Entrepreneurship as Style of Management - Research Paper Example

Entrepreneurship As Style of Management The co-authors of ‘Entrepreneurship: Past Research and Future Challenges’, Murray and MacMillan, define entrepreneurship as “the process of planning, organizing, operating, and assuming the risk of a business venture” (MURRAY, Low and MacMillan, Ian, 1988). Who engages in entrepreneuirship is called an entrepreneur. According to wikipedia.com, “Entrepreneur is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome” (wikipedia.com) Entrepreneurship is one of the four factor of productions and perhaps it is the most important one. It combines all the other factors of production -- land, labour and capital -- in order to create goods and services and to market them for earning a profit. Entrepreneiurship style of management is different from the general concept of management. An entrepreneur takes risk by investing his resources with the aim to achieve profits. It is necessary that an entrepreneur should involve in organizing and operating the business. Those who hire professionals to run their businesses and divert there attention towards something else may not come under the heading of entrepreneur (RICKY, Griffin, 1999). “The entrepreneur is essentially a visualizer and an actualizer. He can visualize something, and when he visualizes it he sees exactly how to make it happen.” said Robert L Schwarz. (WSI) The success of any business is directly linked to the performance of the entrepreneur. Researches show a majority of the new businesses fail within three years of establishment. It is believed that those businesses which last longer are managed by entrepreneurs. The basic concepts of management – power, self-motivation, motivation, rewards, planning etc – acquire great importance when seen in the contex of etrepenneurship style of management. Innovation Without innovation and creativity the concept of entrepreneurship remains incomplete. A successful entrepreneur is one who can anticipate the future trends and unexplored opportunities. Almost all the business tycoons are innovative in one way or the other. The creators of Microsoft, Google, Facebook etc had only the only asset of creativity when they had started their businesses. Innovation is not only important for starting a business, but it’s also crucial in sustaining it. An uncreative person lacks the ability of problem-solving and decision-making at the times of crisis. Only an highly innovative businessman can take timely and effective decisions to bring out his firm of trouble. In fact, an entrepreneur may perform well without other management skills but he would not be able to move a single step ahead without being creative. Contrary to classical theories which claimed that creativity is god-gifted, latest reasearches prove that it could be learnt. Through critical thinking and knowledge one can sharpen his creative faculties. Power When we talk about power of an entrepreneur, we don’t mean pysical power. The power of an entreprenuer is the authority which he exercise to make timely and bold decisions.. His decisions may be good or bad, depending upon the time they are taken. A decision to take a loan from a bank when interest rates are low may be good. However, it is not wisely to take loans when interest rates are high. Decision-making is perhaps the main factor which makes an entrepreneur good or bad or efficient or ineffecient. So we can say that if an entrepreneur is quick, efficient and firm in making decisions then he is powerfull and vice versa. Unlike other managers, an entrepreneur can implement decisions in a shorter and more effective way because of the immense powers he possesses. He is answerable to nobody (though sometimes he is accountable to a board of partners). When he takes bold decisions, it is his own investement which he puts at risk. So, he is more comfortable and confident while taking risks. Self-Motivation An enterprenuir can motivate the executive managers to work more effectively, but in most of the cases there is nobody to motivate him in times of crisis. Therefore, self-motivation acquires an important role in entrepreuneirship style of management. Self-motivation is mandatory for any entrepreneur. An entrepreneur faces many kinds of difficult situations for example loss in business, unproductive employee(s), market downfall and so on. So he needs motivation to keep going. As no one else but himself can motivate him, therefore, an entrepreneur need to learn this art as soon as he starts his business. And also, entreprenuers are the source of motivation for the management and employees. If they are not self-motivated, they would not be able to \motivate their subordinates. One needs not to be worried about every fickle unfavourable situation in business. Self-motivation can be achieved by maintaining a positive attitude. It means to look more on the brighter side of the picture. For example, despite blaming yourself for those wrong decisions, you may take them as life valuable lessons and try to avoid them in future. Another way to keep oneself motivated is to break lengthy projects and other works into pieces i.e. dividing your works into sections which may help pacify your mind as you will be dealing with those divided small goals instead of the total lengthy one and for every single completion, you would take a cold breath of air and feel satisfied (DULING, Joy, 2009). While it is also necessary to establish clear goals for being motivated toward something. Recommendations provided by George Odiorne, a management professor and experienced consultant are worth while to mention here. Among his various recommendations, few are mentioned below: 1. Setting goal for oneself and not losing sight of it. 2. Learning a challenging new task each year. For example, learning any new Accounting software can be challenging task. 3. Making one job somewhat different by improving objectives for one’s position 4. Developing an area of expertise. 5. Giving feedback and rewarding one self. Motivation The co-authors of ‘Management – a global perspective’, Heinz & Harold, defines motivation as “a general term applying to the entire class of drives, desires, needs, wishes, and similar forces.” (WEIHRICH, Heinz and Koontz, Harold, 1994) It is the job of the entrepreneurs to constantly motivate their subordinates in order to induce them to act in a preferred manner. Motivation can be awaked in subordinates by fulfilling their physiological (desires for economic goods and services i.e. getting a new house or a car, living a better lifestyle, etc) and psychological desires (self-esteem, feeling of accomplishment etc) (WEIHRICH, Heinz and Koontz, Harold, 1994). Let’s discuss various theories of motivation: The Carrot and the Stick: For moving a donkey, either keep a carrot in front of him or jab him with a stick behind. This theory relates to the usage of rewards and penalties for inducing preferred behavior. This is one of the oldest theories of motivation and they were thought of as the only solution for awaking motivation in employees but by the time, many theories of motivation are developed which will be discussed later on. Here, “carrot” is the money in form of increase in the salary or bonus or any other increment. However, it is not limited to money but, no doubt, the money is the important factor. There is a problem with this approach. Everyone gets ‘carrot’ regardless of his performance as promotion by seniority, executive bonuses etc which are often not based on the performance. “Stick” is the fear of job loss or reduction in the salary or demotion or penalty etc. It is widely practiced in many private firms. It is considered very effective but it has its own flaws. For example, it thrive defensive behavior in shape of poor quality of work, unionization etc. It breads fear in managers in decision making and force them to avoid risks in planning. It even thrive dishonesty. The Hierarchy of Needs Theory: Psychologist, Abrahain Maslow, mentioned a theory of motivation with the name, “Hierarchy of Needs Theory”. He distributed human needs in a hierarchical form from the lowest to the highest and said that achievement of one level works as a motivator to achieve the next level. He distributed human needs in five categories: Physiological needs (basic needs such as food, water, warmth, shelter etc), security or safety needs (needs of safety and needs to be free of losing a job etc) , affiliation or acceptance needs, esteem needs (such as power, status, prestige and self-confidence) and need for self-actualization (the highest needs. To become what one is capable of becoming). Equity Theory: This theory states that there should be a balance of the outcomes/inputs relationship for one person in comparison with another one. Dissatisfaction arises among the workers when they feel that there is an unequal and biased treatment in distribution of rewards. This may result in reduce quality of output and even leaving the origination. While if workers considers the rewards greater than what is expected, they work harder and there motivation increase. Reinforcement Theory: B.F. Skinner of Harvard developed this theory which states that motivation can be brought by proper designing of the work environment and praising of workers. It also mentions that punishment, in any case, can’t bring positive results. (WEIHRICH, Heinz and Koontz, Harold, 1994) Learning from Mistakes Famous writer James Joyce wrote, “A man's errors are his portals of discovery.” (JOYCE, James). Failures are part of our lives. No one is perfect in all aspect. Especially, an entrepreneur may face it quite a few times because of the nature of work he is controlling. We must not afraid from it. In fact, it paves the way for success if we learn from them. At the same time, we may also avoid failures in business by taking calculated risks. We should think positive about our failures and consider them life valuable lessons. However, we should not make the same mistake in the future. Let me give an impressive example here about this subject. We all know Thomas Edison, the inventor of the light bulb. It is said that he failed more than 10,000 times before eventually finding out that particular filament that would create light for a continuous time period. Would it have been possible for him to invent light bulb if he would have considered himself failed that many times? Obviously not! With every try, he eliminated an additional possibility and eventually came up with his desired wish. There fits another example. I am sure most of us heard about Levi Strauss jeans. Levi Strauss is the owner of Levi jeans and casual wears. He went in California thinking to find gold mines. He couldn’t find any gold there but he came to know about the marketplace gap through this failure. He started selling pants for the miners and slowly and gradually, may be after many defeats, his company is now one of the world’s best jeans and casual wear manufacturing company. (ALLIS, Ryan) Setting Goals It is said that a mission is half accomplished if it is planned well. The first and foremost function of any entrepreneur or manager is to set goals and objectives for the organization. Without defined goals, the organization would be like a traveler without a destination. All other function of management revolves around this basic function. For example, if there are no goals or objectives then there can be no planning, no organization and no control. Setting goals create clarity in plans and actions and enable the members of the enterprise to act in a cohesive and organized manner. Accomplishment of goals would create self-esteem and motivation. The organization are often distinguished on the basis of there goals and objectives. If the goal is profit making, then is a business enterprise. If the goal is to encourage people to go to school, or to clean the city, then it is a social organization and so on so forth. The goals when expressed in broad and wide sense are referred to as mission or vision. In today’s organizations, a mission statement is always made which define the broad objectives of the organization. It is important that goals must be written as beautifully said by Mary Gunn, “Until you put them in writing, they are merely thoughts and hopes” (ezinearticles.com). Some may consider writing goals a childish act or something odd but the truth is that it is very important and should not be avoided in any case. Using Rewards Giving rewards to the employees is one of the many ways to motivate them. Introducing reward system helps any entrepreneur to create an environment of competitiveness within its company. It would help in increasing the morale of employees. Every employee would work harder and better to achieve the rewards. By providing rewards to employees, an entrepreneur is actually showing how many valuable employees are for him. There are times when employees loose their motivation towards the job and may want to switch their job. They may be stopped by using rewards. Their moral and motivation may be acquired back by this approach. Rewards may be in form of salary increment, promotion of the post, providing bonuses and even cheering by a word of mouth. It is a good idea to arrange a formal award ceremony once or twice a year to give medals to the diligent workers. Another way is to treat your employees a lunch in order to thank them. It helps the employees to have a chit chat among each other and solve, if any, disputes among themselves (HAWKINS, Dawn). Decision Making Decision making is one of the vital skills that an entreprenuer should posses. Success in the business widely depends on this important factor. While making decisions, there is always the probability of dealing with risks. Neverthless, an entrepreneur does not have two options in this regard. He has to take decisions in anyway. For him, it is better to take a bad decision rather than being indecissive. However, he should take only calculated risks and try to analyse all the aspects of a decision he takes. Even decisions need to be reviewed after they are implemented. It is possible that a decision was productive at the time it was taken, but after a certain time it may lose its validity. Besides, he has to take his employees into confidence while making decisions because without their support and consent it is impossible to implement those decisions in the organnisation. Offering Support A good entreprenuer always act as a leader. Subordinates look towards him for any support and help they need.. An entrepreneiur can support his employess in a number of ways, for example, financially, morally and intellectually. A good entreprenuer does not wait for a department or section to request for support but he creates an environment where all required facilities are available as and when required. Before the employees ask for help, he makes budget for each department or section and authorizes them to spend money as and when needed by them albeit under some laiddown rules and procedures. A good entrepreneur is the one who is always available for help and support at the time of crisis or hard decision. An entrepreneur who avoid or delays the needed support is like a fire station incharge who send fire vehicle after the fire has engulfed everything. Conclusion Entrepreneurship varies from country to country and region to region. However, as discussed above, some general concepts of entrepreneurship exist almost everywhere. Still, each of these concepts should be considered and analysed in its proper context. A successful entrepreneur in America may meet a terrible fate in the United Kingdom because the ground realities, threats and opportunites may be totally different in both these countries. Therefore, a good entrepreneur, besides keeping in view the general thoeories of management and business planning, should also consider and analyse the ground realities and the surrounding circumstances before engaging himself in any sort of business adventure. References ALLIS, Ryan. woopidoo.com. [online]. Available from World Wide Web: < HYPERLINK "http://www.woopidoo.com/articles/allis/mistakes-article.htm" > DULING, Joy. 2009. The Productive Entrepreneur. [online]. [Accessed 7 August 2009]. Available from World Wide Web: < HYPERLINK "http://a25hourday.typepad.com/productiveentrepreneur/2009/07/five-ways-to-increase-self-motivation.html" > ezinearticles.com. [online]. Available from World Wide Web: < HYPERLINK "http://ezinearticles.com/?The-Top-6-Benefits-of-Setting-Goals&id=239306" > HAWKINS, Dawn. helium.com. [online]. [Accessed 8 August 2009]. Available from World Wide Web: < HYPERLINK "http://www.helium.com/items/1472015-best-ways-to-reward-employees" > JOYCE, James. Think Exist. [online]. Available from World Wide Web: < HYPERLINK "http://thinkexist.com/quotations/mistakes/" > MURRAY, Low and Ian MACMILLAN. 1988. Entrepreneurship: Past Research and Future Challenges. RICKY, Griffin. 1999. Management. Delhi: A.I.T.B.S Publishers & Distributors. WEIHRICH, Heinz and Harold KOONTZ. 1994. Management: A Global Perspective. McGRAW-HILL. Read More