Saturday, 18 January 2014

The Dark Side Of Entrepreneurship: Some Further Thoughts

Have you ever witnessed the birth of a new baby and all the anxiety that comes with it?Have they told you of the many problems that a pregnant mother encounters during the nine months of the pregnancy?Admittedly no two pregnancies are the same;just as no two births are the same.Each has own its own story to tell;stories,bitter,sweet,bitter-sweet and sometimes sad.The story of entrepreneurship is not far from that of the birth of a baby.whereas,one is animate,the other is inanimate, but the pangs of a birth animate and inanimate remain the same.The journey into entrepreneurship is a giant leap of faith;a journey into the unknown and unchatted waters.Only the steely hearted can peer into the future without any certainty,but only by the say-so of a business plan and the faith of would be lenders and/or family members,friends risking their life savings to invest in an idea they perhaps know next to nothing about;without being told or personally aware of the dark side of entrepreneurship.The entrepreneur's beginning is one of sacrifice,going home without pay sometimes,at other times ploughing back the pay into the business;to sleepiness nights,the gnawing thoughts of failure,of debts that he may not be able to pay back;finally bankruptcy.
The route to entrepreneurship is varied and wide.We only have to be instructed in the literature on the subject to be informed of the varied routes taken by the likes of Bill Gates,Richard Branson,Steve Jobs,Jerry Kaplan,to mention just this few.

THE FORMALISM OF ENTREPRENEURSHIP.

Jerry Kaplan,a serial entrepreneur in the computer industry and author of the book,"Start-up- a Silicon Valley Adventure",1995,states that the entrepreneur must embody the five concepts of entrepreneurship,for him to stand out.This he listed as leadership,team play,master of details,good managerial skills and communicator.

On leadership,it is submitted that the entrepreneur must lead in other to take the business to where it belongs,regardless of the staff may want it to be.He must be passionate and persuasive with his subordinates as to the future of the business.

Communication lies at the heart of the firm.The entrepreneur must be open and learn to communicate with his subordinates.While this may be simple when the firm is still small,the need to communicate becomes more acute as the enterprise grows.Formal communication channels will then need to be designed for the organization to function properly.Communicating the vision of the founder at the beginning tends to simplify the process of goal-setting and management of the business into the growth phase.It is also at this stage that an organizational culture is developed driven by the founder's vision for the enterprise.

Decision making has its time value.The right time determines the type of outcome one should expect.No where is this more exemplified than,for instance,when bringing a new product to the market or when change occurs in the market and the entrepreneur needs to react.He must be proactive in his decision making to reflect the dynamism of the market place.In other words,he must be marketing oriented in a strategic sense.

Team play has always been a big problem for the entrepreneur.The larger the ego,the worst it is.Team-play is particularly essential at the growth phase when talent and skills will be required to cope with the pressure that comes from expansion of the business.He needs to trust and not neat-pick subordinates.Being a leader requires the entrepreneur to trust them with tasks and responsibilities without breathing down their necks or always them to faulter for an excuse not to delegate some of his functions.

Telescoping is the ability to attend to details without getting lost in them;not losing sight of the big picture,namely strategy.Telescoping means understanding that every role however minute is as important as the big one.It is learning how to appreciate the small and the big in the organization,and that none is more important than the other.

Although authors like David Deakins,(1999), enunciated the entrepreneurial typology into three- socio-psychological,psychological and economic,much as the behavioral or psychological type has occupied much of the literature in recent times,given the high incidence of serial entrepreneurship,it is in the economic sphere that we have witnessed his impact more,as evidenced by the rapidity with which innovations that improve standards of living and lifestyles keep being churned out.

It is counter-intuitive to state that entrepreneurship and entrepreneurs create new products,new markets and in the process create economic opportunities through innovation.What accompanies these activities is uncertainty of whether your idea will succeed or not;side by side the unpredictability of things going according to the trajectory set forth by the business plan,assuming there is,one at the beginning of the journey.As any budding entrepreneur will tell you,uncertainty is a major element of any entrepreneurial endeavor,through creating wealth and improving society.Uncertainty is the entrepreneur's constant companion through out the early stages of the start-up's life.There is a curve in the learning of the entrepreneur from the many knocks and bruises he will receive along the way.But only steely resolve and constant faith he builds in the future keeps him going against all odds.

Wharton management professor,Ian Macmillan notes,"if you are going to do something that's really going to make a difference and its bold and highly innovative by definition,its also going to be highly uncertain". The entrepreneur is restless,a free spirit,a risk taker,a bucker of tradition,hates organizational structures,often loves to work outside them,not routinized to processes and procedures.He is the 'Man of Action"according to,Schumpeter in his characterization of the entrepreneur.In the womb of the restless,free spirit of the entrepreneur is also the recklessness of risk taking,which Manfred Kets de Vries describes in his article,The Darkside of Entrepreneurship,HBR,November-December,1985;as "acts of bias toward action which makes him act thoughtlessly,sometimes can have dire consequences" Derek du Toit,a business owner,notes,"the entrepreneur who starts his own business generally does so,because he is a difficult employee.He does not take kindly to,suggestions or orders from other people and aspires most of all to,run his own shop.His idiosyncrasies do not hurt anybody so long as the business is small,but once the business gets larger,requiring the support and active cooperation of more people,he is at risk".

The greatest risk to the entrepreneur at the head of a small business transmitting to a large is the loss of control to others in the organization,more specifically,professional managers who now run the business,sharing the decision making process with the entrepreneur.Hell hath no fury with the business owner who loses his absolute control over the decision making apparatus of an organization he solely founded and owns.Derek du Toit,states that the biggest problem a growing business faces is to have an entrepreneur founding,owning and leading it.Giving up control of the management of a growing company to professional managers is one of the down sides of entrepreneurship. The entrepreneurail process,briefly involves the identification and evaluation of opportunities,then development of a business plan,scouting of resources and finally managing the enterprise,day to day.Even though a fuller treatment of this process is beyond the scope of this note(for a fuller account see,'Enterpreurship',by Robert D. Hisrich;Michael P.Peters;and Dean A.Shepherd,2009;also see Entrepreneurship: Concepts,Theory and perspective.Introduction, by Alvaro Cuervo, Domingo Ribeiro2 y Salvador Roig,Universidad Complutense de Madrid 1,Universitat de Valencia 2 ),it is sufficient to note that the point of inflection in the entrepreneurial process is at the growth stage where the literature identifies most start-ups give up the ghost.65% of start-ups die at the growth stage within their first three years.

Joseph Kolobari,an entrepreneur of over two decades,with experience that cuts accross four industries(agricultural production,digital imaging,unit banking and security),notes that the principal reason start-ups fail is due to faulty planning.Acccording to Kolobari,"enterprises fail when they fail to plan,abnitio.In my over two decades in the small business arena,i have come accross numerous firms that merely took off from the starter block without planning the race,only to fail at the finish line".The finish line in this case is the growth stage when funds are critically needed for expansion,but are not easy to find.The rapidity with which innovative changes take place in an industry also hastens the demise;a typical example would be the IT industry industry where innovations are churned out with the rapidity of a clock.The speed of obsolescence in an industry vis a vis a firm's inability to respond quickly sounds the death toll,due to the dearth of working capital.Kolobari,further highlights organizational constraints wherein the entrepreneur,presiding over a rapidly growing firm refuses or fails to realise the need to delegate some of his hitherto functions and authority to colleagues for decision making. The entrepreneur fails to realise that the 'boy'has grown into a'man' and therefore needs to unlearn some of his behaviours towards the man.In other words,the entrepreneur must wean himself from running the show alone,moreso when professional managers have been brought in by him to help in lightening the load.Syndicating some of his functions and distributing the leadership of the growing organization leads to faster decision making and problem solving.At inception,he was a one man riot squad;now that the market has grown and the organization has equally grown in tandem,he too needs to grow as well.That is where the problem lies:the lack of the required mental shift by the entrepreneur which ocassions organizational inertia.The desire to be in absolute control leads him to distrust colleagues,and it is symtomatic of the mystification of the entrepreneur's role in wealth creation and desire to be the centre of the universe in the organization he founded,Kets de Vries (1985) suggested.How does the founder detach himself or herself from the organization and its professional managers and get it running on 'auto-pilot' of professionalism?This is the million dollar question in this debate about the dark side of entrepreneurship. Routinization we earlier identified to be one of the things that drives restlessness in budding entrepreneurs;so too is the feeling of anonymity,being a small speck in the giant wheel of the corporation,vis a vis the feeling of grandiosity.Resistance to change in the structure of the organization in conformity with changes in the business dynamics of the enterprise is a defense of those self same dark sides that propelled the entrepreneur to go seek his fortune and conquer the world. In the final analysis,the fear of failure and the odium it brings to the entrepreneur in the society, often propels him in directions that logically he shouldnt venture.Instead of the long-term,entrepreneurs look to the short term;cutting loose at the slightest opportunity and moving on to other things.Would this be reason why serial entrepreneurs proliferate?Or venture capitalists behave the way they do?Pulling out with their funds within the first five years.Are their actions behavioural,environmental or economic?These questions provide us the opportunity for further enquiry into some of the factors that spur the personality quicks of the entrepreneur.

SUMMARY. The compartmentalization of the study of entrepreneurship into economic,behavioural and managerial roles of the entrepreneur leads us to ask the question in our summation,whether to see him as an entrepreneur,a manager or capitalist.Or can he fit into all roles at once?There is also the issue of the dichotomy between what is and what ought to be about his role in society in terms of wealth creation,employment generation and higher productivity through innovations,the dark side of his endeavour fails to help us fill the deep hole in the normative question that our assumption seeks to answer.The realist school of thought on entrepreneurship is safe in their assumption on the other hand,that the entrepreneur's role is assured in the debate given the criticality of his role in the economic development of all countries of the world,regardless of the fact that the normative remains unanswered.This cognition of the role of the entrepreneur should lead us to a further elucidation of the behavioural aspect of entrepreneurship and the entrepreneur in my subsequent thoughts on the subject.
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