The Institute for Innovation and Entrepreneurship at UTD

1. The Institute for Innovation and Entrepreneurship at UTD Leveraging the power of ideas and technology to create new ventures and add economic, social and cultural value to our community Alcatel-Lucent AT&T University Entrepreneurial Leadership: From Entrepreneur to CEO May 20, 2011

2. You’ve Cleared the Hurdles – You’ve Won the Race – What Now? • You’ve cleared the eight hurdles – Congratulations!! • But there’s one more challenge ahead: you’ve got to make the transition from entrepreneur to CEO – facing personal challenges along three dimensions. • To meet these challenges, the entrepreneur must simultaneously: • Extend his time horizon (from today and next week, to months and years in the future) • Change predominate behavior patterns from doing and deciding, to delegating and managing, to leading and inspiring • Shift his focus from the internal and operational aspects of the company to the external and strategic elements of the broader competitive environment

3. What is Leadership? • The entrepreneur must make a successful transition to the role of CEO – become a leader! • What is leadership? • The most admired leaders… have strong beliefs about matters of principle… an unwavering commitment to a clear set of values… passionate about their causes. • Leadership is a relationship – between those who aspire to lead and those who choose to follow • Leaders mobilize others to… get extraordinary things done in organizations – [they] create a climate in which people turn challenging opportunities into remarkable successes”

4. What is Leadership? Leadership as Process roles, power, influence, tasks, techniques Leadership as Personal Attributes values, competence, emotional intelligence Leadership as Purpose context, opportunity, vision, direction, change Leadership as Relationship Trust, inspiration, credibility

5. The Life Cycle of an Entrepreneurial Firm Period of Transition Strategy, product positioning, marketing, resources, management team, infrastructure, management systems, culture, leadership roles, risk management The Corner: a critical turning point Maturity SALES $50M Startup Product, Initial Customers Sustained and Profitable Growth Expansion, diversification, new product development 3 yrs 5yrs TIME

6. Caitlin & Matthews: Leadership Roles in the Life Cycle of the Firm Initial Growth Direction Setter Drive Sales & Market Share Continuous Growth Organizational Builder Strategic Innovator Chief of culture SALES Rapid Growth Lead the Market Team Builder: Acquire, Integrate & Align Resources Startup Doer/Decision Maker Markets & Products TIME

7. Classic Entrepreneurial Strengths Visionary and pioneering Always searching for new opportunities and challenges Passionate and energetic Driven to achieve High standards of excellence Creative, innovative Proactive, future-focused Smart, capable, decisive Sense of urgency Confident risk-taker Problem solver Determined to create wealth and make a difference In order to succeed, the entrepreneur must also learn to: Plan, balancing short-term and long-term goals of all constituencies Communicate to produce alignment Build a team and facilitate their working as a team Resolve conflicts Understand that people and culture are your key assets Learn from every success and failure you have, and from mentors and other successful entrepreneurs The Challenges of Growth

8. SALES TIME Startup Stage • Company Goals • Understand your personal goals and objectives • Figure out product and concept that customers want to buy • Identify initial customers and build relationships • Develop limited organizational capabilities • Leader’s Role • Doer/Decision-maker • Clearly in charge; making all of the decisions • Rest of the organization reports to one leader

9. Key Questions: Is it Right for You? • AmarBhide argues that, for entrepreneurs, setting a direction involves personal as well as business choices. • He suggests that entrepreneurs must continually ask themselves what business they want to be in and what capabilities they would like to develop. • Developing a strategy consistent with the entrepreneur’s personal strengths and objectives is critically important.

10. Setting the Direction: Personal Goals • Before they can set goals for a business, entrepreneurs must be explicit about their personal goals: • Why do they want to launch their new venture? • Achieve independence? Control my own destiny? Serve others? • What are your financial objectives? • Quick profits? Build a sustainable enterprise to pass on to my children? • What is the end game? Do you have an exit strategy? • Only when entrepreneurs are clear about what they want from their businesses does it make sense to ask three key questions: • What kind of enterprise do I need to build? • What risks and sacrifices does such an enterprise demand? • Can I accept the risks and sacrifices?

11. SALES TIME Initial Growth Stage • Company Goals • Set the direction (articulate a strategy) • Launch differentiated product (competitive advantage) • Capture market share • Grow revenues • Leader’s Role • Delegator/direction-setter • Monitor progress • Ultimate decision-maker for major decisions

12. Initial Growth Stage • Key Challenges • Articulate and reinforce your vision for the company • Understand your personal goals for the long term • Use scarce resources creatively • Watch critical performance indicators, especially financial ones. • Integrate input from stakeholders with your own perspective • Hire multitalented people whose values match yours • Use mentors

13. Initial Growth Stage • Personal Changes in Leadership Role • Focus, focus, focus • Manage proactively, not reactively • Begin delegating responsibility, establish systems and structure with clearly defined roles, responsibilities • Stop making all the decisions, solving all the problems, answering all the questions • Trust others – and hold them accountable for results • Start planning for the future instead of reacting • Share the credit and limelight with others • Spend more time working on the big picture

14. SALES TIME Rapid Growth Stage • Company Goals • Gain significant market share • Become a market leader and ward off competitors • Build infrastructure and team for aggressive growth • Hire and integrate a lot of new people • Leader’s Role • Team Builder • Coach • Planner • Communicator

15. Rapid Growth Stage • Key Challenges • Hire people who are smarter than you to fill gaps in functional expertise • Define new roles/responsibilities – build a management team that works together • Lead team to create a strategic market-focused vision and plan for growth • Create processes to align employees with company’s vision and culture • Develop a meaningful communication process • Be a champion for the customer • Listen to and consider the views of all constituencies

16. Rapid Growth Stage • Personal Changes in Leadership Role • Use the company’s plan to focus and track its efforts • Shift your focus from doing work to managing and coaching others • Stop being the ultimate decision-maker – develop a consensus-oriented decision-making style • Learn to facilitate effective teamwork • Encourage all ideas to be heard in a healthy debate • Stop tolerating organizational misfits • Admit you don’t have all the answers – focus on unleashing the creativity of others • Be a champion for effective, efficient processes

17. SALES TIME Continuous Growth • Company Goals • Dominate the industry • Expand to new markets and grow new niches in current markets • Move from products to “solutions” • Brand the company and its people as thought leaders • Leader’s Role • Change catalyst • Organization builder • Strategic innovator • Chief of culture

18. Continuous Growth • Key Challenges • Recognize the need for fundamental change and proactively lead the discovery and implementation of a strategic plan for dramatic new growth • Develop the executive team so that each member becomes a company leader; empower the team to run day-to-day operations while you focus only on strategic issues • Find and develop high-level partnerships and relationships to leverage for growth • Institutionalize the culture and values, and ensure that reward and recognition programs are effectively aligned

19. Continuous Growth Stage • Personal Changes in Leadership Role • Spend all your time working on the big picture, not on the day-to-day aspects of the business • Make strategy and culture your primary focus • Hold the management team accountable for sharing strategic leadership • Constantly refine and redevelop the organization and culture

20. Caitlin & Matthews: Leadership Roles in the Life Cycle of the Firm Initial Growth Direction Setter Drive Sales & Market Share Continuous Growth Organizational Builder Strategic Innovator Chief of culture SALES Startup Doer/Decision Maker Markets & Products Rapid Growth Lead the Market Team Builder: Acquire, Integrate & Align Resources TIME

21. Building a Management Team • Building a management team is critical to the survival of the enterprise: it requires careful planning, a clear understanding of both organizational and personal objectives, a willingness to accept help and criticism, the confidence to give up control, and an abundance of personal humility. • The skills, aptitudes and motivations required to launch a new venture are very different from those required to lead and manage a rapidly growing firm in a competitive market environment • Making that transition is frequently the toughest challenge for a young entrepreneur!

22. Letting Go The development of CEO-level managerial and leadership skills requires experience, mentoring and practice that frequently spans decades of personal growth It is asking a great deal of a young entrepreneur, focused on overcoming technical, marketing and financial challenges to simultaneously acquire the full portfolio of managerial and leadership skills necessary to ensure the success of his venture as the challenges shift from early growth to operational effectiveness, market leadership and a successful exit. It is frequently essential for the entrepreneur to recognize his limitations and turn over the reins to an experienced manager, in order to ensure the ultimate success of the venture he has nurtured from inception.

23. References Caitlin & Matthews: 2001. Leading at the Speed of Growth. Hungry Minds, Inc. NY. ISBN 0-7645-5366-6 Bhide: 1996. The Questions Every Entrepreneur Must Answer. HBR 96603. November-December 1996

24. Joseph C. Picken, Ph.D. Executive Director The Institute for Innovation & Entrepreneurship at UTD The University of Texas at Dallas PO Box 830688 SM 43 Richardson, TX 75083-0688 (972) 883-5990 innovation@utdallas.edu http://innovation.utdallas.edu Contact Information