Developing Entrepreneurs In Your Organization: The Trade Off

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Entrepreneurship is a concept that has gained widespread currency today. Governments, NGOs, corporations; everybody is talking about entrepreneurship. Governments encourage civil servants to act independently and creatively and become entrepreneurs. NGOs and their donors, want their managements to adopt innovative and sustainable models to solve social problems, in other words paving way for social entrepreneurship.

The business corporations encourage their employees to generate business independently and take initiatives and have coined the term ‘intrapreneures’ for such employees. These are employees who exhibit entrepreneurial characteristics within the organizational domain and for the organization, not for self-interest.

I will take on this last category in this article and will discuss the possible ways of encouraging entrepreneurship within corporate corridors. For this, I will largely dwell upon my formal knowledge about, and practice of, entrepre-neurship and my over six year’s experience as an employer.

Entrepreneurship: Characteristics

I associate entrepreneurship with four basic characteristics: a resolve to remain independent (be your own boss), defining some unique space/opportunity in the market (innovator), assuming a personified risk-return relationship (calculated risk- takers), and marshalling available resources (being resourceful).

Let me also be clear on what expectations I have from my employees. I want my employees to be self-interested rational economic agents (as if some people are not!). These people would devote their best energies to the organization with certain expectations, accept market-based rewards only and believe that their growth is conditional to organizational growth.

Real World Lessons in Entrepreneurship

The corporate leaders and employers looking to make their employees ‘rain-makers’ or business generators, should give them real world lessons in entrepreneurship. First lesson to be learnt, for both employers and employees, is of independence. Independence requires involvement of employees not just in the execution stage, but in the planning stage as well. We usually give targets to our staff but little space to act independently. We want them to follow a laid-out road map and achieve results accordingly. In the process, we make them slaves of commu-nication. However, as our staff goes out and meets clients, several new dimensions are discovered. The marketing plan might have been built on rosy assumptions. The competitive forces might have been under-estimated. In such circumstances which require out-of-the box thinking on part of the staff, ‘slaves of communication’ type employees will usually choke.

The second key real world lesson is identification of an opportunity. Corporate leaders should not just give assignments; rather they should pose problems in a way to encourage and exert the analytical skills of employees. By posing real world problems, for instance, slowing up of receivables process, you will take your staff into confidence from the outset. Once you instill confidence in them, you can expect them to identify opportunities creatively.

Third key lesson is personification of risk-reward structure. Your employees would become entrepreneurs only if you allow them to take measured risks and assure them of reasonable rewards for taking initiatives. Taking initiatives is always a risky business, and it can go in either direction. If you want your employees to be entrepreneurs, then you should also accept the bad side: a good chance of a failure.

The fourth, though not the last, lesson is being resourceful. As a leader or a manager, you will have certain resources at your disposal, which will define the constraints also. However, the same resources available to different persons can yield different results. That difference is largely a function of entrepreneurial characteristics: marshalling available resources to get the best. Employees who always wear complaints on their sleeves due to a lack of resources will never become good entrepre-neurs. As a manager, your job is to distinguish entrepreneurs from non-entrepreneurs and plan your incentive structure accordingly.

Instilling Entrepreneurship and Loyalty

The six million dollar question is: how to instill entrepreneurship in your employees while keeping them loyal to the organization. The answer: ownership. The ownership form would largely vary across the corporate spectrum. For small-to-medium-sized companies, the ownership may well only mean behavioural ownership, which is, taking employees in confidence while making key decisions, and selling them ideas and products before they sell it to the outside world. In the Japanese model of Corporate Management, the employer is a father-like figure. For large-sized companies, the ownership should translate into stocks and shares. This is what the U.S. model has taught us.

There is always a degree of distrust between the employee and the employer. The latter believes that he/she is being exploited and the former believes that the employer is not doing enough. The degree would vary across the organization as well as across organizational hierarchies. However, a key point to consider when taking your employees on board is to offer them ownership-a real stake in the game. Naturally, this cannot be done while signing the employment contract, but this can surely be built into the career track of each employee. If employees are not offered ownership, whether in a formal sense (shares/stocks) or an informal sense (process of decision making), there is a high likelihood that after all the years of training them as entrepreneurs, you will lose them. They will become true entrepreneurs and will take their own course – often taking some slice from your cake in terms of market share- and at least all the knowledge with them.

10 Commandments for Intrapreneurs

Gifford Pinchot’s book ‘Intrapreneuring, Why You Don’t Have to Leave the Corporation to Become an Entrepreneur’ provides ten commandments for intrapreneurs:

Do any job needed to make your project work regardless of your job description.

Share credit wisely.

Remember, it is easier to ask for forgiveness than permission.

Come to work each day willing to be fired.

Ask for advice before asking for resources.

Follow your intuition about people; build a team of the best.

Build a quiet coalition for your idea; early publicity triggers the corporate immune system.

Never bet on a race unless you are running in it.

Be true to your goals, but realistic about ways to achieve them.

Honour your sponsors.

Lack of trust leads to corporate loss

During a recent human resource assessment assignment with a client, I discovered that a very innovative sales strategy was suggested by an existing staff member. However, the staff member was so reluctant that he credited that idea to some one else, trusted for his market knowledge. The strategy worked. The employee, after taking oath from me not to disclose his name, told me that his superiors do not have confidence in his analysis and they would always reject his ideas. This, I thought, had generated a permanent lack of confidence in that otherwise ambitious young fellow. Who will suffer from this…obviously, the management!

Why government employees do not behave like entrepreneurs?

All good-hearted civil servants know this by heart: act of omission can be ignored; act of commission (if it proves a failure) will not be left unpunished. Therefore, government employees do not engage in acts of commission i.e., they do not take initiatives. Actually entrepreneurs are designed to commit this act of commission throughout their life cycle – it is the same as taking some initiative.

3M is a multinational company with diversified product lines. 3M has reaped the rewards of intrapreneurism. 3M has a standard policy that allows all employees to work on developing their own business ideas at least 15 percent of the time they are at work. One of the big breakthroughs that came from this programme was the concept of Post-It-Notes which was pioneered by an employee who wanted something that wouldn’t fall out to mark pages in his hymn book at church.

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    Author Information

    Ali Salman currently works as a senior partner at Development Pool - a consulting firm and teaches Economics. Ali specializes in economic analysis, entrepreneurship, policy formulation and business models. He has worked in the private, public and development sectors of Pakistan for over ten years. Besides various publications, the book 'Alternative Youth Policy' is to his credit. He engaged in good governance reforms, citizens-government liaison and policy research during a two year period at Planning Commission, Government of Pakistan. Ali did his Masters in Economics from Boston University as a Fulbright Scholar; his MA in Development Studies as Royal Netherlands Fellow; and an MBA from Quaid-i-Azam University, Islamabad.

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