Is it just me or are we in the midst of a renaissance of the Entrepreneurial CEO? Obvious mentions include Mark Zuckerberg who’s been driving Facebook as CEO and president since the start of the company in 2004. At Google, Larry Page is taking back the reigns from Eric Schmidt, which means the original Founder-CEO – after an interim phase of ten years – is displacing a “Professional CEO” to recharge the company and innovate at Silicon Valley speed again. At 67 years young, Dietrich Mateschitz from Austria is one of the most successful entrepreneurs of our time. He disrupted the beverage industry by creating a completely new category – the energy drink. His privately held company Red Bull generated an astounding $5.1 billion in 2010 by selling 4.2 billion cans worldwide and more than one billion in the U.S. alone. Red Bull employed just 7,758 employees in 2010, which equals $667,000 in revenue per person.
While entrepreneurship and innovation have always complimented each other, what actually determines the effectiveness of Entrepreneurial Leadership? Can these factors be learned? I think they can as outlined in the three steps below.
Step 1: Energize the Team with a Bold Mission
An entrepreneurial mission typically requires people to get out-of-their comfort zone. Thankfully, entrepreneurs are more concerned about next year’s opportunity than last year’s mistake. So by default, his/her entrepreneurial mission encourages the followers’ openness and curiosity, which increases the willingness to take smart risks and overcome obstacles. A bold and visionary entrepreneurial mission also helps lead in an unstructured environment, as it builds the umbrella for a portfolio of strategic options. In contrast to a deterministic strategy, this increases the company’s flexibility to cope with uncertainty and constant change. Pave the way for your people with the help of a thriving entrepreneurial mission.
Step 2: Connect the Innovation Dots
One skill that successful disruptive innovators share is “associating”. This means creative entrepreneurs make unexpected connections between dots that have been previously regarded as disparate pieces of information. Traditionally, this was focused solely on achieving novel combinations regarding products, services, or hybrid offerings. In today’s era of constant change, new business models as third dimension gains increasing importance as pure product investments frequently fail to yield high return. But be careful, smart phones, tablets, and multitasking leave entrepreneurs less time to synthesize! When connecting the dots, less is more. Successful innovators often simplify by connecting less dots – but the right ones! Are you prepared to glue together innovations by connecting the right existing dots?
Step 3: Execute for Growth
The last element of Entrepreneurial Leadership is centered on focused execution for growth. From my experience, this is the toughest one. Basically every entrepreneur has an excellent instinct for the next (big) opportunity. And therein lies the challenge. It is crucial to have a well-stocked portfolio of “real options” when facing high uncertainty (see step 1). Nevertheless, it’s critically important to understand when to execute on a handful of solid options. Although it sounds counter-intuitive for an opportunity-focused-entrepreneur, who literally does not want to miss a new technology or an additional source of revenue, at a certain point-in-time it is pivotal to “make a bet” and consequently follow-through, invest incrementally and develop THE option in a focused manner. Does focused execution guarantee success? Definitely not, as it can even lead to fast failure. But failure helps define the right path forward. Remember the words of Thomas A. Edison, inventor of the light bulb: “I did not fail! I just found ten thousand ways that didn’t work.”
In the spirit of Entrepreneurial Leadership, is your business ready to connect the innovation dots and embrace failure?