The Entrepreneurial Manager

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The Entrepreneurial Manager

  1. 1. ENTREPRENEURIAL MANAGER
  2. 2. ENTREPRENEURIAL MANAGER ~ 2 ~ SUBMITTED BY: REHMAN ASLAM a) With reference to current academic understanding, discuss the organisational and managerial factors which influence the degree of innovative and entrepreneurial activity occurring within an organisation. This assignment discusses the factors, both organisational and managerial, which influence the degree of innovative and entrepreneurial activity occurring within Engro Corporation Limited (Engro) and its subsidiaries. Engro’s portfolio consists of seven businesses which include chemical fertilizers, PVC resin, a bulk liquid chemical terminal, industrial automation, foods, power generation and commodity trade; each of which has its own history of innovation and entrepreneurial decisions and projects (Engro, 2012). Entrepreneurship has been defined as creating a vision and communicating it to the team while demonstrating the leadership and motivating people to embrace the change (Wickham, 2000). It has been observed that Small & Medium enterprises (SMEs) are more successful in innovation and entrepreneurial activities because of the size of operations, employees and small number of customers. Their ability to respond to and implement the change quickly makes these organisations more successful with innovation (Hashi & Krasniqi, 2011). However, Engro has proved to be among the few large organisations to be entrepreneurial and innovative in its business. Innovation and creativity can be defined as the implementation of an idea, product or practice which is regarded as new and better by the organisation adopting it (Martins & Terblanche, 2003). Figure 1 shows the process flow of a change, creativity or innovation to go through the acceptance and implementation. Engro observes and practices the same flow while going for any innovation.
  3. 3. ENTREPRENEURIAL MANAGER ~ 3 ~ SUBMITTED BY: REHMAN ASLAM Source: (Martins & Terblanche, 2003)
  4. 4. ENTREPRENEURIAL MANAGER ~ 4 ~ SUBMITTED BY: REHMAN ASLAM Entrepreneurial managers should posses some qualities and skills which include the propensity to take risks, passion towards what they believe, able to shape strategy and foresee conditions, able to gather and motivate the team, communicate and market the strategy and usually have varied experience (Chakravarthy & Lorange, 2008). Engro’s leadership possesses most of the desired skills and capabilities of entrepreneurial managers. It comprises of some of the most enterprising leaders of the corporate world in Pakistan who encourages innovation and employee participation in constructing business objectives. The work environment promotes leadership, integrity, teamwork, diversity and excellence. The history of innovation within Engro has its roots from the year 1991 when Exxon Chemical decided to divest its fertilizers business across the world. The employees of the company bought out 75% equity of the company. This was the most successful employee buy-out at that time and unprecedented as well because it included the complete employee population of the company at that time (Mirza, 1992). The employees as well as the new management to run the company showed the qualities of risk taking and passion towards their goal of buying out the business. This innovated idea came from within the organisation by the employees in higher management. They convinced all the employees to make a team and buy out the company together. This management style relates to the Adair’s Centered Leadership Model that describes achieving of task, building and maintaining the team and developing the individuals (Mullins, 2007). The management had shown their willingness to go an extra mile to achieve what they had believed in. The journey of innovation didn’t stop there, but it turned into a never-ending journey to encourage innovation and out of the box thinking. The organisational culture of Engro and its subsidiaries is a mix of all four roles described by Harrison (1972) & Handy (1982) including power oriented culture, role oriented culture, task oriented culture and
  5. 5. ENTREPRENEURIAL MANAGER ~ 5 ~ SUBMITTED BY: REHMAN ASLAM person oriented culture (Mullins L. , 2007). The management applies what is needed in a given situation. Entrepreneurial managers are expected to launch and lead the change schema in already established organisations (Thompson, 2004) and this is the success factor behind all the remarkable innovations within Engro that reflect entrepreneurial thinking. The list of innovations and entrepreneurial decisions in long but few of the remarkable ones are discussed in this assignment. Drivers for innovation are the organisation’s strategy, culture and systems all working together towards innovation (Omta, 2002) which all are the part of Engro’s commitment towards excellence making the shareholders to portray their confidence in the policies of the management. Research has described the barriers to innovation and entrepreneurial activity as, but not limited to, lack of support by top management, insufficient resources, lack of harmony among the departments of the organisation, and lack of experience with innovation (Kirby, 2003). The management of the company had shown the ability to take risks and breaking the barriers by entering into new business time and time again. However, some researchers claim that success of the entrepreneur managers lies in the way they think about and perceive risk and not the tendency of it (Busenitz, 1999). Engro has been the second largest fertilizer producing company in Pakistan. Its management has always looked for an opportunity in new businesses, investing into food business is one of the breakthroughs. The New Ventures Department (NVD) in Engro prepared an extensive feasibility for the dairy plant and its products. It was a huge investment of more than GBP 10 million. Engro had no prior experience of running a food or dairy products business but it had very strong ties with the farmers who are the customers of Engro. By entering into food business, these farmers were about to
  6. 6. ENTREPRENEURIAL MANAGER ~ 6 ~ SUBMITTED BY: REHMAN ASLAM become the supplier of the company. The business gurus in the market rejected the idea of a fertilizer company entering in to food business. This decision of entering into new business is diversification according to Ansoff Growth Matrix. Another innovative decision of Engro was to set-up the first corporate dairy farm in Pakistan on commercial basis. This time it was taken by the subsidiary itself i.e. Engro Foods Limited. The decision was welcomed by the food industry of Pakistan as a good initiative. Initially 1,500 joined cows (a term used for pregnant cows) were imported from Australia. A state-of-the- art dairy farm was set up on 400 acre in a rural area with highly qualified veterinary professionals from around the world. The premium quality milk from the Australian cows is used in premium products of the company. Running the first of its kind farm is a huge challenge in itself. By doing something new, the company becomes the role model for others and this brings huge pressure of succeeding. The never ending thirst of the management to grow resulted in entering into the power sector, again a new business with no prior experience in the power industry, named as Engro PowerGen Limited. It had to face difficulties as a new entrant in an existing market which can be related to the new entrant’s force from Porter’s Five Forces model. Setting up the world’s largest single train ammonia-urea plant is another example of entrepreneurial thinking and innovation. Constructing something that is largest in the world requires lot of thinking and extensive homework to get it approved by the management and shareholders. But the history of success with innovations made it easier for the team to get it accepted by both. By the commissioning of this new plant with the capacity of 1.3 million tones annual production, the overall annual capacity of fertilizer production went upto 2.3 million tones. This has helped in reducing the import of fertilizer and overall cost reduction for the
  7. 7. ENTREPRENEURIAL MANAGER ~ 7 ~ SUBMITTED BY: REHMAN ASLAM customers as well as contributing towards the national economy by saving precious foreign exchange because of less import of fertilizer. Acquisition and setting up the business overseas has given Engro the status of first Pakistani food company to go multinational. This relates to the global strategic thinking of the management. Engro has acquired a business, Al-Safa Halal, supplying halal meat and frozen food products to the supermarkets in Canada and North America. It is now named as Engro Foods Canada Limited with a subsidiary named Engro Foods USA, LLC. The management has spotted opportunity and has foreseen potential growth in the halal food products markets in the North American region. The business was initially managed by an entrepreneur with a staff less than ten members. Most of the services were outsourced by Al-Safa Halal Meat. Now Engro Foods Limited is managing the operations overseas. All the innovations and entrepreneurial activities in Engro and its subsidiaries were possible because of the management and the organisational culture created by them. Employees feel the sense of responsibility and ownership in every single task they do and they find it important no matter how small or simple it maybe. The reward system of the company for individual’s contribution towards the innovation and creativity to make the processes more simple and cost effective has resulted in boosting motivation among the employees. All such cases are usually reported in the Collage (official magazine) published quarterly under the head ‘My Engro’. It reflects the contributions of the individuals towards the corporate goals of the company. Wolcott and Lippitz (2007) have discussed four models of corporate entrepreneurship. These include the opportunist, the enabler, the advocate and the producer. Each of these has distinguished characteristics categorized under two dimensions, namely ownership of organisation and the resource authority. It discusses who has core responsibility of creating
  8. 8. ENTREPRENEURIAL MANAGER ~ 8 ~ SUBMITTED BY: REHMAN ASLAM new business and from where the project would be financed (Wolcott & Lippitz, 2007). The Opportunist refers to the role where the company is self contend and has no deliberate approach to the innovation or corporate entrepreneurship. The Enabler refers to the state where company provides resources, both financial and personnel for the prospective projects and ideas. The Advocate refers to the state where company has strong belief in innovation and entrepreneurship but the financial resources are provided by the business units. The Producer plays the role to encourage hidden entrepreneur within the person to become active. It aims to build cross functional teams, opportunities for executives to pursue a career outside their departments acting as an entrepreneur and protect emerging ideas to implement those. Figure 2: Four Models of Corporate Entrepreneurship
  9. 9. ENTREPRENEURIAL MANAGER ~ 9 ~ SUBMITTED BY: REHMAN ASLAM As evident from the discussion regarding innovations and entrepreneurial activities carried out by Engro and its subsidiaries, it fell under the umbrella of ‘The Producer’. It has established a separate department in each subsidiary to look for opportunities for corporate growth and supports the function of that department. b) In the light of the findings, identify the areas for personal development with respect to entrepreneurial and innovative practices. The qualities of an entrepreneur as discussed with reference to the management of Engro in part ‘a’ of this assignment can be summarized as a person who takes risks, embraces change, thinks differently, spots opportunities and able to convince people about the new ideas. Three major themes are considered to be constituting and developing entrepreneurial qualities (Rae, 2005), namely: i. Personal and Social Emergence; includes the formation of a sense of self and future aspired person. It is developed from the early age that includes family life, education, career and social belongings. ii. Contextual Learning; participation in social gatherings, community and industry based networks helps in acquiring contextual learning. These enable a person to the ability to spot opportunities and develop intuition. iii. The Negotiated Enterprise; the business is not managed by an individual; it requires negotiated relationship with people supporting in running the business.
  10. 10. ENTREPRENEURIAL MANAGER ~ 10 ~ SUBMITTED BY: REHMAN ASLAM Figure 3: Triadic model of entrepreneurial learning Eleven sub themes were identified within the three as shown in figure 3. All of these related themes are helpful in developing an entrepreneur within a person (Rae, 2005). The five factor model of personality (Holt, Rutherford, & Clohessy, 2007) defines it as: a) neuroticism, an individual’s tendency to be anxious, tense and insecure. b) conscientiousness; an individual’s leaning to be thorough, confident and dependable. c) extraversion, an individual’s inclination to be social, active and self- confident. d) openness, an individual’s tendency to be inventive, imaginative, unconventional and out of box thinking.
  11. 11. ENTREPRENEURIAL MANAGER ~ 11 ~ SUBMITTED BY: REHMAN ASLAM e) agreeableness; an individual’s tendency to be accommodating, trusting and selfless. I believe my standing in these five factors is as follows: Factor My standing Neuroticism Low Conscientiousness High Extraversion High Openness Medium Agreeableness High I remain calm under pressure and produce results that are required out of me. Anxiousness is never an option while working in tense situations. This makes me low on the scale for neuroticism. I have developed confidence and become reliable during the years of work at my organisation. I consciously made efforts to enhance my confidence and reliability among my colleagues that made me a champion for all situations at work. Socializing has become synonym with my profile at work; people like to share their problems with me at work. My friendly nature has helped me gaining the status of a good listener. Openness require out of the box thinking and imagination about new and better ways of completing a task or seeking an opportunity. I am trying to build this skill in my personal matters so that I can practice the same at work once gets successful in my personal life. Being unconventional and accepted by the people surrounding us is a highly difficult task but it gives a competitive advantage to us over others.
  12. 12. ENTREPRENEURIAL MANAGER ~ 12 ~ SUBMITTED BY: REHMAN ASLAM Accommodating and selfless are the skills that have been gifted to me and I try to use these whenever I lack in any other factor. This helps me in getting space within the team as a supportive team player. These qualities have helped me in becoming the part of many projects that require high unconventional thinking. Hence in my opinion, I need to develop myself as an entrepreneurial manager and to learn how to balance all the five factors to become successful. Working in a company like Engro has helped me develop all these skills.
  13. 13. ENTREPRENEURIAL MANAGER ~ 13 ~ SUBMITTED BY: REHMAN ASLAM References  Busenitz, L. (1999). Entrepreneurial risk and strategic decision making: it’s a matter of perspective. The Journal of Applied Behavioral Science, 35 (3), 325 - 340.  Chakravarthy, B., & Lorange, P. (2008). Driving renewal: the entrepreneur-manager. Journal of Business Strategy, 29 (2), 14 - 21.  Engro. (2012). Our Company. Retrieved June 3, 2012, from Engro Corp: http://engro.com/our-company/  Hashi, I., & Krasniqi, B. (2011). Entrepreneurship and SME growth: evidence from advanced and laggard transition economies. International Journal of Entrepreneurial Behaviour & Research, 17 (5), 456 - 487.  Holt, D., Rutherford, M., & Clohessy, G. (2007). Corporate Entrepreneurship: An Empirical Look at Individual Characteristics, Context, and Process. Journal of Leadership & Organizational Studies, 13 (4), 40 - 54.  Kirby, D. (2003). Entrepreneurship. Maidenhead: McGraw-Hill.  Martins, E., & Terblanche, F. (2003). Building Organisational Culture that stimulates Creativity and Innovation. European Journal of Innovation Management, 6 (1), 64 - 74.  Mirza, S. (1992). ECPL employees led buy-out experience. Retrieved June 3, 2012, from Resource Library: http://findarticles.com/p/articles/mi_hb092/is_n5_v23/ai_n28617100 /  Mullins, L. J. (2007). Management and Organisational Behaviour (8th ed.). Harlow: Pearson Education Limited.  Mullins, L. (2007). Management and Organisational Behaviour (8th ed.). Pearson Education Limited.  Omta, S. (2002). Innovation in chains and networks. Chain and Network Science , 2.
  14. 14. ENTREPRENEURIAL MANAGER ~ 14 ~ SUBMITTED BY: REHMAN ASLAM  Rae, D. (2005). Entrepreneurial learning: a narrative-based conceptual model. Journal of Small Business and Enterprise Development, 12 (3), 323 - 335.  Thompson, J. (2004). The facets of the entrepreneur: identifying entrepreneurial potential. Management Decision, 42 (2), 243 - 258.  Wickham, P. (2000). Strategic Entrepreneurship: A Decision-Making Approach to New Venture Creation and Management (2nd ed.). London: Pitman Publishing.  Wolcott, R., & Lippitz, M. (2007). The Four Models of Corporate Entrepreneurship. MITSloan Management Review (Fall07), 74 - 82.

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