Running Head: CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Continual Paradigm Shifts in Entrepreneurial Leadership

Barbara Gilley

Professor Daniel Frost

BUS508013VA016-1116-00: Strayer University

July 17, 2011

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg.2

ABSTRACT

This paper will focus on Creating a hybrid theory/philosophy which combines the common elements found in the thinking of Case, Kouzes, and Drucker, including the new definition of entrepreneurial leadership presented in Understanding Entrepreneurial Leadership in todays Dynamic Markets, and will describe what type of organization a transactional, transformational, and authentic leader would thrive in the most, as well as which type of leader would thrive the least, as well as, evaluating the resources and tools available through the Small Business Administration and SCORE, and determine which single resource or tool is most useful to the greatest number of businesses; a rationale will be explained. This paper will evaluate the resources and tools available through the Small Business Administration and SCORE, and determine which single resource or tool is most useful to the greatest number of businesses and a rationale will be explained; and this paper will create a list of leadership best practices that would apply to the greatest number of businesses both small and large, and a rationale will be explained.

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 3

OUTLINE

Abstract. .Pg 2

Create a hybrid theory/philosophy which combines the common elements found in the thinking of Case, Kouzes, and Drucker. In your philosophy, be sure to include the new definition of entrepreneurial leadership presented in Understanding Entrepreneurial Leadership in todays Dynamic Markets....Pg 3 Describe what type of organization a transactional, transformational, and authentic leader would thrive in the most, as well as which type of leader would thrive the least. Explain your response using at least one (1) additional source...Pg 6 Evaluate the resources and tools available through the Small Business Administration and SCORE, and determine which single resource or tool is most useful to the greatest number of businesses. Explain your rationale. Evaluate the resources and tools available through the Small Business Administration and SCORE, and determine which single resource or tool is most useful to the greatest number of businesses. Explain your rationale...Pg 10

Create a list of leadership best practices that would apply to the greatest number of businesses (both small and large). Be sure to explain your reasoning...Pg 12

References.Pg 14

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 4

Continual Paradigm Shifts in Entrepreneurial Leadership

Create a hybrid theory/philosophy which combines the common elements found in the thinking of Case, Kouzes, and Drucker. In your philosophy, be sure to include the new definition of entrepreneurial leadership presented in Understanding Entrepreneurial Leadership in todays Dynamic Markets.

For years, defining entrepreneurial leadership has been an on-going endeavor for many who are eager to claim rights to a final definition. What is entrepreneurial leadership? How can entrepreneurial leadership be defined and how can entrepreneurial leadership mirror the common elements described by Case, Kouzes, and Drucker? With changes in societys, economies, and the widespread growth of technology, entrepreneurship and leadership have both grown to take on many different definitions over the past century. Mr. Case, former CEO at AOL and philosopher refers to the three Ps: People, Passion and Persevering. Mr. Case believes that the right people need to be aligned to the right priorities and that the underlying passion cannot exist with only the founder and CEO but that this passion needs to spread throughout the entire organization (Case, 2010). Mr. Kouzes theorized five characteristics pertaining to effective leadership which are 1) model the way, or lead by example; this is achieved by establishing a clear set of values and expectations for the organization (Kouzes, 2008), 2) inspire a shared vision this

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 5

accomplished by looking into the future and communicating the organizations goals to the rest of the group (Kouzes, 2008), 3) challenge the process by looking for new ways of doing things (Kouzes, 2008), 4) enable others to act by giving them what they need to function at their best and to build skills (Kouzes, 2008), and 5) encourage the heart, caring creates a climate where people feel cared for and where the positive outweigh the negative (Kouzes, 2008). There are two theories hypothesized by Mr. Drucker regarding entrepreneurial strategies which are 1) Being fustest with the mostest; this theory aims at market domination through innovation (Drucker, 1985), and 2) Hit them where they aint this strategy suggests exploiting success from others by using creative imitation and entrepreneurial judo (Drucker, 1985). This strategy will require some authentic innovation to achieve success (Drucker, 1985). The commonalities in the philosophies of Case, Kouzes, and Drucker relates to the new definition of Entrepreneurial Leadership as one of an enterprising, transformational leader who operates in a dynamic market that offers lucrative opportunities (Tarabishy, Fernald, Solomon, 2010). Pertaining to common elements discussed above, Case, Kouzes, and Druckers theories and philosophies include their principles and strategies that do relate to the new definition of entrepreneurial leadership within todays dynamic and changing markets, and they do share many similarities. But, how is Entrepreneurial Leadership defined as entrepreneurial leaders

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 6

open businesses in the 21st Century? Entrepreneurial Leadership has many different meanings across disciplines. The new definition of Entrepreneurial Leadership reflects as one of an enterprising, transformational leader who operates in a dynamic market that offering lucrative opportunities (Tarabishy, Fernald, Solomon, 2010). Case, Kouzes, and Drucker share many similarities to the new definition of entrepreneurial leadership and the main elements shared by these individuals and the new definition of entrepreneurial leadership is entrepreneurial leaders have a clear vision, create opportunities, and adapt to change. Another similarity among these philosophies is that entrepreneurial leadership creates opportunities and seizes opportunities.

This strategy will require some authentic innovation to achieve success (Drucker, 1985). The commonalities in the philosophies of Case, Kouzes, and Drucker relates to the new paradigm shift in defining entrepreneurial leadership; and therefore these leaders recognize opportunities for business and actively take advantage when necessary. The entrepreneur part of entrepreneurial leadership is the ability to recognize, create, and act on given opportunities in a dynamic market. Describe what type of organization a transactional, transformational, and authentic leader would thrive in the most, as well as which type of leader would thrive the least. Explain your response using at least one (1) additional source.

Leaders today encourage followers to step out of their comfort zones, and take risks. Todays innovation and global competition makes the status quo way of operation an endangered species. Leaders must possess the ability to persuade their followers to step out of their comfort zones, and take a leap of faith; they must be willing to follow their leaders into the unknown. This is

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 7

accomplished by building trust, and making oneself vulnerable without knowing the outcome or how it will affect ones job. Leaders must have the skills, and ability to change, learn, adapt quickly, and in a positive manner as innovation dictates. There are four dimensions of authentic transformational leadership which are charisma influence, inspirational motivation, intellectual stimulation, and individualized consideration. Charisma is thought to be the most important aspect of transformational leadership qualities, as well as, personal values which are an unshakable force from within that drives them (Bass, 1985; Bass & Avolio, 1993).

Studies have been conducted on various leadership types and their effectiveness. James MacGregor Burns first introduced the transformation leadership concept in 1970. Other scholars have also published similar studies. Bernard Basss theory examines how leaders affect their followers and literally transform them. Three research studies were examined on transformational leadership, and its effectiveness. The first study proved employees pay close attention to whether leaders practice procedural justice (Leventhal, 1980; Thibaut & Walker, 1975). The second study proved effective transformational leadership has a direct effect on the successful implementation of quality management in administrative service. The third study proved effectiveness of leadership is situational determined.

Since Burns coined the terms transformational and transactional leadership, what is Mr. Burns definition of transformational and transactional leadership? Burns wrote, I define leadership as leaders inducing followers to act for certain goals that represent the values and the

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP motivations-the wants and needs, the aspirations and expectations-of both leaders and

Pg. 8

followers. [Italics original] The leader is not merely wielding power, but appealing to the values of the follower. In this sense, values mean, A principle, standard, or quality regarded as worthwhile or desirable, (Websters New Riverside University Dictionary).

Burns insists that for leaders to have the greatest impact on the led, leaders must motivate followers to action by appealing to shared values and by satisfying the higher order needs of the led, such as their aspirations and expectations. Transforming leadership ultimately becomes moral in that it raises the level of human conduct and ethical aspiration of both leader and the led, and thus it has a transforming effect on both.

Burns and much of the current literature make the point that the way leaders influence followers is based on their shared sense of what is important, worth doing well, and expending energy on it. In a sense the more significant the endeavor, the more the undertaking itself takes on an importance greater than either the follower or leader. Such leadership occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality. Their purposes, which might have started out as separate but related, as in the case of transactional leadership, become fused, (Walsman, Bass, & Yammarino, 1990). The goals, then, take on a life of their own. In business, this leads to market domination and profit. In the military, this leads to professionals leading inspired subordinates through tough budgets, difficult deployments, the rigors of combat, and ultimately victory. Burns recognized that transformational leadership does not stand alone in the leadership lexicon. As mentioned, he coined another leadership term, transactional.

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 9

Transactional leadership is based on a transaction or exchange of something of value the leader possesses or controls that the follower wants in return for his/her services. The relations of most leaders and followers are transactional-leaders approach followers with an eye to exchanging one thing for another: jobs for votes, or subsidies for campaign contributions. The transactional style is precisely what happens in a contracting scenario. The contractor provides the specified service purchased. This only works well when both leader and led understand and are in agreement about which tasks are important. Transformational leadership and transactional leadership are not at odds with one another, but complement each other as the circumstance dictate. There is no magic formula or checklist that dictates when one is more relevant than the other in any given situation. When to make the transition is an art borne of experience and education.

Bernard Bass, a disciple of Burns, points out the relationship between transactional and transformational leadership. The best leadership is both transformational and transactional. Transformational leadership augments the effectiveness of transactional leadership; it does not replace transactional leadership, (Walsman, Bass, & Yammarino, 1990). Transaction continues to be an effective tool, and a necessary tool, for leaders at all levels. Transformational leaders, whose choice would be to gain agreement by appealing to the values of the followers or peers, finding the road blocked, may resort to the transactional style. When the transformational leaders see him/her in a win-lose negotiation he tries to convert it into a win-win problem solving situation. If this is not possible, then he or she can display the transactional skills necessary as an effective negotiator, (Walsman, Bass, & Yammarino, 1990). On the surface it appears that the

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP Pg. 10 transactional style provides the basis of most leader-follower encounters. Why, if the transactional style works, not just stick to the tried and true?

While the transactional style may be the most prevalent, it produces results that may not be as high as with the transformational style. According to Karl Kuhnert and Phillip Lewis, Mr. Kegan examined a six stage developmental theory. Kegans theory is that people may develop higherorder leadership traits as they mature. The six stages range from 0-5; Khunert and Lewis explored stages 2, 3, and 4. They used these stages to examine transactional (stage 2), higherorder transactional (stage 3), and transformational (stage 4), leadership traits. It may be useful to use Kegans model of these stages to distinguish between the previously mentioned leadership traits.

Evaluate the resources and tools available through the Small Business Administration and SCORE, and determine which single resource or tool is most useful to the greatest number of businesses. Explain your rationale. Evaluate the resources and tools available through the Small Business Administration and SCORE, and determine which single resource or tool is most useful to the greatest number of businesses. Explain your rationale. Running a small business can be a lonely life. Working long hours to keep the doors open, it can be easy to feel as though you're the only struggling entrepreneur. But you're not -- and help is available. The irony is that many small-business owners don't ask for assistance even when there are valuable and affordable resources out there providing expert advice and support. Entrepreneurs have access to numerous small-business resources, many of which are available through both private and federal agencies. By taking advantage of these programs and

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 11

services, entrepreneurs can maximize their growth potential and strengthen the national economy. According to SBA.com, there are five overlooked resources for entrepreneurs: 1) The Small Business Administration and SCORE (Service Corps of Retired Executives). With SBA funding shrinking, now's the time to make good use of these resources while they're still around. After all, your taxes paid for them. 2. Your chamber of commerce. I understand that in some places it can cost $500 to join. (Mine costs around $100.) If your local chamber of commerce is pricey, most chambers will have at least the occasional free networking event you could drop in on, and many have marketing programs that can help all the business in their city, including yours. It could pay to get involved. Connect with your local chamber through the U.S. Chamber of Commerce. 3. Your industry association. It has always surprised me that many business owners don't join their industry trade group, which usually takes the lead in advocating for businesses like yours in state and national legislatures. Trade groups are also a great source of useful research and forecasting on industry trends, so membership can give you a jump on the competition. Better than joining; get involved in shaping the agenda and organizing events. You'll learn a lot and build great relationships with others in your field, too. Prices vary, but most trade groups deliver a lot of value for the dues you pay. 4. Other local business owners. Smart business owners look around their town and find ways to team up with other local entrepreneurs, whether it's to market their business, form a mastermind group or just commiserate over a beer. It costs nothing to organize a monthly meeting with a few other business owners, and a lot of great ideas could come out of it. 5. Your community college. Local colleges can be a great source of entrylevel job applicants, a conduit to finding interns or a place to send workers to get training on the cheap. If your local college doesn't offer the education your workers need, let the college know. Many learning

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 12

institutions are focused on meeting the needs of their local business community, so they want to hear from you. They might design a new course to suit your requirements or invite you to be a speaker at a business course, helping to build your reputation and attract new hires (SBA.com). Throughout its history, SBA has provided critical support to tens of thousands of startups and small businesses. This series highlights the stories of six of those firms and shares best practices and lessons learned that can be helpful to other entrepreneurs and small business owners who are working every day to grow their businesses and achieve their own piece of the American dream.

Create a list of leadership best practices that would apply to the greatest number of businesses (both small and large). Be sure to explain your reasoning. Entrepreneurial Leadership combines the common elements found in the thinking of Case, Kouzes, and Drucker. In any business, exceptional leadership skills are needed in order to succeed. Whether you own the business, manage it, or, an employee looking to make his or her way up the corporate ladder, the right leadership style is essential in order to reach ones goals. It can be said without argument that well-honed leadership skills are the most important component of being a success in the business world. The common elements described in all three mens strategies of becoming a successful leader summarized below and these leadership skills will assist leaders to reap the rewards by successfully and effectively contributing to an organization in the 21st Century.

Leaders must be adaptable. As a leader, adaptability means reacting in an effective manner to shifting circumstances in your business environment. Everybody experiences adaptive challenges, but leaders are keen to resolve these issues with a carefully thought-out plan of

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP action. If there is one trait that every business leader needs most in todays business

Pg. 13

environment, it is adaptability. If adaptability is not your strongest asset, then hone your skills by developing ways to anticipate problems and prepare backup plans to effectively cope with those problems. Keep an open mind and commit to learning constantly, learning quickly, reacting accordingly and adopting an approach of flexibility when faced with any situations that require adaptability. When leaders design a work style around a plan that provides plenty of adaptability, entrepreneurs will be able to provide better support and leadership to teams which impact the business. Leaders should also be the person that others turn to for guidance when things change or an unexpected crisis arises. Lead by example if you show them that you are adaptable, open-minded and flexible, greater opportunities open up for the business. Based on the above, I shall name my theory A Continual Paradigm: Defining Entrepreneurial Leadership. This is the ability of the entrepreneurial leader to vigorously explore opportunities in a highly changing economic environment. According to the article understanding entrepreneurial leadership in todays dynamic markets entrepreneurial leadership is the ability to recognize opportunities in a dynamic market. Todays market is characterized by continuous change in technology, markets, financial systems, etc. Therefore, for an entrepreneurial leader to succeed, he/she must possess some vigorously active, forceful and energizing qualities that would help him/her to take advantage of opportunities in the market place. These include collaboration and care for people, good communication skills, passion to achieve goals even in difficult times, shared vision, values and beliefs for goal accomplishment, and ability to handle sudden changes through creativity and innovation.

CONTINUAL PARADIGM SHIFTS IN ENTREPRENEURIAL LEADERSHIP

Pg. 14

References

Bass, Bernard M. The Ethics of Transformational Leadership. In Kellogg Leadership Studies Project, Transformational Leadership Working Papers Transformational Leadership Working Papers, The James MacGregor Burns Academy of Leadership, 1997. Kotter, John P. John P. Kotter on What Leaders Really Do. Boston, MA: Harvard Business School Press, 1999. Kuhnert, Karl W. and Phillip Lewis. Transactional and Transformational Leadership: A Constructive/Developmental Analysis. Academy of Management Review 12, no. 4 (1987): 648657. Leventhal, G. S. (1980). What should be done with equity theory? New approaches to the study of fairness in social relationships. In K. Gergen, M. Greenberg, & R.Willis (Eds.), Social exchange: Advances in theory and research (pp. 2755). New York: Plenum Press. Tarabishy, A., Fernald, L., Solomon, G. (2010). Understanding Entrepreneurial Leadership in Today Dynamic Markets. Retrieved October 20, 2010, from: usasbe.org/knowledge Websters New Riverside University Dictionary - Publisher: Houghton Mifflin; Indexed edition (July 2, 1984)