THE ENTREPRENEURIAL SCHOOL

STRATEGY FORMATION AS A

VISIONARY PROCESS

Strategic Management

INTRODUCTION

From the schools of perception now we move towards the school of thought that seeks to

understand the process of strategy formation. The entrepreneurial school not only focuses on

the strategy formulation process exclusively on single leader but it has also stressed on the

most innate mental states and processes-intuition, judgment, wisdom, experience & insight.

This promotes a view of strategy as perspective, associated with image and sense of direction,

namely vision. Here, however, the strategic perspective is not so much collective or cultural,

as in some of the other schools to be discussed, as personal, the construct of the leader.

Consequently, in this school the organization becomes responsive to the dictates of that

individual subservient to his or her leadership. And the environment, if not exactly

subservient, becomes the terrain on which the leader maneuvers with some ease, at least in

terms of directing the organization into a protective niche. The most central concept of this

school is vision: a mental representation of strategy created or at least expressed in the head

of the leader. That vision serves as both an inspiration and a sense of what needs to be done a

guiding idea, if you like. True to its label, vision often tends to be a kind of image more than

a fully articulated plan that leaves it flexible, so that the leader can adapt it to his or her

experiences. This suggests that entrepreneurial strategy is both deliberate and emergent:

deliberate in its broad lines and sense of direction, emergent in its details so that these can be

adapted.

ORINGIN IN ECONOMICS

Like other school of thoughts such as (positioning school of thought) Entrepreneurial school

of thought also grew out of economics. There were economists, however, who considered this

narrow view of the entrepreneur to be a major failure of economics. Karl Marx, oddly

enough, was one of them. He lavished praise on entrepreneurs as agents of economic and

technological change, but was highly critical of their impact on society at large. The seminal

figure who brought the entrepreneur into prominence in economic thought was Joseph

Schumpeter. To him it was not maximization of profits that explained corporate behavior.

Schumpeter introduced his famous notion of creative destruction. This is the engine that

keeps capitalism moving forward, and the driver of that engine is the entrepreneur. For

Schumpeter, the entrepreneur is not necessarily somebody who puts up the initial capital or

invents the new product, but the person with the business idea. Ideas are elusive, but in the

hands of entrepreneurs, they become power.

STRATEGIC THINKING AS SEEING

As we term strategies as vision then seeing plays a very important role in strategic thinking.

As we all know strategic thinking means to look ahead but we cannot look ahead if we cannot

see behind because any good vision of the future has to be rooted in an understanding of the

past. According to many people strategic thinking is seeing above but it is not always the

case. For example

It is as if strategists should take helicopters, to be able to see the "big picture," to distinguish

"the forest from the trees." But can anyone really get the big picture just by seeing above?

The forest looks like a rug from a helicopter. Anyone who has taken a walk in a forest knows

that it doesn't look much like that on the ground.

Strategic thinkers have to find the gem of an idea that changes their organization. And that

comes from a lot of hard and messy digging. There is no big picture ready for the seeing;

each strategist has to construct his or her own. Thus, strategic thinking is also inductive

thinking. You can, however, see ahead by seeing behind and see above by seeing below and

still not be a strategic thinker. That takes more creativity for one thing. Strategic thinkers see

differently from other people; they pick out the precious gems that others miss. They

challenge conventional wisdom, the industry recipe, the traditional strategy and thereby

distinguish their organizations. But there remains one last element. What is the use of doing

all this seeing ahead and behind, above and below, beside and beyond if nothing gets done. In

other words, for a thinker to deserve the label strategic, he or she must also see it through but

when u put all this together you get the answer and that makes one a strategic thinker.

The Literature of Entrepreneurial School Of Thought:

Entrepreneurial school saw personalized leadership, based on vision, as the key to

organizational success. Earlier it was only observed especially in business but later also in

other sectors. It is not only in starting up and building new organizations but also in "turning

around" faltering established ones. Entrepreneurship was originally associated with the

creators of their own businesses; the word was gradually extended to describe various forms

of personalized, proactive, single minded leadership in organizations. For example in the

chapter there was a term used “in-trapreneurship” describes those people who take initiatives

within large organizations.

Here we will talk about the literature of entrepreneurial school of thought.

THE GREAT LEADER IN THE POPULAR PRESS

If we will talk about literature on entrepreneurship school of thought, the vast majority of

people have find themselves as popular leaders in press or in the biographies and

autobiographies of famous tycoons of industry. For example as mentioned in the chapter

"CEO Jack Smith didn't just stop the bleeding," reported a Fortune headline on October 17,

1994. "With a boost from rising auto sales, he made GM healthy again".

THE ENTREPRENEURIAL PERSONALITY

A second body of literature on entrepreneurship focuses on the entrepreneurial personality. If

entrepreneurship is really about the decisions, visions, and intuitions of the single individual,

then it stands to reason that the most obvious thing to study is the traits of the successful

entrepreneurs. Most of the research is negative on entrepreneurs. As it was discussed in the

chapter that Manfred Kets de Vries, for example, referred to the entrepreneur as "the last lone

ranger" in a 1977 article (34), and published another in 1985 on "The Dark Side of

Entrepreneurship.

"For example, from childhood through formal and informal education to the steps they took

to create their enterprises. Data from psychological tests reinforced their analysis. What

emerged is a picture of tough, pragmatic people driven from early childhood by powerful

needs for achievement and independence. At some point in their lives, each entrepreneur

faced disruption and a tendency to take moderate risks it was here that they set out on their

own.

Entrepreneur Vs Administrative

In looking into the Entrepreneurial personality, a number of writers have contrasted it with

the Administrative. For example, in making decisions, administrators and entrepreneurs

often proceed with a very different order of questions. The typical administrator asks: What

resources do I control? How can I minimize the impact of others on my ability to perform?

What opportunity is appropriate? The administrator’s actions are evolutionary actions, with

long duration. What happens is that the window of opportunity would often be gone by the

time all the necessary information became available for more rational decision making.

The entrepreneur tends to ask: Where is the opportunity? How do I capitalize on it? What

resources do I need? How do I gain control over them? What structure is best? Entrepreneur

actions tend to be revolutionary, with short direction. Entrepreneurs perceived more strength

versus weaknesses, opportunities versus threats, and potential for performance improvement

versus deterioration.

Characteristics of such personalities according to Mintzberg:

In the entrepreneurial mode strategy making is dominated by the active search for

new opportunities. The entrepreneurial organization focuses on opportunities,

problems are secondary. As Drucker wrote: Entrepreneurship requires that the few

available good people be deployed on opportunities rather than frittered away on

solving problems.

In the entrepreneurial organization, power is centralized in the hands of the chief

executive. Power here is believed to rest with one person capable of committing the

organization to bold courses of action. He or she can rule by order, relying on

personal power and sometimes on charisma. In one Egyptian firm described years

ago, but characteristic of today’s entrepreneurial firms nonetheless. There is no plan

for organization, no formalized procedures for selection and development of

managerial personnel, no publicized system of wage and salary.

In the entrepreneurial mode Strategy making is characterized by dramatic leaps

forward in the face of uncertainty. Strategy moves forward in the entrepreneurial

organization by the taking of large decisions those bold strokes.

In the entrepreneurial organization, Growth is the dominant goal. According to

psychologist, the entrepreneur is motivated above all by the need for achievement.

Since the organization's goals are simply the extension of the entrepreneur's own, the

dominant goal of the organization operating in the entrepreneurial mode would seem

to be growth, the most tangible manifestation of achievement.

Entrepreneurship and planning:

Interviews with the founders of 100 companies on the 1989 showed a list of 500 fastest

growing companies in the United States revealed that entrepreneurs spent little effort on

their initial business plan:

• 41 % had no business plan at all

• 26% had just a rudimentary, back-of-the-envelope type of plan

• 5% worked up financial projections for investors

• 28% wrote up a full-blown plan

Further the interview suggested that many entrepreneurs don't bother with well formulated

plans for good reasons. They thrive in rapidly changing industries and niches that tend to

deter established companies. And under these fluid conditions, an ability to roll with the

punches is much more important than careful planning.

Visionary Leadership

As the entrepreneurial school focuses solely on the individual leader and what their goals and

visions are.  Vision is the primary focus of this school and in this chapter vision is the mental

representation of strategy. To choose a direction, a leader must first have developed a mental

image of a possible and desirable future state of the organization. The great leader is someone

with a vision would come and save the organization; with his or her true vision which is

something you can see in your mind's eye. Bennis and Namus devote a good deal of attention

to vision are mentioned below:

• To choose a direction, a leader must first have developed a mental image of a possible and

desirable future state of the organization. This image, which we call a vision, may be as

vague as a dream or as precise as a goal or mission statement.

• A vision is a target that beckons. A vision always refers to a future state, a condition that

does not presently exist and never existed before. With a vision, the leader provides the all-

important bridge from the present to the future of the organization.

• By focusing attention on a vision, the leader operates on the emotional and spiritual

resources of the organization, on its values, commitment, and aspirations. The manager, by

contrast, operates on the physical resources of the organization, on its capital, human skills,

raw materials, and technology.

• If there is a spark of genius in the leadership function at all, it must lie in this transcending

ability, a kind of magic, to assemble out of the variety of images, signals, forecasts and

alternatives.

Vision as a drama

In a paper co-authored by Frances Westley and Henry Mintzberg (1989) contrasted two

views of visionary leadership. One, more traditional, is likened to a hypodermic needle the

active ingredient vision is loaded into a syringe of words, which is injected into the

employees. That causes them to jump up and down with great energy. the authors, drawing

upon Brooks, book on theatre, conceive strategic vision as drama as beginning in that magical

moment when fiction and life blend together. Drawing upon Peter Brook’s theatrical

literature the authors introduce three concepts namely repetition, representation and

assistance.

Repetition (rehearsal) the concept of repetition suggests that success comes from deep

familiarity of the subject at hand. Just as an actor perfects his/her lines by constant rehearsal,

similarly the visionary leader’s success stems from constant experience in a certain field.

Representation (performance) the concept of representation means not just to perform but

to make the past live again, giving it immediacy, vitality. To the strategist, that is vision

articulated, in words and actions, but of a particular kind: the words are pictures. What

distinguishes visionary leaders is their profound ability to use language in symbolic form as

metaphor. They do not just "see" things from a new perspective; they get others to so see

them too.

Assistance (attendance) the concept of assistance suggests that the audience of the drama,

whether in the theater or the organization, empowers the actor no less than the actor

empowers the audience. Leaders become visionary because they appeal powerfully to

specific constituencies at specific periods of time.

Entrepreneurial strategy formation in a supermarket chain:

Now we will discuss the two cases about the visionary leadership in which style and strategy

are combined. The first case is about the Entrepreneurial strategy formation in a super

market chain.

Steinberg’s a Canadian retail chain that starts with a small food store in Montreal in 1917.

After its start their sales grew to several billion dollars. Sam Steinberg who joined his mother

in that small store at the age of eleven and personally made some quick decisions. As

entrepreneur, in Steinberg we saw only two major reorientation in the strategy in sixty years

of company life span. The first change in the strategy is to move into Self-Services and

second one to move into the shopping center business. But these two moves were not so

much bold as they were assumed. In 1933 one of the company’s eight stores was going in

loss. So instead of to simply close that store the Sam Steinberg converted it into s Self

Services a new concept. In this case the business is simple and focused enough to be

comprehended in one head. On the other hand the strong point of this business success is also

the weak point of the case because after the leader departs the business would collapse, in this

case when Steinberg leaves the company went into bankruptcy.

The second case is about to develop a new mind in a Garment firm. This explains that where

visions come from? How do Entrepreneurial leaders pick up signals from the environment?

Canadelle produced women’s undergarments, mainly brassieres and girdles. It was successful

organization till late 1960. When the miniskirts had just come to dominate the fashion scene.

At that time French company entered the market with a light, molded garment using the

theme “just like not wearing a bra.” Nadler went to France to get license to manufacture their

product in Canada, but they refused. Nadler’s quoted that the one are spend in their offices

made the trip worthwhile. This leads to a major shift in strategic vision of Nadler’s. He

introduced a new line of more natural brassieres for younger customers by using Kurt

Lewin’s three stage model of change unfreezing, changing, and refreezing. Not everyone

accept the new vision those who are involved in old strategy may resist but when the

structure is simple as in the entrepreneurial organization that problem is relatively minor.

Contributions of Entrepreneurial School:

This school is very much relevant to new businesses and since its focuses on the visionary

leadership and strategy guidance and also the proactive nature that should be followed by the

businesses to get into a better position while facing the upcoming challenges. The basic

meaning of entrepreneurial school is to promote an entrepreneurial type of thinking in all

kinds of organizations. Also the school says that a leadership is an individual trait and

organization should find such leaders whom they can follow.

Criticism on Entrepreneurial School:

One of the major flaws of entrepreneurial school is that it proposes a single type of solution

for all kinds of issues arising in the organization which is to find a new visionary leader. This

also implies that there is no specific set of plan or a way to formulate new plans for different

types of strategies because the entrepreneurial school promotes innovations with the help of

inbuilt personal traits which again is a very qualitative and general definition of how to find a

visionary leader.

Another issue with this school is that the entrepreneurial school has no clear and universally

accepted definition of which of the entrepreneurial abilities are always good and which can

be harmful, because the authors of this school contradict and have different opinions about

what kind of characteristic are required and when.

One other issue is that operations and strategy formation is both centralized in the leaders or

chiefs office, this might be a good feature but if the leader is too much occupied with the

daily operations then this the strategy formulation can stop. Such a leader is confused and

forget the vision and passion related to it because the operation are pulling him down.

Stacey has also mentioned few drawbacks of the Entrepreneurial school:

The advice to form vision is not very useful and important when future is

unknowable

It might push all the managers in one direction and might not leave any space

for changes

The school implies to follow one person and his vision this end the innovation

on an individual level and also removes empowerment to think

People are distracted by visions if they are already working with unknowable

futures successfully

The entrepreneurial is school is weak because it relies upon one person’s health and whims

and if something happens to that man the whole organization starts falling. That’s is also said

by Phill and Collins that it’s better to make visionary organization than to rely on a visionary

leader.

Although the school has few drawbacks but it still is applied and needed in few specific

situation like new organization that are starting definitely need a leader and vision and

passion , similarly organization which are in big crisis are look for a messiah and there have

been various incidences when the such organization have been pulled out of the trouble by

visionary leaders.