May 26, 2007 0 comments
There is a tension between conventional management information and control systems and entrepreneurial management. Conventional management has a mission, a set of aims and objectives with defined rules, goals and budgets, all of which can be measured the degree of variance between actual outcomes and planned or forecast outcomes. This form of management is governed by grand designs protecting events and outcomes into the future.
Entrepreneurial management participates in trial and error. A kind of gamesmanship, where new ideas are introduced as experiments to find better products, better methods, greater customer satisfaction. This requires having systems with fast response rates linked to analysis methodologies to enable rapid recognition of desirable changes for adoption, and those undesirable changes to be eliminated.
An organization develops routines to match its operational requirements over time. On the other hand the ridged requirements of conventional management information and control systems demands routines to be agreed at the planning stage. Preplanned routines require grand designs and tremendous foresight to cover all eventualities. There is tendency to become bureaucratic and depend to a high degree on policing. Empirical evidence suggests that control by grand design is not always managed as planned, often associated documents find their way into filing cabinets or desk drawers to be pulled out when occasion demands, but otherwise remain untouched and ignored. The routines which do get followed are those which emerge out of everyday usage. Routines drift as new ideas are introduced, or people change roles, enter the organization or leave it. The routines are often forgotten through lack of demand and can get replaced by new routines invented by new people carrying out similar functions or roles.
Entrepreneurs need to develop a range of skills and perform a range of roles throughout the growth stages of the organizations development cycle.
Clark and Pratt developed a typology of Entrepreneurial/Administrative types where the differing roles and organizational skills seen to develop through four phases entitled: Champion; Tank Commander; Housekeeper; Lemon Squeezer.
This role is the one most associated with entrepreneurial activity. It is where the most excitement exists, where new ideas and challenges abound. Inventors operate mainly in this phase of development as they are often obsessed by their concepts and pursue experimental designs based on the outcomes of previous experiments. Visionaries who have invented or discovered new ideas are driven by their need to convince others of the new values and benefits of their ideas. The challenge of winning over others, gaining acceptance of new products or service packages stimulates their motivation. There is a strong need for success. The emphasis here is on doing things.
This is where operational management is established, strategies conceived and combined into operational plans and procedures. Systems are designed and communications networks defined. Resources need to be identified and procurement initiated. Resource management, communication lines and targets setting are the features of this role. The emphasis is on doing the right things.
In this role leader ensures that the agreed strategies are employed and systems operated. Efficiency is the order of the day. The housekeeper ensures that people follow the plans correctly and maintain the systems to ensure that they do what they said they would do. Budgetary control, management information and control systems are of major importance. The emphasis is on doing things right.
The role of the Lemon Squeezer is in optimization of resource allocation, and return on capital invested. The search is on for: improved productivity; reductions in waste; maximization of profitability; optimizing human resource allocation; identification of more profitable activities. The emphasis here is on ensuring effectiveness and efficiency.
Entrepreneurs need to learn how to make the role transition from champion right through to lemon squeezer. They need to recognise their current mode in relationship to emerging requirements. Organisations are not stable, new ideas for products, technologies, and markets emerge randomly while environmental disturbances create both opportunities and threats. Before championing new products or services entrepreneurs need to assess how they are likely to affect existing commitments as well as organisational functions. The biggest risks to entrepreneurs are in pursuing opportunities with insufficient or incapable resources. Scarce resources need to managed effectively to optimise results. Often the role of housekeeper is required to discipline the organisation and maintain budgetary control. Or in the lemon squeezer role to slim down the organisation, conserve resources and rationalise operations. The ability to make the transition between roles is an essential attribute.
Posted by Lisa
Categories: Business Entrepreneurship