SYSTEMS THINKER INTEGRATING ENTREPRENEURSHIP WITH PROFESSIONAL LEADERSHIP

Transcription

1 T H E SYSTEMS V O L U M E 1 2 N U M B E R 4 THINKER M A Y B U I L D I N G S H A R E D U N D E R S T A N D I N G INTEGRATING ENTREPRENEURSHIP WITH PROFESSIONAL LEADERSHIP B Y B A R R Y D Y M T he ucceful entrepreneurial journey lie at the heart of the American dream. Hitorically, American have had a romance with thoe who, in the word of Horatio Alger, combine pluck and luck to travel the road from rag to riche. Thi journey repreent the triumph of merit and virtue over inherited wealth. It allow every man and now every woman to become a king or a queen in a democratic ociety. Over the lat century, people uch a Ford, Rockefeller, and Carnegie have been our entrepreneurial icon. Today, Gate, Bezo, and the founder of many thouand of dot.com tartup fill the newpaper and our imagination.thi dream of creating omething new and, in the proce, engendering wealth, power, and pretige ha pread around the globe. New buinee are proliferating in the Pacific Rim, South America, the Middle Eat, and Europe place that, not o long ago, were marked by rigid cla and economic ytem that dicouraged entrepreneurial effort. The entrepreneurial journey, however, i rarely traight or eay. And ucce, once achieved, i not alway what the company founder anticipated. A a buine grow in ize and complexity, it become harder for them to manage in the informal, family-like way that led to early ucce. Leader face a paradox: In order to manage and continue growth, more effective control require letting go. That i, entrepreneur need to entrut other to manage much of the organization and to intitute ytem, uch a budget and quality control, that partly replace or upplement their vigilance.then, once effective buine procee have been introduced, the organization mut find way to reinfue itelf with the pontaneou, The entrepreneurial journey i rarely traight or eay. Leader face a paradox: In order to manage and continue growth, more effective control require letting go. creative energie of the tart-up day to avoid growing tagnant and dry. In the mot ucceful companie, thi cycle, from entrepreneurial to profeional and back to entrepreneurial, may repeat many time over. In other word, ucceful entrepreneur thoe who build, utain, and continuouly renew their buinee mut learn to balance rik taking, hard work, and elf-reliance with forethought, delegating authority, and truting their taff.the ame i true for entrepreneurial endeavor in large, otherwie bureaucratic organization.thi uncommon balance of entrepreneurial and profeional leaderhip i hard to achieve. No wonder o many entrepreneur cannot complete their journey: 50 percent of tart-up are out of buine after the firt year; 80 percent cloe by their third year. For all but the mot talented (and lucky), the tricky proce of integrating entrepreneurial with profeional leaderhip require meeting certain challenge and acquiring new practice. It mean a major hift in buine a uual for everyone in the company. Although no ingle approach to change can accommodate every entrepreneurial culture, mot entrepreneur and thoe who work for them will recognize their own experience and the efficacy of many of the recommended action tep in the tranition proce outlined below. Continued on next page I N S I D E TOOLBOX 6 The Pocket Matrix:A Dialogue Tool for the Shopfloor SYSTEMS STORIES 8 Building Community Through Healthy Chao : An Interview with Steven Bingler SYSTEMS SLEUTH 9 Failing the Tet SYSTEMS THINKING 11 WORKOUT The Downide of End-of-Quarter Dicount FROM THE FIELD 12 Copyright 2001 Pegau Communication, Inc. ( All right reerved. For permiion to ditribute copie of thi article in any form, pleae contact u at permiion@pegaucom.com.

2 Continued from previou page The Entrepreneurial Peronality The entrepreneur peronality drive and hape the organization that they build. On the upide, people who launch tart-up generally poe high energy and enthuiam, enjoy building thing, have enormou reerve of creativity and intuition, and live for excitement and challenge.they are viionarie who rarely tay focued on the mall thing in life but try to change the world in ome ubtantial way. And they are willing to aume reponibility for almot everything that happen in their organization; take frequent, calculated rik; and perevere in the face of great odd and almot contant preure.through their action, drive, purpoefulne, and deciivene, entrepreneur inpire effort and loyalty in other. On the downide, entrepreneur can be arrogant, impulive, ditrutful, and controlling.they often think they can do the job better than anybody ele, yet they dilike doing routine tak. Entrepreneur prefer initiating and developing project, not running them but they want to be in charge of every apect of the organization. Thee contrary qualitie, left unchecked, eventually iolate the company founder, cutting them off from the information and people who have been the organization lifeblood. In the early day of mot tartup, profit often take a backeat to growth. Planning tend to be ad hoc. Budget and financial control are almot abent.training take place on the job. Role and reponibilitie are defined by the tak at hand, often hifting and overlapping one another. In the hort term, when organization are mall, they benefit from entrepreneurial qualitie. For one thing, informality make buinee agile and adaptive to market demand. For another, becaue the founder are clearly in charge with power and pretige flowing directly from them and from thoe in cloe relationhip with them worker know who they re accountable to. Plu, many employee, themelve caught up in the excitement and often given trong incentive, are willing to do whatever it take to fulfill the entrepreneur viion. In the long term, however, problem tend to arie.the tight hierarchical tructure of mot tart-up inhibit the development and retention of trong manager and people capacity for autonomou action epecially when the entrepreneurial leader can no longer devote time to the organization internal operation becaue they mut work to poition the company in the market. In addition, burnout and diilluionment run high in many employee, who incerely try, but frequently fail, to maintain the entrepreneur feverih pace and ene of unwavering commitment. A Developmental Crii At ome point in the life of every growing organization, ad hoc planning T H E L I M I T S T O E N T R E P R E N E U R S H I P Entrepreneur Willingne to Take Rik R1 Company Level of Innovation o Company Succe Need for More Formal Infratructure, Procee, Procedure B2 Entrepreneur Deire to Maintain Control Entrepreneur Ditrut of Outider A entrepreneur drive their employee to take rik, their companie develop innovative product that attract cutomer (R1).The more ucceful their companie become, the more entrepreneur need to create and manage the complex infratructure neceary for meeting the challenge of growth. But the entrepreneur reit bringing in profeional leader, thereby limiting their company capacity to handle complexity and, ultimately, it ucce (B2). and determined, centralized leaderhip become inadequate for dealing with the complex tak at hand. Sign of thi inadequacy become evident when, for example, the company capacity to handle cutomer demand decreae, employee tart miing key detail uch a order fulfillment, and the company burn venture capital fater than it build product. Depite thee clear warning ign, entrepreneur and their management team may not be ready to implement the procee that characterize profeional management: careful planning; clearly defined role and reponibilitie; monitored budget, financial performance, and product quality; and the entruting of major reponibilitie to omeone other than the leaderhip team. For a time chao eem to reign. People feel confued and anxiou about the company direction. Manager may be overwhelmed by the volume of work and the magnitude of their dutie, but they feel they don t have the time, budget, or expertie to hire the right upport taff. So they fall into fire-fighting mode, trying to do everything themelve, partly becaue they don t think their ubordinate have the expertie or knowledge to do o, and partly becaue the company founder have modeled thi kind of controlling behavior.thi approach create a Limit to Succe cenario, in which the company incapacity to handle complexity limit it ability to grow (ee The Limit to Entrepreneurhip ). Even a they flounder, the leader truggle to create an infratructure that will help them meet the challenge of growth. But attempt to intall procee uch a information ytem or budget frequently fail:the entrepreneur don t yet have the kill to make them work or the habit of depending on them. Nor do they have the time the demand of the preent eem to conpire againt their own long-term interet. So jut a the founder build the infratructure, they tear it down again, relying on gut, determination, intuition, and even harder work.thi method doen t ucceed either, o they renew their effort to intitute 2 THE SYSTEMS THINKER VOL. 12, NO PEGASUS COMMUNICATIONS

3 policie and procedure.the entrepreneur may go back and forth everal time, in a maddening effort to ecape their dilemma. Morale drop, and employee kepticim about the capacity of the management team to lead them through the crii grow. Here, then, i the fulcrum on which the developmental crii turn: The organization mut undergo fundamental change in order to urvive, but few current employee are prepared or qualified to make the hift to a new operating mode including the entrepreneur. More often than not, only when the organization bring in a more profeionally oriented leaderhip team doe it urvive and, all too often, thi move tem not from the entrepreneur but, partly or entirely againt their wihe, from a board of director or venture capitalit. Profeional Leaderhip Organization In contrat with entrepreneur, profeional manager tend to be conitent, cautiou, detail-oriented, and conervative in their peronal tyle.yet, in their own way, they are far-eeing. Longterm planning, for intance, comprie a central part of their activity, a doe the training and retention of able manager to guarantee the organization future.thee leader emphaize financial and product-quality control that allow for coure correction when performance varie from goal.they alo work to develop and maintain trong relationhip with cutomer and upplier. In hort, profeional manager create formal organizational tructure, in which goal, operational procee, and role and reponibilitie are explicitly articulated, implemented, and monitored. To begin to incorporate profeional leaderhip into their organization, entrepreneurial leader mut execute the following practice: 1. Delegate reponibility and authority. A organization grow in ize and complexity, the entrepreneur mut hire effective manager and trut them to do their job.to enure a mooth tranition, leader hould put thi management team in place before launching major new initiative. 2. Behave conitently. To ome degree, entrepreneur mut curb their impulive tendencie. Employee work better when they know what to expect in their job, what tak they are reponible for, and how their performance will be evaluated. If entrepreneur cannot limit their impulivene, they hould hire an intermediary, uch a a COO. 3. Plan and prioritize. Entrepreneur, with input from manager and employee, need to et clear goal and prioritie, even if it mean letting go of ome alluring tak and opportunitie.with thi guidance, manager can effectively marhal organizational reource to accomplih the goal. 4. Communicate openly and effectively. Intead of keeping plan and financial data cloe to their vet, entrepreneur need to hare vital information with their taff. Manager need thi information to help plan and execute project well. 5. Intitute control. Entrepreneur mut recognize the need to monitor key organizational procee, uch a budget and performance, and trut other people to do much of the overight. A crucial a it i for entrepreneur to implement thee profeional practice in order for their companie to urvive, mot initially reit doing o.a we ll ee below, they and their taff are ill-equipped to handle the turbulence that arie a the company move toward a new mode of operation. Characteritic of Tranition Period One of the major reaon that organizational tranition falter i that leader do not anticipate and account for the uncertainty and difficulty that change bring to the entrepreneurial journey. Change rarely, if ever, follow a traight line, from conception to planning to realization.the proce of managing change involve negotiating unexpected twit and turn, top and tart, frutrating regreion and forward leap of breathtaking peed and magnitude. We can attribute thi inability to navigate the change proce in large part to the failure of our buine culture to create an image of the journey that i both poitive and realitic. So we continue to cling to the old idea that we can plan change tep by tep, and we become bewildered by the contradiction between thi eductive myth and the tumultuou reality that we actually encounter. The tranition from entrepreneurial to profeional leaderhip involve more than imply the development or importation of new kill and new procee. It alo require coniderable phyical, emotional, and intellectual tamina, a well a a capacity to move ahead with clear thinking and action in the face of inevitable uncertainty. Entrepreneur who are leading their buinee to a mature level of development mut be able to both fly with the wave of progre and endure tagnant time, and to let go of cherihed idea and often valued people, while promoting other who have not yet proven trutworthy. We know that an entrepreneurial organization ha completed the paage from old to new when it achieve a table ynthei of it entrepreneurial origin and it profeional future that fit it own ditinctive purpoe.thi ynthei merging creativity with control repreent a new paradigm; that i, a new way for people in the organization to think, act, and feel that balance the bet of the pat and the promie of the future. Developing a New Organizational Infratructure To integrate entrepreneurial leaderhip with profeional management uccefully, entrepreneur and their organization mut move through four developmental tage. 1. Recognize the need for baic change. To begin the tranition, the entrepreneur, and then everyone ele in the company, mut perceive the need for change. Entrepreneur generally undertand why the organization mut tranform itelf, but they often fail to act on thi inight. Still believing that urvival i paramount, they init that they don t have the time or reource to build a new infratructure, hoping that mall adjutment Continued on next page 2001 PEGASUS COMMUNICATIONS THE SYSTEMS THINKER MAY

4 Continued from previou page combined with determination and hard work virtue that led to early ucce will carry the day. Entrepreneur and their cloet employee often cling to a culture that feel to ome like family and to other like comrade waging war together againt a hotile, uncomprehending world. At thi tage dicord may arie between the core group and formerly truted lieutenant, who undertand the rik to the organization if it doen t adopt a more profeional infratructure. It uually take the financially oriented people, uch a accountant and venture capitalit, to hammer home the need for implementing new ytem and policie. Once the entrepreneur accept the inevitability of organizational tranformation, the mot effective way to convince other people in the company about the need for change i to create an environment where they can talk honetly about the challenge the organization i facing. Action Item: Aemble a mall tranition management team that include at leat one employee who i not part of the entrepreneur inner circle, one outider (preferably a board member or an organizational development conultant), and the entrepreneurial leader. Launching thi proce with a facilitated retreat can be helpful. Write a diagnoi that indicate current problem and reaon why the organization need to change. Be ure to gather input from throughout the organization.you may want to introduce tool to upport open dicuion, epecially if the organization culture ha dicouraged candid feedback in the pat. Identify area of the company that have already changed or have been moving toward a profeionally managed tyle and upport thee development.you might want to provide worker in thee area with financial incentive, broaden their managerial role, or publicize their accomplihment within the organization. Create informal dialogue at all level of the organization about the company challenge and people fear around the change proce. For example, at one company a manager intituted Bagel with Steven, a weekly meeting at which employee were allowed to vent frutration and confuion about the change. Once employee felt their concern were being taken eriouly, they began to offer uggetion about the organization future path. Articulate a viion of what the organization might look like and accomplih in it new form. 2. Commit to and plan for change. Once the organization a a whole recognize the need for tranforming the company, everyone mut commit to implementing a plan of action even when preent demand and financial rik are daunting. Again, obtacle abound. In entrepreneurial organization, the act of planning itelf i problematic; it often violate the cultural norm. In repone, leader tend to hedge their bet: Let do it, but I reerve the right to change coure when I think it neceary. Or they may languih in indeciion, perhap initiating change everal time in mall way, then pulling back. Or the entrepreneur may do an inadequate job of planning, aying An hour or two hould do the job. I know where we need to go, anyway. Entrepreneur may alo delegate the planning proce to other and then override or limit their authority to implement the plan.thi interference generally upet the manager, who may engage in a truggle with the entrepreneur for power.thi proce could have a poitive outcome, by bringing the entrepreneur ambivalence about the change proce out in the open. Or it could caue the entrepreneur to halt change effort or alienate taff member. Action Item: In conultation with the ret of the taff, identify any obtacle to change, including contraint on employee time, lack of material reource, and internal reitance to the initiative. Develop a plan to overcome thee obtacle, and move the organization in the deired direction. Continue to upport the people, team, and procee in the organization that are already moving toward profeional management, rather than focuing on correcting problem. Continue to hold dialogue, particularly with key peronnel, to head off polarized ituation. Bring ambivalence about change into the open by having people acknowledge their own doubt. 3. Implement the plan while tolerating intability. Once the organization i committed to the change proce, everyone mut execute the plan of action confidently, leaving little doubt about which direction the company i headed. For example, one key indicator of commitment i the entrepreneur willingne to go outide of their circle of loyalit to hire and empower profeional manager. Thee new leader mut poe the requiite kill to meet the organization need and may require higher level of compenation than the exiting pay cale upport. Developing a new organizational infratructure require coniderable time, energy, and kill. A change proceed, anxiety in the organization will reach new height, becaue key meaure might get wore before they get better cutomer complaint may jump, buine may flag, and financial concern may grow.thee challenge will tet everybody commitment to the plan.the leader will probably pend many leeple night wondering what happened to their organization. Intene power truggle may emerge between the old and new guard of manager, or among member of each. Initially, ome employee may leave the company. Long-time worker may wonder if they will retain their job; other will develop a bunker mentality, determined to wait out the change fad. Many may feel betrayed by the entrepreneur, who eem to have gone over to the other ide. The profeional manager, on the other hand, may feel the entrepreneur are moving too lowly and poradically. In uch trying time, the leader and their cloe manager may be tempted to revert to old way, once again eeking to micromanage every detail of the operation. Entrepreneur may in fact repond to the intability by becoming dictatorial, uncertain, 4 THE SYSTEMS THINKER VOL. 12, NO PEGASUS COMMUNICATIONS

5 and indeciive, or by becoming dependent on a newly hired profeional. Depending on their behavior at thi time, the founder credibility might be eriouly jeopardized. The challenge for all i to tolerate the intability and the identity crii both the actual work diruption and the mental and emotional repone to thee diruption.to do o, all employee mut focu on maintaining a clear viion of what the change can eventually do to help the company achieve it goal and appreciate the diruption a natural growing pain. Action Item: Develop a timeline that indicate when the company hope to complete each apect of the trategic plan. Thi timeline will help orient and reaure all the player that there i a olid plan for the future. Solicit the help of a coach or mentor perhap a board member who ha uccefully gone through the entrepreneurial proce or a conultant for moving through the tranition. Provide guidance and training for loyal, long-time employee. Interview thoe outide the inner circle to ee what they think of the change. Reiterate and revie the change plan, making ure that each peron can actually viualize their potential career path in the new tructure. Continue to convere with employee, recognizing how change bring lo and regret, and help make thee feeling acceptable. Identify and dicu area of intability, doubt, and tenion until they are reolved or modulated. 4. Integrate the old and the new. The final developmental challenge i to retain the entrepreneurial pirit in the new and improved organization. Often, in the name of efficiency and order, organization kill off the ene of adventure that built them. But that energy i what allow companie to remain innovative and tay on the cutting edge of their indutrie. After the tranition, the buine mut till compete in fat and contantly changing market and technologie; if it grow luggih, officiou, and conervative in hort, bureaucratic it will fail to remain competitive. To that end, the new management ytem need to act in the ervice of the entrepreneurial pirit.the organization need to continually find way to integrate the bet of the old and the new, and to tabilize itelf around thi integrated way of doing buine. For the leader, the challenge i giving the management team room to exercie their kill and tabilize the organization while, at the ame time, providing them with viion and upport. The alternative to integration i both conflict between thoe who repreent the entrepreneurial tyle and thoe who advocate planning and control and fragmentation in The organization need to continually find way to integrate the bet of the old and the new. which variou department and people operate in contradictory, dijointed way. Each group believe it undertand more fully than other the trategy that the company need to follow. Faction can fall into a kind of cold war, an untable form of tability that create contant tenion and undermine performance. Action Item: Identify and meaure the value of what i old (flexibility, creativity) and what i new (infratructure, control). Outline how the company will yntheize the bet of both to create omething more effective than either tyle. Continue to define and redefine how the organizational plan will allow the company to move forward to meet the demand of growth, competition, quality, and o forth. In order to adapt all employee and tak into the new organization, the plan need to be flexible and reponive to new idea and unintended conequence. Introduce method to utain openne, flexibility, and creativity, uch a continuou learning and cenario planning. Create or maintain entrepreneurial apect of the organization through equity- and profit-haring practice and pinning off new product into new companie or diviion. Create new role for entrepreneur who want to remain engaged with their companie in a different capacity, o they can till provide overarching viion and leaderhip. In order to atify their need for action, create opportunitie for entrepreneur to take on pecial project, uch a leading a major product development proce. Realizing the Dream In ummary, if entrepreneur want to create a lating enterprie that impact their indutrie well into the future, they need to lead their organization in making the tranition from a tartup to a profeional culture. By integrating profeional leaderhip (effective planning, budget, and quality control) with the entrepreneurial pirit (openne, flexibility, and the ability to think outide of the box ), organization can continuouly renew themelve and achieve long-term, utained ucce. Barry Dym, Ph.D., i preident of WorkWie Reearch & Conulting. He ha 30 year of experience a an entrepreneur, organizational development conultant, author, teacher and pychotherapit. N E X T S T E P S 1. Identify area in your company that have grown through entrepreneurial effort but lack an infratructure to monitor and utain growth. How might you integrate profeional leaderhip into thee area? 2. Notice where there i reitance to change in your organization, particularly in ituation where more formal planning and control are needed to accomplih organizational goal.what tructure are in place to make people comfortable with the change proce? How might you create thoe tructure if they aren t currently available? 3. Find colleague who have been moving toward a profeionally managed tyle. In what way can you work together to upport each other effort? 2001 PEGASUS COMMUNICATIONS THE SYSTEMS THINKER MAY