Manage like an entrepreneur

From PLN

1 Manage like an entrepreneur
2 Entrepreneurship in the social sector
3 Related articles
4 Your turn: Talk about it

by Leslie Dillon, from Leader's Digest January 2008

Manage like an entrepreneur

Harvard Management Update frequently features a classic article from the recent past in a current issue. The December 2007 issue carried an article from January 2005 on entrepreneurship that’s as current now as it was 3 years ago. I think the article’s particularly relevant to today’s library managers, who are being asked--even required--to assume a more business-like posture.

“In a...climate where disruptive technologies overturn all the rules...executives who fail to lead like entrepreneurs place their [organizations] in deep peril.” What defines an entrepreneur? They “pursue opportunities beyond the tangible resources currently controlled by their organizations....And they’re driven to identify new opportunities, not protect what their companies already have.”

While many business executives find this management approach difficult to master, Harvard Business School professor Bill Stahlman believes that “a handful of practices and principles can help leaders begin thinking--and acting--like entrepreneurs.”

Start at the top. Entrepreneurial management needs to start at the top and “permeate the company’s culture and all its systems.”
Run war games. Entrepreneurial managers are characterized by a healthy paranoia. They constantly ask, “Why did we miss that opportunity?” In this age of disruptive technologies, leaders are aware that threats can come from anywhere. Successful organizations “run into trouble by trying to protect what they have rather than developing an opportunity orientation.” Microsoft, for example, “has missed important opportunities, such as those grabbed by Google, because it’s been in defense mode. It wants to protect its monopoly and its strong market position.”
Resist the sunk-costs trap. “Replacing an older business model with a new one takes the courage and will to destroy protective cocoons built around trusted structures and practices.”
Don’t worry about cannibalization. Barnes & Noble’s “less-than-stellar entry into online sales” wasn’t “nearly as successful as Amazon.com because they spent their time worrying that the new online business would sabotage in-store book sales. They didn’t take the time needed to realize that this was a different business that required different sorts of leaders.”

For it to succeed, the entire organization needs to embrace enterpreneurial management. How to spread the entrepreneurial spirit? “Get managers together...to share best practices and lessons learned, and drive home the importance of constantly looking for ways to improve.”

(Lauren Keller Johnson, “Debriefing William Sahlman: Manage Like an Entrepreneur,” Harvard Management Update, Jan. 2005.

Entrepreneurship in the social sector

The social sector is big business. In the U.S. alone, 1.5 million nonprofits and similar organizations have revenues of $700 billion and control assets of $2 trillion. This would seem a sufficient “arsenal to tackle problems in crucial areas such as education, poverty, and health care.” But in fact it isn’t; their efforts haven’t solved targeted issues.

Four Harvard professors, authors of a recent casebook called Entrepreneurship in the Social Sector, believe that new models and new ways of thinking based on social entrepreneurship will enable “organizations to create more value with their limited resources and tap additional resources not directly under their control.”

Social entrepreneurship is defined here as “innovative, social value-creating activity that can occur within or across the :nonprofit, government, or business sectors... [F]undamental to this definition is that the drive for social entrepreneurship is primarily to create social value, rather than personal or shareholder wealth.”

These experts advocate a network approach, which requires that leaders focus on mobilizing resources inside and outside the organization to create social value. “Social entrepreneurs who have innovated using network approaches are in many ways ahead of the curve, even relative to leaders in other fields.”

“Social entrepreneurs stay relentlessly focused on their missions and seek to continually innovate…” To build successful networks, they must be willing to relinquish control and “share recognition with their partners to advance the mission, not their organizations.” Incremental changes in existing activities won’t meet the challenge. Essential to success is a fundamental transformation in the way the organization does business.

The HBS Working Knowledge article mentioning this book notes, by the way, that MBA interest in social entrepreneurship has increased dramatically in recent years, and is expected to continue. (I wonder how many current and aspiring library directors have or are working toward MBAs?)

(Sean Silverthorne, "Putting entrepreneurship in the social sector", HBS Working Knowledge, Feb. 4, 2008.)

Entrepreneurialism - The February 2008 LLN Peer Panel discusses entrepreneurialism in libraries/
Managing performance management - Whatever your management style, you still need to track performance.
Promise-based management - a management approach that may be complementary.