The Entrepreneurial Manager - JADE - 7/3/14

The Entrepreneurial Manager

JADE Spring Conference
Olivier Witmeur
March 7th, 2014

2

Desired Outcomes of the Workshop

• Who is the entrepreneur?
• What are the differences
between entrepreneur
and manager?
• Does it matter?

07-03-2014

1. Why entrepreneurship
matters
2. About entrepreneurs
3. Introduction to
effectuation
4. Case study: Wafles and
Dinges
5. Introduction to
intrapreneurship
6. Conclusion

• What makes
entrepreneurs
entrepreneurial
(Sarasvathy)

JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

3

Olivier Witmeur (Belgian, 46)
•

A real passion for entrepreneurship education and entrepreneurs.
• Student entrepreneurs: 2x
• Full time entrepreneur: once, in a team of 5
• Coach: 500+ projects over the last 20 years
• (Advisory) Board member in multiple new ventures
• Policy making: 2x
• PhD in entrepreneurship in 2008
• … never as an investor

•

My wife (as Colombo), no kids, one dog (Vicky).

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5

Did you know one of the largest and most profitable businesses during
the late 1800s and early 1900s was ice harvesting?

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6

Jump to the next curve.

2

1
Rule #1
The dominant players on curve #1 are
not likely to jump to the curve #2…
Temps

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7

Again!

Today’s businesses, especially the large ones, simply will not survive in this period of rapid
change and innovation unless they acquire entrepreneurial competences.
Peter Drucker
1985 (!)

2005

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8

Strategy  Entrepreneurial Orientation
“An entrepreneurial firm is one that engages in product-market
innovation, undertakes somewhat risky ventures, and is first to come up
with ‘proactive’ innovations, beating competitors to the punch.
A non-entrepreneurial firm is one that innovates very little, is highly risk
averse, and imitates the moves of competitors instead of leading the way.”
•
Danny MILLER
(Canada)
•

Entrepreneurial Orientation (EO) =
– Risk Taking
– Proactiveness
– Innovativeness
EO  Performance
(The relation is stronger in turbulent environments)

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Towards ‘Entrepreneurism’
• Y= f ( L, C )

… Capitalism and Socialism

• Y = f ( L, C, K )

… The Knowledge Economy

• Y = f ( L, C, K, E )

... The Entrepreneurial Society?

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Global Entrepreneurship Monitor
Total Entrepreneurial Activity Level

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How To Navigate In Turbulent Times?

V
U

UNCERTAINTY
Lack of predictability and prospects for
surprises.

C

COMPLEXITY
Multiplex of forces, confounding of issues
and causes-and-effects confusion.

A

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VOLATILITY
Nature, dynamics and speed of change.

AMBIGUITY
Haziness of reality, potential for misreads,
and the mixed meanings of conditions.


13

Different views on the entrepreneur
1.
2.
3.
4.

As a revolutionary  ‘Entrepreneurial leadership’
As a manager  ‘Entrepreneurial management’
As a salesman
As a team player  Entrepreneurial team

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Traits approach: Classical variables

Need for
achievement

Need for achievement (N-Ach) refers to an individual's desire for
significant accomplishment, mastering of skills, control, or high
standards.

Locus of control

Locus of control refers to how much individuals believe they can
control events that affect them.

Tolerance for
ambiguity

Ambiguity tolerance is the ability to perceive ambiguity in
information and behavior in a neutral and open way

Self efficacy

Self-efficacy is the extent or strength of one's belief in one's own
ability to complete tasks and reach goals

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About Entrepreneurs (a personal view)
Passion &
Values

Tolerance for
Ambiguity

Commitment
& Courage
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Knowledge &
Expertise

Network &
Social Capital


15

ELEMENTS OF ENTREPRENEURIAL LOGIC:
INTRODUCTION TO EFFECTUATION

18

Managerial Approach based on optimization
Selecting between given means to achieve a predefined goal

Resource 1
Resource 2
Given
Goal

Resource 3
Resource 4
Resource 5

How to optimize
the use of the
resources?

Typical tools & techniques: project management, leadership, controlling,
quantitative methods…
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A more creative approach based on planning
Generating new means to achieve pre-determined goals

Resource 1
Resource 2
Given
Goals

Resource 3
(needed)
(needed)

How to write a ‘case’
or a plan to ask for
more resources.

Typical tools & techniques: strategic and financial planning

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Entrepreneurial Thinking
Imagining possible new ends using a given set of means

Opportunity Space
Possible goal 1

Resource 1
Resource 2

Possible goal 2

Resource 3

Possible goal 3

Resource 4

…

Resource 5
How to exploit one
opportunity inside the
opportunity space?

…

Typical tools & techniques: co-creation, creativity, enrolment, lean
entrepreneurship, bootstrapping….

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21

Introducing Effectuation: The logic of expert entrepreneurs.

The word effectual (entrepreneurial approach) is the inverse of
causal (managerial approach).

In general, in MBA programs across the world, students are taught
causal or predictive reasoning in every functional area of business.
Saras Sarasvathy
India

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22

Causation vs. Effectuation
Causation

Need to
manage
the causes

Effects are
predicted

•
•
•
•

Effectuation (Cre-Action)

Planned approach
Top-Down
Managerial logic
Prediction based: To the extent we
can predict the future, we can control
it.
 For predictable situations

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Causes are
given

•
•
•
•

Need to
manage
the effects

Emergent approach
Bottom-up
Entrepreneurial logic
Control based: To the extent we can
control the future, we don’t need to
predict it.
 For uncertain situations


23

Principle #1: Bird in Hand
Start with who you are, what you know and whom you know
… Not with pre-set/given goals (based on prediction)

•

Typical entrepreneurial resources:
– Expertize, skills…
– Social capital
– Psychological capital: hope, optimism, self efficacy and resilience

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24

Principle #2: Affordable loss
Invest what you can afford to lose (extreme case = 0€)
… Not expected (risk adjusted) return

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25

Principle #3: Crazy Quilt
Build a network of self-selected stakeholders
… Not competitive analysis and transactional relationships with first-best partners.

Committed
stakeholders
network
Co-Creation

Customers
Suppliers
Channels
Financial partners
Employees
Sponsors
…

Crazy quilt, not puzzle.

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Principle #4: Lemonade principle
Embrace and leverage surprises (they can present new opportunities)
…Not avoid them

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Nils Bergvist

Question:
• What would you do?

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About Nils
• Swedish
• Environmental engineer
• Worked 8 years in the mining industry in
Kiruna (in Northern Sweden)
• Passion for wildlife and sports

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Ice Hotel

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Principle #5: Pilot-in-the-plane
The future comes from what people do
… No inevitable trends

 Control vs Plan

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The Dynamics of the Entrepreneurial Network
Iterative opportunity
co-construction

Who I am?
What I can do?
Whom I know?

My Goals?

My affordable
loss?

Additional
resources
Who may be
involved?

Dead end
The venture grows
step by step.

New Goals

Multiple techniques help to deal with these cycles: Design Thinking,
Lean Startup, Business Model Generation, Staged Financing…
To be continued.

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32

Managerial vs. Entrepreneurial Thinking (stylized facts)
High

Expert
Entrepreneurs
Angels
Experienced
VCs

Effectual

Bankers
Novice
entrepreneurs

Novice
VCs
Corporate
Managers

Low

Low

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Causal

High


33

From Causation to Effectuation…and vice-versa
Causal

LOGIC

Novice
entrepreneur

Moderating
effect of
resources

Large
firm

Entrepreneurs
do not always
manage to
bridge this gap

Shift in logic
necessitated by
firm growth

Start-up
firm

Expert
entrepreneur

Effectual
TIME AND EXPERIENCE

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Wafels & Dinges

Questions:
• What would you do next?
• What is your logic?

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34

Don’t wait/look for the
perfect opportunity.
Just start!

INTRODUCTION TO INTRAPRENEURSHIP

37

Entrepreneurs and Intrapreneurs

Owner-Manager
in Small Firms

Managers
in Large Firms

Lifestyle
Entrepreneurs
Entrepreneurs

Intrapreneurs

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Entrepreneurs vs Intrapreneurs
ENTREPRENEUR

INTRAPRENEUR

Ownership

Yes

No (employee)

Decision power

Unlimited as long as
shareholders agree

Hierarchy

Incentive

Overall

Limited: Bonus, SOP…

Risk

Large, i.e. may include personal
assets

Job reputation

Strategic Freedom

Full

To be aligned with the corporate
agenda

Type of activity

Ex-nihilo creation

Strat with existing organizational
support

Sponsors

Stakeholders

Corporate Management

• Adapted from Basso, 2004

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Corporate Entrepreneurship Challenges
•
•
•

Pace of change is accelerating  Need to renew
Core vs non-core activities
Breakthrough innovation

•

STRATEGY
(Vision)

Entrepreneurial culture / values
Recruit, Develop & Retain entrepreneurial people
Leadership skills

•
•
•

CULTURE

Develop an organization that is entrepreneurship friendly

ORGANIZATION
(Tactics)

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40

Entrepreneurial Values and Behaviours
•

Adapted from Burns, 2008
Long term
impacts
Creatity
Innovation

Change is
normal

Trials & Errors
Learn from
mistakes

‘Can do’

Opportunistic
Optimism

Network and
Sharing

Self
confidence
Multidisciplinarity

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‘Work is Fun’
Team

Celebrate
Success

Achievement


41

Organizational framework for Internal Venturing
Strategic Importance
Very important

Not important

Unrelated
Operational
relatedness

Uncertain

Special BU

Special BU

Spin-off

Partly related

New department

New department

Contracting

Strongly related

Direct Integration

New department

Contracting

Adapted from Burns, 2008

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Traditional vs Entrepreneurial Management
(Adapted from H. Stevenson)
ENTREPRENEURIAL

TRADITIONAL

Strategic
Orientation

Driven by perception of
opportunity

Driven by resources currently
controlled

Commitment to
opportunity

Revolutionary with short
duration

Evolutionary of long duration

Commitment of
resources

Multistaged with minimal
exposure at each stage

Single-staged with complete
commitment upon decision

Control of
resources

Episodic use of rent of required
resources

Ownership or employment of
required resources

Management
structure

Flat with multiple informal
networks

Formalized hierarchy

Reward philosophy

Value-driven
Performance-based
Team-oriented

Security-driven
Resource-based
Promotion-oriented

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44

Initial
discovery

MANAGEMENT

ENTREPRENEURSHIP

Entrepreneurship and Management

Opportunity
refinement
Discovery process

Market
making

Resource
acquisition

Co-ordination
(New) coof old
ordination of
(new) resources resources/ongoing activity

Exploitation process
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The test of a first-rate intelligence is the
ability to hold two opposed ideas in the
mind at the same time, and still retain the
ability to function.
F. Scott Fitzgerald

46

Entrepreneur vs. Manager is the wrong question.

Act like Lionel Messi; ie be
good at everything and
know what tool/logic to
use at the right time

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Every morning in Africa, a gazelle wakes
up.
It knows it must run faster than the fastest
lion or it will be killed.

Every morning a lion wakes up.
It knows it must run faster than the
slowest gazelle or it will starve to death.

It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.
Thomas L. Friedman in “The World Is Flat”
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Never Stop Wondering and Asking

olivier@solvayentrepreneurs.be

T. +32.2.650.41.60 – M. +32.475.68.62.50 if important and urgent
For visitors: 48 avenue F. Roosevelt (Janson Building) – Room J1-117, 1050 Brussels
Postal address: 50 avenue F. Roosevelt – CP 141, 1050 Brussels, Belgium
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Definition 1: The HBS working definition

The pursuit of opportunity beyond the resources you currently control.

H. Stevenson
USA

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Definition 2: The classical academic definition
We define the field of entrepreneurship as the scholarly examination of how, by whom and
with what effects opportunities to create future goods and services are discovered, evaluated
and exploited.
Academy of Management Review, 2000, vol. 25, n°1, 217-226

S. Shane

07-03-2014

S. Venkataraman


53

Adapted from C. Bruyat (1993) & A. Fayolle

Definition 3: Degree of entrepreneurship?
New
to founders
High tech
& Social
start-ups

Take-over
Buy Out

Change

Ch. Bruyat A. Fayolle
Franchisee
Shops
Corporate
Spin-offs
Lawyers,
Doctors,
….

Innovation

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New to
market


54

Definition 4: A classical definition
Thinking and acting =
There is a “method”

Central role of the
opportunity
(but found or made?)

A way of thinking and acting that is opportunity obsessed,
holistic in approach & leadership balanced
for the purpose of value creation
Take all aspects into
consideration

Need to be managed
There are best practices
Value for the stakeholders, i.e.
founders, team, investors,
customers, society…
J. Timmons
USA

07-03-2014


The Entrepreneurial Manager - JADE - 7/3/14

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