Entrepreneurial leadership is organizing a group of people to achieve a common goal using proactive entrepreneurial behavior by optimising risk, innovating to take advantage of opportunities, taking personal responsibility and managing change within a dynamic environment for the benefit of an organisation.
Its aim is to cultivate entrepreneurial individuals and teams that fully leverage their creative potential in creating value for the organisation. Entrepreneurial leadership does this by employing leadership practices that "develop the ability in employees to self-generate, self-reflect, and self-correct in their workplace".
Entrepreneurial leadership is effectively using the skills associated with successful individual entrepreneurs and applying those within the environment of a larger organisation. This especially means within an organisation where those skills have been lost and replaced with a "corporate" mindset that focuses on process, systems and risk minimisation rather than on entrepreneurial behaviour.[need quotation to verify]
Definitions and theories
Other definitions of entrepreneurial leadership have also emerged:
The entrepreneurial leader executes through inspiration and aligns relationships to achieve common goals.
An entrepreneurial leader will proactively identify opportunities to gain advantage through creativity, innovation and market understanding and then hold themselves responsible for delivering what customers need via the effective management of risk to optimise outcomes for both the organization and the customer.
Attributes of an entrepreneurial leader
The entrepreneurial leader will work within a formalised organisational structure, but use the approaches normally expected of an entrepreneur to identify opportunities. Once an opportunity has been identified, they work towards creating a value proposition which will enable a rapid testing of their key assumptions. Next to an effective management of risk (rather than the minimisation of risk often sought within corporate environments), they are required to operate with contextual awareness in order to create a value proposition that delivers value to the customer while taking into account the organisational requirements and strategic aims. The entrepreneurial leader must have the ability to learn fast and within environments of ambiguity and change, while providing clarity and coherence for those around them.
The entrepreneurial leader takes responsibility for their actions and those actions must be more proactive than reactive. They think about achieving organisational outcomes in an innovative way and working with a diverse group of people and resources to achieve these goals.
Perhaps the best known and most widely considered example of an entrepreneurial leader is Steve Jobs, but there are many real life examples in the world of business and other industries, such as Bill Gates, Mark Zuckerberg and Richard Branson.
The search for the characteristics or traits of leaders has been ongoing for centuries. History's greatest philosophical writings from Plato's Republic to Plutarch's Lives have explored the question "What qualities distinguish an individual as a leader?". Underlying this search was the early recognition of the importance of leadership and the assumption that leadership is rooted in the characteristics that certain individuals possess. This idea that leadership is based on individual attributes is known as the "trait theory of leadership".
The concept of entrepreneurial leadership was introduced in 2000 by McGrath and MacMillan who suggested that in dynamic markets where there is increased uncertainty and competitive pressure a new type of leader is required. They described this as the "entrepreneurial leader". These fast changing markets or situations give those with an "entrepreneurial" approach the ability to exploit opportunities to gain advantage for their organisation faster than others.
A number of organisations have sought to develop the concept of entrepreneurial leadership within the business world. A good example is UBS, the global bank, which in the period 2002 to 2006 proactively developed entrepreneurial leadership amongst its top 500 leaders. The success of this was demonstrated by improvements in individual, team and financial performance, the project becoming a key element in the Harvard Business School Case study, "UBS Aligning the Integrated firm". The bank was subsequently awarded the title Best Company for Leaders (Europe) 2005. The implementation of this project over a multi divisional bank spread globally was complex and took a number of years. This is reviewed in a case study by Chris Roebuck, Visiting Professor of Transformational Leadership at Cass Business School in London. Roebuck was one of the leaders of the team who implemented entrepreneurial leadership in UBS.
The principles of entrepreneurial leadership can be applied to a number of sectors and to a wide variety of organisations. The success of this approach has confirmed the compatibility of entrepreneurial leadership to the majority of organisations seeking to improve client/customer service and overall performance.
Prof Chris Roebuck notes that in recent examples of applying entrepreneurial leadership to organisations, the link to employee engagement has increasingly become as a key success factor. This has also allowed development of the concept of entrepreneurial support functions, such as Entrepreneurial HR and Entrepreneurial IT, to support the customer or client facing parts of organisations.
Entrepreneurial Leadership is not so much a style of leadership as a focus of leadership and employees' efforts on specific actions that either maximise the effectiveness of service delivery currently or seek to improve it in the future.
Styles of leadership
Leadership style refers to a leader's behavior. It is the result of the philosophy, personality, and experience of the leader. Rhetoric specialists have also developed models for understanding leadership (Robert Hariman, Political Style, Philippe-Joseph Salazar, L'Hyperpolitique. Technologies politiques De La Domination).
Participative or democratic style
The democratic leadership style favors decision-making by the group. Such a leader gives instructions after consulting the group. They can win the cooperation of their group and can motivate them effectively and positively. The decisions of the democratic leader are not unilateral as with the autocrat because they arise from consultation with the group members and participation by them.
Leaders do not entertain any suggestions or initiatives from subordinates. The autocratic management has been successful as it provides strong motivation to the manager. It permits quick decision-making, as only one person decides for the whole group and keeps each decision to him/herself until he/she feels it needs to be shared with the rest of the group.
Other types and theories
- Charismatic authority
- Trait Leadership
- Collaborative leadership
- Business oligarch
- Entrepreneurship education
- Internet entrepreneur
- Operational risk
- Venture capitalist
- Cross-cultural leadership
- Leader-Member Exchange Theory (LMX)
- Leadership development
- Social entrepreneurship
- Outstanding leadership theory
- "Entrepreneurial Leadership – A Primer". Institute for Integral Entrepreneurship. 2016-12-12. Retrieved 2016-12-20.
- McGrath, R. G. & MacMillan, I. C. 2000. The entrepreneurial mindset : strategies for continuously creating opportunity in an age of uncertainty. Boston, Mass.: Harvard Business School Press.
- Robert Hariman, Political Style, U of Chicago Press, 1995
- Philippe-Joseph Salazar, L'Hyperpolitique. Technologies politiques De La Domination, Paris, 2009
- Lewin, K.; Lippitt, R.; White, R.K. (1939). "Patterns of aggressive behavior in experimentally created social climates". Journal of Social Psychology. 10: 271–301.