Five minutes on … corporate entrepreneurship

Traditionally, in divisional organisations, the prerogative of entrepreneurship rests with top managers. It is their job to allocate resources; those on the front line are implementers. The divisional structure has also proved ideal for refining the management of on-going operations.

However, it has little built-in capability for discarding obsolete ideas and assumptions, nor has it proved an exciting environment for entrepreneurs who could bring in fresh ideas and business approaches.

To fix these problems, many top management teams have, in the past, turned to strategic or purely structural solutions:

no innovation? Then turn front-line units into skunk-works

no internal skills to generate ideas? Form a strategic alliance to gain access to new skills

no possibility to grow organically? Acquire and bolt on a growth company

Downsizing and re-engineering are now occupying senior managers, as these attempts to kindle the entrepreneurial spirit have proved to be no more than short term fixes.

Companies that really do innovate are characterised by a different view of the organisation. Their leaders view them as a collection of processes, not structures. The entrepreneurial process is a key one.

the entrepreneurial process

Requires a view of the organisation’s anatomy from the bottom up:

front line management’s role is transformed from implementer to initiator

senior management’s role is to provide a context within which entrepreneurship can happen i.e. establish internal discipline and set the standards that will motivate front line managers to superior performance

tarmac
Challenge: restructuring mature business to increase management freedom and action. The company reinforces message through awards given to managers and their employees who have shown the greatest initiative in improving their performance or solving difficult problem. However, many senior executives still find it difficult to accept a less centralised approach to problem-solving. One example: a manager of a concrete block plant rewarded because his plant increased production by 40% in 6 months (based on suggestions from employees) admits he felt uncomfortable at first asking employees for help; thought it was his job always to know what was best.

To demonstrate a belief in the people deep down in the company as those who will ignite the entrepreneurial spirit, companies need to find ways to create a federation of small disaggregated units that will behave like enterprising small businesses, creating excitement for everyone working in them.

ABB has been reconstructed as 1,300+ little companies that operate individual businesses in national markets worldwide

Canon’s numerous production and marketing units have been split into separate companies

Andersen Consulting organises and manages its operations as individual practice groups in each office

3M’s project teams are building blocks for its organisation; successful project teams consisting of an entrepreneur with an idea and a small team that believes in it, grow into larger divisions and departments

But the mere existence of small units doesn’t guarantee that they will be innovative. A lot of work is still needed to transform the attitudes of managers at all levels to create the right conditions for the entrepreneurial process to flourish.

From traditional to enterprising managers

The concepts of empowerment and self-managed teams apply not just to front line or first level employees but to managers and professionals at all levels.

However: cannot turn command and control managers into entrepreneurs overnight years of being reported to, approving everything and working within strict boundaries means a gradual, steady process of “unlearning”

 

Keeps structure flat; breaks down operations into as small units as possible; devolves responsibility from the outset; infuses employees with open, value-based culture; preserves and develops fast, decentralised decision-making. Top 3 leaders give constant attention and a lot of resources to keeping management freedom.

Many managers are not trained or competent in the ‘soft’ skills on which business success really depends

technical managers trained to manage functions, numbers, processes, machines, technology suddenly find themselves having to manage people; managers trained in rigid hierarchies find it difficult to make the transition to a more democratic, participative style and to relate to people

Traditional managers are not encouraged to come up with new ideas yet business survival and success now rely on a company’s ability to manage its most

valuable asset: the application of human imagination and creativity to making ideas happen generating breakthrough ideas

The process of idea generation needs a certain amount of muddling, confusion, disorder, uncertainty. This is radically different from the precise, controlled thinking of classical management, but used in areas where creative breakthroughs are a more established way of thinking and acting, for example in science and the arts.

The aim is to create a climate to stimulate everyone to be on alert for breakthroughs; and to act on thought.

Managers are now applying tools to develop the mind’s ability to connect seemingly irrelevant lines of thought to spark unusual ideas, then develop them later into feasible actionable solutions.

Some techniques:

  • put problem temporarily out of mind
  • let team/individual distance themselves from problem or issue
  • deliberately focus on an apparent irrelevancy can generate surprising or unusual connections; speculative explorations
  • force-fit ‘irrelevant material’ together with the problem or issue allow mind to invent a way of connecting them
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