Entrepreneurs’ broad vision can benefit all

The need for entrepreneurial leadership is central to growth and social impact in the 21st century, writes Insead's Randel Carlock.

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Entrepreneurship is not just for start-ups. It’s a lens through which all organisations should view strategy and leadership in the 21st century to address societal problems.

Management theories come about in response to particular problems. At the turn of the 20th century, the most notable organisations were large and industrialised and carried out routine tasks to manufacture a variety of products. This led Frederick Taylor in the late 19th century to develop his theory of scientific management, or Taylorism, which advocated optimising tasks by breaking big complex jobs into small ones, measuring what workers did and linking pay to performance.

Entrepreneurial leadership will, and should, define the next era of management theory. Entrepreneurs have always existed to improve society by spotting gaps and filling them. Henry Ford’s mass-market automobile, for example, made travel exponentially more efficient.

James Chen is a member of the Outward Bound Trust of Hong Kong, a past president of the Young Entrepreneurs’ Organisation Hong Kong and a founder at Project Oversight. His latest venture, Adlens, aims to provide adjustable and affordable spectacles to the visually challenged, and is a good example of the new era of management theory in action. Adlens has a related social venture, Vision for a Nation, that aims to make the glasses available in the developing world.

From health care to the environment to education, governments are facing budget constraints that leave many citizens underserved. The need for entrepreneurial ideas and strategies to address this shortfall has never been greater.

Furthermore, business leaders already have to grapple with new strategies for growth, innovation, regeneration and turnarounds, whether they are in start-ups or multinational companies.

Therefore, all organisations require entrepreneurial mindsets and entrepreneurial leaders.

Entrepreneurship as a continuum

Entrepreneurship in its different forms comprises a continuum of behaviours related to strategy and leadership, often driven by organisational life cycles.

The challenge for all organisations is sustainability based on creating value for stakeholders. There are four entrepreneurial contexts, which require different types of entrepreneurial leadership:

1. Organisational innovation: This requires leaders to strengthen the alignment between strategy and culture by providing leadership that enables creativity and change.

2. Starting a new venture: Leaders need to be more hands-on, identifying opportunities and engaging teams and investors. They have to operate differently to big organisations that have access to resources by low-cost probes, teams and partnering. They have to be closer to customers and aim at ensuring the venture survives.

3. Social ventures: The main purpose is meeting the unaddressed social or economic needs. Leaders in social ventures should spend more time on partnerships, developing relationships with community, government, NGOs and foundations. Funding is less conventional, coming from a combination of sources including sales of products and services, government and NGO grants, and project loans with social impact as the main aim.

4. Family enterprise: Leaders in this environment have to focus on the parallel planning of the family and business to ensure a successful transition to the next generation. They are backed by family values and capital, and have the ability to play the long game. Ultimately their aim is to grow the family capital, be it economic, emotional, social or spiritual.

The challenge for management educators is to teach managerial practices that focus on entrepreneurial strategy and leadership that can be applied across a range of organisational contexts.

It is clear that new approaches are needed, and the evidence suggests that entrepreneurship in most organisational contexts works.

From the Ford family quarterly shareholders’ meeting to consider the future to Mr Chen’s team struggling with disruptive technology to improve peoples’ sight, entrepreneurial leadership is central to growth and social impact in the 21st century.

Randel Carlock is a senior affiliate professor of entrepreneurship and family enterprise at Insead