Management Assistance Program FOSTERING AND MANAGING THE ENTREPRENEURIAL SPIRIT AT WORK: Defining the attributes and qualities of a workplace that creates and maintains entrepreneurial characteristics GOAL: The goal of this module is to help organizations, managers, and employees understand what entrepreneurial spirit means, how it can benefit the workplace, and strategies organizations and managers can utilize to successfully foster and manage the entrepreneurial spirit at work. An additional goal is to provide organizations with a framework for making entrepreneurial initiatives a part of the organization s goals and values. The specific goals are to help organizations, managers, and employees: Foster and manage the entrepreneurial spirit in the workplace. Make the entrepreneurial spirit part of the core of the organization s goals and values. OVERVIEW: As our world constantly evolves, organizations must learn to foster and manage the entrepreneurial spirit in the workplace, if they want to remain at the cutting edge of the global marketplace. It is essential for organizations to take the necessary steps to make their employees feel valued, and create an environment where the entrepreneurial spirit is prominent. In a Time Magazine article, Here Come the Intrapreneurs, author John Demott writes, [Big companies] are trying to create spirit, zest, and rewards of entrepreneurship right in their corridors, shop floors, and laboratories. They are giving their employees the resources and freedom to pursue their own ideas, cutting back on traditional red tape, endless meetings and other obstacles that can slow down innovation. 1 One goal of an organization should be to create an entrepreneurial attitude throughout 1 Demott, John S. Here come the Intrapreneurs, Big corporations are trying to capture some of the magic of small companies Time Magazine Online. 4 February 1985. Available at: time.com/time/magazine/article/0,9171,959877-1,00.html 2008, PENN Behavioral Health Page 1
the organization that will drive employees to achieve the next level of success. 2 Employees can be discouraged from being entrepreneurial or intraprenuerial (defined below) by a variety of conditions in the workplace: turfism, lack of rewards, punishment of failure, old thinking patterns, group think, obsolete and inflexible rules and procedures, paucity of funds to experiment, inadequate knowledge about intrapreneurship, lack of extra time beyond daily job duties, and insufficient support from top management. 3 Ignoring the importance of entrepreneurial spirit at work hinders growth, productivity and creativity, resulting in reduced performance and a loss of competitive edge. As a first step, it is helpful to begin by defining the term entrepreneurial spirit and listing the typical characteristics of an entrepreneur. It is also useful to understand what is meant by the term intrapreneur. What is Entrepreneurial Spirit? While there are many ways to characterize entrepreneurial spirit, one helpful perspective is to view it as having or displaying the qualities of a risk-taker, which include personal motivation and a spirit of independence. 4 What is an Intrapreneur? An intrapreneur is a person that embodies all the characteristics of an entrepreneur by using his or her talents to create new products or procedures within the organization. In short, an intrapreneurial person exercises entrepreneurial talent within the organization, not by starting a new organization or company. (In this article, the terms intrapreneur and entrepreneur are used interchangeably.) What are Characteristics of an Entrepreneur? Recognizing the typical characteristics of an entrepreneur is essential to understand how to foster and manage the entrepreneurial spirit in the workplace. Entrepreneurs are creative, innovative, and free thinkers, attributes which can significantly benefit an organization, if correctly channeled. Organizations face a challenging balancing act how to manage and guide creative intrapreneurs to achieve organizational goals without crushing the very entrepreneurial spirit that makes them so potentially valuable. 2 Bowen, John J. Team Players: If your employees don t share in the risks and the rewards of your business, they won t be motivated to do their best. Financial Planning. 1 August 2006. pp 1. 3 Kuratko, Donald F, Montagno, Ray V. The Intrapreneurial Spirit. Training and Development Journal. October 1989. pp 83. 4 Glossary. Available at findmehere.com/search/dictionary/e_index.htm 2008, PENN Behavioral Health Page 2
In an online article, Kristine Geimure, a young entrepreneur, lists the following as qualities of a successful entrepreneur. 5 Understanding these characteristics will help organizations and managers guide intrapreneurs without suppressing their spirit. These qualities include: Inner Drive to Succeed Entrepreneurs are driven to succeed and expand their business. They see the bigger picture and are often very ambitious. Entrepreneurs set massive goals for themselves and stay committed to achieving them regardless of the obstacles in the way. Strong Belief in Themselves Successful entrepreneurs have a healthy opinion of themselves and often have a strong and assertive personality. They are focused and determined to achieve their goals and believe completely in their ability to achieve them. Their selfoptimism can often been seen by others as flamboyance or arrogance, but entrepreneurs are just too focused to spend much time thinking about un-constructive criticism. Search for New Ideas and Innovation - All entrepreneurs have a passionate desire to do things better and to improve their products or services. They are constantly looking for ways to improve. They're creative, innovative, and resourceful. Openness to Change If something is not working for them, they simply change. Entrepreneurs know the importance of keeping on top of their industry and the only way to become number one is to evolve and change with the times. They're up to date with the latest technology or service techniques and are always ready to change if they see a new opportunity arise. Competitive by Nature Successful entrepreneurs thrive on competition. The only way to reach their goals and live up to their selfimposed high standards is to compete with other successful businesses. Highly Motivated and Energetic Entrepreneurs are always on the move, full of energy and highly motivated. The high standards and ambition of many entrepreneurs demand that they have to be motivated! Accepting of Constructive Criticism and Rejection Innovative entrepreneurs are often at the forefront of their industry so they hear 5 Geimure, Kristine. 7 Key Qualities of a Successful Entrepreneur Available at woopidoo.com/articles/geimure/entrepreneur-article.htm 2008, PENN Behavioral Health Page 3
the words "it can't be done" quite a bit. They readjust their path if the criticism is constructive and useful to their overall plan; otherwise they simply disregard the comments as pessimism. Also, the best entrepreneurs know that rejection and obstacles are a part of any leading business and they deal with them appropriately. OBJECTIVES: This module will outline strategies for fostering and managing the entrepreneurial spirit in the workplace and then show how organizations can make entrepreneurial initiatives part of their culture. 1. Fostering and Managing the Entrepreneurial Spirit at Work Implementing the recommendations below will help organizations develop the entrepreneurial spirit at work. The suggestions are described in more detail throughout this objective. Reduce Bureaucracy and Increase Flexibility When an organization is less bureaucratic and more flexible, the staff become more autonomous and more creative. Value employee input Staff members will feel responsible for the success of the company and consider themselves a part of the organization and its goals, if they perceive that their advice is valued. They will be more inclined to develop creative ideas and solutions. Make new ideas a part of the company s culture Foster an environment that is open to new ideas. Do not brush off an idea an employee has, even if it does not meet the immediate goals of the company. Do not punish failure It is important not to punish failure, when an employee is making a legitimate effort to improve the organization. The lack of a successful outcome should be viewed as a learning experience and an effort by the employee to take a risk to benefit the company. Reward creativity and innovation Reward creativity and innovation monetarily or through other company incentives such as bonus points, trips, dinners, plaques etc. Less Bureaucracy/More Flexibility While it is necessary to have a set of designated rules and set behaviors, it is also important to retain some flexibility in those guidelines to account for the exceptionally innovative employee. Author Robert MacDonald reminds us of the need to strike the proper balance: 2008, PENN Behavioral Health Page 4
Everywhere you scan the American business landscape, you'll find systems. Systems that regulate employee behavior; systems that organize ideas, principles and doctrines; systems that establish procedures and processes all designed to bring order where there might otherwise be chaos. But, systems have a downside. They can also take away from employees creativity, innovation, and may hinder an employee s desire to break the rules, and suggest ideas that may not be a goal of the company. 6 In Exploring the Principle of Subsidiary in Organizational Forms, Domènec Melé speaks about how an organization can insert flexibility into the workplace: Mele adds: Flexibility is introduced by practices such as decentralization, empowerment and participation. Through decentralization, management consciously attempts to widely distribute authority among the lower levels of the organization. Through empowerment, employees have more power in decision making. Through participation, such as in quality circles, team work and total quality management, employees become more involved in their jobs and their responses to problems can be more situation specific. All of these practices are usually seen as managerial tools or techniques which, if applied properly, make the organizations more efficient, and so are reflected in the bottom line. 7 Managers have to be aware that people are not mere instruments or resources from which to generate profits, but free beings who need to develop as people. This should lead managers to encourage employees initiatives and entrepreneurial spirit by giving them appropriate training and support. Top mangers have to strive to maintain unity within the diversity in order to achieve the goals of the whole organization. This can be achieved by encouraging and coordinating activities, maintaining fluid communication and a sense of trust and cooperation with other cultural values, including a sense of belonging to the company which in reality is a community of persons. The more freedom the individual has, the more responsibility. Thus, when employees are no longer mere executors of orders a cog in the industrial machine but are to some extent managing their own work, they have more responsibility to do whatever they can to take initiatives and develop an entrepreneurial spirit. 6 MacDonald, Robert W. Fighting the Blob Best s Review. October 2006. pp 54. 7 Melé, Domènec. Exploring the Principle of Subsidiary in Organizational Forms. Journal of Business Ethics. September 2005. p 293-303. 2008, PENN Behavioral Health Page 5
Value Employee Input According to John Bowen, author of Team Players: If Your Employees Don't Share in the Risks and the Rewards of Your Business, They Won't be Motivated to do Their Best, most employees believe that they have little or no impact on overall productivity. In a study by Meek and Associates, 73 percent of employees felt that quality and effort have little or no impact on their pay. Only 9 percent believed that they would personally benefit from enhanced productivity. The study also revealed that only approximately 1 percent of all compensation for employees in the United States is based on an incentive program of variable pay. Valuing employee input is a critical part of fostering entrepreneurial spirit. When staff members feel as though their contributions make a difference, and if they play an integral part in the success of the organization, they are motivated to be creative and hard-working. Jeff and Rich Sloan write: In today s fast changing business environment, you and your team members need to be looking for the next big idea. If you don t recognize it, your competition will. It is essential to look for new innovations and create a dynamic, creative culture where there is an incubation of ideas. One should listen to the market, and give employees an opportunity to go with it and grow with it. 8 Reward Risk Takers According to the Sloans, employees want to feel valued, suggest ideas without fear of retribution, and know they have a future working on new and exciting projects with a growing company. To keep the entrepreneurial spirit alive, it is important to reward risk-takers. Depending on company policies and procedures, compensation can be provided to promote innovation and generate enthusiasm. It does not have to be expensive. John Bowen, in his article mentioned earlier, emphasizes that simple bonus programs, profit sharing, special events, trips and other awards go a long way to build a creative culture that encourages risk taking and employee involvement. More Recognition Bowen goes on to say that compensation alone is not always enough to achieve and maintain the level of motivation required to build a truly superior business. Additional forms of recognition and rewards from gifts, plaques, travel, bonuses and even professional training in exotic locations are frequently used to reinforce the successful motivational attitudes and behaviors that drive higher levels of success. Other less costly supplemental rewards may prove to be powerful incentives as well. These supplemental rewards make an impact if they are a surprise, personalized, delivered in person, timely, given in recognition of a specific behavior, given 8 Sloan, Jeff, and Rich. Entrepreneurial Spirit Keeping it Alive. Start Up Nation.com. Available at: startupnation.com/pages/articles/at_keepingspiritalive.asp 2008, PENN Behavioral Health Page 6
frequently but in small amounts, creative, given in public, and accompanied by the reasons for the award. Hire the Right People Organizations must commit to hiring and keeping the right people with the right skills, and cutting those who cannot keep up. The best way to build the entrepreneurial spirit in the workplace is to hire employees who have an entrepreneurial orientation. Trying to make an entrepreneur of someone who is not a risk-taker at heart is not usually a winning formula. Track Employee Progress Bowen indicates that hiring the right people is not sufficient tracking their progress and contributions is necessary if an organization is to benefit from their intrapreneurship. Quarterly progress reviews based on each individual's performance plan are essential to determining whether everyone is on track. Regular reviews keep workers focused on their personal goals as well as the firm's goals. Frequent evaluations also help identify any potential problems with employees while avoiding unpleasant surprises that can have a negative impact on your clients. Keep the Customer Connection The Sloans add that, for many companies, customers make or break businesses and their input is essential to the success of the organization. It is important to always be in touch with customer suggestions, compliments, complaints and ideas. Staying connected with customers allows organizations to stay on top of customer needs. For the entrepreneurial spirit to remain focused, the organization must understand the current needs and concerns of its clients. Employees Must be Proactive It is important that individual employees be proactive and seek out opportunities to enhance their skills, and take their job to the next level. Employees should also make an effort to stay on top of current trends and opportunities in their field, and take the time to generate strategies and solutions that are innovative and entrepreneurial. 2. Making the Entrepreneurial Spirit Part of the Core of the Organization s Goals and Values. Managers can utilize certain strategies to foster the entrepreneurial spirit in the workplace. One way that managers can maintain this spirit is to make entrepreneurial initiatives part of the organization s culture. Bill Mickey, author of, Getting a Project Greenlighted in a Big-Company Environment, suggests that companies create an environment that is open to free-thinking where employees are encouraged to present management with new ideas, whether a product or process, with the confidence that their ideas are fairly evaluated. 2008, PENN Behavioral Health Page 7
In his article, Mickey highlights the corporate style encouraged in Paul Calento s organization (Info World). Paul Calento states in the article, "If we have a good idea, it works well and we communicate it well, it will get repeated across the company. It's more of a culture than a formal process." Among other factors encouraging the entrepreneurial spirit, Calento credits a decentralized environment, where 100 business units are given a certain degree of autonomy. He also cites the company s corporate credo that lists let's try it as a corporate value, another characteristic that gives every employee the confidence to act like a business developer. Calento states, Being decentralized allows business units the flexibility to do what they think will best meet their constituencies' needs but also allows the company to hedge its bets. They can take something that works, duplicate it, and expand it across the company as appropriate. 9 In summary, Mickey believes this type of entrepreneurial culture can be achieved if the organization: Gives the operating groups more autonomy. Creates a legitimate entrepreneurial culture, then facilitates it with some guidance, and adds entrepreneurial initiatives to corporate values. Holds frequent opportunity meetings. Monthly opportunity meetings act as idea incubators, where new market opportunities are frequently uncovered and built upon. Capitalizes on an idea by duplicating a good idea company-wide. Makes its employees work for their idea. Key is separating wishes from real ideas by requiring employees to submit business plans backing their ideas. Makes sure employees are ready to champion the ideas they offer. 9 Mickey, Bill. Getting a Project Greenlighted in a Big Company Environment. Folio. Oct. 2006. pp 27. 2008, PENN Behavioral Health Page 8
SUMMARY: Tips for Fostering and Managing the Entrepreneurial Spirit at Work Recognize that fostering and managing entrepreneurial spirit in the workplace will keep organizations at the cutting edge of the competitive, ever-changing global marketplace. Take a look at the structure of your organization and create a less bureaucratic and more flexible environment for employees. This will allow employees to feel more independent and accountable for their work. Value the input of your employees and make them feel as though they have a direct effect on the success or failure of the organization. They do! Challenge employees. Make them think outside the box and give them the opportunity to rise to the challenge. Employees should become problem resolvers. Reward innovators and risk takers. Employees should feel free to come up with new ideas and occasionally challenge ideas that have lost their original intention. Make employees work for their idea. Separate wishes from real ideas by requiring employees to submit business plans backing their ideas, and make sure they are ready to stand behind any idea they offer. Employees need to do their homework first. Create a culture with a lets try it attitude or a culture where managers and senior management welcome the opportunity to review new ideas and employees get behind them. Scope out the intrapreneurs at your organization and mentor them. Entrepreneurs are free thinkers and innovators and can prove successful if given the right amount of freedom and direction. Employees should also come out of their shells and become leading intrapreneurs. Take the initiative to speak with managers and senior management about your new ideas, and always be on the look out for new trends and developments in your field. Work with human resources and senior management to create a set of criteria for new employees and current employees. Hiring the right people with the entrepreneurial spirit and tracking the progress of all employees will ensure that the organization is filled with hard-working, innovative, and goal-oriented employees. 2008, PENN Behavioral Health Page 9