Where Are The Entrepreneurial Leaders?

WHERE ARE THE ENTREPRENEURIAL LEADERS?

March 2018 | By: By Professor Jay Rao

Estimated reading time: Estimated reading time: 6 minutes

Key Takeaways

 

  1. Today’s business climate has unparalleled levels of volatility, uncertainty, complexity, ambiguity, and hyperconnectedness. The most successful leaders in this environment are those who are not afraid to navigate uncertainty and explore ambiguity.
  2. Most traditional leaders are risk managers, attuned to the known world. Entrepreneurial leaders stand apart for their willingness and skill at navigating uncertainty and the unknown world.
  3. Entrepreneurial leadership is a skillset that can be developed, and entrepreneurial leaders can thrive in all kinds of organizations.

 

The world has experienced some significant changes in the last 45 years:

  • The opening of China to the world after Mao’s death in 1976
  • The rise of the Asian Tigers in the 1980s
  • The fall of the Berlin Wall in 1989
  • The opening up of India to the world in 1991
  • The creation of HTML/WWW in 1993
  • The awakening of the Middle East since 1996
  • The disappearance of most juntas in Latin America by the end of the 1990s
  • Two billion people at the bottom of the pyramid having access to satellite TVs and mobile phones

Consequently, the world is experiencing increasing levels of volatility, uncertainty, complexity, ambiguity, and hyperconnectedness; a phenomenon collectively known as VUCAH. While a tumultuous VUCAH environment offers unparalleled opportunities for many, it has resulted in disruptive and even profoundly existential challenges for others. Specifically, it has been less than merciful on many traditional firms.

Of the top 500 Fortune firms in the U.S. in 1980, only 202 survived past the year 2000. Most were acquired, merged, or broken to pieces. In the 1960s, U.S. Fortune 500 Goliaths lived for an average of 60 years. Today, that average lifespan is just 15 years. Globally, it is no different. The largest 1,000 global firms are dying faster than ever before. In most situations, the Goliaths have been disrupted or degraded by fast, flexible, and entrepreneurial companies.

Kodak, Sony, Nokia, Blackberry, Blockbuster, and Sharp were all great Goliaths. Many had the right technologies, received signals of fundamental changes in what customers wanted, created new products and services, and worked hard to maintain their dominant market shares. And, yet, many floundered. In each case, their demise was not brought on by lack of understanding of the changing times, or lack of technology, or lack of money, or lack of products, or lack of access to markets. In some cases, it was the inability to change and even abandon their existing business models. In others, it was either internal conflict and/or collusion among the top leaders to make significant and meaningful commitments to new business models or ecosystems. At others, it was the failure to make the transition from an analog world to the hyperconnected digital world. And, some even fell victim to a prevailing enterprise culture of inaction.

A New Kind of Leader

This new world requires a different type of leader—the entrepreneurial leader. Executives and managers at Goliaths around the world must learn new skills to navigate and lead in a VUCAH environment. Entrepreneurial leadership is different from other types of leadership (e.g. transformative, military, resonant, etc.). Entrepreneurial leaders are not just risk managers; they are ambidextrous and are experts at navigating uncertainty.

Risk is about the known world. Risk cares about existing customers, existing competitors, and existing technologies. Risk works on known products, markets, and business models. If we have data from the past, then we can calculate risk. One can make decisions using spreadsheets and what-if analysis. Risk management is a commodity skill and risk managers are a dime a dozen; every person on earth with an undergraduate or graduate business degree is a risk manager.

On the other hand, uncertainty is about the unknown world: unidentified customers, uncharted markets, unproven technologies, unverified products, and untested business models. Uncertainty is full of unknowns, unsupported by data. We can’t calculate uncertainty. One has to make decisions without a spreadsheet and what-if analysis. Uncertainty navigators make decisions and take action even when data and spreadsheets aren’t available. In order to survive and thrive in a VUCAH world, Goliaths need more uncertainty navigators. Unfortunately, this is a rare talent. Most business schools and academic programs do not train students to navigate uncertainty and explore ambiguity.

How Are Entrepreneurial Leaders Different?

Although truly entrepreneurial leaders are rare, they can be found in all kinds of enterprise settings. Look for them within small, medium, and large organizations, in nonprofits, in government, in startups, and beyond. They are the managers who are always questioning the status quo. They believe there is a better way of doing business and improving process. This relentless quest for improvement also makes them genuinely curious. They have a burning desire to explore opportunities, to change, and to create.

Entrepreneurial leaders take initiative without waiting for orders. They take action and demonstrate progress toward identifying, shaping, and capturing opportunities. Rather than wait for permission, they are opportunistic and see possibilities where others see obstacles. They usually have a positive outlook about the future, as they are always trying to improve things.

Seasoned entrepreneurial leaders are problem solvers. They love a challenge. Through problem solving, these individuals can change the dynamics or help an enterprise’s competitive position in the market. They try to bring new value to the enterprise or society. Experienced entrepreneurial leaders understand that the traditional scientific method of analyzing and then acting does not always work when faced with business problems in a high-VUCAH environment. It requires a mode of thinking long popularized by innovators and scientists—to experiment, learn, and iterate. They forge forward into the future with disciplined and deliberate experiments that combine both emergent and analytical strategies. Entrepreneurial leaders understand when to use predictive, analytical thinking and when to use creative, emergent thinking. In essence, they act their way into tackling unknown problems with unknown solutions. The most successful leaders are pragmatic, and tend to fall in love with the problems, rather than falling in love with their solutions.

Failure does not deter entrepreneurial leaders. They would rather try and fail than not try at all, and they are often good at bouncing back from failure. This is revealed in a self-deprecating sense of humor and a willingness to laugh at oneself, as well as a strong internal locus of control. They believe that they alone are responsible for the outcome of their actions, and do not blame others for their failures. Those with an external locus of control usually attribute their failure or inaction to an external factor or source—their bosses, their customers, industry regulations, their enterprise, or even national culture.

Finding Entrepreneurial Leaders at Work

Where are the entrepreneurial leaders in your organization? Some focus their energy outside the firm. They are obsessed with the customer, the competitors, or the industry’s changes. These individuals are constantly looking for opportunities for the enterprise to gain a competitive advantage in the market. Others may want to focus internally, for example championing an organization’s talent. They find valuable resources—time, money, and space—for other employees to innovate. These entrepreneurial leaders try to build a safe sandbox where innovators can network, observe, listen, question, associate, and experiment—all skills needed to find the right business models for tomorrow. Another internal strategy is coaching employees through internal bureaucracy, making it easier to engage and act. Some are even skilled at outsmarting their firms to make creative progress in spite of overwhelming internal obstacles. In short, they play judo with their enterprise’s bureaucracy.

Entrepreneurial leaders come in many shapes and styles. Some are lone mavericks, some are team builders, and others are team players. They can be introverts or extroverts; subdued, or loud and passionate. Some may be sensitive, empathetic, and supportive, while others are bold, courageous, and demanding. Many are imperfect and incomplete. In spite of the various personality flavors, all entrepreneurial leaders have one thing in common: they are not afraid to navigate uncertainty and explore ambiguity. They have the courage to venture out of their comfort zones to learn new things.

Finally, in the face of VUCAH, entrepreneurial leaders inspire people to act their way into new ways of thinking and help people think their way into new ways of acting. Inside enterprises, they set the tenor for change and innovation culture. Fortunately, we believe that entrepreneurial leaders are made, not born. This skillset can be developed through knowledge, training, experience, and enterprise culture. An entrepreneurial leadership mindset is something that all of us can learn and practice.