Description
During this such a detailed file with regards to a process for the entrepreneurial decision.
1
A Process for the Entrepreneurial Decision?
(To be or not to be an entrepreneur may or may not be the
question, but what is the answer?)
Written November 1992, Revised December 1992
Published in Entrepreneurship, Innovation and Change
Much of the writing on Entrepreneurship is concerned either with Entrepreneurial
personality, i.e. what type of person is most likely to succeed or, with practical
aspects of launching a new venture i.e. planning, raising capital and so on. This
paper begins to address the research programme proposed by Flood (1991) as
necessary for progress to be made from the narrow focus of those existing writings.
This is attempted by seeking to adapt some of the ideas of strategic management to
making the Entrepreneurial decision: To be or not to be?
KEY WORDS: methodology, entrepreneurship, strategic management, systemic,
viable system, purpose.
1) Introduction
Flood (1991) proposed that the “narrow focus” of entrepreneurial studies be
broadened by drawing lessons from the systems and management sciences. This
paper attempts to follow that proposal by seeking to adapt the process of strategic
management: matching the capabilities of an organisation to its environment to
achieve its objectives; for use by a potential entrepreneur.
The major part of the mainstream published work on entrepreneurship is concerned
either, with the “type” of person most likely to succeed as an entrepreneur, or on the
practical detail of business planning, raising capital and so on. This paper suggests
a process through which those with entrepreneurial inclinations can assess their
position and define the opportunities open to them.
Although the need for entrepreneurs is highlighted, the question “why be an
entrepreneur?” is not aske; there may be almost as many reasons as there are
entrepreneurs and the answer must be for the individual to decide. Similarly, the
practical aspects will not be addressed, these are covered adequately elsewhere.
Instead the paper concentrates on proposing a systemic and general methodology,
through which any individual or group may assess wants and needs, can review an
existing position and decide upon possible courses of action. It is systemic since it
attempts to deal with a whole process of decision, recognising both the continuous
interaction between the individual elements of the process and that any one part of
the process, taken in isolation, is unlikely to generate a productive outcome. It is
2
general since it attempts to deal with the process itself rather than an individual case
and it is intended to be applicable to any form of entrepreneurship or
intrapreneurship.
The next section of this paper will briefly review the process of strategic
management adopted by many organisations.
2) The Strategic Management Process
There is no single accepted and universally applied approach to strategic
management, each organisation using its own internal systems and procedures to
make strategic decisions. There is though a common pattern to these processes
which, if followed, is considered to increase the chances of success. It is that
common pattern which will be reviewed in this paper.
The process, for simplicity of writing, has been started at defining the mission but
any organisation may be at any stage of the process and may in effect start at any
point. To be successful the process must be dynamic and iterative, looping forwards
or backwards between points as circumstances change and new information is
discovered, each subsequent stage reinforming the others.
The mission can be best described as the “purpose” of the organisation, that is to
say the reason for which it exists and is viewed by Mintzberg (1983) as the
“organisation’s basic function in society”. This conception of purpose is vital
because it provides a framework within each subsequent decision can be made i.e.
does this decision, or action, help towards fulfilling the stated purpose.
The second step, objective setting, may be seen as describing the attributes the
organisation must have in order to fulfil its purpose, e.g. if the organisation has a
stated purpose of being “a leader in new technology”, then it would be expected to
have attributes such as a strong research and development capability and a highly
innovative management group. If it does not have these attributes then its
objectives, arising from its mission statement, would be to acquire these things.
Thus the objectives may be seen as more or less measureable achievements which
enable the fulfilment of purpose. These objectives are shaped by the culture, norms,
values and expectations of those within the organisation.
The third step in the process is the review of the general and specific environments
in which the organisation operates. This enables the identification of opportunities
and threats surrounding the organisation. The general environmental factors are
seen as having a broad and indirect impact on the organisation. The specific
environment acts directly on the organisation and is viewed by Porter(1980) as
3
consisting of four basic forces, potential entrants, buyers, suppliers and substitutes.
The interaction of these forces indicates the level of competitive rivalry.
The review of external factors having been completed attention turns to an
examination of internal factors. This means a study of the strengths and
weaknesses of the organisation in relation to its mission, objectives and the external
influences acting upon it. This may include finance, staff, structure, products and
many other issues.
This SWOT analysis should ensure that the organisation is fully aware of its position
and is able to determine the options available to it. There then follows a process of
evaluating the options in order to choose between them, for which a number of
techniques are available and finally development and implementation of plans to
achieve strategic objectives.
It was stated above that this should be a dynamic and iterative process and it is
important to note that at any point those involved in the process should be prepared
to question and alter prior decisions when new information makes that desirable.
The process is shown diagrammatically in Figure 1.
4
5
This section has reviewed a process of strategic management. The next section will
show how the same process may be followed by an aspiring entrepreneur or
intrapreneur.
3) An Entrepreneurial Decision Process.
Flood (1991) describes an entrepreneur as “a person (or group) who initiates and
manages enterprising new ventures” whilst an intrapreneur is seen as “an innovative
person (or group) in a project situation who (re)vitalises management (the five
functions) to sustain and strengthen enterprising new, establishing or established
venture”. Such people would be displaying purposeful behaviour.
The purpose of strategic management is to enable the commencement of new
ventures (initiation) and the renewal or renovation of established ventures
(revitalisation). Corporate renewal is, by Flood’s definition, intrapreneurial and the
people charged with facilitating that renewal are intrapreneurs.
The process by which an individual can determine his or her own entrepreneurial
desire may be called personal renewal. It will now be argued that individuals and
groups can utilise the process of strategic management to determine for themselves
whether or not To Be.
As with the previous section this process takes as its starting point the definition of
purpose but must be seen as continuous, dynamic and iterative. There cannot be a
“clean start” for an entrepreneur or intrapreneur because his or her current condition
has arisen from the past which perpetually re-informs the present. It is important to
remember throughout that human needs, wants and aspirations need not necessarily
be fulfilled through paid work and that Entrepreneurial or intrapreneurial activity in
pursuit of individual purpose is as valid outside the workplace as within it.
3.1 Mission: a sense of purpose, a framework for decisions.
Beer (1985) proposes that “The purpose of a system is what it does” and each
human is considered by him as a “viable system”, that is, a system capable of
independent existence within a given environment. Following this, if humans are
viable systems, and viable systems are purposeful, then we must have “purposes”
around which are lives are organised and these purposes can be inferred from
observation of what we do. An aspiring entrepreneur or intrapreneur can be seen as
someone who wishes to review his or her “purpose and, if appropriate, make
changes.
6
The definition of “mission” for an organisation is seen as providing a framework for
all other decisions. The first step then for potential entrepreneurs or intrapreneurs is
to determine a personal mission in order to provide that framework. To have reache
d a stage in personal development where purpose can be reviewed the candidate(s)
must already be doing something, the first question then is, “What is it that I (we)
do?” Asking that question alone, though, would be to deny the whole process in
which the candidate has become engaged, the mind must be opened to innovation
by asking “What is it that I (we) wish to do?” A half-formed answer may already exist
to this question, otherwise, why is it being asked.
If it is the case that what is desired is to change the context or practice of the activity
rather than the activity itself (to build a better mousetrap) then the purpose that is
being pursued is perhaps not the explicit activity but some higher order desire e.g. to
be independent, to be different, to be satisfied, to improve the human condition.
Human motivation is not the subject of this paper; it is enough that there is a desire
for change. That desire may be driven by some dissatisfaction with the current state
and/or some personal inspiration for improvement, albeit one persons “improvement”
may be another’s retrograde step. Regardless, the questions remain as fundamental
to the process:-
What is it that I (we) do?
What is it that I (we) wish to do?
These questions can only be properly answered by the individual or group by whom
they are asked, working from the meaning (to them) of the functions undertaken
rather than the functions themselves. In this context to claim a personal meaning to
activity as being “to make money” is as valid as “to develop knowledge”. In the first
case money is the motivation, whilst in the second it is something which the structure
and legal framework of the developed world, in general, constrains us to possess to
be considered “viable”.
Once a purpose or mission has been defined the candidate can progress to the next
step, objective setting, using that purpose as the framework for decisions.
3.2 Objectives: the basis for action
Objectives were described in section2 of this paper as stating the attributes the
organisation must have in order to fulfil its purpose. Transferring this to the
candidate entrepreneur or intrapreneur, objectives may be seen as statements of
achievement which may be measures against the stated purpose. The objectives
will again be closely related to the set of expectations, beliefs, values and norms of
the individual(s) involved in the process.
7
Objectives, derived from the purpose, may be as varied as the purposes themselves.
These will develop from the attributes which are already evidenced and those which
are to be attained, they may be expresses very simply e.g. “to obtain a position in
research” or in more financially measurable ways, e.g. for making money, “how
much” and “when”.
Included in these attributes may be skills and knowledge targets which are
considered desirable to fulfil the purpose. An aspiring millionaire may want to
acquire accountancy skills whilst someone who wishes to “influence managers” may
wish to acquire consultancy and teaching skills as well as subject knowledge.
The key questions for this stage of the process then are:-
What attributes do I (we) have?
What attributes do I (we) need?
The gap between these is the basis for action.
This stage being, temporarily, complete there exists a statement of purpose and the
objectives to be pursued to fulfil that purpose. The next key stage is to review the
environmental factors which will influence success.
3.3 Environment: the context
The entrepreneurial decision cannot be taken in isolation from the environment of the
entrepreneur, it is suggested that it is driven by that environment. The entrepreneur
if regarded as a “viable system” will both be influenced by the environment and be
seeking to influence it to support HIS purpose and HIS objectives. The environment
may be seen as the decision context, what may be appropriate in one may be highly
inappropriate in another although seemingly absurd entrepreneurial ventures do
occur and succeed, such as the British construction company selling sand to
countries of the Middle east.
The desire for change was suggested in section 3.1 as being derived from
“dissatisfaction with the current state” or “personal inspiration for improvement”. This
desire for change, and perhaps the increasing level of commercial entrepreneurship
particularly in the most developed economies, can be considered to arise from the
enormous changes occurring in all aspects of contemporary life. Assumptions and
beliefs are continuously challenged and when yesterday’s fiction becomes today’s
fact and tomorrow’s history then each individual must seek to exercise some degree
of control over his or her future. This is attempted by trying to recognise and
anticipate environmental changes and secure advantage from them within the
context of a set of personal expectations and desires.
8
A major change being experienced by the Western economies is seen in the nature
and structure of our large organisations and institutions. Less than a generation ago
people joined such organisations with an expectation of a lifetime’s employment and
the organisations themselves reinforced this belief. During the 1980s and 90s the
certainties promised by these organisations have been seen to become of less and
less value. Neither their managements nor their employees seemed to realise the
extent to which changes in technology and world politics and economics would affect
their existence and operations.
Handy (1989) wrote of the “Age of UnReason”, an age in which change would not be
gradual and incremental, a part of a pattern, but “discontinuous”, when the biggest
differences in the way we live will arise from the way our work is organised, and,
when our thinking will have to become discontinuous in order to match the
turbulence of the environment.. It seems to me that it is entrepreneurs, innovators,
agents of change who are embracing this most effectively because they have
recognised that “The Age of UnReason” has already arrived.
Oliga, quoted by Flood (1), referred to “phenomenal changes found in science and
technology, political structures and new visions of a global market”. The impact of
these changes on society collectively and individuals is the concern of the general
environmental review, an environment of increasing complexity, dynamism and
diversity. All of these factors increase the number of options available to the
individual and must be considered relevant to the entrepreneurial decision.
The need then is to undertake an environmental review in relation to entrepreneurial
aspirations and not to simply recognise the changes that are happening, but to
critically assess and interpret those changes and their potential impact on the stated
purpose and objectives.
The specific review should focus on issues of direct relevance to the venture under
consideration. Porter’s model (1990), which is intended to identify the sources of his
four forces and to enable the development of a strategy which maximises opportunity
while minimising threats, provides the inspiration for this review. Whilst Porter
attempts to determine the level of competitive rivalry through an examination of the
factors directly acting on the business, the terms used in this adaptation are derived
from factors considered to affect entrepreneurial opportunity and attempt to allow for
a more general interpretation in any entrepreneurial or intrapreneurial context.
The terms are substituted as follows:-
Potential Entrants: Resistors
- those forces which act to inhibit change in the chosen field. These may be
Legal, Financial, Technical, Political, Social etc. and may be either external to
9
the entrepreneurial environment or internal for intrapreneurial activity in an
existing organisation.
Substitutes: Alternative Innovators
- other actors addressing or seeking to address the identified need by other
means. A high level of alternatives would suggest strong recognition of the
need for change.
Buyers and Suppliers: Providers and Users
- those exercising some power or influence over the area to be addressed.
Power is high when these control either the inputs to or the outputs from the
motivation.
The purpose of the general and specific studies is to inform the decision maker
about the state and nature of the environments. This stage should reveal to the
would-be entrepreneur. This stage should reveal to the would-be entrepreneur
whether there is any perceived value in his or her idea, whether and how the need
for change is already being addressed and what threats are in evidence against a
successful outcome.
The candidate has now reviewed his or her mission, set objectives and reviewed the
opportunities and threats in the environment. The next stage is an internal review of
strengths and weaknesses.
10
3.4 Internal audit: Self-assessment?
This stage of the strategic management process requires a critical review of the
organisation to reveal its strengths and weaknesses in relation to the purpose,
objectives and environmental opportunities and threats to be faced.
This adapted process for entrepreneurial decision making has the same purpose but
need to take account of some additional factors. Typically, within an organisation the
internal business audit would take account of issues such as marketing, production
capability, finance and staffing. These remain relevant issues for the
entrepreneur/intrapreneur interpreted as follows:-
Marketing how is the proposed change to be promoted?
Production capability what resources are available to enable the change?
Finance what funding is available to sponsor the change?
Staffing what skills are available, how do they match the requirements of the
proposed task?
These questions may be asked either at the level of the organisation or the
individual, the answers being particular to a given case.
For individuals wishing to become entrepreneurial/intrapreneurial there are additional
questions which need to be addressed. These come closest, in this paper, to asking
the question why (or why not?) be entrepreneurial? A need for change has been
established and the individual must determine whether he or she is to contribute to it.
The questions are as follows:-
How strong is the personal determination to initiate or innovate, and to make it
successful?
What level of support/resistance can be expected from family and friends?
In an intrapreneurial situation, whilst resistance to change has already been
assessed through the environmental review what support or opposition can be
expected from the immediately superior or subordinate in the organisation?
How strong is the network of support?
It will be apparent that the greater the strengths revealed throughout the review the
more likely the entrepreneur is to achieve success in the innovation.
11
3.5 Self-determination?
The equivalent part of the strategic management process seeks to bring together all
of the work so far undertaken in a SWOT analysis which reveals the current state of
the organisation in its environment and highlights the need for action.
For the model this stage of the process is, perhaps, the most critical. An individual,
or group, have recognised a need for a new purpose, have identified attributes which
they must possess to fulfil that purpose, reviewed their external environments and
assessed themselves and their resources.
They will then be aware of all of the constraints acting on them and the opportunities
presented. There are then two key questions for this stage:-
How can I (we) take advantage of the opportunities?
How can I (we) overcome the constraints?
The answers to these questions will reveal the extent to which the subject can
control his or her own destiny; how the future may be self-determined.
The opportunities and constraints now revealed provide a prompt for the introduction
of systems methodologies to address them. A suggested approach to this is to
utilise the Total Systems Intervention approach proposed by Flood & J ackson (6),
this enables an appropriate methodology to be chosen for handling the issues
present in a variety of situations. Flood (1) showed how ideas from Cybernetics, Soft
Systems Thinking and Critical Systems Thinking could help to deal with the problems
of choice and organisation.
It is intended that through the application of systems approaches, opportunities can
be exploited and constraints overcome.
3.6 Reiteration
Figure 3 reveals the whole process diagrammatically. The process is shown as
looping back to its, arbitrarily, start point of “mission” since it is considered to be the
case that the “self-questioning” can never be complete as the present and future are
continuously reinformed by the past.
For those unfamiliar with systems thinking it is perhaps worthwhile to reiterate the
process for which the diagram is a representation.
Firstly, the process is composed of a number of parts of which continuously interact
with the others. This means both, that the outcome is a product of the whole
process and the result of the interaction between the parts, and that to undertake
12
any one stage in isolation from the others would lead to a different and arguably less
useful outcome.
Secondly, the arrows on the diagram indicate flows of information which are
continuously in operation; the process does not stop and start.
Convenience of writing has determined a start point for the investigation of “Defining
the mission”, a process continuously informed by the past, present and desired
future. This process is in itself continuously influenced by previous outcomes. The
second stage is the selection of objectives, this may be seen as identifying desired
attributes to “close the gap” between where and what we are and what we would like
to be. The third and fourth stages, environmental review, considers the influence
which acts upon the achievability of the stated mission and objectives. This is a two
stage process looking both at general environmental factors and at particular
influences on entrepreneurial opportunity (see diagram 2), the specific environment
is contained within the general environment as a sub-system.
13
14
The fifth stage, self-assessment again deals with two sub-systems, the first of these
assesses the availability of resources to promote and sustain the change, the
second at the strengths and weaknesses of the individual and his/her support.
These sub-systems again interact with each other.
The final stage is called self-determination and requires the subject to make a
decision based on the information now gathered. This information will suggest
opportunities and constraints acting upon the decision maker. It has been suggested
that the methodologies of systems thinking are used to help inform the decision by
enabling a systemic review of the problem situation.
Completion of the final stage will lead to an outcome; that outcome reinforms the
stated mission and the process of the model is ready to commence.
3.7 Conclusion
This section has suggested an entrepreneurial decision process aimed at revealing
the factors and issues bearing upon that decision for any particular case.
If, the decision is to proceed with a new venture or innovation, then, the next stages
will be unique to the case although the literature on management provides
considerable assistance.
If, the decision is to maintain the status quo, perhaps the individual knows why he or
she has chosen that route.
4. Summary
This paper has endeavoured to follow Flood’s proposal that in order to provide some
basis of principle for the study of entrepreneurship we should extract lessons from
the systems and management sciences. It has done this by attempting to adapt the
process of strategic management to the entrepreneurial desire and has brought in to
that process systems methodologies which help to address the opportunities and
constraints which act on the aspirant entrepreneur.
It is hoped that this work starts to answer Flood’s request for a discipline of
entrepreneurship which respects human well-being and is innovative.
This paper was first used as a teaching device for MBA students in Hong Kong and
the validity of the ideas has been explored through that process. Their comments
and criticisms, particularly from Tom Lun, helped in formulating this version of the
paper and the model.
15
It is hoped that there is some value in these ideas, firstly in that it allows each of us
to define for ourselves what “success” means and, secondly that it may make a
contribution to reducing the failure rate of new ventures of all types.
References:
(1) R.L. Flood 1991, Entrepreneurship, Innovation and Change Vol 1.1 pp 13-25
Plenum
(2) Mintzberg, 1983,Power in and around Organisations
(3) Porter, 1980, Competitive Strategy, Free Press
(4) Beer, 1985, Diagnosing the System for Organisations, Wiley
(5) Handy, 1989, The Age of Unreason, Arrow
(6) Flood & J ackson, 1991, Creative Problem Solving, Wiley
doc_731023340.pdf
During this such a detailed file with regards to a process for the entrepreneurial decision.
1
A Process for the Entrepreneurial Decision?
(To be or not to be an entrepreneur may or may not be the
question, but what is the answer?)
Written November 1992, Revised December 1992
Published in Entrepreneurship, Innovation and Change
Much of the writing on Entrepreneurship is concerned either with Entrepreneurial
personality, i.e. what type of person is most likely to succeed or, with practical
aspects of launching a new venture i.e. planning, raising capital and so on. This
paper begins to address the research programme proposed by Flood (1991) as
necessary for progress to be made from the narrow focus of those existing writings.
This is attempted by seeking to adapt some of the ideas of strategic management to
making the Entrepreneurial decision: To be or not to be?
KEY WORDS: methodology, entrepreneurship, strategic management, systemic,
viable system, purpose.
1) Introduction
Flood (1991) proposed that the “narrow focus” of entrepreneurial studies be
broadened by drawing lessons from the systems and management sciences. This
paper attempts to follow that proposal by seeking to adapt the process of strategic
management: matching the capabilities of an organisation to its environment to
achieve its objectives; for use by a potential entrepreneur.
The major part of the mainstream published work on entrepreneurship is concerned
either, with the “type” of person most likely to succeed as an entrepreneur, or on the
practical detail of business planning, raising capital and so on. This paper suggests
a process through which those with entrepreneurial inclinations can assess their
position and define the opportunities open to them.
Although the need for entrepreneurs is highlighted, the question “why be an
entrepreneur?” is not aske; there may be almost as many reasons as there are
entrepreneurs and the answer must be for the individual to decide. Similarly, the
practical aspects will not be addressed, these are covered adequately elsewhere.
Instead the paper concentrates on proposing a systemic and general methodology,
through which any individual or group may assess wants and needs, can review an
existing position and decide upon possible courses of action. It is systemic since it
attempts to deal with a whole process of decision, recognising both the continuous
interaction between the individual elements of the process and that any one part of
the process, taken in isolation, is unlikely to generate a productive outcome. It is
2
general since it attempts to deal with the process itself rather than an individual case
and it is intended to be applicable to any form of entrepreneurship or
intrapreneurship.
The next section of this paper will briefly review the process of strategic
management adopted by many organisations.
2) The Strategic Management Process
There is no single accepted and universally applied approach to strategic
management, each organisation using its own internal systems and procedures to
make strategic decisions. There is though a common pattern to these processes
which, if followed, is considered to increase the chances of success. It is that
common pattern which will be reviewed in this paper.
The process, for simplicity of writing, has been started at defining the mission but
any organisation may be at any stage of the process and may in effect start at any
point. To be successful the process must be dynamic and iterative, looping forwards
or backwards between points as circumstances change and new information is
discovered, each subsequent stage reinforming the others.
The mission can be best described as the “purpose” of the organisation, that is to
say the reason for which it exists and is viewed by Mintzberg (1983) as the
“organisation’s basic function in society”. This conception of purpose is vital
because it provides a framework within each subsequent decision can be made i.e.
does this decision, or action, help towards fulfilling the stated purpose.
The second step, objective setting, may be seen as describing the attributes the
organisation must have in order to fulfil its purpose, e.g. if the organisation has a
stated purpose of being “a leader in new technology”, then it would be expected to
have attributes such as a strong research and development capability and a highly
innovative management group. If it does not have these attributes then its
objectives, arising from its mission statement, would be to acquire these things.
Thus the objectives may be seen as more or less measureable achievements which
enable the fulfilment of purpose. These objectives are shaped by the culture, norms,
values and expectations of those within the organisation.
The third step in the process is the review of the general and specific environments
in which the organisation operates. This enables the identification of opportunities
and threats surrounding the organisation. The general environmental factors are
seen as having a broad and indirect impact on the organisation. The specific
environment acts directly on the organisation and is viewed by Porter(1980) as
3
consisting of four basic forces, potential entrants, buyers, suppliers and substitutes.
The interaction of these forces indicates the level of competitive rivalry.
The review of external factors having been completed attention turns to an
examination of internal factors. This means a study of the strengths and
weaknesses of the organisation in relation to its mission, objectives and the external
influences acting upon it. This may include finance, staff, structure, products and
many other issues.
This SWOT analysis should ensure that the organisation is fully aware of its position
and is able to determine the options available to it. There then follows a process of
evaluating the options in order to choose between them, for which a number of
techniques are available and finally development and implementation of plans to
achieve strategic objectives.
It was stated above that this should be a dynamic and iterative process and it is
important to note that at any point those involved in the process should be prepared
to question and alter prior decisions when new information makes that desirable.
The process is shown diagrammatically in Figure 1.
4
5
This section has reviewed a process of strategic management. The next section will
show how the same process may be followed by an aspiring entrepreneur or
intrapreneur.
3) An Entrepreneurial Decision Process.
Flood (1991) describes an entrepreneur as “a person (or group) who initiates and
manages enterprising new ventures” whilst an intrapreneur is seen as “an innovative
person (or group) in a project situation who (re)vitalises management (the five
functions) to sustain and strengthen enterprising new, establishing or established
venture”. Such people would be displaying purposeful behaviour.
The purpose of strategic management is to enable the commencement of new
ventures (initiation) and the renewal or renovation of established ventures
(revitalisation). Corporate renewal is, by Flood’s definition, intrapreneurial and the
people charged with facilitating that renewal are intrapreneurs.
The process by which an individual can determine his or her own entrepreneurial
desire may be called personal renewal. It will now be argued that individuals and
groups can utilise the process of strategic management to determine for themselves
whether or not To Be.
As with the previous section this process takes as its starting point the definition of
purpose but must be seen as continuous, dynamic and iterative. There cannot be a
“clean start” for an entrepreneur or intrapreneur because his or her current condition
has arisen from the past which perpetually re-informs the present. It is important to
remember throughout that human needs, wants and aspirations need not necessarily
be fulfilled through paid work and that Entrepreneurial or intrapreneurial activity in
pursuit of individual purpose is as valid outside the workplace as within it.
3.1 Mission: a sense of purpose, a framework for decisions.
Beer (1985) proposes that “The purpose of a system is what it does” and each
human is considered by him as a “viable system”, that is, a system capable of
independent existence within a given environment. Following this, if humans are
viable systems, and viable systems are purposeful, then we must have “purposes”
around which are lives are organised and these purposes can be inferred from
observation of what we do. An aspiring entrepreneur or intrapreneur can be seen as
someone who wishes to review his or her “purpose and, if appropriate, make
changes.
6
The definition of “mission” for an organisation is seen as providing a framework for
all other decisions. The first step then for potential entrepreneurs or intrapreneurs is
to determine a personal mission in order to provide that framework. To have reache
d a stage in personal development where purpose can be reviewed the candidate(s)
must already be doing something, the first question then is, “What is it that I (we)
do?” Asking that question alone, though, would be to deny the whole process in
which the candidate has become engaged, the mind must be opened to innovation
by asking “What is it that I (we) wish to do?” A half-formed answer may already exist
to this question, otherwise, why is it being asked.
If it is the case that what is desired is to change the context or practice of the activity
rather than the activity itself (to build a better mousetrap) then the purpose that is
being pursued is perhaps not the explicit activity but some higher order desire e.g. to
be independent, to be different, to be satisfied, to improve the human condition.
Human motivation is not the subject of this paper; it is enough that there is a desire
for change. That desire may be driven by some dissatisfaction with the current state
and/or some personal inspiration for improvement, albeit one persons “improvement”
may be another’s retrograde step. Regardless, the questions remain as fundamental
to the process:-
What is it that I (we) do?
What is it that I (we) wish to do?
These questions can only be properly answered by the individual or group by whom
they are asked, working from the meaning (to them) of the functions undertaken
rather than the functions themselves. In this context to claim a personal meaning to
activity as being “to make money” is as valid as “to develop knowledge”. In the first
case money is the motivation, whilst in the second it is something which the structure
and legal framework of the developed world, in general, constrains us to possess to
be considered “viable”.
Once a purpose or mission has been defined the candidate can progress to the next
step, objective setting, using that purpose as the framework for decisions.
3.2 Objectives: the basis for action
Objectives were described in section2 of this paper as stating the attributes the
organisation must have in order to fulfil its purpose. Transferring this to the
candidate entrepreneur or intrapreneur, objectives may be seen as statements of
achievement which may be measures against the stated purpose. The objectives
will again be closely related to the set of expectations, beliefs, values and norms of
the individual(s) involved in the process.
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Objectives, derived from the purpose, may be as varied as the purposes themselves.
These will develop from the attributes which are already evidenced and those which
are to be attained, they may be expresses very simply e.g. “to obtain a position in
research” or in more financially measurable ways, e.g. for making money, “how
much” and “when”.
Included in these attributes may be skills and knowledge targets which are
considered desirable to fulfil the purpose. An aspiring millionaire may want to
acquire accountancy skills whilst someone who wishes to “influence managers” may
wish to acquire consultancy and teaching skills as well as subject knowledge.
The key questions for this stage of the process then are:-
What attributes do I (we) have?
What attributes do I (we) need?
The gap between these is the basis for action.
This stage being, temporarily, complete there exists a statement of purpose and the
objectives to be pursued to fulfil that purpose. The next key stage is to review the
environmental factors which will influence success.
3.3 Environment: the context
The entrepreneurial decision cannot be taken in isolation from the environment of the
entrepreneur, it is suggested that it is driven by that environment. The entrepreneur
if regarded as a “viable system” will both be influenced by the environment and be
seeking to influence it to support HIS purpose and HIS objectives. The environment
may be seen as the decision context, what may be appropriate in one may be highly
inappropriate in another although seemingly absurd entrepreneurial ventures do
occur and succeed, such as the British construction company selling sand to
countries of the Middle east.
The desire for change was suggested in section 3.1 as being derived from
“dissatisfaction with the current state” or “personal inspiration for improvement”. This
desire for change, and perhaps the increasing level of commercial entrepreneurship
particularly in the most developed economies, can be considered to arise from the
enormous changes occurring in all aspects of contemporary life. Assumptions and
beliefs are continuously challenged and when yesterday’s fiction becomes today’s
fact and tomorrow’s history then each individual must seek to exercise some degree
of control over his or her future. This is attempted by trying to recognise and
anticipate environmental changes and secure advantage from them within the
context of a set of personal expectations and desires.
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A major change being experienced by the Western economies is seen in the nature
and structure of our large organisations and institutions. Less than a generation ago
people joined such organisations with an expectation of a lifetime’s employment and
the organisations themselves reinforced this belief. During the 1980s and 90s the
certainties promised by these organisations have been seen to become of less and
less value. Neither their managements nor their employees seemed to realise the
extent to which changes in technology and world politics and economics would affect
their existence and operations.
Handy (1989) wrote of the “Age of UnReason”, an age in which change would not be
gradual and incremental, a part of a pattern, but “discontinuous”, when the biggest
differences in the way we live will arise from the way our work is organised, and,
when our thinking will have to become discontinuous in order to match the
turbulence of the environment.. It seems to me that it is entrepreneurs, innovators,
agents of change who are embracing this most effectively because they have
recognised that “The Age of UnReason” has already arrived.
Oliga, quoted by Flood (1), referred to “phenomenal changes found in science and
technology, political structures and new visions of a global market”. The impact of
these changes on society collectively and individuals is the concern of the general
environmental review, an environment of increasing complexity, dynamism and
diversity. All of these factors increase the number of options available to the
individual and must be considered relevant to the entrepreneurial decision.
The need then is to undertake an environmental review in relation to entrepreneurial
aspirations and not to simply recognise the changes that are happening, but to
critically assess and interpret those changes and their potential impact on the stated
purpose and objectives.
The specific review should focus on issues of direct relevance to the venture under
consideration. Porter’s model (1990), which is intended to identify the sources of his
four forces and to enable the development of a strategy which maximises opportunity
while minimising threats, provides the inspiration for this review. Whilst Porter
attempts to determine the level of competitive rivalry through an examination of the
factors directly acting on the business, the terms used in this adaptation are derived
from factors considered to affect entrepreneurial opportunity and attempt to allow for
a more general interpretation in any entrepreneurial or intrapreneurial context.
The terms are substituted as follows:-
Potential Entrants: Resistors
- those forces which act to inhibit change in the chosen field. These may be
Legal, Financial, Technical, Political, Social etc. and may be either external to
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the entrepreneurial environment or internal for intrapreneurial activity in an
existing organisation.
Substitutes: Alternative Innovators
- other actors addressing or seeking to address the identified need by other
means. A high level of alternatives would suggest strong recognition of the
need for change.
Buyers and Suppliers: Providers and Users
- those exercising some power or influence over the area to be addressed.
Power is high when these control either the inputs to or the outputs from the
motivation.
The purpose of the general and specific studies is to inform the decision maker
about the state and nature of the environments. This stage should reveal to the
would-be entrepreneur. This stage should reveal to the would-be entrepreneur
whether there is any perceived value in his or her idea, whether and how the need
for change is already being addressed and what threats are in evidence against a
successful outcome.
The candidate has now reviewed his or her mission, set objectives and reviewed the
opportunities and threats in the environment. The next stage is an internal review of
strengths and weaknesses.
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3.4 Internal audit: Self-assessment?
This stage of the strategic management process requires a critical review of the
organisation to reveal its strengths and weaknesses in relation to the purpose,
objectives and environmental opportunities and threats to be faced.
This adapted process for entrepreneurial decision making has the same purpose but
need to take account of some additional factors. Typically, within an organisation the
internal business audit would take account of issues such as marketing, production
capability, finance and staffing. These remain relevant issues for the
entrepreneur/intrapreneur interpreted as follows:-
Marketing how is the proposed change to be promoted?
Production capability what resources are available to enable the change?
Finance what funding is available to sponsor the change?
Staffing what skills are available, how do they match the requirements of the
proposed task?
These questions may be asked either at the level of the organisation or the
individual, the answers being particular to a given case.
For individuals wishing to become entrepreneurial/intrapreneurial there are additional
questions which need to be addressed. These come closest, in this paper, to asking
the question why (or why not?) be entrepreneurial? A need for change has been
established and the individual must determine whether he or she is to contribute to it.
The questions are as follows:-
How strong is the personal determination to initiate or innovate, and to make it
successful?
What level of support/resistance can be expected from family and friends?
In an intrapreneurial situation, whilst resistance to change has already been
assessed through the environmental review what support or opposition can be
expected from the immediately superior or subordinate in the organisation?
How strong is the network of support?
It will be apparent that the greater the strengths revealed throughout the review the
more likely the entrepreneur is to achieve success in the innovation.
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3.5 Self-determination?
The equivalent part of the strategic management process seeks to bring together all
of the work so far undertaken in a SWOT analysis which reveals the current state of
the organisation in its environment and highlights the need for action.
For the model this stage of the process is, perhaps, the most critical. An individual,
or group, have recognised a need for a new purpose, have identified attributes which
they must possess to fulfil that purpose, reviewed their external environments and
assessed themselves and their resources.
They will then be aware of all of the constraints acting on them and the opportunities
presented. There are then two key questions for this stage:-
How can I (we) take advantage of the opportunities?
How can I (we) overcome the constraints?
The answers to these questions will reveal the extent to which the subject can
control his or her own destiny; how the future may be self-determined.
The opportunities and constraints now revealed provide a prompt for the introduction
of systems methodologies to address them. A suggested approach to this is to
utilise the Total Systems Intervention approach proposed by Flood & J ackson (6),
this enables an appropriate methodology to be chosen for handling the issues
present in a variety of situations. Flood (1) showed how ideas from Cybernetics, Soft
Systems Thinking and Critical Systems Thinking could help to deal with the problems
of choice and organisation.
It is intended that through the application of systems approaches, opportunities can
be exploited and constraints overcome.
3.6 Reiteration
Figure 3 reveals the whole process diagrammatically. The process is shown as
looping back to its, arbitrarily, start point of “mission” since it is considered to be the
case that the “self-questioning” can never be complete as the present and future are
continuously reinformed by the past.
For those unfamiliar with systems thinking it is perhaps worthwhile to reiterate the
process for which the diagram is a representation.
Firstly, the process is composed of a number of parts of which continuously interact
with the others. This means both, that the outcome is a product of the whole
process and the result of the interaction between the parts, and that to undertake
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any one stage in isolation from the others would lead to a different and arguably less
useful outcome.
Secondly, the arrows on the diagram indicate flows of information which are
continuously in operation; the process does not stop and start.
Convenience of writing has determined a start point for the investigation of “Defining
the mission”, a process continuously informed by the past, present and desired
future. This process is in itself continuously influenced by previous outcomes. The
second stage is the selection of objectives, this may be seen as identifying desired
attributes to “close the gap” between where and what we are and what we would like
to be. The third and fourth stages, environmental review, considers the influence
which acts upon the achievability of the stated mission and objectives. This is a two
stage process looking both at general environmental factors and at particular
influences on entrepreneurial opportunity (see diagram 2), the specific environment
is contained within the general environment as a sub-system.
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The fifth stage, self-assessment again deals with two sub-systems, the first of these
assesses the availability of resources to promote and sustain the change, the
second at the strengths and weaknesses of the individual and his/her support.
These sub-systems again interact with each other.
The final stage is called self-determination and requires the subject to make a
decision based on the information now gathered. This information will suggest
opportunities and constraints acting upon the decision maker. It has been suggested
that the methodologies of systems thinking are used to help inform the decision by
enabling a systemic review of the problem situation.
Completion of the final stage will lead to an outcome; that outcome reinforms the
stated mission and the process of the model is ready to commence.
3.7 Conclusion
This section has suggested an entrepreneurial decision process aimed at revealing
the factors and issues bearing upon that decision for any particular case.
If, the decision is to proceed with a new venture or innovation, then, the next stages
will be unique to the case although the literature on management provides
considerable assistance.
If, the decision is to maintain the status quo, perhaps the individual knows why he or
she has chosen that route.
4. Summary
This paper has endeavoured to follow Flood’s proposal that in order to provide some
basis of principle for the study of entrepreneurship we should extract lessons from
the systems and management sciences. It has done this by attempting to adapt the
process of strategic management to the entrepreneurial desire and has brought in to
that process systems methodologies which help to address the opportunities and
constraints which act on the aspirant entrepreneur.
It is hoped that this work starts to answer Flood’s request for a discipline of
entrepreneurship which respects human well-being and is innovative.
This paper was first used as a teaching device for MBA students in Hong Kong and
the validity of the ideas has been explored through that process. Their comments
and criticisms, particularly from Tom Lun, helped in formulating this version of the
paper and the model.
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It is hoped that there is some value in these ideas, firstly in that it allows each of us
to define for ourselves what “success” means and, secondly that it may make a
contribution to reducing the failure rate of new ventures of all types.
References:
(1) R.L. Flood 1991, Entrepreneurship, Innovation and Change Vol 1.1 pp 13-25
Plenum
(2) Mintzberg, 1983,Power in and around Organisations
(3) Porter, 1980, Competitive Strategy, Free Press
(4) Beer, 1985, Diagnosing the System for Organisations, Wiley
(5) Handy, 1989, The Age of Unreason, Arrow
(6) Flood & J ackson, 1991, Creative Problem Solving, Wiley
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