The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty
Rita Gunther McGrath and Ian C. MacMillan
* Successful executives will learn to master uncertainty through the skills of entrepreneurial leadership
* This calls for different disciplines than in conventional management
* There are five key elements:
* Creating a climate supporting continuous search for opportunity
* Stocking an opportunity register
* Promoting adaptive execution
Entrepreneurial leadership: The most important job
Although uncertainty might cause many to freeze, it can be used to your ...view middle of the document...
" This meant he was interested in proposals that had the potential to deliver 50 million Swedish kroner ($8 million) in profits, by capturing 50% market share, with 50% margins in at least 50 countries. The logic was to seek opportunities where he solved a real problem for enough customers that he could capture the lions' share of a defensible global market without having to deal with competition from multinational firms. This gave his people scope, but also kept them focused on those opportunities where he felt that his company could build a strong position.
* Specific hands-on management practices recognize that the quest for insight is the single most important source of competitive differentiation a management team can bring to an organization. For example, Robert Brown and Linda Mason, founders of Bright Horizons child care centers capitalized on an insight that allowed them to create an attractive business model in a traditionally unattractive industry. Instead of focusing on individual families' needs for child care, the couple instead redefined their customer as corporations. In 15 years, the venture grew from a concept to a thriving business with over 340 centers.
Establishing the Entrepreneurial Frame
The entrepreneurial frame defines your goals. The idea is to push you and your team to undertake those initiatives that go beyond mere incremental improvement to really make a difference. Framing has two parts: first, a definition of success, and secondly an articulation of strategic direction.
The process for establishing a frame involves working through the following questions:
1. If you were to do something in the next three to five years that you, your boss, and your company's investors would regard as a major win, what would this look like?
2. What are the minimum amount of profits you need from your new ventures (at maturity) to make a difference to your business? From your established business? What rate of growth must you sustain?
3. What is the increase in profitability you need to achieve in the next three to five years?
4. What return on investment are you seeking?
The results can be categorized thus:
| Current Performance | Desired Performance | Specification of Success |
Last year's Profits | 200 | 10% improvement | 220 |
Return on sales | 10% | 5% improvement | 10.5% |
Revenues required to produce profits | 2,000 | 220 (above) / 10.5% (above) | 2,095 |
Return on assets | 15% | 10% improvement | 16.5% |
Assets required to produce profits | 1,333 | Profit goal / ROA goal | 1,333 |
Next articulate strategic direction by establishing screening criteria that are consistent with your 'ballparking' definition. Screening-out criteria are "drop dead" if a proposal has that characteristic. Screening-in criteria are "the more the merrier" (the more of these characteristics, the more attractive the opportunity). Think through the following questions:
1. What have the least desirable...