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The New Entrepreneurial Leader

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In years past, the keywords for leaders were confidence, single-minded purpose, and strategic planning. But today’s vastly complex, globalized, and fast-evolving world requires a different kind of leadership. This game-changing book details a new approach—entrepreneurial leadership—developed at Babson College, the number-one school for entrepreneurship in the world.
Entrepreneurial leadership is inspired by, but is separate from, entrepreneurship. It can be applied in any organizational situation, not just start-ups. Based on two years of extensive research, it embraces three principles that add up to a fundamentally new worldview of business and a new logic of decision making.
First, rapid change and increasing uncertainty require leaders to be “cognitively ambidextrous,” able to shift between traditional “prediction logic” (choosing actions based on analysis) and “creation logic” (taking action despite considerable unknowns). Guiding this different way of thinking and acting is a new view of business, where simultaneous creation of social, environmental, and economic value is the order of the day. Finally, entrepreneurial leaders leverage their understanding of themselves and their social context to guide effective action.
Each chapter offers concrete examples of how educators across all disciplines are integrating these ideas into their courses—and even their entire curricula. The New Entrepreneurial Leader lays out a comprehensive new paradigm for reinventing management education in order to mold leaders who will shape social and economic opportunity.

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12 Chapters

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Chapter 1 Cognitive Ambidexterity: The Underlying Mental Model of the Entrepreneurial Leader

ePub

Heidi Neck

IN 2003 JIM POSS WAS WALKING DOWN A BOSTON STREET WHEN HE noticed a trash vehicle in action. The truck was idling at a pickup point, blocking traffic, smoke pouring out of its exhaust, and litter was still prevalent on the street. There has to be a better way, he thought to himself. In investigating the problem, Poss learned that garbage trucks consume more than 1 billion gallons of fuel in the United States alone. The vehicles average only 2.8 miles per gallon, and they are among the most expensive vehicles to operate (BigBelly Solar 2010). In the early 2000s, municipalities and waste collection services were considering more-fuel-efficient vehicles and better collection routes to reduce their overall costs and environmental footprint. Poss was not convinced that this was the right approach.

Through interactions with diverse stakeholders, he turned the problem upside down. He considered that the answer might not be about developing a more efficient collection process but about reducing the need for frequent trash collection. As he considered this solution, he discovered multiple benefits: if trash receptacles held more trash, they would not need to be emptied so often; if trash did not need to be collected so often, collection costs and associated pollution would be reduced; and if receptacles did not overflow, there would be less litter on the streets. There were many advantages to this approach.

 

Chapter 2 Creation Logic in Innovation: From Action Learning to Expertise

ePub

Sebastian K. Fixson and Jay Rao

Most people view product as the one aspect of a business over which they have absolute control—unlike capital, say, or employees. But most products I have seen develop a life of their own, beyond anyone’s power to control. Just look at this innocent little snack called Smartfood, which has managed to reroute the lives of everyone drawn into its orbit (Kahn 1988).

SMARTFOOD, A SNACK FOOD MADE FROM PREMIUM-QUALITY WHITE popcorn sprinkled with aged white cheddar cheese, was first introduced to the New England market in 1985 and quickly became America’s leading snack food, with sales going from $500,000 in 1985 to $18 million in 1988. What is most interesting about this product innovation is that in many ways it was a by-product of the innovation the entrepreneurial leaders were seeking.

Ken Meyer and Andrew Martin were working on the Tug-N-Tie resealable bag. At the time they were looking to create a resealable bag for the snack food industry that was cheap to produce and easily adaptable to the current technology. They had spent two years developing the Tug-N-Tie bag only to find that snack food companies weren’t interested in buying it. They decided to make Smartfood to show the industry that the bag worked. The irony is that when Smartfood was launched in 1984, it was never sold in the Tug-N-Tie bag (Kahn 1988).

 

Chapter 3 Prediction Logic: Analytics for Entrepreneurial Thinking

ePub

Tom Davenport and Julian Lange

CREATIVITY AND ACTION, TWO CONCEPTS DETAILED IN THE FIRST two chapters, are more frequently associated with entrepreneurial leadership than are terms like prediction, analytical, and quantitative. As discussed in chapter 2, the popular myth assumes that entrepreneurs have a vision for a new product or service and are determined to carry it out despite any obstacles. The image of an intrepid entrepreneurial leader in a garage seldom includes printouts of regression models or chi square statistics.

Such myths do have some logical underpinnings. Analytical and data-based approaches were often not available to founders of startups. First, startups did not have the history of operations that is required to accumulate sufficient data for analysis. In addition, entrepreneurs in early-stage firms may have lacked the financial, technological, and human resources to perform extensive quantitative analyses. Analytical hardware and software and skilled people may well have been too expensive to acquire outside of large organizations. In the past analytics clearly weren’t easy for small new firms to engage. These impressions have some support in academic research (see Sarasvathy 2001).

 

Chapter 4 SEERS: Defining Social, Environmental, and Economic Responsibility and Sustainability

ePub

IN 2003 ROBERT CHATWANI, A MARKETING EXECUTIVE AT EBAY, was traveling to India with his family. As he visited open-air markets, he kept hearing from local craftspeople that they wanted to find ways to access more shoppers and bigger markets. With more buyers, these artisans could create more opportunity for themselves, their families, and their communities (Kiser 2010). When he returned home, Chatwani experimented with selling artisan products from India on eBay. He sourced $700 worth of Indian jewelry, which he then sold on eBay for $1,200. After his experiment Chatwani went to then-CEO Meg Whitman, eBay founder Pierre Omidyar, and other key players to secure their support to engage the eBay platform to help craftspeople in developing countries reach buyers in developed countries. With their cooperation, he started gathering data to understand the market and the opportunity.

Chatwani’s big break came in 2005, when a mutual friend introduced him to Priya Haji, a social entrepreneur who had founded an organization called World of Good, which was bringing fair-trade and ethically sourced products to market (Kamenetz 2008). Chatwani and Haji created a strategic partnership between eBay and World of Good and launched the new business WorldofGood.com. Their passion, skilled relationship building, and cognitive ambidexterity helped them create what is now the world’s largest multiseller marketplace for socially and environmentally responsible products (Kiser 2010).

 

Chapter 5 Beyond Green: Encouraging Students to Create a Simultaneity of Positive SEERS Outcomes

ePub

Toni Lester and Vikki L. Rodgers

THE SLOW RESPONSE OF BRITISH PETROLEUM (BP) TO ADOPT A quick and comprehensive approach to the 2010 Deepwater Horizon oil rig explosion and spill (Isikoff and Hirsh 2010) reinforces the stereotype that business has little concern and competency to address major environmental challenges. Furthermore business schools have been slow to address ways in which education can be used for shaping the attitudes of future business leaders through socially and environmentally responsible curricula. These topics may be covered in one or two electives, but for the most part an across-the-curriculum approach to teaching these issues is rare. The Princeton Review didn’t start ranking business schools based on their coverage of environmental issues until 1997 (Green Colleges 2010), and Newsweek didn’t start its green business rankings until 2009 (McGinn 2009). No doubt this is because, beyond the activities of a few well-known programs and businesses, there was not much to report.

 

Chapter 6 Sustainability Metrics: Has the Time Arrived for Accountants to Embrace SEERS Reporting?

ePub

Janice Bell, Virginia Soybel, and Robert Turner

IN THE 1990S, WHEN MANAGERS AT HEWLETT-PACKARD (HP) recognized that the soldering lead used in the company’s manufacturing process was toxic, they voluntarily initiated R&D projects to develop nontoxic, non-tarnishing, non-oxidizing alternatives. In 2006, when the European Union passed the Restriction of Hazardous Substances Directive, HP was in compliance; this earned goodwill from regulators that resulted in a voice in future regulation of the industry, and it opened European markets for new services from HP (Nidumolu, Prahalad, Rangaswami 2009).

Here’s another real-world example: In 2004 Costco Wholesale beat Wall Street’s expectations, posting a 25 percent profit and 14 percent sales growth. The market responded with a 4 percent decline in Costco’s stock price because analysts were concerned about Costco’s strategy of paying high wages relative to its competitor, Wal-Mart. Costco paid its workers well and achieved lower employee turnover, higher sales per square foot, and lower wages per dollar of sales than Wal-Mart did, yet Wall Street didn’t appreciate Costco’s human resource strategy and failed to reward it for its socially and economically responsible approach to employee compensation (Holmes and Zellner 2004).

 

Chapter 7 The Financial Challenge: Reconciling Social and Environmental Value with Shareholder Value

ePub

Richard Bliss

IN THE FINANCE COMMUNITY, SHAREHOLDER VALUE HAS LONG BEEN the performance metric of choice for academics and professionals. Along with increasing profits, the maximization of shareholder value is viewed by many as the primary objective of corporate managers and is a pillar of most finance courses. As we introduce the importance of SEERS, the immediate question arises regarding how social and environmental sustainability, financial performance, and shareholder value are related. Can these concepts not only coexist but be taught in a cohesive, effective pedagogy? As the importance of developing a SEERS worldview becomes more central for both organizations and entrepreneurial leaders, we have an obligation to try. The task of incorporating SEERS into a finance perspective based on predictive logic, however, can be formidable. To illustrate this challenge, we begin with what appear to be simple questions about sustainability and corporate social responsibility, activities resulting from a SEERS worldview.

 

Chapter 8 Who Am I? Learning from and Leveraging Self-Awareness

ePub

James Hunt, Nan S. Langowitz, Keith Rollag,
and Karen Hebert-Maccaro

AT THE CORE OF ENTREPRENEURIAL LEADERSHIP IS AN INDIVIDUal’s deep understanding of him- or herself, the context in which he or she is operating, and his or her network of relationships. Returning to the Clorox Green Works example discussed in the introduction, the success of the venture was dependent on a few entrepreneurial leaders’ being deeply connected to their values regarding the environment and the safety of families. These leaders’ passion to follow their values and put them into practice brought Green Works to market. Similarly, Robert Chatwani’s passion for supporting artisans in developing countries was fundamental to the founding of WorldofGood.com (see chapter 4). Focusing on their own passions, these entrepreneurial leaders created teams who shared their vision for bringing a social and economic opportunity to fruition.

Beyond understanding themselves, these entrepreneurial leaders were also successful because they were aware of and responsive to the context in which they were operating. In the case of Green Works, the entrepreneurial leaders developed insight into why a certain population was interested in natural cleaning products. By connecting to the values and not the demographics of this group, they opened up a new market for Clorox and for the natural-products industry as a whole. Similarly, Chatwani’s interactions with the local artisans in India helped him understand the needs of this community. His knowledge of eBay and its values also enabled him to garner internal support for WorldofGood.com by showing how the opportunity connected to eBay’s culture.

 

Chapter 9 What Is the Context? Fostering Entrepreneurial Leaders’ Social Awareness

ePub

Stephen Deets and Lisa DiCarlo

We don’t see things as they are, we see them as we are.

—Anaïs Nin

BY THE END OF CAITLYN’S FIRST EVENING IN THE COUNTRY, THE Ghanaian fishmongers had reduced her to tears. Caitlyn had traveled to Ghana excited about the opportunity to advise Ghanaians on how to improve their businesses. During her first evening of consultations, however, the women in her small group openly mocked her. Whenever she offered a new idea, the women laughed, “What do you think this is— America?”

The next day Caitlyn took a different approach. She asked questions and listened intently. The women slowly opened up and explained the entire process—from how fish are caught to how they are sold at the market. More importantly, they helped Caitlyn understand how the community operates and the social relations and practices that surround the fishing industry. Although Caitlyn did not solve these business owners’ problems, by listening and learning about the Ghanaian context she was able to advise the group in a way that was consistent with the social processes that make the Ghanaian fishing industry work.

 

Chapter 10 Whom Do I Know? Building and Engaging Social Networks Using Social Media Technology

ePub

Salvatore Parise and PJ Guinan

IN THE PREVIOUS TWO CHAPTERS, WE CLARIFIED THE IMPORTANCE of knowing oneself and one’s context as cornerstones of being an entrepreneurial leader. Beyond the ways that have already been discussed, this awareness is essential, as it supports one’s ability to build relationships and enlist social networks to garner support for new ideas and organizational initiatives. Entrepreneurial leaders—with a deep understanding of their capabilities, weaknesses, values, and drives—use this understanding to connect with others who complement and supplement their own skills and share their own passions. Even within traditional bureaucratic decision-making contexts, entrepreneurial leaders can learn to develop and tap social networks to build momentum for ideas and strategic initiatives that they are passionate about. Finally, understanding their own position within networks enables entrepreneurial leaders to discern and build connections in a way that is sensitive to the interests and the perspectives of those who are situated in the particular cultural context.

 

Chapter 11 A New Pedagogy for Teaching “Doing”: Preparing Entrepreneurial Leaders for Values-Driven Action

ePub

THUS FAR WE HAVE PRESENTED THE THREE PRINCIPLES OF ENTREpreneurial leadership—cognitive ambidexterity, SEERS, and self- and social awareness—and have provided examples of how these principles can be taught through various exercises, cases, and courses. For most readers, however, one nagging question remains: How can I get started?

Can it be done only through a radical change to management education that is driven from academic leadership, or can it begin with individual faculty members who act as entrepreneurial leaders? We believe that faculty must walk the talk. If we believe that our students need to learn entrepreneurial leadership, we should model that behavior as we develop our courses and engage students outside of the classroom. We can take action and modify individual class sessions or develop our own courses, as we have illustrated throughout this book.

We would like to thank Mary C. Gentile for her assistance in developing this chapter. Mary is the creator and director of Giving Voice to Values (http://www3.babson.edu/babson2ndgen/GVV/default.cfm) and a senior research scholar at Babson College. She has authored many books, including Giving Voice to Values: How to Speak Your Mind When You Know What’s Right (New Haven, CT: Yale University Press, 2010).

 

Chapter 12 Curriculum-Wide Change: Leading Initiatives to Develop Entrepreneurial Leaders

ePub

THROUGHOUT THIS BOOK WE HAVE PROVIDED PEDAGOGICAL examples to illustrate how individual faculty from diverse disciplines and programs can teach students to make decisions guided by cognitive ambidexterity, a SEERS worldview, and self- and social awareness. Yet the largest opportunity for shaping entrepreneurial leaders comes when we consider how to reorient our entire curriculum. We have the most power to change management education when faculty from diverse disciplines work together to develop entrepreneurial leaders who possess both core disciplinary knowledge and a new way of thinking based on a new worldview. By working together management educators have the opportunity to develop the next generation of entrepreneurial leaders who will shape social and economic opportunity across diverse contexts.

Thus the challenge becomes: How can management educators introduce systemwide changes to reorient student learning toward educating entrepreneurial leaders? We recognize that the answer is both simple and quite complex: we advocate that management educators need to become entrepreneurial leaders. Just as we are teaching students to engage a different way of thinking and a different worldview, management educators need to do the same as we test and build new models of management education in our own universities.

 

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