Entrepreneurial Leadership

1. Entrepreneurial Leadership Presentation to: Leadership Symposium KU Edwards Campus Wally Meyer November 19, 2008

2. Premise Entrepreneurial leadership will accelerate achievement of organizational goals, enhance organizational performance

3. Proof At one time or another, all successful organizations were new ventures New ventures, to succeed, must surpass the most arduous hurdles: mortality rates of 65%+ New venture success is largely dependent on entrepreneurial leadership And if that impeccable logic doesn’t convince you….

4. How would you like to have the net worth or track record of these entrepreneurs? http://www.youtube.com/watch?v=5xNA8seaqGQ

5. Was the Scarecrow an entrepreneur? What do each of these successful entrepreneurial leaders have in common? Entrepreneurial leadership starts with having an entrepreneurial mindset.

6. Agenda • Entrepreneurial Mindset • Characteristics of Entrepreneurial Leaders • Entrepreneurial Mindset Scorecard • Leadership Types • Transactional • Transformational • Entrepreneurial • Entrepreneurial Leadership Behavior Checklist • Leadership Values • Leadership Success: Measuring Self Performance

7. Entrepreneurial Mindset Leading like an entrepreneur requires: Internal locus of control Tolerance for ambiguity Willingness to hire people smarter than oneself Consistent drive to create, build or change things Passion for an opportunity Sense of urgency Perseverance Resilience Optimism Sense of humor about oneself

8. Internal Locus of Control “In the hands of the Gods” Fate is in charge “Go with the flow” More in control than controlled Leadership of the self  Tolerance for Ambiguity Leading in the midst of chaos and uncertainty See opportunities others don’t see Offsets: Knowing the process Knowing which way is north Embracing the vision Opportunity identification, development and capturing a new venture concept = messy affair Chaos ≠ problem; chaos = fun. Characteristics of Entrepreneurial Leaders

9. Willingness to Hire Smarter People Hire to complement self identified weaknesses Challenge to accept ‘outside’ leadership McDonald’s as franchisor Kim Smith: New Schools Venture Fund Manager http://ecorner.stanford.edu/authorMaterialInfo.html?mid=615&fileID=2473 Consistent Drive Set the pace for leading the business Energy to change (not invent) things: Most entrepreneurial leaders change, not invent, things Change requires motivation and leadership Self imposed momentum Mailbox money Characteristics of Entrepreneurial Leaders

10. Kim Smith, Co-Founder and CEO New Schools Venture Fund (educational venture investments) on working with smart people.

11. Willingness to Hire Smarter People Hire to complement self identified weaknesses Challenge to accept ‘outside’ leadership McDonald’s as franchisor Kim Smith: New Schools Venture Fund Manager http://ecorner.stanford.edu/authorMaterialInfo.html?mid=615&fileID=2473 Consistent Drive Set the pace for leading the business Energy to change (not invent) things: Most entrepreneurial leaders change, not invent, things Change requires motivation and leadership Self imposed momentum Mailbox money Characteristics of Entrepreneurial Leaders

12. Passion Not so much mindset as emotional setup Missing full objectivity; but energizes others with demonstration of devotion Natured or nurtured? Sense of Urgency Impatience/wanting to ‘just do it’. Self imposed deadlines Cash flow Equity ownership Characteristics of Entrepreneurial Leaders

13. Perseverance Freebie: generally a by-product of: passion sense of urgency fear the consequences Henry Ford: 6X attempts to start Intel: 14X attempts to fund Resilience Characteristics of Entrepreneurial Leaders

14. Optimism Sense of Humor Did you hear the one about the two businessmen and the entrepreneur? http://eclips.cornell.edu/search?querytext=optimism&id=id&clipID=8465&tab=TabClipPage Characteristics of Entrepreneurial Leaders Source: Jeff Timmons, New Venture Creation

15. Daniel Stein, President JDS Capital (venture capital investments) on entrepreneurial leadership optimism

16. Optimism Sense of Humor Did you hear the one about the two businessmen and the entrepreneur? http://eclips.cornell.edu/search?querytext=optimism&id=id&clipID=8465&tab=TabClipPage Characteristics of Entrepreneurial Leaders Source: Jeff Timmons, New Venture Creation

17. Entrepreneurial Mindset Scorecard • Rate yourself on each key entrepreneurial mindset component • Develop an action plan to help improve self assessed areas of opportunity

18. Leading Like an Entrepreneur Leadership vs. Management Leadership Types

19. Entrepreneurial Leadership Leading like an entrepreneur: Always involves creation of value through change of assets to develop a new business Always involves inspiring employees to capture that business opportunity “Employees won’t be managed, but they can be led.” Ewing Kauffman

20. Management or Leadership? Management = Administration Leadership = Change and Transformation J. Kotter, ‘What Effective Managers Really Do/ (HBR, 1999)

21. Leadership Types

22. Transformational vs. Entrepreneurial Leadership Transformational: Bring about a change in existing order Change is the key Entrepreneurial: Bring about a new order Create something which did not exist before New learning is always involved Destroy, disrupt, reinvent

23. Differences in Leadership Types

24. Transformational and Entrepreneurial Leadership But: Transformational leaders and entrepreneurial leaders are linked in leadership qualities: passion vision stubbornness Transformational leadership may become entrepreneurial leaders Transformational leaders productively co-exist with entrepreneurial leaders, particularly in corporate environments

25. Transforming into an Entrepreneurial LeaderCorporate Case Study Large southeastern utility Privatization forced adoption of new approaches by transformational leadership to: Reverse inefficiencies Improve customer satisfaction ratings Source: Journal of Business Venturing, 1997

26. Corporate Case Study • Pre-privatization: • Change is externally achieved: • “If we need more revenue, we’ll raise the rates.” • Post-privatization: • Change must be internally generated • Transformational managers asked subordinates to adopt entrepreneurial leadership behaviors

27. Overcomes bureaucracy Displays enthusiasm Changes course quickly when needed Encourages others’ initiatives Inspires others to pursue own ideas Devotes time to help others Supports others’ good ideas Moves boldly ahead with new ideas Futuristic vision Rallies others efforts to meet challenges Corporate Entrepreneurial Leadership Behaviors

28. Case Study Results Achieved: Increased customer satisfaction Improved operating profit margins Higher employee satisfaction Particularly among those implementing the behaviors

29. Put the research to work for you:Entrepreneurial Leadership Checklist Adopt and apply the entrepreneurial leadership behaviors:

30. Leadership Values Value Centered Organizations Start at the Top

31. Leadership Values • Financial performance of companies with defined value statements: net income 23X vs. GDP 2.5X over same 10 years (Garfield, Peak Performers, 1986) • “Management values are primary source of corporate identity (Jack Welch)(Nanus, Visionary Leadership, 1992) • “Single most important factor in organization’s success is leaders’ adherence to core values (Thomas Watson, Ideas That Helped Build IBM, 1986)

32. Leadership Values • Leaders may be forgiven for inefficiencies, lack of accomplishment, missing the business marks • Leaders will not be forgiven for immorality and lack of principles • Entrepreneurial environments need well defined values; entrepreneurial led organizations are: • Opportunity based • Structure evolving • Resource challenged

33. Leadership Values • Honesty: • knowing oneself; in dealing with others • Consideration: • ‘ treating others as you would want to be treated’ (Ewing Kauffman) • Responsibility: • life is what you make it, choosing to make a difference • Persistence: • tenacity for repeated attempts • Excellence: • ‘anything worth doing is worth doing right’ • Commitment: • essentials of life are someone to love and something to do (Bertrand Russell, What I Have Lived For) (Source: Sagie and Elizur, Journal of Organizational Behavior17, 1996)

34. Leadership Values • Lack of leadership value red flags: • Members lack clear understanding regarding how to meet organizational goals • Different individual/groups have different value systems • Top leaders send mixed messages • Day-to-day life is disorganized • Members complain about organization to family, friends • Organization has values, even written, but doesn’t practice them

35. Leadership Success:Measuring Self Performance How do you know when you’ve arrived?

36. Leadership Success:Measuring Self Performance • Leadership requires competency in three overall areas: • Statesmanship: • Ability to work with and through other people • Entrepreneurship: • Ability to achieve results, regardless of obstacles • Innovation: • Ability to generate new and usable ideas

37. Statesmanship Ability to work with and through other people • Rx: • Let people know where they stand • Give credit where due • Tell people as soon as possible about changes that will effect them • Make the best use of each person’s ability

38. Entrepreneurship Ability to achieve results, regardless of obstacles • You know you’re an entrepreneur when: • You’re one of the top producers of results • Most jobs you have worked on have resulted in significant contributions • You will gamble on good odds anytime • You plan work and hold performance to schedule • If you want something done, you find a way to get it done.

39. Innovation Ability to generate new and usable ideas • Keep an open mind • Have a questioning attitude • Use a new-ideas system • Ask six simple questions: I keep six honest serving men; They taught me all I knew; Their names are What and Where and When, And How and Why and Who. Rudyard Kipling • Answers to six simple questions, applied creatively, usually identify the solutions to most challenges

40. Conduct self appraisal Evaluate results Develop improvement plan Execute Leadership Success:Measuring Self Performance

41. Source Materials • Richard Huges, Robert Ginnett, Gordon Curphy: Leadership, Enhancing the Lessons of Experience, McGraw-Hill, NY 2009 • George Manning, Kent Curtis, The Art of Leadership, McGraw-Hill, NY 2007 • Neal Thornberry, Lead Like An Entrepreneur, McGraw-Hill, NY 2006 • Richard Daft, The Leadership Experience, Thompson South-Western, Mason, OH 2008 • Jeffrey Timmons, Steve Spinelli, New Venture Creation, McGraw-Hill, 2007

42. ‘Live what you talk, make your actions match your words. You must live what you preach and do it right and do it often. As an entrepreneur, you really need to develop a code of ethics, a code of relationships with your people because it’s the people who come and join you. They have dreams of their own. You have a dream of the company. They must mesh somewhat.’ Ewing Marion Kauffman For every person who’s a manager and wants to know how to manage people, there are 10 people who are being managed and would like to figure out how to make it stop. Scott Adams, creator of Dilbert

43. Entrepreneurial Leadership Presentation to: Leadership Symposium KU Edwards Campus Wally Meyer November 19, 2008