The Meaning of Leadership to Successful Entrepreneurship - Case Study Example

LEADERSHIP By Introduction Successful entrepreneurship depends on multiple factors, but one of the most dominant factors is leadership. Time and over again, an organization’s success or failure is attributed to the style and application of leadership that exists within it. Entrepreneurship involves identification, organization, and operation of businesses or a business by acting upon the risks that are out of the normal. As such, it requires a “driver” who knows what to do, how to do, and when to do it for the good of their organizations. While entrepreneurship requires a leader, the leaders themselves should be entrepreneurial in that they should be innovators in terms of recognizing opportunities and organizing resources to take advantage of them. Entrepreneurship extends beyond the business context as Cohen (2007, p. 8) states, “successful global leaders are entrepreneurial”. Therefore, it is evident that the two contexts go hand in hand and should be intertwined for entrepreneurship to be successful. Leadership has proven to be a key determinant of successful organizations. For instance, the global logistics company, FedEx, attributes its success to its founder and longest-serving CEO, Frederick Smith, who apart from demonstrating effective leadership qualities took some big risks that bloomed into success (Bradford 2012, n.p.). To justify these assertions, the following study will critically discuss the meaning of leadership to successful entrepreneurship and the contribution it may make with regards to recognizing business opportunities that can be exploited by likely future trends in the twenty-first century. Leadership and Leadership Types Hulsing (2009, p.26) states that the leadership ability of entrepreneurs plays a key role in determining entrepreneurial success. This is because in entrepreneurship, multiple parties are involved, and a leader is required to find and engage others in a manner that assures success to a business entity. Better put, an organization’s success is greatly determined by the manner in which a leader acts, guides, or behaves towards their followers (Madun.d., p4). Effective twenty-first century entrepreneurial leadership requires attributes such as taking initiatives and acting positively towards success, demonstrating entrepreneurial creativity, continuously searching for new opportunities, pursuing found opportunities, taking risks, and most importantly taking responsibility for failures that may occur occasionally (Antonites& Wordsworth 2009, p.69). In the light of the above highlighted [required] attributes, leadership will be determined by the type of leadership that a leader chooses to apply. One applicable leadership type is the Laissez-Faire style. In this type of leadership, the leader does not provide supervision or any feedback to their employees. In short, no leadership efforts are required in this style. However, this style requires highly-trained and experienced employees who require minimal supervision (Schulman &Kowadlo 2004, p.208). Secondly, the autocratic style of leadership can be used. In it, managers will make decisions without requiring the input of any other person. In short, total authority lies with the leader, and will work best for cases where employees require maximum supervision (Bass & Bass 2009, p.449). The third leadership style is the participative (democratic) type. In this, leaders and subordinates come together in making organizational decisions. However, it is the leader that makes the final decision (Bogdnic 2012, p.64). The fourth type of leadership is the transactional style. In this style, the leaders set predetermined goals together with their employees. Upon performing appraisals, the leaders award their followers accordingly. Bonuses also exist in this method (McCleskey 2014, 117). The final leadership type is the transformational style in which high levels of communication exist between the leader and their employees (followers). The leaders apply certain strategies such as the Open Door Policy to motivate their employees thus increase organizational output (Baldoni2012, n.p.). The choice regarding which leadership style to use lies with the leader, and should be done for the overall good of the organization. Entrepreneurs and Entrepreneurship As indicated earlier, entrepreneurial leaders are always successful. Leadership on its own will not guarantee organizational success. On the other hand, pure entrepreneurship will also not guarantee the same. Rather, it is a combination of both that will act as an effective business tool. This therefore means that entrepreneurial leadership is likely to recognize and act upon business opportunities in the highly-competitive twenty-first century. In definition, an entrepreneurial leader is one who organizes their groups to attain common goals by applying proactive entrepreneurial tactics by optimizing risks, innovating to maximize on opportunities, takes responsibility of their actions, and most importantly manages change with dynamic environment for the good of their organizations (Gasparski, Kwiatkowski & Ryan 2011, p.116). The main intersection between entrepreneurship and leadership is that apart from the key roles that an entrepreneur should play, teamwork is one of the most critical elements of organizational success. It is impossible to build a successful business alone (Bennett, N, Crawford, M, & Cartwright 2003, p.56). Apart from the immediate employees and co-workers, an entrepreneur should build a top-notch team with other stakeholders who include sub-contractors, local communities, business allies, suppliers, the local government, and just any entity affected by their business. The biggest shareholder that an entrepreneurial leader should consider though is the customer. Apart from the services or products on offer, the competitive advantage created, or the prices charged, the customer should always be the focus of entrepreneurship. As trends indicate today, the twenty-first century customer requires personalized attention (Sunika, Bragge&Kallio 2011, p.183). In short, apart from just providing the goods or services, an entrepreneurial leader should guide their team into wooing new customers, knowing them inside out, and from this, providing what the customer needs in the closest match. In a nutshell, rather than lean on leadership too much and be more of a manager, entrepreneurs should think effectually. This means that they should understand human action as a great controller of the future, and should therefore be in a position to predict it. Decision Making Entrepreneurs as leaders will be frequently required to make organizational decisions that have the capacity to impact their organizations positively or negatively. This therefore calls for the development of effective strategies that guide the decision making processes. Entrepreneurial leaders, as defined earlier, should be critical and innovative thinkers (Okpara 2007, p.2). Several decision-making processes exist, and which leaders can adhere to in making correct and informed decisions about their organizations. One of them is the rational model of decision making. In this model, there is a four-step sequence that guides one through the decision-making process. The first step involves identifying the issue, or the problem that needs to be solved. The second step involves generating solutions from the leader and their followers collectively. All potential solutions are collected. The third step sees the leader guiding their teams in evaluating and selecting the best solution from the overall suggested solutions. Finally, the chosen solution, as agreed by the team, is implemented. Follow ups and further evaluations should be used applied to trace the progress of the solution being implemented (“Decision Making” 2013, n.p.). The second effective decision-making process is known as the Vroom-Yetton decision model which applies three of the leadership styles mentioned earlier. In its application, the leader decides whether an autocratic, consultative, or group-based approached will be best suited in making the organizational decisions. If using the autocratic model, the leader may collect information from their followers and use it to make decisions by themselves. If using the consultative approach, the leader presents the problem to their followers who suggest potential solutions. The leader then brainstorms on the best solution and focuses on it. The final and most effective method is the group-based approach. In it, the leader presents the problem to their followers upon which they collectively brainstorm, and decide on the solution themselves. The leader does not enforce their individual solutions but adhere to the decision agreed upon by their followers (Lunenburg&Ornstein 2011, p.66). It is however upon the leader to assess their organizations and decide which the best approach to apply is. The Business Environment Decision-making plays a critical role when it comes to the business environment. Entrepreneurial leadership in the twenty-first century needs to be overly innovative and critical when evaluating the business environment since these are the key factors that determine business success or failure. In definition, the business environment is the collective internal and external factors that affect a business entity (Jain, Trehan&Trehan 2014, p.7). As such, a leader should be fully aware and capable of handling both factors effectively to gain productivity and competitiveness today. The internal aspect of the business environment is largely defined by the organizational culture. In turn, the organizational culture is made up of elements such as visions, norms, values, and customs shared within the business entity. An effective leader should realize that the organizational culture is what determines the interaction between employees, between the organization and its customers, and also with the involved stakeholders. As such, a leader should plan these so they are effective in the best manner to gain maximally from them. The external factors of the business environment are the most complex in that they cannot be modified by the entrepreneur (Jain, Trehan&Trehan 2014, p.6). They are mainly political conditions or governmental activities, implying that they are beyond the entrepreneur’s control. Political factors are one of them, and manifest themselves in terms of tariffs, social unrest, regulations, laws, war, and trade barriers. There are also macroeconomic factors such as depressions, recessions, interest rates, consumer confidence, and currency exchange rates. Social factors fall under this category too (Shaikh 2010, p.3). They include consumer preferences such as fashion trends. On microeconomic factors, the elements to consider are competitors, demand, market size, and supply. Finally, and particularly for the twenty-first century entrepreneur, technological factors should be critically evaluated. They can either increase or decrease profits by influencing productivity. Information technology-based businesses and the internet as a marketing tool are examples. Therefore, it is up to the entrepreneurial leader to consider both external and internal factors of the business environment and use their innovativeness and critical thinking to devise strategies that guarantee organizational success. Both external and internal factors are equivalent to this success. Complexity The business environment is directly related to organizational complexity in that according to the complexity theory, organizations are collections of structures and strategies that are collectively perceived of as Complex Adaptive Systems (CAS) (Schneider 2006, p.352). CAS systems are applied in understanding how firms or organizations adapt to their business environments, in addition to how they cope with uncertainty when it emerges. On a wider scale, complexity in organizations is simply the effectiveness of interactions between dynamic networks and individual static entities that make up the organizations. Employee or interdepartmental relationships are examples. The ball again shifts to the entrepreneurial leader. As Duin and Baer (2010, p.30) assert, “in order to remain competitive in the global business world, organizations need to change their systems which are run like machines where top leaders decide everything important to dynamic systems… that exceed the complex demands of today’s organizations”. In this assertion, the need to have shared control that takes place at different levels of organizations is necessary. In being aware of their dynamic business environments, leaders can lead their organizations to adapting easily, and in it recognize business opportunities that can be exploited by likely future trends in the twenty-first century. D’Altorio(2012, n.p.) acknowledges the interaction between Coca Cola and Pepsi as they compete to outdo each other in the global market. Their interactions are interesting in that at one time, Pepsi will lead Coca Cola, and at other times, Coca Cola leads Pepsi. The dynamism in their correlation is in that their rivalry is healthy because none of them submits to defeat. Rather, their managements (leadership) work round the clock to understand the dynamic external environments that they exist in, thus retaining their competitive advantages against each other. Again, leaders cannot do such alone; they need to involve all stakeholders in coming up with effective CAS systems in order to survive in the competitive twenty-first century and in future. Future Trends One characteristic of successful and promising entrepreneurship is the ability to analyze and correctly predict the future of business (Ogden &Rarick 2010, p.111). The entrepreneur, who in this case doubles up as a leader, should be able to tell what the future of business is likely to taste, feel, and look like. This is one of the most-challenged roles of entrepreneurial leaders in that the twenty-first century is fast-evolving especially due to the virility of information technology. In that case, leadership should use future-focused approaches to investigate and understand megatrends so that they can predict the future. According to Reimers-Hild&Schlake (2014, p.1), there are three certain major megatrends that are likely to influence entrepreneurship in the future; rise of the Gig Economy, Decentralized Marketplaces, and Living with Purpose and Meaning. The Gig economy is emerging from the fact that global joblessness is on the rise, and people are turning to marketing their talents and skills as a means of surviving. This in turn poses both positive and negative impacts on future entrepreneurship. For instance, businesses will shift online, and any entity that resists this trend is likely to suffer. Therefore, today’s leadership should investigate such trends and devise corresponding measures of survival and relevance in the future. The second predicted megatrend in future is a Decentralized Marketplace. As businesses go online, the consumer will have a wide variety of choice in deciding what to buy. Therefore, a future-focused entrepreneur should be able to analyze data from the decentralized marketplaces and learn what it is that people prefer nowadays, how they want, and what unique features they go for. In this way, the entrepreneurial leader can effectively come up with an all-round service or product that will easily win competitiveness since the clients will have all they needed in one basket. In this way, cutting edge competitiveness and relevance will be attained. The final expected future megatrend is a consumer Living with Purpose and Meaning. This simply means that in the future, people will seek to expose themselves to less stressors while strengthening their healthy habits and increasing their fulfillment. “Leaders must be willing to create an atmosphere of sustainable innovation designed to continuously move organizations forward while connecting employees and clientele to their definitions of personal fulfillment” (Reimers-Hild&Schlake 2014, p.2). In a nutshell, leadership should devise means that satisfy customer and employee beliefs and in this helping them meet their satisfaction demands. Again, unnecessary clutter and unhealthy living should also be minimized since this is what the future of entrepreneurship in the twenty-first century will demand. Conclusion Leadership possesses a meaning that can translate to successful entrepreneurship and particularly in terms of recognizing business opportunities than can be exploited by likely future trends in this century. However, this can only be attained if several aspects of entrepreneurial leadership are applied. First of all, effective leadership and leadership styles should be applied in ensuring that the organization is headed towards a direction of success. Second, the decision-making process of the organization should be guided by models such as the Vroom-Yetton or the rational model of decision-making. Third, the external and internal factors constituting the business environment should be scanned and understood well. Additionally, leadership should create CASs that work for the good of the entrepreneurial entity by involving all the stakeholders. Finally and most importantly, entrepreneurial leadership should be able to analyze current trends and use them to predict the future. In predicting future trends, a business entity will always remain highly competitive and relevant in terms of recognizing and acting upon business opportunities. Collectively, these aspects of leadership, if effectively applied will translate to successful entrepreneurship that will facilitate recognition of business opportunities than can be exploited by future trends in the twenty-first century. Bibliography Antonites, A, & Wordsworth, R 2009, “Risk Tolerance: A Perspective on Entrepreneurship Education”, Southern African Business Review 1. (13): 69-96. Baldoni, J 2011, “Do You Have an Open Door Policy that Works?”Cbsnews.Available at http://www.cbsnews.com/news/do-you-have-an-open-door-policy-that-works/ [10 April, 2015]. Bass, B, & Bass, R 2009, The Bass Handbook of Leadership: Theory, Research, and Managerial Applications. Simon & Schuster. Bennett, N, Crawford, M, & Cartwright, M 2003, Effective Educational Leadership. SAGE Publications. Bogdnic, D 2012, “Expectations of Participative Leadership Behavior in Bosnia and Herzegovina”, Journal of Engineering Management and Competititveness 2. (2): 64-68. Bradford, H 2012, “Fred Smith, FedEx founder and CEO, Once Gambled $5,000 on Blackjack to Keep Company Alive.” Huffington Post. Available at http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjack-fedex_n_1966837.html [10 April, 2015]. Cohen, E 2007, leadership without Borders: Successful Strategies from World-Class Leaders. John Wiley & Sons. D’Altorio, T 2012, “Coke vs. Pepsi… Are the Cola Wars Finally Over?”,Investmentu. Available at http://www.investmentu.com/article/detail/17410/are-the-coke-vs-pepsi-cola-wars-over#.VSfVKvCv_cs [10 April, 2012]. “Decision Making” 2013, “A Variety of Rational Decision Making Models”.Decisionmakingconfidence.Available at http://www.decision-making-confidence.com/rational-decision-making-models.html [10 April, 2015]. Duin, A, & Baer, L 2010, “Shared Leadership for a Green, Global, and Google World”, Planning for Higher Education 39. (1): 30-38. Gasparski, W, Kwiatkowski, S, & Ryan, L 2011, Entrepreneurship: Values and Responsibility. Transaction Publishers. Hulsing, R 2009, Leadership and Entrepreneurial Success: The Relationship of Leadership Factors and Economically Entrepreneurial Endeavours. RusselHulsing. Jain, T, Trehan, M, &Trehan, R 2014, Business Environment.VK Global Publications. Lunenburg, F, & Ornstein, A 2011, Educational Administration: Concepts and Practices. Cengage Learning. Madu, B n.d. “Organizational Culture as a Driver of Competitive Advantage.”Journal of Academic and Business Ethics 1.1-14. McCleskey, J 2014, “Situational, Transformational, and Transactional Leadership and Leadership Development”, Journal of Business Studies Quarterly 5. (4): 117-130. Ogden, J, &Rarick, S 2010, The Entrepreneur’s Guide to Advertising.ABC-CLIO. Okpara, F 2007, “The Value of Creativity and Innovation in Entrepreneurship”, Journal of Asia Entrepreneurship and Sustainability 111. (2): 1-17. Reimers-Hild, C &Schlake, M 2014, “Future-Focused Entrepreneurship: Three Mega-Trends Influencing Business in Rural Areas”, Cornhusker Economics/ University of Nebraska. 1-5. Schulman, M, &Kowadlo, B 2004, Working Smart. Cengage Learning. Sunika, A, Bragge, J, &Kallio, H 2011, “The Effectiveness of Personalized Marketing in Online Banking: A Comparison between Search and Experience Offerings”, Journal of Financial Services Marketting 16. (1): 183-194. Read More