Why managers must embrace entrepreneurship


Managers are constantly asked to behave like entrepreneurs. And equally, entrepreneurs are often asked to behave like managers. The manager is supposed to develop the drive and opportunism associated with entrepreneurship, and the entrepreneur is expected to learn the methodical disciplines of the manager.

How real is the difference, anyway? Probably the best study of entrepreneurship is Peter Drucker's classic 'Innovation and Entrepreneurship'.

Some of what Drucker wrote is highly debatable. He argued, for example, that entrepreneurs are not capitalists, investors, or employers. He also insisted that part of entrepreneurship is knowing how to raise, deploy and invest capital. But he was on surer ground in arguing that 'everyone who can face up to decision-making can learn to be an entrepreneur and to behave entrepreneurially'.

But if that is so, why do managers have so much trouble adopting the required behaviours – even though they are constantly urged to do so?

The favoured explanation is that entrepreneurship involves taking risks. While that is true, so does all human activity. The risk of taking an entrepreneurial decision is no different from the non-entrepreneurial risk of, say, offering somebody a job.

The classic definition of the entrepreneur is somebody who 'shifts economic resources out of an area of lower and into an area of higher productivity and greater yield'. That is hardly a risky proposition. No, the risk lies in a different definition, offered by Drucker: 'the entrepreneur always searches for change, responds to it, and exploits it as an opportunity'.

The crucial word here is 'change'. Change carries the risk that your second state will be worse than the first. That is, you launch a new, innovative product: if it succeeds, all is well; if it fails, your job might fail, too. The calculation is the same one that tilts the balance of executive decisions towards 'No' rather than 'Go'. Approval commits the approver to a new course of action. 'No' preserves the status quo.

Answer yes or no to these questions:

1) Do you 'evangelise' about your company and its products and services – both internally and externally?

2) Are you aroused to the extent of competitive paranoia by threats and actual challenges from rivals new and old?

3) Are you 'brutally frank' in your views and criticisms?

4) Are you intensely focused on the key business and strategy of the organisation?

5) Do you take the decision and act at a speed that's near to instantaneous?

6) Do you like ambiguity and feel comfortable in unclear situations?

7) Is your judgment good?

Seven Yes answers clearly establish your entrepreneurial credentials. It's only the last question that describes both the old and new model managers.

But even here there's a difference. The new variety of executive exercises that sound judgment on the run. This probably makes little difference to the quality of decision. But the slower-moving manager's loss of time, of course, can't be recovered. And the faster events are moving, the less you can afford the loss of time.

Focus, flatness and decisiveness have always been driving features of entrepreneurial success. The new management is going back to basics to move forward confidently amid spectacular uncertainties. Most of the old-economy managers have forgotten (if they ever knew) the entrepreneurial basics. Their need to relearn true management is urgent.

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About The Author

Robert Heller
Robert Heller

Robert Heller, who died aged 80 in August 2012, was Britain's most renowned and best-selling author on business management. Author of more than 50 books, he was the founding editor of Management Today and the Global Future Forum. About his latest title, The Fusion Manager, Sir John Harvey-Jones wrote: "The future lies with the thinking manager, and the thinking manager must read this book".

Older Comments

Supporting entrepreneurship is so important, especially in this economic climate. Allowing people to open their minds to the possibility of running their own business may be just what helps our economy get back on track.

The rise of entrepreneur based TV programmes such as Dragons' Den and websites and resources such as www.inafishbowl.com have helped to bring entrepreneurship to the forefront of people's minds and will hopefully encourage more entrepreneurs in the future.


You say that 'the risk of taking an entrepreneurial decision is no different from the non-entrepreneurial risk of, say, offering somebody a job.'

I don't agree. The risk of taking a truly entrepreneurial decision is that you stand to lose your own money. Employees never take that risk. By the very fact of being employed, employees are anti-entrepreneurial. They have rejected the opportunity provided by a free society to set up a business of their own. Comparing any employee to an entrepreneur, who often risk all their possessions to support their business, is an insult to the latter.