Applying Theoretical Principles to Entrepreneurial Practice - Essay Example

? The Entrepreneurial Experience: A Reflective Report BY YOU YOUR SCHOOL INFO HERE HERE TABLE OF CONTENTS 0 Introduction........................................................................................... 2.0 Applying theoretical principles to entrepreneurial practice............. 2.1 The entrepreneurial journey...................................................... 3.0 Critical Incidents.................................................................................... 4.0 Applying lessons to future entrepreneurial practice........................... 5.0 Conclusion............................................................................................... References EXECUTIVE SUMMARY This reflective report is founded on an interview with a respected entrepreneur, George Watkinson-Yull, a Director at Lansdowne Chemicals PLC. Using references from reputable sources on the concept of entrepreneurship and entrepreneurial competencies, a framework of effective entrepreneurial behaviour is developed. Lessons learned from the interview provided valuable knowledge and support for theoretical positions on entrepreneurship that can be translated into future practice. The report is divided into five sections, each focusing on elements of the interview and findings from discussions with Watkinson-Yull utilising an open-ended interview format. The report highlights the dimensions of theoretical entrepreneurship and then applies these practically to real-life business experience. 1.0 Introduction The contemporary definition of entrepreneurship varies from business professional to a variety of researchers on the subject. The most effective definition is an individual able to create something (a product, service or ideology) with value through time investment and tangible effort whilst assuming financial, market and social risks to achieve monetary rewards, personal satisfaction and increasing independence in business (Hisrich and Peters 2002). This definition tends to paint a portrait of entrepreneurial behaviour as being willing to persistently build business success by not avoiding uncertainty and maintaining a persevering attitude to achieve important goals. Sarasvathy and Dew (2005) do not equate entrepreneurial behaviour as an individual maintaining inherent, prophetic talents, but an individual that consistently devote human, financial and creative capital to transform a vision into actuality. Entrepreneurs maintain an internalised locus of control, believing that the entrepreneur is directly responsible for their destinies and do not attribute the external environment as an influencing entity for achievement (Morris and Maisto 2005). Those with an externalised locus of control tend to blame others in the social or professional environment for their failures, preventing them from achieving important goals to enhance well-being and lifestyle. Entrepreneurs are able to self-regulate their needs, emphasise their own self-confidence and further translate this esteem into action in order to self-actualise their goals. Maslow’s Hierarchy of Needs (as well as other respected models of human development) emphasise that self-esteem is a fundamental catalyst for long-term achievement within the framework of the pinnacle of individual success (Morris and Maisto 2005). Entrepreneurship, therefore, is representative of an individual with a considerable volume of inherent drive, either learned or in-borne, that does not believe in the existence of boundaries that impede success. They are reflective thinkers, able to examine historical failures, ponder the experience, formalise this learning into a future action plan, and develop a vision to achieve business goals. Coupled with a persevering mentality that trusts in the self to attain success and victory in goal achievement, an entrepreneur is characteristic of a triumphant businessperson able to overcome extraordinary odds. This reflective report highlights findings from an interview conducted with an influential and vigorous entrepreneur, George Watkinson-Yull, of Lansdowne Chemicals, PLC. Watkinson-Yull is the Chairman and Director of Lansdowne Chemicals with historical business experience as a financial analyst at Goldman Sachs. Watkinson-Yull is a model of entrepreneurial behaviour having achieved significant self-actualisation to climb quickly to the highest levels of corporate governance at a very young age, injecting entrepreneurial visions into every business in which he has been involved, turning vision into actual reality with his perseverance. 2.0 Applying theoretical principles to entrepreneurial practice Entrepreneurship is recognised as being behaviours that can inspire others to accept and become motivated to be devoted to an established mission or vision. Kouzes and Posner (2012) reinforce that exemplary leadership involves the ability to speak to the hearts of followers to improve business performance outcomes. Watkinson-Yull believes that one of the most fundamental activities that distinguish a true entrepreneur from the homogenous characteristics of generic businesspersons is establishing an organisational culture that is dedicated, motivated and cohesive. The interview participant reinforced that in order for a business to succeed throughout all areas of the value chain, and financially, it is absolutely vital to be transformational, utilising inherent characteristics of charisma, empathy, and instilling value to gain followership. Fairholm (2009) absolutely supports this viewpoint, offering a model of transformational leadership in which vision and mission are consistently reiterated, where leaders take the role of coaching and mentoring to build human capacity and skills, and decentralising hierarchies of control to provide more opportunities for autonomous working and provide innovative problem-solving solutions. Watkinson-Yull has achieved significant cultural cohesion in his experiences in the business world by illustrating dynamic leadership capabilities. Entrepreneurial theory deconstructs the notion that entrepreneurs are prophets, instead it suggests that they control the environment and circumstances that lead to opportunities. Establishing partnerships are crucial to the entrepreneurial venture as it provides broader reach. Upon reflection of theory versus actual business practice, cultural development internally appears to be a vital component to the entrepreneurial process. Very, Lubatkin, Calori and Veiga (1997) strongly support this notion, iterating that cultural cohesion in the organisation makes it more favourable and inviting for investors (i.e. venture capitalists) to invest and partner with a firm. Organisations with a dedicated and unified organisational culture with dynamic leadership are considered to be high-prestige organisations. For the entrepreneur requiring externalised financial resources in order to make the venture successful, it would be highly limiting to negate the importance of maintaining charismatic behaviours with an emphasis on worker autonomy and satisfaction. This ties in closely with the bird in the hand theory of entrepreneurship, which indicates making productive usage of existing resources that include internal skills, knowledge production and transfer, and networks both professional and social to achieve business goals (Sarasvathy 2005). Watkinson-Yull is a primary example of an individual that recognised the opportunities of developing human capital advantages by exploring a transformational leadership model that focuses on building worker and managerial capacity. The cohesiveness of organisational culture produced as an outcome of this foresight has given the interview participant a very positive reputation as Board member at Lansdowne Chemicals and within the professional network which opens the doors to a variety of business opportunities and even cost savings throughout the value chain. In his experience at Goldman Sachs, Watkinson-Yull was awarded an innovation award by senior governance for excellence in leadership talent and cultural development that led to better service provision and prevalence of customer satisfaction supported by statistical survey results. In reflection of the theory of organisational culture development as being a model by which an entrepreneur is deemed successful, research indicates that employee satisfaction is directly correlated with follower’s positive perceptions of leader competency (Emery and Barker 2007; Nguni, Sleegers and Denessen 2006). The information and assuredness that cultural development is critical in establishing the dynamics required for successful entrepreneurial outcomes reinforces the importance of being an energetic and vibrant force within the organisation. There are a great many risks associated with attempting to build a cohesive organisational culture, including recurring resistance to change. Watkinson-Yull developed his own theoretical model of transformational leadership that defied prescribed theoretical models, giving him a unique position as a dynamic leader in the organisation. His own additions to existing models included psycho-social evaluations of existing worker mental capacity to assist in developing human resources strategies that would assist the business in achieving competitive advantages against rivals. The establishment of new models represents not only innovative behaviour, but pragmatic reflective capabilities capable of utilising existing resources to gain improvement over rival companies in the industry. Whilst other competitive organisations were focusing on streamlining supply chain or focusing on adaptable strategies to combat changing market conditions, Watkinson-Yull was strongly influenced by the bird-in-the-hand ideology and putting forth considerable resources (both financial and laborious) into developing active competencies for better internal networking and knowledge control. Both the receipt of awards and the rapid climb through the ranks of management to achieve the role of Director illustrate an individual entrepreneur that understands how to control circumstances effectively, requiring very little prophetic capabilities. 2.1 The entrepreneurial journey David A. Kolb established a model of learning, a type of reflective practice that analyses and evaluates the entrepreneurial journey. Figure 1 illustrates this cycle. Figure 1: Kolb’s Learning Cycle Source: BSSPDL. (2008). Kolb Learning Cycle. [online] Available at: http://bsspdl.wordpress.com/2008/04/22/kolb-learning-cycle-2/ (accessed 1 April 2013). An entrepreneur, under Kolb’s theory of learning, illustrates the importance of translating concrete experiences into a systematic approach to reflective observation. This involves, as illustrated by Figure 1, reviewing the aforementioned experiences and creating a reflective conceptualisation of what was tangibly learned from the experience. This allows for active experimentation of conclusions under experiential ideology to test whether changes or new learning from the experience can be translated into effective entrepreneurial behaviours, ranging from emotional coping to new operational strategies. Reflective practice is critical in the entrepreneurial journey, as it serves as the foundation for creating new business practices and developing an understanding of historical business scenarios that lead to positive change in the organisation. Mintzberg, Ahlstrand and Lampel (1998) justify the rationale of this statement, suggesting that genuine comprehension and understanding come from emergent situations where the past is important in constructing future strategies. Reflecting of the past allows the entrepreneur to develop and test various hypotheses in order to improve business position in dynamic markets, improve revenue streams, or even improve customer relationships as part of a holistic business model analysis. Watkinson-Yull is a prime example of an entrepreneur that is able to consistently reflect on historical failings (or successes) to create a new model of operations, culture development, or market-centric service model that continues to bring excellence and profit reward to every business in which he is involved in the management process. “In grasping experience some of us perceive new information through experiencing the concrete, tangible, felt qualities of the world, relying on our senses and immersing ourselves in concrete reality” (Kolb, Boyatzis and Mainemelis, 1999, p.4). As illustrated by the aforementioned quotation, the entrepreneurial experience involves taking a holistic approach to reflection, relying on the senses and concrete experiences to produce new knowledge. A true entrepreneur, then, must be adaptable, maintain foresight about market conditions and internal dynamics of the organisation, and then subsequently be capable of translating this information into workable new strategies to build competitive advantage. A true entrepreneur must be able to consider the meaning that is attached to organisational circumstances or events and consider how this aforementioned meaning can be applied effectively for future actions and strategies. Watkinson-Yull was forthright in describing his own experiences with reflective practice, illustrating that experiential learning is one of the most critical dimensions of successful entrepreneurship if there are to be any workable and viable strategies developed that can respond to the concrete realities of business practice and market conditions. When Watkinson-Yull was asked about the type of learner he considered himself, based on Kolb’s learning styles inventory, he considered himself a pragmatist. These are very focused problem-solvers who genuinely enjoy the challenges associated with coming up with unique and innovative business solutions. This type of reflective personality delights in asking the question “What if?” and then provides a series of practical and realistic solutions whilst also considering every possible road toward failure and then building strategies to ensure that catastrophe does not occur (Honey and Mumford 1982). Watkinson-Yull is a prime example of a pragmatic reflector that is able to connect concrete reality with sensible business solutions by focusing on historical circumstances and events and then applying experiential learning to formulate new and innovative business practices. His experiences with Goldman Sachs, a very centralised organisation, unfortunately did not provide opportunities to regularly apply learning from reflective practice in a variety of business circumstances. It was not, according to the participant, until he became the Director of Lansdowne Chemicals that he had the authority to test his hypotheses and contingency plans derived from reflective practice that he was able to be rewarded by financial and market-centric rewards. In his role as Director of the organisation, Watkinson-Yull finally achieved a position of accountability where he could balance independence with liability in a way that gave him flexibility to be a true and autonomous entrepreneur. According to Watkinson-Yull, his entrepreneurial prowess was stifled by bureaucratic systems. Dess, Lumpkin and McKee (1999) offer strongly that these types of business models impede entrepreneurial habits and behaviours as they suffocate effective cultural communications and restrict flexibility and adaptability. Though Watkinson-Yull maintains a very strong internal locus of control, he is also pragmatic in recognising that legitimate organisational structures absolutely can inhibit growth as an autonomous entrepreneur. His drive and perseverance to exploit his inherent entrepreneurial characteristics illustrates the importance of remaining committed and devoted to achieving independence which, in the case of Watkinson-Yull, paid off significantly which most literature supports would be an outcome of this entrepreneurial behaviour. Thus, it would seem, in reflection, that the entrepreneurial journey is not a short one without its fair share of obstacles. However, as identified by Hisrich and Peters (2002) the genuine entrepreneurial journey must involve time investment, labour investment and risk adoption in order to achieve self-actualisation and the ultimate rewards of independence. It is the ability to recognise the sensible reality of business advancement, create practical solutions based on previous understanding and experiences, and apply these solutions to administrative or operational business strategies to outperform other business leaders that do not maintain the patience and perseverance necessary to be considered a genuine entrepreneur. 3.0 Critical incidents Team members were asked to work cooperatively in order to achieve the goal of asking appropriate and relevant questions that could draw the most significant learning out of the interview participant. When discussing the methodology by which interview questions would be coordinated, either open-ended or closed-ended, group sentiment differed about the approach. One group member demanded a very structured approach to gain a set of ordered responses that could be more statistically-justified. Others in the group felt that open-ended questions would provide more depth and individuality in responses from Watkinson-Yull. Ultimately, this led to a short-term conflict when attempting to build a team-centric set of research strategies. However, the group eventually concurred, accepting an open-ended structure after discussing the concepts described in the coursework about the importance of team ideology and networking to gain advantages. The team was able to draw on conceptual literature on the subject of partnerships in entrepreneurial behaviour, which ultimately provided much broader and more in-depth responses that would not have been achievable with a closed-ended format. Not all members of the team were experienced with working in groups (a necessity in entrepreneurial behaviour according to Watkinson-Yull), however by drawing on entrepreneurial theory, the interview process was a monumental success and was conducted with a cohesive set of strategies that are reminiscent of those found in Watkinson-Yull’s professional experience. 4.0 Applying lessons to future entrepreneurial practice The principle of effectual knowledge is that opportunities can be created. When working in a dynamic business environment, theory tells businesspersons that market conditions can provide a very incomplete set of information needed to make viable and appropriate business decisions. In some industries, markets are not clearly defined and consumer characteristics can complicate creating innovative products and services or establishing relationships aligned with their preferences or psychological needs. Drawing on these conceptions in entrepreneurship, Watkinson-Yull was asked about how he is able to respond to uncertainty in the market in order to create opportunities. The interview participant provided a thoughtful and obviously reflective response in which he indicated that he makes assumptions about market conditions based on known phenomenon. Watkinson-Yull believes himself adept in conducting environmental scanning, which in his view is identifying market gaps that can translate into opportunities. Through this process, he observes competitive pricing structures, reviews analyses of market research (especially related to the business-to-business buyer), results of satisfaction surveys, and many other pieces of knowledge involving external market conditions. Through this, Watkinson-Yull independently creates a market profile based on assumptions by which he is able to propose potential strategies for improving market position. Lansdowne Chemicals devotes a great deal of resources and labour into the research and development process, attempting to build pioneering products that have more perceived value to customers. The chemical industry is highly saturated with competitors that are distributed internationally, each maintaining different formulations and pricing structures for similar products. Therefore, according to Watkinson-Yull, it is very difficult to differentiate through marketing strategies to gain advantages over rival chemical companies. To combat this, Watkinson-Yull becomes fully interactive in the marketing and promotional functions based on his perceptions of current market conditions that he has gleaned through ongoing external environmental scanning efforts. What is most interesting, especially as it relates to the notion of an entrepreneur being a cultural developer, is that his suggestions were often, initially, challenged by the marketing division since they did not follow protocols established by the company long before he became a Director. However, seeing that his legitimate authority superseded those who would challenge his directions, he was able to coerce others to adopt his strategies for promotion and improving business position with very diverse business buyers. Entrepreneurial theory, therefore, justifies his position as it indicates the need for an aggressive and insistent character in order to achieve results and gain reward for these efforts. Once the marketing division began to witness the profit results and market response to his strategies, which were highly innovative and unparalleled in previous marketing functions, his role as leader and entrepreneur became respected and he was able to ensure followership from those who were, at first, critical of his strategy developments. The experience in working with Watkinson-Yull iterated that hard-hitting and forceful leadership is sometimes a requirement of entrepreneurship, the notion of not giving up on a dream, concept or innovation despite opposition. According to Kalyanaram and Gurumurthy (2008), pioneers that are the first to market with a new innovation have a market advantage based on consumer characteristics. The first mover is often compared to late movers unfavourably and buyers are unwilling to defect or switch to other companies or brands when they finally launch their own, similar products. Covin and Miles (1999) further define the entrepreneur as an individual that understands how to operationalise the business effectively to ensure innovative products and services are launched using existing resources. Watkinson-Yull developed a promotional model of innovative service delivery that changed the scope by which business buyers are serviced, building a model of customer relationship management that was wholly innovative without over-reliance on costly technological support. His plan required more investment from certain business divisions, however meeting certain performance guidelines were rewarded with bonuses or other incentives when they proved demonstration of success in service delivery. Watkinson-Yull taught the group that even in absence of legitimate authority, maintaining persistence and determination despite challenges or the odds of gaining organisational commitment are absolutely critical in entrepreneurial behaviour. The rewards were higher profitability and a great deal of respect internally that further reinforced a cohesive and harmonious organisational culture that buyers genuinely appreciated, which made them choose Lansdowne Chemicals (even sometimes over rivals with lower pricing structures) which was attributable to the changes in marketing and cultural cohesion created by Watkinson-Yull. All of the concepts about persistence are aligned with entrepreneurial theory about maintaining a strict focus on achieving desired goals, despite the setbacks or even internal organisational resistance that can complicate achievement. Watkinson-Yull was a prime example of the importance of maintaining a positive internalised locus of control without applying blame to others in the external environment when failures occur. It would be quite easy for anyone in the group, as well as Watkinson-Yull and other important entrepreneurs in today’s business world, to become discouraged from externalised factors that attempt to create barriers to success and achievement. In personal reference to embarking on the entrepreneurial journey, Watkinson-Yull taught the group about the importance of not giving up on a dream and staying focused on goals by developing faith and confidence in one’s own self-esteem and knowledge and much less emphasis on the impediments often created by external factors and attitudes of others. 5.0 Conclusion So much of what was provided by Watkinson-Yull strongly justified the literature about entrepreneurship and how to attain perfection and achievement in the entrepreneurial journey. From maintaining an internalised locus of control, to perseverance and dedication to goal attainment, to even cultural development by establishing partnerships and networks to ensure collaboration, illustrates that only one with a certain type of doggedness and aggression can achieve superior business performance and personal goal attainment. Watkinson-Yull stressed the importance of following the advices of respected business theorists on the entrepreneurial function, thereby justifying the characteristics required of a genuine entrepreneur that will assist in taking the entrepreneurial journey well into the future. References Covin, J.G. and Miles, M.P. (1999). Corporate entrepreneurship and the pursuit of competitive advantage, Entrepreneurship: Theory and Practice, 23(3). Dess, G.G., Lumpkin, G. and McKee, J.E. (1999). Linking corporate entrepreneurship to strategy, structure and process: suggested research directions, Entrepreneurship: Theory and Practice, 23(3). 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