by subordinates• Offer only credible rewards

Reward Power

• Inform subordinates of rules and penalties

• Warn before punishing• Administer punishment consistently and

uniformly• Understand the situation before acting • Maintain credibility• Fit punishment to the infraction• Punish in private

Coercive

Power

36

Summary of Key Points Power is the potential ability of a person or group to exercise

control over another person or group.

The five bases of power are legitimate power (granted by virtue of one’s position in the organization), reward power (control of rewards value by others), coercive power (the ability to punish or harm), expert power (control over information that is valuable to the organization), and referent power (power through personal identification).

Position power is tied to a position regardless of the individual who holds it, and personal power is power that resides in person regardless of position.

Attempts to use power can result in commitment, compliance, or resistance. 37