Does entrepreneurship help in implementing strategies? Contd from last week...

They maintain that "a successful firm not only engages in entrepreneurial managerial behaviour, but also has the appropriate culture and organisational structure to support such behaviour".

(E-V-R) Congruence Model

The E-V-R congruence model provides an ideal framework for examining how entrepreneurship helps in achieving organisational effectiveness and success through successful implementation of strategies (Thompson, 1999).

Thompson says that what entrepreneurs achieve strategically can help foster enterprise in a wide range of organisations.

The environment is the source of opportunities and threats, the external key success factors. Resources constitute strengths and weaknesses, strategic competencies and capabilities which either match, or fail to match, environmental needs. Key factors vary significantly from industry to industry and from market to market, and consequently there can be no common formulae for successful strategic positioning which entrepreneurship would facilitate. Moreover, the matching of environment and resources (E&R) should be managed in a dynamic environment.

It is the values and culture, which entrepreneurship can influence, of the organisation which determine first, the effectiveness of the current match between E&R, and, second, the ability and will of the organisation to change and strengthen this matching. Entrepreneurs and entrepreneurial managers obtain resources and exploit organisational competencies and capabilities to seize or even open windows of opportunity in their selected environments for better positioning.

They are opportunity driven. It is, therefore, an implicit assumption that a truly entrepreneurial organisation creates E-V-R congruency and sustains the match with measured strategic change (Thompson, 1999).

It is widely acknowledged that entrepreneurship is not confined to any one type of business.

Some build a business from nothing, invariably with determination and commitment.

These can be profit seeking business; equally they can be community based initiatives by 'social entrepreneurs'.

One key challenge of entrepreneurs is dealing with the strategic and structural changes required for growth.

Lack of entrepreneurship would lose the direction and momentum of business. Entrepreneurial behaviour is a ubiquitous need for all types of organisations.

Entrepreneurship in practice

We will now take some examples to exploit the practical nature of entrepreneurship and how it facilitates the implementing strategies.

The theory, we have developed supports that entrepreneurship facilitates the blending of E-V-R to make the most suitable mix of them to support the implementation of strategies in a novel and complex situation.

This will not be achieved, and strengthened, without strategic awareness, the ability to capture and harness key information and knowledge within the organisation and from the environment.

This must then be synthesized and shared to inform and support innovation and continuous improvement.

The E-V-R model can be used at micro level as well as macro level to illustrate how entrepreneurship contributes or hinders in implementing strategies. Without promising entrepreneurship which leads to E-V-R congruency, innovation and operating efficiency through sound implementation of strategies, the following businesses would have not grown to achieve the levels of success that they enjoy.

VAA vs BA

British Airways (BA) has experienced substantial change as it has emerged from privatisation to become one of the world's leading airlines. It has worked hard on its culture and values to establish and exploit E-V-R congruence.

Naturally it views the other leading global players as its competitors. These include US, European and Far Eastern airlines. Nevertheless, the much smaller, focused and entrepreneurial VAA has also proved to be a competitive threat. Richard Branson at VAA has deliberately targeted selected routes and destinations for business people and holiday makers, gained access to prime slots at London Heathrow and offered a high level of service at competitive prices.

VAA is clearly differentiated and successful. BA underestimated the threat and was forced into reactive mode for not losing major presence in important sectors of the short haul market.

Southwest Airline

The pioneer of this competitive paradigm is the visionary and entrepreneurial Herb Kelleher, founder of the very successful Southwestern Airline in the USA. SWA concentrates on domestic US routes and flies between cities rather than adopting the hub-and-spoke patterns of the more established US airlines.

With the objective of flying people safely, cheaply and conveniently, SWA does not serve meals during flights; seats are not pre-assigned, even at the airport; and hand baggage is limited. Travel is ticketless because bookings are direct with the airline by phone or Internet and fully computerised; travel agents do not sell tickets for SWA.

The successful implementation of all of these strategies curtails costs and speeds up the turnaround time at airports.

Waterstone's Bookshop

In the 1980's Tim Waterstone left W H Smith after the company's US interests, for which he was responsible, failed to meet their targets. Using part of his redundancy money he opened the first Waterstone's bookshop, and from this base helped to build a substantial chain. Waterstone appreciated that a wide choice of titles and the opportunity, even the encouragement, to spend time browsing and looking through the stock results in purchase. Unlike most other retailers, Waterstone empowered individual store managers to select their own stocks; typically that is the centralised decision for retail chains.

Eventually, Waterstone's was sold to W.H. Smith. The underlying success of Waterstone's lies in its vision about bookselling.

Ford, Starbuck, Sony

Henry Ford invented neither the automobile nor the division of labour. He applied 'division of labour' to the production of automobiles in a new way i.e., the assembly line.

Akio Morita, the president of Sony, saw that his company's existing products could be adapted to create the Walkman.

Though grinding coffee beans and selling brewed coffee are not new, the quality and ambience that Starbucks gives to production is a new offering.

Conclusion

In the real competitive world, many organisations find themselves unable to compete due to the lack of suitable vision to understand the change happening in the environment and implement strategies accordingly.

This inability, which is often seen as a problem of management, has demanded leadership, more increasingly entrepreneurship to meet the complexity and turbulence of the environment within which managers need to implement strategies.

Opportunity recognition is at the heart of entrepreneurship. Both opportunity seeking behaviour (entrepreneurship) and advantage seeking behaviour (strategic management) are necessary for wealth creation.

These two are complementary and entrepreneurship facilitates the implementation of strategies in a dynamic environment.