Entrepreneur: 1 — Manager: 0?

Entrepreneurs as the new icons in the Church of Capitalism (Image from the internet)

“Management is not about managing people, but about helping people become entrepreneurs” (Zhang Ruimin, CEO Haier Group)

In recent discussion it was often suggested that we should transform our businesses so that everybody can “become an entrepreneur”. It certainly sounds compelling, but what exactly does this mean? With all the hype about entrepreneurship it might indeed come as a surprise that the role of “entrepreneurs” has been far from unequivocal during the last two centuries.

In the 18th century, being an entrepreneur was rather lacklustre. At least in any social gathering that mattered. Entrepreneurs were at best perceived as “carriers of business risk” — i.e., those people who “acquire resources at known prices to produce and sell goods at an uncertain future profit”. Even Adam Smith saw entrepreneurs primarily as financiers, without wider societal importance. Unsurprisingly, all that quickly changed during the industrial revolution, a century later. Entrepreneurs rushed into the limelight and their roles and relevance quickly expanded: Jean Baptiste Say praised entrepreneurs as the critical “link between science and labour”, and Alfred Marshall acknowledged their crucial role across all strategic business and investment decisions. Yet, at the same time the societal image of entrepreneurs rapidly deteriorated: decried as unscrupulous hunters for profits and condemned as selfish exploiters of society to make money. Edward Burke thus described the early English industrialists: “the ledger is their bible, the stock exchange their church, and money their God”. Even Winston Churchill proposed that: “Some see private entrepreneurs as a predatory target to be shot, others as a cow to be milked, but few are those who see it as a sturdy horse pulling the wagon.”

In fact, the idea that entrepreneurs are icons of modernity is surprisingly new. Joseph Schumpeter might well be the godfather of the ideal of the entrepreneur as the creative, dynamic, even heroic figure who — against all odds —” imagines and implements new combinations of resources to generate innovation and economic growth”. Concurrently, especially in the post-war years, the ethics of entrepreneurship recovered: society looked to entrepreneurs, more than to politicians or soldiers, to reconstruct both economy and society. And much in line with the (European) tradition of “honourable merchants”, many illuminated enterprising businessmen started to do their personal best to pull that wagon, supporting higher taxes and embracing greater social responsibility.

“I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty. I believe in the dignity of labor, whether with head or hand; that character-not wealth or power or position-is of supreme worth. I believe that the rendering of useful service is the common duty of mankind and that only in the purifying fire of sacrifice is the dross of selfishness consumed and the greatness of the human soul set free. I believe that love is the greatest thing in the world; that it alone can overcome hate; that right can and will triumph over might.” (John D. Rockefeller)

Yet, more recently, it seems to me that the image of entrepreneurs mutated again: in fact, in most textbooks today, technical definitions dominate and the ethical perspective has almost vanished: “an entrepreneur”, says Investopedia, “is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards.” Simple, yet almost with a touch of magic! No surprise that in the soul-thirsty imagination of an ever more disillusioned corporate society, entrepreneurs are often portrayed as wizards of technological progress and as almost mythical avengers in a raging battle for market share, innovation and power. And there is not doubt — in the Churches of Capitalism entrepreneurs are the new uncontested Saints!

So, should we all become entrepreneurs? Well, not so fast.

  • Undoubtedly, entrepreneurs have contributed massively to the progress and well-being of our society. And, where appropriate, we should undoubtedly praise them for their virtues and character - for their curiosity or courage or perseverance or contribution. But as I have written elsewhere, I strongly believe there is no separate “morality for markets” — our economy must serve our society — and leaders of organisations must responsibly serve their people, communities and ecosystems. That requires more than fancy t-shirts, bubbly unicorns or flashy products.
  • Yet, I do believe the idea that every employee should become capable to be “their own CEO” is powerful— especially in those companies that still often stifle and constrain our ability to flourish at work. It strongly underscores the importance of a radical decentralisation of power, to both enhance individual flourishing and attain organisational adaptiveness and agility.
  • But I see two caveats: firstly, the often blatantly individualistic (and “americanised”) image of entrepreneurship is neither the only, nor necessarily the best model. In my belief, every good organisation must balance autonomy and subsidiarity with integration and solidarity. Good organisations are more than portfolios of profit-seeking “mini enterprises“ — they craft “entrepreneurial communities” where the production of “internal goods” (like friendship, development, justice, ecological sustainability) is as important as the production of “external goods” (like customer satisfaction or revenues). Secondly, I do know many people who simply wouldn’t want to become entrepreneurs. Hence, rather than promoting one specific role we should focus on collective and integral human development. As Stefano Zamagni points out: “it is the productive process that should be adapted to the human condition of people, not vice versa.” Good organisations should understand and respect people for who they are and cherish who they want to become, enabling an environment where people can step into different roles and communities “lift each other up”, for the good of all.

Hence, in conclusion, I believe we don’t need more entrepreneurs at work, we need more entrepreneurship to courageously innovate the way we work. Reifying entrepreneurs as the messianic saviors of humankind is neither justified nor useful. And juxtaposing entrepreneurs to managers is ridiculously simplistic — in the same way we tried to separate “leadership” from “management”, without much success. Let me therefore suggest that: “management is not about managing people, it is about enabling communities to flourish”.

We are not leaders (or entrepreneurs) because we rule, we are leaders because we truly care.

Historical overview based partly on: Christliche Unternehmer by Francesca Schinziger

Discussion

Isn’t more autonomy good? Fair point Otti. However, would you say that shifting the system of management and governance in organizations to provide more autonomy to individuals in the workplace is an equally problematic aspiration? I would argue this it is inherently a good thing for humans and humanity, even if some organizational members prefer less autonomy for themselves. To be fair, the post talks about giving more autonomy to workers — which resulted in more of them acting like entrepreneurs. As long as they made this choice on their own, it is hard to find fault in that. The problem would be in imposing the risk profile preference of an entrepreneur on everyone.

  • Yes, I certainly agree with most of that. I do believe, however, that the desire for autonomy as often understood — in the sense of “negative freedom” — is overrated. I believe differentiation and integration, and subsidiarity and solidarity should go hand in hand. And as Mary Parker Follett wisely pointed out, the true magic of organisations is their capacity to integrate, rather than fragment. I am pondering about a different theory of the firm that transcends the simplistic and I believe erroneous notion of the firm as a “nexus of contracts” — where boundaries are determined by transaction costs. Conversely, I reckon we need to look at the meaning-creating capacity of the firm — the ability to endow people with collective purpose and spark their creativity and imagination in service of the shared (and good) enterprise. More to be pondered…

From: “Sunday Morning Thoughts on LinkedIn” — I will report some of the interesting LinkedIn dialogues here, paraphrased and applying the Chatham House Rule — trying to protect some of the sentiments, thoughts, and above all our stimulating discussions from oblivion ;-)

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Disruptive thinker, amateur poet and passionate global C-level transformation leader with over 20 years of experience in cross-cultural strategic change

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Otti Vogt

Otti Vogt

Disruptive thinker, amateur poet and passionate global C-level transformation leader with over 20 years of experience in cross-cultural strategic change

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