2014 03-07-jade- the entrepreneurial manager (witmeur)

The Entrepreneurial Manager (Short Version) JADE Spring Conference Olivier Witmeur March 7th, 2014

2 Desired Outcomes of the Workshop • Who is the entrepreneur? • What are the differences between entrepreneur and manager? • Does it matter? 07-03-2014 1. Why entrepreneurship matters 2. About entrepreneurs 3. Introduction to effectuation 4. Case study: Wafles and Dinges 5. Introduction to intrapreneurship 6. Conclusion • What makes entrepreneurs entrepreneurial (Sarasvathy) JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

3 Olivier Witmeur (Belgian, 46) • A real passion for entrepreneurship education and entrepreneurs. • Student entrepreneurs: 2x • Full time entrepreneur: once, in a team of 5 • Coach: 500+ projects over the last 20 years • (Advisory) Board member in multiple new ventures • Policy making: 2x • PhD in entrepreneurship in 2008 • … never as an investor • My wife (as Colombo), no kids, one dog (Vicky). 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

WHY ENTREPRENEURSHIP MATTERS

5 Did you know one of the largest and most profitable businesses during the late 1800s and early 1900s was ice harvesting? 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

6 Jump to the next curve. 2 1 Rule #1 The dominant players on curve #1 are not likely to jump to the curve #2… Temps 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

7 Again! Today’s businesses, especially the large ones, simply will not survive in this period of rapid change and innovation unless they acquire entrepreneurial competences. Peter Drucker 1985 (!) 2005 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

8 Strategy  Entrepreneurial Orientation “An entrepreneurial firm is one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with ‘proactive’ innovations, beating competitors to the punch. A non-entrepreneurial firm is one that innovates very little, is highly risk averse, and imitates the moves of competitors instead of leading the way.” • Danny MILLER (Canada) • Entrepreneurial Orientation (EO) = – Risk Taking – Proactiveness – Innovativeness EO  Performance (The relation is stronger in turbulent environments) 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

9 Towards ‘Entrepreneurism’ • Y= f ( L, C ) … Capitalism and Socialism • Y = f ( L, C, K ) … The Knowledge Economy • Y = f ( L, C, K, E ) ... The Entrepreneurial Society? 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

10 Global Entrepreneurship Monitor Total Entrepreneurial Activity Level 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

11 How To Navigate In Turbulent Times? V U UNCERTAINTY Lack of predictability and prospects for surprises. C COMPLEXITY Multiplex of forces, confounding of issues and causes-and-effects confusion. A 07-03-2014 VOLATILITY Nature, dynamics and speed of change. AMBIGUITY Haziness of reality, potential for misreads, and the mixed meanings of conditions. JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

ABOUT ENTREPRENEURS

13 Different views on the entrepreneur 1. 2. 3. 4. As a revolutionary  ‘Entrepreneurial leadership’ As a manager  ‘Entrepreneurial management’ As a salesman As a team player  Entrepreneurial team 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

14 Traits approach: Classical variables Need for achievement Need for achievement (N-Ach) refers to an individual's desire for significant accomplishment, mastering of skills, control, or high standards. Locus of control Locus of control refers to how much individuals believe they can control events that affect them. Tolerance for ambiguity Ambiguity tolerance is the ability to perceive ambiguity in information and behavior in a neutral and open way Self efficacy Self-efficacy is the extent or strength of one's belief in one's own ability to complete tasks and reach goals 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

About Entrepreneurs (a personal view) Passion & Values Tolerance for Ambiguity Commitment & Courage 07-03-2014 Knowledge & Expertise Network & Social Capital JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur 15

ELEMENTS OF ENTREPRENEURIAL LOGIC: INTRODUCTION TO EFFECTUATION

18 Managerial Approach based on optimization Selecting between given means to achieve a predefined goal Resource 1 Resource 2 Given Goal Resource 3 Resource 4 Resource 5 How to optimize the use of the resources? Typical tools & techniques: project management, leadership, controlling, quantitative methods… 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

19 A more creative approach based on planning Generating new means to achieve pre-determined goals Resource 1 Resource 2 Given Goals Resource 3 (needed) (needed) How to write a ‘case’ or a plan to ask for more resources. Typical tools & techniques: strategic and financial planning 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

20 Entrepreneurial Thinking Imagining possible new ends using a given set of means Opportunity Space Possible goal 1 Resource 1 Resource 2 Possible goal 2 Resource 3 Possible goal 3 Resource 4 … Resource 5 How to exploit one opportunity inside the opportunity space? … Typical tools & techniques: co-creation, creativity, enrolment, lean entrepreneurship, bootstrapping…. 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

21 Introducing Effectuation: The logic of expert entrepreneurs. The word effectual (entrepreneurial approach) is the inverse of causal (managerial approach). In general, in MBA programs across the world, students are taught causal or predictive reasoning in every functional area of business. Saras Sarasvathy India 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

22 Causation vs. Effectuation Causation Need to manage the causes Effects are predicted • • • • Effectuation (Cre-Action) Planned approach Top-Down Managerial logic Prediction based: To the extent we can predict the future, we can control it.  For predictable situations 07-03-2014 Causes are given • • • • Need to manage the effects Emergent approach Bottom-up Entrepreneurial logic Control based: To the extent we can control the future, we don’t need to predict it.  For uncertain situations JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

23 Principle #1: Bird in Hand Start with who you are, what you know and whom you know … Not with pre-set/given goals (based on prediction) • Typical entrepreneurial resources: – Expertize, skills… – Social capital – Psychological capital: hope, optimism, self efficacy and resilience 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

24 Principle #2: Affordable loss Invest what you can afford to lose (extreme case = 0€) … Not expected (risk adjusted) return 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

25 Principle #3: Crazy Quilt Build a network of self-selected stakeholders … Not competitive analysis and transactional relationships with first-best partners. Committed stakeholders network Co-Creation Customers Suppliers Channels Financial partners Employees Sponsors … Crazy quilt, not puzzle. 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

26 Principle #4: Lemonade principle Embrace and leverage surprises (they can present new opportunities) …Not avoid them 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

Nils Bergvist Question: • What would you do? 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur 27

28 About Nils • Swedish • Environmental engineer • Worked 8 years in the mining industry in Kiruna (in Northern Sweden) • Passion for wildlife and sports 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

29 Ice Hotel 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

30 Principle #5: Pilot-in-the-plane The future comes from what people do … No inevitable trends  Control vs Plan 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

31 The Dynamics of the Entrepreneurial Network Iterative opportunity co-construction Who I am? What I can do? Whom I know? My Goals? My affordable loss? Additional resources Who may be involved? Dead end The venture grows step by step. New Goals Multiple techniques help to deal with these cycles: Design Thinking, Lean Startup, Business Model Generation, Staged Financing… To be continued. 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

32 Managerial vs. Entrepreneurial Thinking (stylized facts) High Expert Entrepreneurs Angels Experienced VCs Effectual Bankers Novice entrepreneurs Novice VCs Corporate Managers Low Low 07-03-2014 Causal High JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

33 From Causation to Effectuation…and vice-versa Causal LOGIC Novice entrepreneur Moderating effect of resources Large firm Entrepreneurs do not always manage to bridge this gap Shift in logic necessitated by firm growth Start-up firm Expert entrepreneur Effectual TIME AND EXPERIENCE 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

Wafels & Dinges Questions: • What would you do next? • What is your logic? 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur 34

Don’t wait/look for the perfect opportunity. Just start!

INTRODUCTION TO INTRAPRENEURSHIP

37 Entrepreneurs and Intrapreneurs Owner-Manager in Small Firms Managers in Large Firms Lifestyle Entrepreneurs Entrepreneurs Intrapreneurs 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

38 Entrepreneurs vs Intrapreneurs ENTREPRENEUR INTRAPRENEUR Ownership Yes No (employee) Decision power Unlimited as long as shareholders agree Hierarchy Incentive Overall Limited: Bonus, SOP… Risk Large, i.e. may include personal assets Job reputation Strategic Freedom Full To be aligned with the corporate agenda Type of activity Ex-nihilo creation Strat with existing organizational support Sponsors Stakeholders Corporate Management • Adapted from Basso, 2004 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

39 Corporate Entrepreneurship Challenges • • • Pace of change is accelerating  Need to renew Core vs non-core activities Breakthrough innovation • STRATEGY (Vision) Entrepreneurial culture / values Recruit, Develop & Retain entrepreneurial people Leadership skills • • • CULTURE Develop an organization that is entrepreneurship friendly ORGANIZATION (Tactics) 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

40 Entrepreneurial Values and Behaviours • Adapted from Burns, 2008 Long term impacts Creatity Innovation Change is normal Trials & Errors Learn from mistakes ‘Can do’ Opportunistic Optimism Network and Sharing Self confidence Multidisciplinarity 07-03-2014 ‘Work is Fun’ Team Celebrate Success Achievement JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

41 Organizational framework for Internal Venturing Strategic Importance Very important Not important Unrelated Operational relatedness Uncertain Special BU Special BU Spin-off Partly related New department New department Contracting Strongly related Direct Integration New department Contracting Adapted from Burns, 2008 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

CONCLUSION

43 Traditional vs Entrepreneurial Management (Adapted from H. Stevenson) ENTREPRENEURIAL TRADITIONAL Strategic Orientation Driven by perception of opportunity Driven by resources currently controlled Commitment to opportunity Revolutionary with short duration Evolutionary of long duration Commitment of resources Multistaged with minimal exposure at each stage Single-staged with complete commitment upon decision Control of resources Episodic use of rent of required resources Ownership or employment of required resources Management structure Flat with multiple informal networks Formalized hierarchy Reward philosophy Value-driven Performance-based Team-oriented Security-driven Resource-based Promotion-oriented 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

44 Initial discovery MANAGEMENT ENTREPRENEURSHIP Entrepreneurship and Management Opportunity refinement Discovery process Market making Resource acquisition Co-ordination (New) coof old ordination of (new) resources resources/ongoing activity Exploitation process 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function. F. Scott Fitzgerald

46 Entrepreneur vs. Manager is the wrong question. Act like Lionel Messi; ie be good at everything and know what tool/logic to use at the right time 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

47 Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve to death. It doesn’t matter whether you are a lion or a gazelle. When the sun comes up, you better start running. Thomas L. Friedman in “The World Is Flat” 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

48 Never Stop Wondering and Asking olivier@solvayentrepreneurs.be T. +32.2.650.41.60 – M. +32.475.68.62.50 if important and urgent For visitors: 48 avenue F. Roosevelt (Janson Building) – Room J1-117, 1050 Brussels Postal address: 50 avenue F. Roosevelt – CP 141, 1050 Brussels, Belgium 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

BACK UP

WHAT IS ENTREPRENEURSHIP?

51 Definition 1: The HBS working definition The pursuit of opportunity beyond the resources you currently control. H. Stevenson USA 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

52 Definition 2: The classical academic definition We define the field of entrepreneurship as the scholarly examination of how, by whom and with what effects opportunities to create future goods and services are discovered, evaluated and exploited. Academy of Management Review, 2000, vol. 25, n°1, 217-226 S. Shane 07-03-2014 S. Venkataraman JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

53 Adapted from C. Bruyat (1993) & A. Fayolle Definition 3: Degree of entrepreneurship? New to founders High tech & Social start-ups Take-over Buy Out Change Ch. Bruyat A. Fayolle Franchisee Shops Corporate Spin-offs Lawyers, Doctors, …. Innovation 07-03-2014 New to market JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur

54 Definition 4: A classical definition Thinking and acting = There is a “method” Central role of the opportunity (but found or made?) A way of thinking and acting that is opportunity obsessed, holistic in approach & leadership balanced for the purpose of value creation Take all aspects into consideration Need to be managed There are best practices Value for the stakeholders, i.e. founders, team, investors, customers, society… J. Timmons USA 07-03-2014 JADE - Entrepreneurial Manager - 2014 © Olivier Witmeur