Introduction
Changing a mindset is extremely difficult, especially for a person who is juggling all of the commitments of a busy life—a full-time job, family obligations, showing up for social occasions, and the like. It seems to be simple human nature to go along in life making incremental changes, but never really examining the underlying assumptions that our days are based upon. Entrepreneurs may have certain character attributes that give them the capacity to distance themselves from the urgent—what to wear, who to hire, how to soothe the boss—to focus on the truly important—what is meaningful, where are we going, how do we collaborate. The case study, “Andy’s Parties,” and the article, “Why Aren’t We All Working for Learning Organizations?” provoke some intriguing ideas about entrepreneurship and the innovation it often germinates.
Andy’s Motivation to Start a Business
One wonders what would make a man with a new wife and a new mortgage quit his secure, corporate job to start up a party planning business with no capital or business model, let alone no experience in running such an enterprise. The case states that the couple planned to operate the business together, so Andy’s wife seems not to have a full-time job either.
What Andy does have is an “all consuming” need to have his own business, and it is a need he finds difficult to explain. It may be that Andy simply has an entrepreneurial personality, a set of characteristics that have been identified by several researchers, including Beugelsdijk and Noorderhaven (2005). Their study shows that many entrepreneurs share three attributes that could prompt them to become self-employed. These are 1) the need to achieve, 2) an internal locus of control, and 3) comfort with taking risks.
The need to achieve can be described as an internal push to set and meet goals that an individual decides are important. This makes self-determined goals deeply meaningful, as opposed to the goals that an employee is directed to pursue by others. An internal locus of control means that a person believes he has a high level of control over outcomes. This leads an entrepreneur to believe in herself and to have confidence that her actions will result in success. (The opposite, an external locus of control, means that a person believes the outcomes of his life are determined by external forces.) Finally, Beugelsdijk and Noorderhaven assert that entrepreneurs are more comfortable with risk than are non-entrepreneurs. This speaks to Andy’s willingness to start a new venture in spite of the fact that he is already stretched to his financial capacity.
Success Against the Odds
While at first glance it may seem that Andy’s Parties succeeded against the odds, that may not be the case. If he and his wife had the right entrepreneurial stuff to start and run a successful business, then those characteristics may have given them an advantage that evened out the risks. Certainly some entrepreneurs fail, possibly due to over-confidence in their ability, which causes them to engage in counterfactual thinking (Guerra and Patuelli, 2016). This is described as continued belief in obtaining success, even though there are multiple signs to the contrary. Thus, some entrepreneurs can’t give up on their enterprise until it fails financially.
Happily, this was not the case with Andy’s Parties. There are several possible reasons for the success of the company. First, Andy identified an unfilled need in his local market. While at the birthday party of a friend’s child, the case study says “it came to him.” It is valid to infer that Andy noticed what a huge, probably frustrating, task it was for a parent to plan and execute a party for her child. Therefore, he put customer convenience at the center of his company. He would relieve parents of the hassles of party planning while delivering to their children an elaborate, themed party designed especially to their tastes. The parents and their friends could enjoy the party along with their children while Andy’s Parties provided convenience, security, and fun. And they cleaned up!
Andy maintained a strong focus on what he did best—planning and organizing—and sub-contracted all of the ancillary party services, such as catering, entertainment, and bounce houses, to outside experts. He didn’t spread himself too thin or court trouble by trying to manage things he didn’t know much about.
He also kept his eye on the bottom line. The business office was small but had enough space so he could hold parties there for customers who didn’t want to have a party in their homes. He hired high school kids, who probably worked for minimum wage, but he spent a lot of time training them to ensure that they would provide good service that would reflect well on his brand. Other than the students, the businesses total employees were two; just Andy and his wife.
Future Business Extension
A logical next step for Andy’s Parties is to begin offering parties for adults. This would build on the current strengths of the business. Because Andy is successful at children’s parties, the odds are good he will be successful at planning adult parties too. The same skills are required; the only things that would change are the sub-contractors. Andy already has good relationships with adult caterers; plus it seems fair to surmise that he has good relationships with parents who have employed his company in the past. As Baron (2004) notes, social competence plays a role in an entrepreneur’s success (16). Andy’s current customer base is likely to overlap considerably with the adult party customer base he needs to expand. The company would have to retain adults to staff the party, rather than high school students, but that does not present a significant problem, particularly if Andy hires freelance workers. College students might be an option.
Conclusion
While no set of founder personality traits or management techniques can guarantee the success of a new business, in the case of Andy’s Parties these factors could have played an important role in making Andy’s entrepreneurial gamble pay off. There is no insurance against, say, a recession like the one the world experienced in 2008, but fear of that is unlikely to stop certain individuals from striking out on their own. Entrepreneurs are impelled by some force of character that even they, like Andy, can’t explain. The wise entrepreneur should therefore avail herself of the findings of scholars like those cited in this essay.
Summary of ‘Why Aren’t We All Working for Learning Organizations?’
It is possible that Andy’s Parties is a learning organisation, although the case study does not provide enough detail to make a compelling case. In this article Seddon and O’Donovan (2010) describe a learning organisation as one in which people engage in generative learning, as opposed to the more conventional adaptive learning. The difference between the two is discussed at length in the article.
Adaptive learning is essentially reactive. People learn how to navigate new circumstances by reacting to external events and adapting their behaviors to accommodate change. Generative learning, on the other hand, is proactive. It focuses on systems, rather than worker activities, and is concerned with developing the capacity to create an organization’s future (5.01). The learning organisation examines work flow to find efficiencies and opportunities. The “command and control” organization as described by Demming (1990) and named by Seddon (2006) tries to find efficiencies and manage costs by focusing on workers and delineating how people do their jobs (5.03). By adding layers of measurement indicators, performance targets, and management oversight to the workers, many organizations actually add to the cost of doing business, entirely missing the goal of lowering costs.
This command and control style of management exemplifies what Argyris and Schon (1974) called ‘single-loop learning.’ This way of learning is incremental, wherein a manager might improve her knowledge or skills, but to do so without questioning her underlying assumptions about management practice. So if a manager gets better at, for instance, motivating staff members, that manager is likely to remain unaware that the hierarchical structure upon which the company is built may be preventing him and his staff member from achieving better results.
For many managers it may seem intuitive to manage worker activities rather than focusing on work flow and systems. But by focusing on these higher-level factors, managers are engaging in what Argyris and Schon (1974) called double-loop learning. This involves going beyond worker activity to examine the underlying causes of problems. By studying a system, a manager is more likely to engage in generative learning.
Also, learning organizations focus on value demand, rather than failure demand. Value demand refers to the value that a customer wants from a company. Andy’s Parties seems to be doing this in delivering convenience, security, and fun, the three values that parents want for their children’s parties. Non-learning organisations focus on demand failure, which refers to the fixes that customers demand when they have received poor products or services. In other words, they adapt to problems, rather than anticipating opportunities.
References
Baron, R.A. (2004). Psychological perspectives on entrepreneurship: Cognitive and social factors in entrepreneurs’ success. Current Directions in Psychological Science, 9(1), 15—18. Stable URL: http://www.jstor.org/stable/20182610
Beugelsdijk, S. and Noorderhaven, N. (2005). Personality characteristics of the self-employed: An empirical study. Small Business Economics, 24(2) 159—167. doi:http://dx.doi.org/ 10.1007/s11187-003-3806-3
Guerra, G. and Patuelli, R. (2016). The role of job satisfaction in transitions to self-employment. Entrepreneurship Theory and Practice, May 543—571. doi: 10.1111/etap.12133
Seddon, J. and O’Donovan, B. (2010). Why aren't we all working for learning organisations? e- Organisations and People 17(2) 5.01—5.15. http://www.amed.org.uk
