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Agile Corporate Entrepreneurship
Early in the last decade, several senior scholars from the Harvard Business School undertook an expansive research project aiming to draw wide-ranging trends about business management across the twentieth century. Anthony Mayo, Nitin Nohria, and others guided the HBS Leadership Initiative that identified three categories of leadership: innovative entrepreneurs, savvy managers and transformational leaders. As elaborated in a series of books, these distinct paths help us both to understand individual behaviors and impact and to illuminate the life cycles of growth (and decline) of specific firms and industries that occurred across long-term changes in social, economic and market contexts.
In the twenty-first century, many individuals and businesses appear increasingly to have evolved beyond this typology. From the specific skills and behaviors of specific leaders to the unprecedented macro-contexts in which they are acting, successful business leadership today arguably demands more varied and dynamic traits and capabilities. While creative problem-solving is regularly listed among these skills, ‘creativity,’ per se – at least when defined in traditional terms of virtuosic artistic expression and viewed as a silver bullet for resolving business problems – is not included. To take one example, Bain & Company, the consultancy, published earlier this year the results of an extensive project on the ‘firm of the future’. They posited that corporate leaders of the future need increasingly to be nimble and adopt more hybrid roles that combine creativity with other business skills: their emergent types thus resemble a venture capitalist, a professional service firm team leader, and an individual working to scale a start-up.
Bain is hardly alone in exploring the future of organizations and leadership as well as the transformations that are shaping them. Alex Osterwalder, who helped to popularize the Business Model Canvas, also recently categorized various types of innovation that can and should occur for continuing business success. Innovations in management and organization, business processes, technology and science, product and service, and marketing and advertising are more familiar historically. Building on his own research, Osterwalder also identified a further level of exploration and reinvention: ‘Business R & D’. Moving beyond conventional approaches to improving products or processes or increasing efficiencies, he focuses on the persisting challenge of driving consistent corporate growth through the ongoing reinvention of business models themselves.
One of the challenges that leaders face in today’s businesses and marketplace is the hype swirling around both creativity and entrepreneurship. While these are hardly new, we need consistently to look beyond their unrelenting usage as buzzwords. Impugning the notion that a quasi-mystical ‘spirit of entrepreneurship’ guides meaningful change in business, the late economist William Baumol opened an essential 1990 paper with a more pragmatic view that we would do well to keep in mind. Entrepreneurs are defined, simply, Baumol wrote, ‘to be persons who are ingenious and creative in finding ways that add to their own wealth, power, and prestige’. That emphasis – or, as Baumol put it, ‘bias’ – towards profit is crucial to understanding innovation in both new and established private enterprises. Put more straightforwardly, leaders do well to recognize that the centers of their entrepreneurial and other business activities extend far beyond the reveries of creativity alone.
‘Agile’ has emerged as another ill-defined buzzword for all manner of adaptable and rapid engagements with situations and talent. Originating in software development and project management, its core tenets were captured in a 2001 Manifesto. The last decade has seen agile approaches re-figured for other industries. Last year, Darrell K. Rigby, Jeff Sutherland, and Hirotaka Takeuchi wrote a lengthy article for the Harvard Business Review about how the business world was more and more ‘embracing agile.’ Their adapted version of the Manifesto prioritized four values and principles as the basis of strategy and innovation:
- People over processes and tools
- Working prototypes over excessive documentation
- Respond to change rather than follow a plan
- Customer collaboration over rigid contracts
The importance of these values and principles is their potential relevance to a range of business activities and organizations that extend far beyond software development or start-ups – and include the corporate entrepreneurship ecosystem. Marking that system of established firms is a continuing tension between exploitation of existing, more certain, efficient, and predictable markets and the exploration of uncertain, unpredictable, ambiguous and potentially high-growth opportunities. As is often observed, an investment in exploration requires a willingness to fail and, more importantly, an openness to learn and then to act upon that learning. Here is why agile can ultimately be so valuable: more than simply referring to speed or experimentation, agility involves adopting a set of priorities as the basis for analyzing and responding creatively and strategically to uncertain and shifting situations. General Electric, SAP, Coca-Cola, and Haier are among the large firms that have invested in ongoing innovation efforts that turn on the widespread willingness to act, fail, learn and ultimately re-invent.
Agile corporate entrepreneurship employs openness, imagination, and adaptability to unleash the full potential of people, experimentation, learning, and collaboration. To achieve and sustain meaningful innovation and transformation in corporate settings, leaders must know how and when to sense, analyze, and respond to dynamic situations and diverse people, and to learn from their actions. This requires greater flexibility, iteration, and speed than many of these leaders or their organizations have previously exercised. Besides fresh and flexible combinations of leadership skills and knowledge, agile corporate entrepreneurship thus compels far-reaching changes in the mental models, strategic and executional activities, and measurement frameworks of established firms. The many opportunities enabled by agile and entrepreneurial mindsets and approaches – from more thoroughgoing innovation and firm reinvention to increased competitiveness and new market entry – make the hard work of realizing these changes beyond the hype and buzzwords a wise investment of leadership resources.
Explore this topic in full with David Slocum at the unmissable Reinvention Summit 2017 in Guayaquil, Ecuador