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The Entrepreneur is just another Manager - albeit a very effective one

Seminar Paper 2001 16 Pages

Business economics - Personnel and Organisation

Excerpt

TABLE OF CONTENT

Content

Introduction

Entrepreneur Life Cycle

Manager Life Cycle

Comparison of Task's

Comparison of Skills

Environmental Influences

Conclusion

References

INTRODUCTION

Entrepreneurial behaviour can be seen in various areas like sports, music, solidarity, etc. just to mention a few. In this context we have to focus on the business style entrepreneur to enable the comparison with the manager.

But what exactly does an entrepreneur and which characteristics he fits? Thereby even experts despair at the question what exactly makes an entrepreneur successful und which lacks leave him fail. "Entrepreneurship is an extremely topical subject. The concept of entrepreneurship is useful, however, only if it is careful defined. It is sometimes suggested that entrepreneurship is to be found mainly in high-technology industries or in owner-managed firms,"[1] but if we look in history entrepreneurs can be found in every branch. Moreover it would point out that an entrepreneurs is not just another manager, but a business owner. Otherwise it would lack concrete information about the differences between these two kinds of business leaders.

"I am often asked what it is to be an 'entrepreneur' and there is no simple answer. It is clear that successful entrepreneurs are vital for a healthy and competitive economy. If you look around you, most of the largest companies have their foundations in one or two individuals who have the determination to turn a vision into reality." (Richard Branson, 1995)

Even one of the greatest entrepreneurs of the last century does not have a concrete definition or explanation about entrepreneurship. Therefore we need to evaluate firstly which components influence persons to be entrepreneurs or managers.

"Certainly, internationally we can see that many of today's dominant corporations, have been spawned by individuals with vision and, importantly, the commitment to turn that vision into a reality. What they have in common is that they saw an opportunity, commercialised it, and in the process created wealth and jobs that, hopefully, benefit the rest of the society. Such entrepreneurs are people who have the courage and self-belief to turn their own dreams into realities. Furthermore, they permeate all levels of society and every walk of life."[2]

We all know the influence and importance of these multinationals, which all are result of entrepreneurial processes. "Like many of us, the 'entrepreneurs' have spotted a window of opportunity ... but unlike most of us they have acted on it."[3] Through skills "such as risk-taking, good planing, assumption of responsibility, decisiveness, drive and foresight,"[4] they have established organisations, which stayed healthy until nowadays. But these companies are now leaded by managers...

"People who specialise in applying judgement to problem-solving are, by definition, entrepreneurs."[5] Now we have a definition of an entrepreneur but this is rarely exact enough and moreover business managers in influential positions, such as heads of divisions and Cho’s are doing the same during strategic planing. Can we then define CEO's as entrepreneurs as well?

THE ENTREPRENEUR LIFE CYCLE

To explain the required tasks and skills, similarities and differences of entrepreneurs and managers I invented the 'entrepreneur and the manager life cycle'. This concept followed the product life cycle because the entrepreneurial and manager life can be divided into different stages with various specialities, like the product life. It should give a better and more detailed understanding of required skills and forced tasks. As every theoretical concept the entrepreneur life cycle also provides exceptions, which will be outlined during explanation.

The both decisive factors are 'age of the entrepreneur' and 'level of responsibility for the society'. It does not mean that entrepreneurs mainly social orientated, more that "... entrepreneurs are ordinary human beings, seeking to do good for themselves in terms of material gain and social status."[6] But "in creating their own wealth, entrepreneurs also 'pollinate', generating wealth creation opportunities for others, and with the potential to bring about positive consequences in the wider society."[7]

Therefore we use these factors, which identify five different stages. It starts with education, goes over employment to self-employment, to leadership and finally retirement, which is shown more clearly in illustration 1, below.

Abbildung in dieser Leseprobe nicht enthalten

Illustration 1

The entrepreneur life cycle is divided into these five stages because surveys figured out that "the majority (of entrepreneurs) was what we described as professional entrepreneurs. The professional entrepreneur ... had seen a long period of stability in business and most managers were content to enjoy the security afforded by a career spent in one firm. The recession then caused the contraction of many industries from, which emerged large numbers of professionally qualified individuals who were seeking new business opportunities. These were ready and available to fill the key roles in these emerging mid-sized companies."[8]

The 'Education' stage should not needed to be explained more detailed because of compulsory education throughout schools in the US, Europe and most Western states.

Followed by a stage of 'Employment', which most entrepreneurs participate. Getting experience in business and taking first levels of responsibility for the society moulds this phase. Thereby just to mention the learning process is of enormous importance, which depends on person and situation. "Experience alone, however, is of little value if the individual cannot learn from it. If he is strongly attached to certain prejudices, or he feels that he would lose face (either with himself or with others) if he were to change his initial position, then he is unlikely to benefit from this experience."[9] So even in this early stage "flexibility of thought is very important, and most particular when the environment 'or person' itself is undergoing major change."[10]

The future business leaders get firstly involved in the process of business including leadership style, customer orientation and work sharing. "Breadth of experience comes from having 'hands-on' experience in a wide variety of different situations, and in having had sufficient experience of each such that the experiences are to some extent representative of the actual situation."[11]

A significant number of entrepreneurs, mainly in the US, never stayed at this stage because they started to develop their own businesses directly from scratch without participating of experiences in other companies. This depends, not surprisingly, enormous on business culture, which will be outlined later on. These entrepreneurs start directly in stage three, 'Self-employment'.

The third stage 'Self-employment' is defined as transforming an idea in reality. "Ideas are useless unless used. The proof of their value is only in their implementation. All too often people believe that creativity automatically leads to innovation. It doesn't. The scarce people are the ones who have the know-how, energy, daring and staying power to implement ideas."[12]

Thirdly follows a period of leadership, "understanding their markets and customers,"[13] and flexibility of the organism.

Here the entrepreneurs have shown their talents in risk-taking and self-organisation most impressive. "Entrepreneurs are ambitious individuals with a strong passion to achieve. They are highly proactive and respond to challenges with enthusiasm, self-confidence and the determination that they have the potential to excel - to win. This motivation is driven by a need to achieve a combination of personal and economic goals ... As business persons, entrepreneurs are both goal and result oriented, setting ambitious but realistically do-able goals. While entrepreneurs seem to be motivated by a self-belief that they can succeed, that does not imply a complete lack of the fear of failure."[14]

At the point another attraction is findable. Minorities of entrepreneurs leave their companies if these have been established in the market because of various reasons. Most important are lacks of challenge in established organisations, missing of entrepreneurial spirit and not sufficient levels of changing required skills.

Mostly the stage of 'Self-employment' is followed by growing the company and establishing themselves as business leaders of corporation, the forth stage so-called 'Leadership'.

By realising ideas the entrepreneur showed skills and has to use these further on. Entrepreneurs are innovative, manage labour forces, open up new markets, find new ways of combining inputs, and respond to market signals quickly. The modern literature lists additional to the essential character traits "a high need to achieve; a preponderance to take calculated risks; self-confidence; persistence; leadership; ability to influence people;" and so on.[15]

"A key issue facing the entrepreneur is how to organise such a division of labour with minimum market-making costs."[16] Thereby one major challenge entrepreneurs are faced with is the attraction and holding of a creative and qualified team. Therefore "...business companies tend to have a high profile and success breeds success; good people are attracted to a prestigious name. Where an organisation is identified with a single person, employees find it easier to share their values. A classic example of this was Virgin where the personality of Richard Branson permeated the entire company."[17]

This, mostly, successful phase ends with transferring the decisive power to the follower. Thereby many business leaders stay in position of control and consulting for a certain amount of time.

The stage of 'Retirement' again should not need to be outlined furthermore. Just to mention that a significant number of entrepreneurs as well as other business leaders stay in contact to their environment. They still 'feel' the responsibility for the society and fit it through foundations and engagement for youth, education and so on.

Finally the characteristics of 'professional entrepreneurs' are shown to underline the concept of the entrepreneur life cycle. These are recognised by literature and recent surveys done all over Europe, but mainly in the UK.

- They were professionally trained, usually in a large multinational company
- They have a 'theory of the business' - a recipe for business success
- They can provide a clear vision of the future for the business, but their vision is seldom expressed on paper as a formal mission statement
- They maintain 'bus ticket' controls - key management ratios which allow them quickly to check the health of the business
- They are committed to success through continuous change and innovations
- They understand their market and have a strong desire to grow the business and compete successful
- They are totally dedicated and identify closely with the business
- They have a strong commitment to the people in the organisation and tend to operate a 'star-shaped' organisation[18]

[...]


[1] Casson, M.; 1990 Enterprise and Competitiveness p. 45

[2] Morrison, A.; 1998 Entrepreneurship: An international Perspective p. 4

[3] Harrison, J. & Taylor, B.; 1996 Supergrowth Companies; Entrepreneurs in action Foreword

[4] Morrison, A.; 1998 Entrepreneurship: An international Perspective p. 17

[5] Casson, M.; 1990 Enterprise and Competitiveness p. 61

[6] Morrison, A.; 1998 Entrepreneurship: An international Perspective p. 4

[7] Morrison, A.; 1998 Entrepreneurship: An international Perspective p. 4

[8] Harrison, J. & Taylor, B.; 1996 Supergrowth Companies; Entrepreneurs in action p. 62

[9] Casson, M.; 1990 Enterprise and Competitiveness p. 57

[10] Casson, M.; 1990 Enterprise and Competitiveness p. 57 - 58

[11] Casson, M.; 1990 Enterprise and Competitiveness p. 57

[12] Levitt, T.; 1981 Marketing Intangible Products and Product Intangibles

[13] Harrison, J. & Taylor, B.; 1996 Supergrowth Companies; Entrepreneurs in action Foreword

[14] Morrison, A.; 1998 Entrepreneurship: An international Perspective p. 13

[15] Timmons, J.; 1994 New Venture Creation

[16] Casson, M.; 1990 Enterprise and Competitiveness p. 76

[17] Harrison, J. & Taylor, B.; 1996 Supergrowth Companies; Entrepreneurs in action p. 31

[18] Harrison, J. & Taylor, B.; 1996 Supergrowth Companies; Entrepreneurs in action p. 63

Details

Pages
16
Year
2001
ISBN (eBook)
9783638127967
File size
528 KB
Language
English
Catalog Number
v4536
Institution / College
University of Wolverhampton – Business
Grade
A 15 - deu
Tags
Manager Führung Organisation Existenzgründer business set-up leadership

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Title: The Entrepreneur is just another Manager - albeit a very effective one