ENTREPRENEURIAL ORGANIZATIONS

The Challenges to Entrepreneurial Organizations and Their Management

Question #1

The challenges to entrepreneurial organizations and their management continue to grow in complexity and number. Lean Manufacturing has been suggested as a means by which the entrepreneurial organization can meet these challenges. Therefore, assess the conditions/circumstances under which the entrepreneurial organization can adapt lean manufacturing. Then evaluate Lean Manufacturing's effectiveness in assisting an entrepreneurial organization achieve its goals.

Introduction

The very term, "entrepreneurial organization," seems contradictory and problematic. "Entrepreneurs" do new things and make waves (e.g., Chase, Jacobs, Aquilano, 2006), while "organization" signals control, order, and stable replication of the past. Traditional organizations are slow to change if they change at all, and they are notably risk averse. "Entrepreneurial" activity and "organizations" appear to have little in common. (Zhou and Li, 2005) Entrepreneurs like Henry Ford, An Wang, Fredrick Smith, Bill Gates, or Seymour Cray, often leave existing organizations in frustration, creating new companies to support their entrepreneurial activity. Even these organizations founded by entrepreneurs often fall short, becoming rigid and fixed as their founders fail to integrate other organization members around the changing goals, directions, and tasks entrepreneurship requires.

Entrepreneurial organizations must do more than support an individual entrepreneur: they must repeatedly initiate new product or service ideas within the context of an existing firm, reconverting their people and assets to new uses, bringing new ideas from many sources into good currency. Ideas must be generated, resources assembled, the new product or services produced and delivered to users by organization-wide redirection and cooperation. The test of organizational entrepreneurship is that members across the firm must be involved in creating "something different," and that the organization must sustain such effort again and again.

To do this, many organization members must create new ideas, get resources, and have the freedom to initiate action in a new direction. However, entrepreneurial efforts cannot simply take the firm "in any direction." For entrepreneurial firms, the challenge is to maintain direction while facilitating a constant flow of new ideas. Most traditional organizations solve the problem by discouraging innovation as illegitimate (e.g., Chase, Jacobs, Aquilano, 2006).

Three central and seemingly unresolvable paradoxes stand between traditional thinking and organizational entrepreneurship. First, traditional organization theory and traditional organizations are designed to produce stable, predictable performance by eliminating unplanned, unauthorized behavior. (Zhou and Li, 2005) Authority, reporting relationships, rewards systems, and other methods, ensure compliance with established rules, walling the organization off from disturbance. Yet entrepreneurship, by contrast, embraces ambiguity as its source for opportunity, often creating unexpected and unpredictable complexity in response to the very opportunities for change that traditional organizations eschew.

Second, through specialization, traditional organization theory and practice seek to narrow members' focus to the responsibilities at hand. Members are encouraged to ignore "distractions." If traditional organizations block out the "irrelevant," so, too, do typical human cognitive processes. Data that do not fit existing frames of reference are commonly ignored, dismissed, explained away or even distorted to fit prior expectations. New views of reality arise only when new information is ...