Entrepreneurship

DEEPAK BAJAJ

SESSION V
Chapter I Entrepreneurship Development

Entrepreneur Vs. Manager

ENTREPRENEURS AND MANAGERS

Entrepreneurs and professional managers have comparable yet different scope of their functions. They are two like sides of the coin, inseparable yet different. An effective entrepreneurial strategy should be an integral part of an enterprises competitive positioning. The progressive development in the size of business and the separation of ownership and management in the enterprise has made management a distinct profession. Although both strive to achieve similar goals, they are said to distinguish themselves in different measures. Both managers and entrepreneurs are answerable for producing results. The results are, of course, different. In their respective result areas, the buck stops with them. While they can delegate, they are finally accountable.

Both have to produce results through people working with them though they deal with different set of people. They are not effective in the long run, if they are loners. Both are decision makers but decisions are different as their tasks vary. Both have to operate under constraints which are understandably different. To be effective in their respective role, both have to follow sound principles of management like planning, staffing, delegation and control. The focus of these management tools may vary upon the ultimate purpose.

ENTREPRENEUR Vs MANAGER
Professional Manager

A professional manager is one who specializes in the work of planning, organizing, leading & controlling the efforts of others by the systematic use of classified knowledge and principles. He subscribes to the standards of practice and code of ethics established by a recognized body. To be a professional manager, he should have an insight of his job requirements, carry out continuous updating of his learning to fulfill his job requirement, have a performance-oriented relationship with his subordinates & colleagues based on mutual respect to facilitate team work for collective contribution to the organization, have comn with colleagues to improve the standard of contribution and the prestige of the managerial profession.

have a relationship based on long term mutual benefit approach with customers, suppliers and other members of the public A professional manager is required to possess specific mgt knowledge relating to technical processes, products, materials, equipment and procedures economic knowledge about the basic objective of the entrepreneurs and its position in the economic and social system within which it is operating, human knowledge about employee motivation, morale and delegation of authority and administrative knowledge about application and analysis of data. This will facilitate him to deal with various problems of the organization in an effective manner. A professional manager brings into operation planning, organizing, staffing, motivating, controlling and coordinating the works of technocrats and professional aspects to achieve pre-determined goals.

The professional manager must possess a desire to achieve, to expand, to build and to grow. The manager who has had the benefit of formal managerial education and has been exposed to the managerial tools and techniques of achieving the profit-cum-growth will be in a good position to deliver the goods to in developing economy like ours. Entrepreneur may be a manager but a paid manager cannot acquire the position of an entrepreneur. An entrepreneur has great motivation to manage his business successfully and lays down the policies for the business. He is keen towards developing business through innovations and is satisfied when his efforts give him positive results. He is an investor, risk bearer, manager and the controller. The entrepreneur may appoint a manager and delegate part of his functions. The manager however, even after satisfactorily performing his assigned duties can not substitute the entrepreneur.

Entrepreneur as Owner Manager

The entrepreneur is motivated to satisfy a high need for achievement in innovative and creative activities. The entrepreneur perceives and exploits opportunity and the takes the subsequent steps necessary for management of an organization. The entrepreneur differs from a professional manager in that he undertakes a venture for his personal gratification. As such he can not live within the framework of occupational behaviour set by others. The owner-manager exhibits a strong desire for independence, which he demonstrates through the building of an organization. He may employ a professional manager to perform some of his management related functions, however, the entrepreneurial functions of innovation, assumption of business risk and commitment to his vision can not be delegated to any body. Failure to the professional executive may at the worst mean locating a new job, whereas failure for an entrepreneur in his efforts would mean a devastating loss.

Table 6.1 Areas of Similarity

To produce results

Manager
Results of today, this month, this year. Short term & medium term Have usually to handle people oriented to day-to-day management of nitty-gritty & nuts & bolts Operational & administrative decisions, which have a bearing on short term and medium term results The constraints are usually organizational, i.e. those within the organization like machine capacity, labour productivity, routing and scheduling, information availability, financial limitations etc. The principles are more oriented towards internal administration and control like planning, budgeting, responsibility, accountability, delegation, reporting & info system.

Entrepreneur
Results of tomorrow, next year and coming five years. Long term & very long term. Have to deal with people who can conceptualize with aggregate perspectives Strategists. Most strategic decisions, involving growth through expansion, takeovers & mergers. The constraints are usually environmental which lie outside an organization like the policy of financial institutions, import policy, infrastructural constraints etc. The principles are with reference to macro-social aspects like social responsibility, equal opportunity, ethical advertisement practices, employment, adherence to government policies etc.

To produce results through people

To take decisions

To co-operate under constraints

To follow sound principle of management

Table 6.2

Entrepreneur
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Professional Manager
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Perception of opportunity Risk taking Strategic Planning Inter-personal communication Negotiating Trouble shooting Making it a growing concern Innovator Motivator Determined Idealist Committed Visionary Planner Policy formulation

Setting of objectives Tactical planning Formal communication Organizing Motivating Controlling Administrator Skilled, knowledgeable Confident Specialist Loyal Planner Implementer

A successful organization needs both entrepreneurs & managers. Entrepreneurial role may be played by Chief Executive and his team of top level executives & managerial role by the middle level and joint level executives.

MANAGERIAL Vs ENTRAPRENEURIAL DECISION MAKING

To be specific, the difference between the entrepreneur and the managerial styles can be viewed from five key business dimensions Strategic orientation, Commitment to opportunity, Commitment to resources, Control of resources & Management structure. Managerial styles are normally termed as administrative domain. Entrepreneurs strategic orientation depends upon his or her perception of the opportunity. This orientation is more important when other opportunities have diminishing returns accompanied by rapid changes in technology, consumer economics, social values or political rules.

Strategic Orientation

When the use of planning system as well as measuring performance to control current resources is the strategic orientation, the administrative domain is operant, as is the case with many large multinationals. In terms of the commitment to opportunity, the second key business dimension, the two domains vary greatly with respect to the length of this commitment. The entrepreneur domain is pressured by the need for action, shorter decision windows, a willingness to assume risk and few decision constituencies and has a short time span in terms of opportunity commitment. The administrative domain is not only slow to act on an opportunity, but once action is taken, the commitment is usually for a long time span, too long in some instances. There are often no mechanisms set up in companies to stop and reevaluate an initial resources commitment once it is made a major problem in administrative domain.

Commitment to Opportunity

Commitment to Resources

An entrepreneur is used to having resources committed at periodical intervals that are often based on certain tasks or objectives being arrived at. These resources, often acquired from others, are usually difficult to obtain, forcing the entrepreneur to maximize any resources used. This multistage commitment allows the resource provider (such as venture capitalists or private investors) to have as small an exposure as possible at each stage of business development and to constantly monitor the task records being established. Even though the funding may also be implemented in stages in the administrative domain, the commitment of the resources is for the total amount needed. Administratively orientated individuals respond to the source of the reward offered and receive personal rewards by effectively administering the resources under their control.

Control of Resources

Control of resources follow a similar pattern. Since the administrator is rewarded by effective resource administration, there is often a drive to own or accumulate as many resources as possible. The pressures of power, status and financial rewards cause the administrator to avoid rental or other periodic use of resources. The opposite is true for the entrepreneur who under the pressure of limited resources, the risk of obsolescence, a need for flexibility and the risks involved strives to rent, or otherwise achieve periodical use of, the resources on an asneeded basis.

Managerial Structure

The final business dimension, management structure, also differs significantly between the two domains. In the administrative domain, the organizational structure is formalized and hierarchical in nature, reflecting the need for clearly defined lined of authority and responsibility. The entrepreneur, true to his or her desire for independence, employs a flat organizational structure with informal network throughout.

NK HA T OU Y