Ethics is about good and evil, right and wrong, and of duty and obligation in human conduct; and how we reason and make choices about them (Hicks, R.). Ethical leadership plays a major role in creation of an entrepreneurial team. Northouse (2007) suggested that ethical leadership is founded on respect, service, justice, honesty and community. Ethical leaders treat other people’s decisions, ideas and values with respect; allow other to be themselves with creative desires. The leaders listen to them attentively, empathize with them and are tolerant of opposite opinions. Furthermore, the leaders place people’s benefits ahead of their own, foster others’ visions and integrate all of them to contribute to a common goal. They have a responsibility to attend to others and be a service to them (Northouse, 2007).
It is said about Robbie Hardy, president of Chapel Hill-based IntraSoft and North Carolina’s Entrepreneur of the Year 1997 by Business Leader magazine, that “She knows what people can do best and empowers them to make the most of their talents." Her colleague confirms, "She gets true satisfaction from helping staff and associates reach higher and perform better. She knows what she does best and what she doesn't, and enthusiastically shares responsibility and power." Hardy’s ethical leadership is evidenced by the fact that she set up a superior entrepreneurial team; and the original CI Technologies (CIT) team stayed together for CI Partners (CIP) and has reformulated itself for Intrasoft (Lester, 1998).
With respect, support, trust and encouragement from leaders, subordinates can feel competent about their work and many innovative ideas come into world without fear for failure. Justice and honesty are also important characteristics of leaders. Leaders keep issue of fairness in mind when making decisions. They do not lie nor do they tell the truth in a destructive way.
Respect, support, honesty and justice are extremely substantial in entrepreneurial teams as they are the key ingredients in developing trust and cooperative relationships between leaders and subordinates which are very important to a successful enterprise process.
Beside their own and followers’ objectives, ethical leaders need to take into account the community’s goals. Leaders have to be sensitive to the world in which they operate. They pay attention to how the firm will affect the community, society and environment. What leaders and their subordinates contribute to community may become sources of competitive advantage, one of the vital drivers for innovative team growth and development. Lush Cosmetics is a typical example. Constantine, founder of Lush, has strong ethical stance of anti-animal testing, “green” packaging (minimal / no packaging) which give Lush the competitive advantage, and help to differentiate Lush from its competitors (Purkayastha, 2008).
In conclusion, the best leaders should exhibit their ethics in their leadership style and actions. Ethics is considered as a secret of leadership success.
Let me leave you with words from Guy Kawasaki, a managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Entrepreneur Magazine: “Given a choice, most people would rather work for an ethical company” – under an ethical leadership (Perry, 2004).
References:
Hicks, R. Ethics and Leadership. Retrieved 2008-11-15 from http://level2.cap.gov/documents/Ethics_and_Leadership_Brief.pdf
Lester, M. C. (1998). 1997 Top Gun Enterpreneur of the Year. Business Leader Magazine. Retrieved on October 31, 2008 from http://www.businessleadermagazine.com/Index.aspx?page=ui.article&PID=7707
Perry, D. (2004). Ethics, Leadership and Success. Retrieved 2008-11-15 from
http://www.perrymartel.com/PDFs/Ethics%20Leadership%20and%20Success.pdf
Purkayastha, D. (2008). Sustainable Packaging Practices at Lush Fresh Handmade Cosmetics. ICFAI Center for Management Research.
Wednesday 19 November 2008
Sunday 9 November 2008
Financial Crisis and Entrepreneurs
Most of the world is experiencing a financial crisis of historic proportions. Without question, the crisis will not be over in the short time and the international consequences will be deep and lasting. We all have been stressed by that economic downturn. And via communication channels, we easily realize that the credit crisis has hit small business owners particularly hard.
How can smal business owners cope with the crisis? They should not panic, and try to focus on the solutions to help their companies get out of the difficult time. Howard Anderson, management professor at Massachusetts Institute of Technology's Sloan School of Management, says the first and only rule is to make sure the company doesn't run out of money (Klein, 2008). Some suggestions from Scott Shane (2008), Professor of Entrepreneurial Studies at Case Western Reserve University are:
1. Extend less credit to your customers: provide less trade credit to customers and reduce accounts receivable.
2. Borrow from different sources (Community banks which did not get involved in the toxic mortgage mess, peer-to-peer borrowing)
3. Bootstrap, or raise equity
4. Cut your costs: leasing instead of buying; look at consultant who has not added enough value but costs much or employee who has not shaped up despite warnings…
Although it is considered as one of the biggest threats to most of the world, the situation could change depending on how we react to this. During such a crisis, actually, opportunity often arises.
“This is a time of great opportunity,” Bill Warner - founder of Avid Technology and Wildfire, one of the most successful entrepreneurs in America - said. “This is not a pep talk. This is reality.” Warner started his best-known company, digital media hotshot Avid Technologies, in September 1987, a month before the stock market crash of that year (Kirsner, 2008).
There is no better time to start a company for a number of reasons. Because highly paying jobs have disappeared and employment opportunities in general have decreased, previously unaffordable talented people are now available to. Operation cost for a business (rent, equipment…) is reduced. New business opportunities may be created and can be captured by startup companies. Therefore, entrepreneurs should stay motivated and not give up dreams. Do not delay starting company until the economy is stronger because someone may beat you in the market (Finn, 2008)
Economic crisis is a part of life and business. Those who react to a crisis passively wilt after the crisis passes, but those who react proactively and assertively to it ultimately succeed.
I’d like to end my post with a quote from Horace, a Roman lyric poet & satirist:
“Adversity has the effect of eliciting talents, which in prosperous circumstances would have lain dormant.”
References:
Finn, M. (2008, October 1). There is opportunity in crisis. Retrieved November 3, 2008 from http://the4eblog.com/home/2008/10/2/there-is-opportunity-in-crisis.html
Kirsner, S. (2008, October 2). My Notes from Today's Innovation Unconference. MassTLC Innovation2008 unConference. Retrieved October 30, 2008 from
http://www.innoeco.com/2008/10/my-notes-from-todays-innovation.html
Klein, K. (2008, October 8). How Small Business Owners Can Cope with the Crisis. BusinessWeek. Retrieved November 1, 2008 from http://www.businessweek.com/smallbiz/content/oct2008/sb20081010_904259.htm
Shane, S. (2008, October 6). What can Entrepreneurs do to Deal with the Credit Crisis? Retrieved October 30, 2008 from http://www.smallbiztrends.com/2008/10/what-can-entrepreneurs-do-to-deal-with-the-credit-crisis.html
How can smal business owners cope with the crisis? They should not panic, and try to focus on the solutions to help their companies get out of the difficult time. Howard Anderson, management professor at Massachusetts Institute of Technology's Sloan School of Management, says the first and only rule is to make sure the company doesn't run out of money (Klein, 2008). Some suggestions from Scott Shane (2008), Professor of Entrepreneurial Studies at Case Western Reserve University are:
1. Extend less credit to your customers: provide less trade credit to customers and reduce accounts receivable.
2. Borrow from different sources (Community banks which did not get involved in the toxic mortgage mess, peer-to-peer borrowing)
3. Bootstrap, or raise equity
4. Cut your costs: leasing instead of buying; look at consultant who has not added enough value but costs much or employee who has not shaped up despite warnings…
Although it is considered as one of the biggest threats to most of the world, the situation could change depending on how we react to this. During such a crisis, actually, opportunity often arises.
“This is a time of great opportunity,” Bill Warner - founder of Avid Technology and Wildfire, one of the most successful entrepreneurs in America - said. “This is not a pep talk. This is reality.” Warner started his best-known company, digital media hotshot Avid Technologies, in September 1987, a month before the stock market crash of that year (Kirsner, 2008).
There is no better time to start a company for a number of reasons. Because highly paying jobs have disappeared and employment opportunities in general have decreased, previously unaffordable talented people are now available to. Operation cost for a business (rent, equipment…) is reduced. New business opportunities may be created and can be captured by startup companies. Therefore, entrepreneurs should stay motivated and not give up dreams. Do not delay starting company until the economy is stronger because someone may beat you in the market (Finn, 2008)
Economic crisis is a part of life and business. Those who react to a crisis passively wilt after the crisis passes, but those who react proactively and assertively to it ultimately succeed.
I’d like to end my post with a quote from Horace, a Roman lyric poet & satirist:
“Adversity has the effect of eliciting talents, which in prosperous circumstances would have lain dormant.”
References:
Finn, M. (2008, October 1). There is opportunity in crisis. Retrieved November 3, 2008 from http://the4eblog.com/home/2008/10/2/there-is-opportunity-in-crisis.html
Kirsner, S. (2008, October 2). My Notes from Today's Innovation Unconference. MassTLC Innovation2008 unConference. Retrieved October 30, 2008 from
http://www.innoeco.com/2008/10/my-notes-from-todays-innovation.html
Klein, K. (2008, October 8). How Small Business Owners Can Cope with the Crisis. BusinessWeek. Retrieved November 1, 2008 from http://www.businessweek.com/smallbiz/content/oct2008/sb20081010_904259.htm
Shane, S. (2008, October 6). What can Entrepreneurs do to Deal with the Credit Crisis? Retrieved October 30, 2008 from http://www.smallbiztrends.com/2008/10/what-can-entrepreneurs-do-to-deal-with-the-credit-crisis.html
Saturday 1 November 2008
Flat Organizational Structure – Think about it...
In the article – “The heart of entrepreneurship” by Howard H. Stevenson and David E. Gumpert (1985), the authors discuss about the best organizational structure for a venture and come up with a reasonable answer and explanation. The management structure should be flat, decentralized with multiple informal networks, to enhance communication and decision making process, and mobilize people.
In 12Manage – The Executive Fast Track website, it is stated: “A flat organizational structure is an organizational structure that features relatively few layers of managers between the top of the corporation and the normal employees".
This structure supports innovation at the unit level, provides more effective communication processes and increased flexibility to deal with rapidly changing environment. The decision making process is quicker because of less approval levels. Employees have more responsibility, independence and authority. It is unnecessary for supervisory management to step in unless the plan is off track and an effective corrective action is needed.
My previous company applied the flat organizational structure with few management levels. Due to equally distributed authority, all employees built up a small society of mutual trust and support. We communicated openly, shared thoughts and learned from each other. With support, trust and encouragement from managers, many creative ideas come into world without fear for failure. We once failed to deliver a software product to client. After serious meetings about that failure, the manager realized that the goals should have been discussed, deliberated and adjusted based on communication and feedback among all related employees.
According to Robbie Hardy, president of Chapel Hill-based IntraSoft and North Carolina’s Entrepreneur of the Year 1997 by Business Leader magazine, building and maintaining a flat organization is one way to keep the best employees. “Keeping the team and founders in touch is really important in creating an atmosphere that's healthy where people feel they can do anything”. “You can't expect your people to read your mind,” Hardy said. ”And you can't expect them to create innovative solutions if you're not fostering creativity.” IntraSoft developed a progressive and creative environment in which employees are challenged to use cutting-edge technology to create a unique and innovative product line (Lester, 1998)
Harold Leavitt, professor emeritus of organizational behavior at Stanford University and author of Top Down: Why Hierarchies Are Here to Stay and How to Manage Them More Effectively, highlights one inevitable fact about flat organizations: ”The more you flatten, the less you control” (Henricks, 2005). Besides, Ingvar Kamprad, founder of IKEA, emphasizes that Time is an Entrepreneur’s Best Asset (LaBarre, 1999). Therefore, I think an entrepreneur should be aware of the advantages of ”Flat Organizational Structure” and consider to apply it for the purpose of Empowering people and Making faster decisions.
References:
12Manage – The Executive Fast Track. Flat Organizational Structure. Retrieved August 31, 2008, from http://www.12manage.com/description_flat_organizational_structure.html
Henricks, M. (2005). Falling flat? How flat is too flat when it comes to management? You'd better find out before it's too late. Entrepreneur. Retrieved October 31, 2008, from http://findarticles.com/p/articles/mi_m0DTI/is_/ai_n8688088
LaBarre, P. (1999). Success Here's the Inside Story. Retrieved October 31, 2008, from http://www.fastcompany.com/magazine/29/bookpage.html?page=0%2C1
Lester, M. C. (1998). 1997 Top Gun Enterpreneur of the Year. Business Leader Magazine. Retrieved on October 31, 2008 from http://www.businessleadermagazine.com/Index.aspx?page=ui.article&PID=7707
Stevenson, H.H. & Gumpert, D.E. (1985), "The heart of entrepreneurship", Harvard Business Review, Vol. 85 No.2, pp.85-94.
(Photo from http://www.thesykesgrp.com)
In 12Manage – The Executive Fast Track website, it is stated: “A flat organizational structure is an organizational structure that features relatively few layers of managers between the top of the corporation and the normal employees".
This structure supports innovation at the unit level, provides more effective communication processes and increased flexibility to deal with rapidly changing environment. The decision making process is quicker because of less approval levels. Employees have more responsibility, independence and authority. It is unnecessary for supervisory management to step in unless the plan is off track and an effective corrective action is needed.
My previous company applied the flat organizational structure with few management levels. Due to equally distributed authority, all employees built up a small society of mutual trust and support. We communicated openly, shared thoughts and learned from each other. With support, trust and encouragement from managers, many creative ideas come into world without fear for failure. We once failed to deliver a software product to client. After serious meetings about that failure, the manager realized that the goals should have been discussed, deliberated and adjusted based on communication and feedback among all related employees.
According to Robbie Hardy, president of Chapel Hill-based IntraSoft and North Carolina’s Entrepreneur of the Year 1997 by Business Leader magazine, building and maintaining a flat organization is one way to keep the best employees. “Keeping the team and founders in touch is really important in creating an atmosphere that's healthy where people feel they can do anything”. “You can't expect your people to read your mind,” Hardy said. ”And you can't expect them to create innovative solutions if you're not fostering creativity.” IntraSoft developed a progressive and creative environment in which employees are challenged to use cutting-edge technology to create a unique and innovative product line (Lester, 1998)Harold Leavitt, professor emeritus of organizational behavior at Stanford University and author of Top Down: Why Hierarchies Are Here to Stay and How to Manage Them More Effectively, highlights one inevitable fact about flat organizations: ”The more you flatten, the less you control” (Henricks, 2005). Besides, Ingvar Kamprad, founder of IKEA, emphasizes that Time is an Entrepreneur’s Best Asset (LaBarre, 1999). Therefore, I think an entrepreneur should be aware of the advantages of ”Flat Organizational Structure” and consider to apply it for the purpose of Empowering people and Making faster decisions.
References:
12Manage – The Executive Fast Track. Flat Organizational Structure. Retrieved August 31, 2008, from http://www.12manage.com/description_flat_organizational_structure.html
Henricks, M. (2005). Falling flat? How flat is too flat when it comes to management? You'd better find out before it's too late. Entrepreneur. Retrieved October 31, 2008, from http://findarticles.com/p/articles/mi_m0DTI/is_/ai_n8688088
LaBarre, P. (1999). Success Here's the Inside Story. Retrieved October 31, 2008, from http://www.fastcompany.com/magazine/29/bookpage.html?page=0%2C1
Lester, M. C. (1998). 1997 Top Gun Enterpreneur of the Year. Business Leader Magazine. Retrieved on October 31, 2008 from http://www.businessleadermagazine.com/Index.aspx?page=ui.article&PID=7707
Stevenson, H.H. & Gumpert, D.E. (1985), "The heart of entrepreneurship", Harvard Business Review, Vol. 85 No.2, pp.85-94.
(Photo from http://www.thesykesgrp.com)
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