Entrepreneurship entails the ability to identify business opportunities and take a risk of exploring that opportunity using the appropriate resources. Successful entrepreneurs however, are those individuals with the ability to start and sustain a business towards growth in the future. The current global market has several business opportunities, but the courage to explore these opportunities is limited, especially as a result of changing market trends and high levels of competition. Small business are sometimes forced to compete for market with big organization with massive resources and without creativity and rational thinking attributed to effective leadership style, most entrepreneurs tend to give up and look for alternative ideas with less competition. In order to survive in the global market in the 21st century, entrepreneurs need to have strategic leadership traits and apply them in making critical decisions and in nurturing human resource through encouraging teamwork and reduce the existence of individualism. As a way of surviving in the competitive market and gain a recommendable market share. This paper explores the major role that leadership plays in achieving successful entrepreneurial abilities, in particular accessing how effective leadership could help in accessing and sustaining businesses in the global market in the 21st century.
What is successful entrepreneurship?
Entrepreneurship entails more than just building or managing a business in a competitive environment. It means the process of identifying an opportunity of a possible venture and having the courage of venturing a risky business and be able to establish a successful business venture from scratch, building it and nurturing it into an enterprise with capacity to compete for the scarce market share (Timmons, 1994, p. 7). An entrepreneur on the other hand is an individual or a group of individuals who takes a risk of developing a business from scratch as soon as they discovers an opportunity or an idea that could result to a successful business venture. A successful entrepreneur is also an individual who is capable of nurturing other than controlling human resources as well as manage other available resources carefully with the aim of maximizing profits while minimizing costs. In simple terms a successful entrepreneur is a person who is able to convert an idea or an opportunity into a successful business venture through aligning various resources together with a common goal of achieving success. Other that identifying an opportunity and taking a risk to expand it onto a business, people also become entrepreneurs as a result of various factors such as having the need to be their own bosses as a result of pressure at workplace, retaining a family business, or having the urge to accumulate profits through pursuing in personal venture among other personal reasons.
Based on the definition, there are specific traits that surround the meaning of entrepreneurship and its processes. The first aspect is the ability to identify opportunities. This is derived through observing the customer needs and coming up with an innovative idea that could help solve the issue. For instance, the ability of Steve Jobs to identify the need for a portable music device that was appealing, easy to use and provided the customers with a wide selection of playlist provided an opportunity to innovate the production of iPod. Identifying hidden ideas requires personal leadership capabilities of innovating consumer oriented products. The second aspect is the ability to take risk to develop the identified idea or opportunity. According to Timmons, (1994), it takes a brave mind to invest in an idea which has market uncertainty and only a person with risk taking traits could make such a decision (Kuratko and Hodgetts, 2004). Uncertainty is caused by the fact that no one knows the potential buying behavior of the customer in addition to varied consumer perception, availability of possible substitutes in addition to the changing technological factors required to facilitate the production of certain products.
The crucial aspect for a successful entrepreneurial process is the integration of resources to produce desired products and services by the entrepreneur. As McGrath and McMillan (2000) notes, integrating various resources together especially managing the human resources to develop a business from scratch is a difficult task and only an entrepreneur with strong leadership skills could achieve such a task. Thus, it is evident that a leadership abilities influences a person’s ability identify new opportunities and align the available resources into establishing a successful business without the fear of the existence of risks such as limited market share and possibility of a failure of the business.
Leadership and entrepreneurial roles
The process of taking a risky step to build a business or a product from absolutely nothing through innovation and proper utilization of resources could only be adopted by a risk taker and a person with patience, courage, optimistic and success-oriented. In addition, it entails having the leadership abilities to organize and motivate a group of individuals into achieving a particular goal. Such traits are used to describe a successful leader. Without courage and optimism, one cannot invest in a business that they are not sure of the results and similarly, without patience, it is possible to easily let go of an idea if it happens to go down in the implementation stage. However, an entrepreneurial leader is motivated to restart the business despite a series of failures or possible threats and risks that could hinder the growth of the business. An entrepreneurial leader also motivates his employees or team members to strive for success rather than control them in performing their tasks as per the job description.
While an entrepreneur is mandated with the abilities to make decisions on the issue of taking a risk into building a business from a simple opportunity as well as aligning resources to achieve success, applying leadership skills is an essential factor required to self-dedicate as well as mobilize the employees towards achieving a common goal. In order to understand the personality traits of a leader, it is also important to differentiate leadership from management. Leadership is the process of influencing an individual or a group of people to into understanding what needs to be and how to do particular tasks as well as motivating them to work collectively towards achieving a particular objective. Management on the other hand involves facilitating, controlling and directing individuals to implement their specific tasks with the aim of achieving projected business productivity. While a manager aims at maximizing profits and delivering the set objectives, a leader aims at developing a business through identifying what needs to be done and motivating the employees to work hard so as to achieve the set objectives of business growth. An entrepreneur should therefore apply leadership traits rather than management traits as a way of achieving success.
According to a research conducted by Ireland and Hitt (1999) on the role of leadership in entrepreneurship, leadership traits such as charisma, patience and goal oriented traits were found to be the vital elements that defines a successful entrepreneur. This was so especially as a way of achieving competitiveness by the small and medium enterprises (SMEs) where the market share is relatively small and also the resources for maximizing the economies of scale are limited. As such, creativity and thinking beyond the competitors as well as leading the team members into taking a risk were the essential tools that entrepreneurial leaders could use to gain a competitive advantage. As Lee and Tsang (2001) notes, this entails being the first to come up with a distinct product or service that is not easy to be copied by the potential or actual competitors. It also entails looking for a new opportunity to produce something that the current market has not been able to provide to the customers. A perfect example could be the innovation of services provided by the leading global search engine Google that has successfully been able to provide an effective search engine globally, while incorporating special features that are not provided by the competing search engines.
Understanding how leadership in applied in achieving successful entrepreneurship can be understood by reviewing some of the leadership styles applied in running different types of organizations. One of the widely known leadership style is the democratic leadership. According to this style, leaders are lenient and they allow the team they are leading to participate in the decision making process. Such leaders encourages open communication as a way of motivating the team to participate in decision making aimed at achieving the set objective (Lee and Tsang, 2001). Democratic leaders also set objective but allow the team to criticize or contribute any ideas that could stimulate the achievement of the set objective. Democratic or participative leadership style which involves the entrepreneur incorporating the employees in making decisions and suggestions on how to grow the idea at hand through effective communication has been recommended by most theorists the most effective form of entrepreneurial leadership style. Notable entrepreneurs such as Richard Branson have portrayed this form of leadership style in implementing their business opportunities and growing them into global organizations.
However, other entrepreneurs, especially those who need to feel a sense of control of their businesses especially in small and medium businesses incorporate the use of autocratic leadership style to some extent (Heaton, 2008). This incorporate the use of a defined organization style with the decisions being made at the top level, mostly by the entrepreneur himself. Employees are supposed to execute their duties according to the division of labor requirements and communication is mostly done from the top. Although this leadership style is not regarded as the appropriate tool in entrepreneurship, it is applied in some countries such as Middle East where cultural differences calls for power distances between the bosses and the employees (Makhbul, 2011). However, the changing trend of globalization that has given opportunities for the entrepreneurs to invest in different countries calls for the need for the entrepreneurs to understand different cultural beliefs and practices as a way of applying the appropriate leadership style once an opportunity surfaces.
Managing entrepreneurial trend in the 21st century
The market trends in the 21st Century can be described as fluctuating as a result of uncertainty. Similarly, the success of entrepreneurial process is uncertain as it is faced with a challenge of constantly making critical decisions in order to survive. This is critical due to the changing market demands as well as rising competition in both small and medium enterprises as well as well large corporations. According to McGrath and McMillan (1999), predicting the future trends especially in business operations and performance is a difficult task facing many entrepreneurs. This is further complicated by the current market and business trends such as the emergence of new business trends such as online marketing and other e-business operations as well as the emergence of globalization, all of which have changed the traditional business models. For instant, entrepreneurs are opting to outsource human resources with the appropriate expertise required to grow the business.
As a result of the current market trends and unexpected global economic crises, it is evident that small and medium enterprises have become more popular and successful (Heaton, 2008 and Shane, 2003). This is mainly because of the simple business models and lean organizational structures that have made these SMEs to adapt easily to change. The flexibility of an organization and its ability to adapt to changing market trends is more importantly influenced by the leadership traits of the entrepreneur which includes the ability to envision possible changes that could be done in case of the future changes (Burns, 2011).
Entrepreneurial leadership is vital in defining organization mission, vision and objectives in the 21st century businesses as well as identify and sustain core competencies. Unlike the traditional business models whose mission statements are mostly profit and customer base oriented, establishing a new business in the 21st century requires focusing more on creativity and development as a way of establishing a core competency that will enable the business to gain competitive advantage, thus achieving the set objectives (Beaver, 2002, and Thompsons, 2002). This is achieved by outlining what needs to be done in order to nurture and point the business towards the right direction of achieving the goals. They should be able to identify the competencies of their unique business and use them in developing a strong business model. As the co-founder and former CEO of Apple Inc. stated, entrepreneurs can achieve their organization’s goals by thinking differently from the competitors while employees just need to be pointed in the right direction in order to make the ideas come into a real product. His successful conversion of Apple Inc. from a small business operating in a garage to a multinational organization manufacturing the best technologically advanced gadgets can be attributed to his democratic leadership skills and the application of the opportunist model of entrepreneurship.
The business environment in the 21st century also incorporates the use of technology and innovation as well as changing consumers’ tastes and preferences. Therefore, with effective leadership traits, entrepreneurs should be able to identify and utilize different technologies to aid in their innovations and search for opportunities. Some of the decisions include use of information technology to aid in communication and decision making processes as well as in research and development aimed at perusing various customer needs and measure them up with what the competitors have been able to offer, thus identifying any gaps that could provide an opportunity for a new entrepreneurial venture. This is one of the strategies that Richard Branson has utilized to expand the Virgin Group while satisfying the needs of the public as well as expand the business, thus becoming one of the most respected entrepreneurs globally.
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