20. Entrepreneurial roles
Generalization entails the
transfer of application to novel areas. For products this entails entry into
new markets. This reflects Mangoldt’s notion of entrepreneurship, and was
recognized also by Schumpeter.
In differentiation
practices are adapted to differences in demand. This may connect with the arbitrage
notion of entrepreneurship, ‘filling gaps in markets’. However, while it
entails the realization of existing potential, it also entails learning and
conceptual change, leading up to a next innovation.
Reciprocation is more
Schumpeterian in that it explores elements for novel combinations. Schumpeterian
entrepreneurship comes more into its own in accommodation towards novel
combinations in novel architectures, where existing structures of action are
broken down and from the debris novel practices are experimentally built up,
to survive, die or be improved in the subsequent stage of consolidation.
However, there
are ambiguities in the attempt to fit existing notions of entrepreneurship
along the cycle. How far does the arbitrage notion of entrepreneurship (Smith,
Cantillon, Austrian economists) go? To what extent does it include adaptation
in the form differentiation and reciprocation? Does it overlap, and where, with
Schumpeterian entrepreneurship? In reciprocation, perhaps? Perhaps this
matching exercise becomes too forced, and serves to show that the distinctions
and boundaries between old notions of entrepreneurship are unclear. Perhaps we
should go beyond them, to provide new perspectives and aspects of
entrepreneurship, as follows.
In
consolidation we find:
- Recognition of success and failure. This
requires sense of realism, in the judgement of technical and commercial
viability.
- Adapting or innovating systems of
application to allow the innovation to achieve its fullest potential. This
requires managerial innovation and corresponding capabilities, for utilization
of economies of scale and scope, in division of labour, and corresponding
standardization of practices, and development of organizational structure for
coordination.
In
generalization:
- Risk taking and vision for expansion
into new applications and markets, and design of corresponding systems of
coordination.
In
differentiation:
-
Incremental innovation by adaptation of practices to
new conditions of demand and production, while maintaining the basic elements
and architecture of existing practice. This requires ‘intrapreneurship’.
-
On the level of top management it requires the ability
to combine the maintenance of efficient exploitation with an allowance for
local deviations, in appropriate forms of decentralization.
In reciprocation:
-
Importation of elements from ‘adjacent’ practices that
in novel contexts appear to be better in some respect of product or production,
while maintaining the architecture of the practice at hand. The requirements
from the previous stage apply to a higher degree: imagination to produce ideas
for novel combinations. The intrapreneur requires an ability of diplomacy to
obtain scope for experimentation while still adhering to demands for coherence
with existing practices.
-
On the level of top management, the problem of
combining efficient exploitation and local deviations, for the sake of
exploration, becomes more problematic. Patterns of collaboration are required
with outside firms, typically in joint ventures. This requires the ability to
‘let go’, and skills of cross-cultural management.
In radical
novel combinations:
-
Trials of new combinations of elements from diverse
practices in a new architecture. This requires a high degree of risk
acceptance, courage, determination, perseverance and charisma and leadership
to bring other people along, including internal or external suppliers of
capital.
-
This stage requires a large degree of organizational
autonomy. If the origin of ideas lay inside a large, integrated organization,
this will often require a spin-off, particularly when the existing system of
exploitation is highly systemic. Top management may then need to be
entrepreneurial in the sense of facilitating external corporate venturing.
Clearly, along the cycle, the requirements of entrepreneurship vary
greatly, and require different people with different competencies. For example,
while radical innovation requires courage, independence, boldness and
determination to tenaciously pursue an idea, consolidation requires a sense of
realism, in the recognition of failure, and the ability to step back and design
structures of coordination and seek compromise between conflicting interests.
Few people will be able to combine such competencies.
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