Most corporate leaders understand the importance and value of entrepreneurship — or even the critical element of entrepreneurial thinking. But there are three specific reasons why they struggle in this area.
And this is why so many companies fail to integrate entrepreneurship in their company culture.
The 'We've Made It' Myth
First, the “we’ve made it” mindset takes over. This is best understood by considering that the evolution of a firm shifts from stage one (inexperienced, high risk, experimental) to stage two (established, respectable, “brand”).
When a stage one firm takes a risk by introducing a new product or service, which then fails, employees, customers and virtually all stakeholders say, “You gave it a shot” or “Way to go.”
When a stage two firm tries and fails those same supporters start to wonder “What's wrong at the top?” and “Why are they losing their way?”
At the core, people inside and outside the firm adopt an expectation that profiles the firm as either risky and adaptive (stage one) or stable and invincible (stage two).
While I don’t have the research to back it up, there could be a driver of status and ego associated with stage two, which makes jumping back to being vulnerable a highly challenging option for most established firms.
Acceptance of the Status Quo
Second, there are the usual challenges of change within any organization: The fear of loss, the reluctance to abandon a zone of known comfort, and so on.
These are powerful forces that start with the simple belief, “If it isn’t broke, don’t fix it” and moves into the inertia of, “We tried that before and it didn’t work” type of responses to new ideas.
Outside Pressures on Innovation
Finally, the pressure from outside the firm can be daunting.
Consider in particular the pressure that publicly-traded companies face from analysts and institutional investors. In those situations, “What have you done for me lately?” is the key question, which leads to a focus on quarterly returns and short-term results.
Entrepreneurial thinking and corporate entrepreneurship are targeted at developing long-term shifts in product and service offerings.
Vision and insight (plus a bit of luck) are essential to successful entrepreneurship — but not so much for public companies who become more concerned with lawyers, liability and maintaining the status quo.
The Grass is Always Greener …
Ironically, most entrepreneurial start-up (stage one) firms are desperate to become established stable stage two firms, and most established stage two firms really need to investigate their roots and maintain an element of adventure and boldness more typical of stage one firms.
We seem to be caught in the age-old conundrum of wanting or needing more of what we don’t have.
Nurturing Entrepreneurial Drive
So how do established firms become more entrepreneurial? There is no one magic answer to this question, but instead of looking for the fix, look for the fit.
That is to say, each firm must find a fit that works with the industry, organizational culture, economy and technological context within which they operate.
And one must remember that while it has happened in the past (IBM is a great example), change rarely happens at the institutional level across all business units.
It is more reasonable and probable to introduce change in one or two units that have the highest chance for success.
4 Principles for Entrepreneurial Success
Success then breeds more success, particularly if the firm’s senior leadership supports it. It is a jigsaw puzzle that is unique to each organization, but there are four principles that can help:
- Establish a clear narrative of what entrepreneurial success look like within your firm,
- Identify the idea generation path most suited for your firm (is your firm more of an inventor looking for a market, or a firm that sees the market gap and then tries to close it?),
- Engage in opportunity discovery and creation processes (it is amazing how systematic organizations can be about finding new opportunities), and
- Support middle management (platitudes are nice, but one has to respect, support, and promote where the rubber meets the road).
Make a commitment today to become a more entrepreneurial firm. Your successors will thank you for your vision.
Title image by Elena Saharova