Ch9 managing the entrepreneurial organization

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

CHAPTER 9

Managing the Entrepreneurial

Organization

PART 2

LEADING AND MANAGING

THE ENTREPRENEURIAL

ORGANISATION

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Influences on Organisational Architecture

Architecture Strategy

Leadership

Environment

Culture

Structure

and size

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Influences on Organisational Architecture

Architecture Strategy

Management

Environment

Culture

Structure

and size

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Barriers to Corporate Entrepreneurship

• Focusing on efficiency or return on investment

• Planning for the long-term and then control

against plan

• Enforcing standard procedures, rules and

regulations

• Avoiding risk

• Making decisions based on past experience

• Managing functionally

• Promoting individuals who conform

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Barriers to Corporate Entrepreneurship

• Systems

• Structures

• Strategic direction

• Policies and procedures

• People

• Culture

Morris 1998

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Barriers: Solutions

• Ignore them

• Work round them

• Remove them

You can use all

three for different

types of barriers

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Eff

ec

tive

ne

ss

High

Low

ShortTime

Long

STAGE 1 STAGE 2 STAGE 3

Getting used

to the new

circumstances

Immobilisation

Change and Effectiveness

Relearning Becoming

effective

Denial

Depression

Letting go

Testing new

reality

Putting it

together

CHANGE

EVENT

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Preparing for Change

• Provide a compelling reason for change

• Make aims and tangible results of change

clear

• Make information on changes freely available

• Get commitment from management

• Do as much as possible, as quickly as

possible – don’t change piecemeal

• Address cultural components of change

• Consult staff on process of change

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

‘Political and organisational’ actions

for Change

1. Decide who are the blockers and do something about them

2. Put change agents in key positions

3. Build political support for changes with stakeholders

4. Use task forces to push through implementation

5. Make dramatic, symbolic changes early on

6. Begin on a small scale and demonstrate success quickly

7. Remember to change relevant parts of structure

8. Monitor process and ensure change is embedded

Yukl (2002)

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

‘People orientated’ actions for Change

1. Create sense of urgency

2. Brief people on effect of changes

3. Help people deal with change

4. Keep people informed about changes as they progress

5. Break changes down into small parts

6. Empower staff top make changes themselves

7. Demonstrate commitment to change from the top until project is complete

Yukl (2002)

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

The Change Cube

Strategy Organisation

Vision

Positions

Programmes

Products

Culture

Structure

Systems

People Formal

Informal

Conceptual

Concrete

Mintzberg (1998)

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Freedom v Control

SPACE

SUPPORT

Too much

Too little

BO

UN

DA

RIE

S DIR

EC

TIO

N

Too

few

Too

littleCONSTRAINT

CHAOS

CHAOS CHAOS

CHAOS

BALANCE BALANCE

BALANCEBALANCE

Adapted from Birkinshaw (2003)

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Open Book Management

1. Free access to financial information

2. Continuously presenting information to

employees

3. Train them to understand information

4. Make them understand their job is improve

financial results in whatever way they can

5. Empower them to make decisions that do

this

6. Give them a stack in success or failure

Case (1997)

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Organization structure & management

styleOrganic structure Mechanistic structure

Entrepreneurial management style Bureaucratic management style

Open free-flowing communication

Emphasises getting things done

Loose and informal control

Behaviour shaped by situation &

personality

Participative decision-making

Authority based on expertise

Free to adapt to change

Allows different operating styles Stresses uniform operating styles

Highly structure & restricted

communication

Authority based on role & position

Emphasises compliance with

processes & procedures

Tight control

Behaviour constrained by job

description

Hierarchical decision-making

Reluctance to change

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Structure, Style and Cycling

Effective

entrepreneurial firm

Effective

bureaucratic firm

Pseudo-

entrepreneurial firm

Unstructured

unadventurous firm

En

trep

ren

eu

ria

lB

ure

au

cra

tic

Ma

na

ge

me

nt

sty

le

Organisation structure

Mechanistic Organic

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Risk Classification

Great

risk

Greatest risk

Likelihood

Low

High

Impact on

the

organisation

Low

High

HighLow

Controllability

Least

risk

More

risk

More

risk

Great risk

Great risk

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Risk Classification

Great

risk

Likelihood

Low

High

Impact on

the

organisation

Low

High

HighLow

Controllability

Least

risk

More

risk

More

risk

Great risk

Great risk

Greatest risk

=

High Impact

+

High Likelihood

+

Low Controllability

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Reactions to Risk

1. Attempt to eliminate risk

2. Attempt to reduce risk by increasing

controls

3. Transfer the risk

4. Accept the risk and monitor key risk

indicators