As the venture grows and evolves through the different stages from a startup to a mature organisation, the role that the entrepreneur needs to play changes too. Leadership and management requirements become more important and not all entrepreneurs are able to support the organisation through all of these changes. In this topic, we will look at the need for entrepreneurs to step back from the organisation, reflect on their own role and strategically plan the future of the organisation, which becomes vital for its long-term success.
Welcome to Topic 11: The Journey Part 3: Key Management Factors and the Stages of Development. In this topic, you will learn about:
- The need for the entrepreneur’s role to change as the venture evolves through different stages of development
- The importance of strategic planning
- The need for an entrepreneur to reflect on their own contributions to the venture and refine the business model
- Creating adaptive organisations.
These relate to the Subject Learning Outcomes:
- Discuss the importance of entrepreneurship as a driver of growth and how it varies from "business as usual".
- Identify generally shared traits of entrepreneurs, although there is no single set of entrepreneurial traits.
Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.
Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.
As ventures grow, entrepreneurs will need to think strategically about the business and its needs. Watch the following video, which shares some tips on what to ask yourself in order to step back from the venture, which you (the entrepreneur) are likely to be very close to and passionate about.
Kauffman Founders School 2016, Scaling your company: Starting to scale - "the best question a founder can ask", streaming video, YouTube.
Task: Imagine you develop a venture that you are very passionate about. What aspects of the organisation do you think you would need most help with? What aspects of the organisation do you think your skills would be most valuable in? Justify your answers and record them in your reflective journal. You can access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.
Read through the topic content and action the learning tasks within it.
Now that we have covered quite a few topics, discussed several ventures and looked at different entrepreneurs, reflect on yourself as a future entrepreneur.
In Topic 11: Forum activity 1, post your responses to the following questions:
You can also navigate to the forum by clicking on 'ENT100 Subject Forum' in the navigation bar for this subject.
- If you were an entrepreneur (and you were limited to choosing one (1) of the following options), which of the following focus areas would you most likely develop a startup in?
- Holiday travel
- Health
- Food
- Technology
- Water
- Agriculture.
- Identify one (1) action you might take to study the chosen focus area.
- Identify one (1) question you might ask yourself to develop alternative future scenarios for the focus area.
- Respond to at least one (1) post by a classmate and see if you can extend on their learning by making a suggestion in response to their action and/or question.
Development of an organisation
Entrepreneurs are likely to find that they need different skills at different points of a venture’s development. If the organisation is going to endure and remain successful over time and as the market changes, there is a need for the venture to evolve and adapt to different requirements. Frederick et al. (2018) identify five (5) phases of the development of an organisation:
- New venture phase
- Startup phase
- Growth phase
- Stabilisation phase
- Innovation or decline phase.
You will notice that this model is similar to the Lichtenstein and Lyons model (2008) we looked at in the topic 'The Journey Part 1'. While the first model is more focused on a general overview of the life cycle of ventures, this second model by Frederick et al (2018) is more relevant to what is required from the entrepreneur in managing the various stages of an organisation’s development successfully.
The following sets out what is needed from the entrepreneur at each phase of development (Frederick et al. 2018):
New venture phase
In terms of the entrepreneur’s role, the new venture phase requires creativity and assessment. This is the point where the entrepreneur is searching for opportunities and evaluating their potential. Aspects of strategic thinking are necessary at this stage, because the enterprise’s purpose, philosophy and activities must be determined.
Startup phase
The startup phase lays the foundation for the operation of the enterprise. In terms of the entrepreneur’s role, capital must be raised, a business plan created and a team assembled. At this stage, the initial groundwork for operations, marketing and financing must be laid.
Growth phase
If the business model finds initial success and breaks into the desired market, growth should follow. While this is exactly what should happen, it can create pain and stress for the entrepreneur. In the growth phase, the role of the entrepreneur changes to incorporate more management tasks. This includes being prepared to expand, to rethink unsuccessful or outmoded strategies and to keep up with changes.
Stabilisation phase
As the organisational growth slows and plateaus, the entrepreneurial team should shift their attention to the next 3-5 years of its life. As an enterprise stabilises, it is important to use that time wisely and carefully analyse the market to prepare for future threats, such as increased competition or reduced market demand. The stabilisation phase is also time to consider new directions for growth.
Innovation or decline phase
The innovation or decline phase occurs as a natural part of the organisational life cycle. Every firm will eventually reach the limit of its potential for growth in a certain market. If they do not innovate, stagnation will eventually occur. The role of the entrepreneur (or the entrepreneurial team) shifts to adaptation and innovation if they want the organisation to remain viable.
Strategic planning for the longevity of the organisation
No organisation stays a startup indefinitely. Either it grows and develops into a mature enterprise or it fails. As we have previously discussed, a sound grasp of the entity’s financial picture makes a significant difference in its odds of survival. While financial planning and reporting are vital, money alone will not drive a business, nor is profit the only indicator of success. Sound strategic planning matters just as much and has an equal impact on overall organisational health.
Frederick et al. (2018) define strategic planning as the formulation of long-range plans for the effective management of environmental opportunities and threats, considering a venture’s strengths and weaknesses. It includes defining the venture’s mission, specifying achievable objectives and developing strategies and ways to identify ‘success’.
Some entrepreneurs are very capable of strategic planning and adapting to organisational needs. However, others excel at particular stages of venture development. Either way, the ability to recognise where the entrepreneur’s strengths and weaknesses lie and work with this insight is a crucial aspect of being an entrepreneur.
Creating adaptive firms
Growing businesses often discover a need for increased structure (Noseleit 2013). With more commerce comes a need for more equipment, employees and increased delegation of responsibility. With more people and complexity comes a need for more clearly defined regulations and policies. With more regulations and policies come slower responses and less improvisation. These are usually the results of success – growth brings complexity; complexity demands order and intentionality.
Frederick et al. (2018) identified five (5) steps for a venture to remain adaptable, able to shift course and innovate when the need arises. Click on each of the following headings to learn more about each step:
The entrepreneurial vision is the starting point for any new enterprise. As the firm grows, keep that vision at the core of the mission and operations. Get buy-in from all employees and other stakeholders. Re-evaluate the vision at key junctures and make alterations as needed.
All organisational members should be encouraged to consider their role in the production of a service or product. Encourage collaboration and implement fresh ideas. Remember the notion of ‘owner-like behaviour’ and cultivate it at all levels. Keep a close relationship with the demographic the enterprise serves.
Be willing and able to change the organisation’s structure, activities and functions as the environment and market evolve. Position the company to take advantage of new developments in technology and managerial approach.
Prepare all stakeholders for transformation. Staff who feel empowered to innovate and management who stand ready to shift policy and practice will prioritise speed and agility without sacrificing judgement.
Allow resources for staff to try new ideas. Reward good results. Dedicate certain people or teams in the business to creativity and visionary thinking.
From entrepreneur to management or leadership
As a business changes, its leadership must adapt alongside. An entrepreneur who wishes to remain with a venture long after the startup phase, needs to understand that they will be required to take on different responsibilities. It can be particularly painful to shift from the high energy, hands-on environment of an embryonic venture to one of constant delegation and distance from the day-to-day business of the enterprise.
Many entrepreneurs leave companies shortly after the growth phase begins simply because they do not wish to make the shift from creator to manager – they don’t find it any fun! Fortunately, a truly bureaucratic, rigid style only functions for very large, stable and mature corporations (even those can get into trouble if they cannot evolve over time).
However, for other organisational types, a certain degree of flexibility and creative spirit should always be built into the firm’s culture.
Knowledge check
Complete the following two (2) tasks. Click the arrows to navigate between the tasks.
Key takeouts
Congratulations, we made it to the end of the topic! Some key takeouts from Topic 11:
- An entrepreneur who wishes to remain with a venture long after the startup phase needs to understand that they will be required to take on different responsibilities.
- Growing businesses often discover a need for increased structure.
- The ability to recognise where the entrepreneur’s strengths and weaknesses lie and work with them, is a crucial aspect of being an entrepreneur.
- If the organisation is going to endure and remain successful over time and as the market changes, there is a need for the venture to evolve and adapt to different requirements.
Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your seminar.
The following learning task will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
In-seminar learning task
The in-seminar learning task identified below will be completed during the scheduled seminar. Your lecturer will guide you through this task. Click on the following heading to read more about the requirements for your in-seminar learning task.
Your lecturer will facilitate a discussion about your own perception of your role as an entrepreneur and how your strengths and weaknesses may impact on the ability to evolve as an entrepreneur.
Welcome to your post-seminar learning tasks for this week. Please ensure you complete these after attending your scheduled seminar with your lecturer. Your lecturer will advise you if any of these are to be completed during your consultation session. Click on each of the following headings to read more about the requirements for each of your post-seminar learning tasks.
Assessment 3 – finalise your reflective analysis. Reflect on the topics covered and how this has made you consider yourself a future entrepreneur.
Assessment 4 – as a group, look through the scenario provided and consider your approach to the analysis. Think about how you will complete the analysis, how the tasks will be distributed across the team members and discuss and reflect on your findings as a group. Be prepared to discuss these initial group findings with your lecturer during the consultation session.
Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your consultation session.
Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
The following additional resources can be used to extend your understanding of this topic:
- Taneja, H & Chenault, K 2019, ‘Building a startup that will last’, Harvard Business Review, 7:23-27.
References
- Durante, G & Turvani, M 2018, ‘Coworking, the sharing economy, and the city: which role for the ‘coworking entrepreneur’?’, Urban Science, 2(3):83.
- Frederick, H, O'Connor, A & Kuratko, D 2018, Entrepreneurship, Cengage.
- Kauffman Founders School 2016, Scaling your company: starting to scale – the best question a founder can ask, streaming video, YouTube, https://www.youtube.com/watch?v=eWhRIVzrdXc&t
- Mathias, BD & Williams, DW 2018, ‘Giving up the hats? Entrepreneurs' role transitions and venture growth’, Journal of Business Venturing, 33(3):261-277.
- Noseleit, F 2013, ‘Entrepreneurship, structural change, and economic growth’, Journal of Evolutionary Economics, 23(4):735-766.
- Okrah, J, Nepp, A & Agbozo, E 2018, ‘Exploring the factors of startup success and growth’, The Business & Management Review, 9(3):229-237.
