Change and the "Entrepreneurial Society"

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Home > Articles > Change and the "Entrepreneurial Society"

 Change and the "Entrepreneurial Society"

Susan Goldsworthy and Walter McFarland | Today's Manager
June 1, 2017
Years after its publication, Professor Peter Drucker’s Innovation and Entrepreneurship challenges us to see that change is not a problem to be solved, but fuel for continuous innovation.
We can learn a lot about the present and potential future from the lessons of the past. If you are a student of organisational change, it is important to review the perspectives of great thinkers on the topic of change. It struck us that not much has been written recently about the perspectives of Professor Peter Drucker—perhaps the best known scholar of management. In reviewing Professor Drucker’s perspectives, we focussed specifically on his book Innovation and Entrepreneurship 1. We did this because in this book, Professor Drucker develops his thinking about the “Entrepreneurial Society” and the role that organisational change plays in it.

The idea of an Entrepreneurial Society (a society optimised for entrepreneurship and innovation) is as relevant today as when Professor Drucker conceived it over 30 years ago. What we found fascinating was how very differently Professor Drucker viewed the role of organisational change in the Entrepreneurial Society compared to today’s change gurus. Clearly, many of Professor Drucker’s ideas about change have been either forgotten or ignored. Let’s take a look at Professor Drucker’s perspectives on organisational change.

Although 30 years after the writing of Innovation and Entrepreneurship the entrepreneurial society does not formally exist—the prospect of one still fires the imagination. Professor Drucker’s ideas from the book continue to influence thinking and action. One such idea of special interest concerns the role of change in the entrepreneurial society.

We imagine the entrepreneurial society as a vibrant place in which entrepreneurial leaders in government entities, commercial organisations, and not-for-profit institutions work together to “…make innovation and entrepreneurship a normal, ongoing, and everyday activity…”. 1 Because of this, the entrepreneurial society is also a place of continuous change—and therein lays the rub. Continuous change is something that organisations find extremely difficult to do. 2

How does continuous change unfold in the entrepreneurial society? More importantly what, if anything, can the entrepreneurial society teach today’s organisations’ about continuous change? The following sections explore this question by examining Professor Drucker’s perspectives on “the nature of change” and on “the nature of change leadership.”

The Nature of Change
On one hand, Innovation and Entrepreneurship is not a book about organisational change—at least in the usual sense. However, it is all about change—because change triggers the opportunity for “systematic innovation.” In Professor Drucker’s words:



               Systematic innovation therefore consists of the purposeful and organised search for changes, and in the systematic    
               analysis of the opportunities analysis such changes might offer for economic or social innovation. 1

 
The “changes” referenced above flow from a unique perspective on the nature of change—and one very different from the orthodoxy of the field of organisational change.

To Professor Drucker, change is not something an organisation occasionally does to align itself better with its market. The need for continuous change is an immutable force of history arising from a particular kind of entropy—the entropy of the “artifacts” of humans. In Professor Drucker’s words: “…we also know that theories, values, and all the artifacts of human minds and human hands do age and rigidify, becoming obsolete…”.1 Because everything created by humans inevitably becomes obsolete, opportunities for innovation are constantly presenting themselves in organisations and societies. It is the job of the entrepreneur to recognise this ongoing obsolescence and use it as an opportunity for innovation.

This notion of change arising from obsolescence is a very different perspective than that of the organisational change community. In that community, the need for change arises primarily from shifts in the market. When the market shifts in a significant way, so too must the organisation to remain viable. The focus is not on innovation but quick reaction.

This difference in perspectives is important for several reasons, but a key one is that the perspective in Innovation and Entrepreneurship is proactive while the perspective of the change community is reactive. In the entrepreneurial society: “…the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” 1 In the change community, organisations wait for market changes and focus resources on trying to anticipate better and predict these changes.

One lesson from the entrepreneurial society is that using continuous change for innovation demands a more proactive stance—constantly seeking change and acting on opportunities. This proactive stance by entrepreneurial change leaders might lead the market instead of following it.

The Nature of Change Leadership
In the entrepreneurial society, leadership is all. Therefore, it requires a process for creating and reinforcing entrepreneurial leadership across both the leadership corps and the workforce. Professor Drucker makes three recommendations for accomplishing entrepreneurial practices. 1 The first one is “focusing managerial vision on opportunity”. 1 This practice assures that managers are not only focussed on problems but also on successes—on understanding what is working better than expected and why. As an aside, this focus on success has recently been highlighted by neuroscientists as a key factor in brain performance. 3

The second practice is “generating an entrepreneurial spirit among the entire management group.” 1 This practice focusses the entire leadership corps on “units that do better and do differently” 1 and ensures that learning from the highest performing parts of the organisation is shared organisation-wide. This practice also unites the leadership corps and contributes to creating an entrepreneurial culture.

The third practice is “systemically listening to and interacting with the workforce.” Senior leaders listen to and engage members of the workforce in discussions about opportunities for innovation and entrepreneurialism. Leaders not only draw out the best ideas of the workforce—but actively engage them as fellow entrepreneurs. Recent research has highlighted this approach as a critical factor in increasing employee engagement and decreasing resistance to change. 4 The alignment of the workforce with the leadership corps is a major step in creating the entrepreneurial culture.

Historically, the change community has viewed the leadership of change very differently. Change leaders (or change agents) are not focussed on discovering opportunities for innovative change but on leading change efforts initiated by someone else. In the context of large-scale change, for example, these leaders focus on topics like the cost, schedule, and performance of change efforts. Their function can be as much administrative as entrepreneurial.

Another lesson for change from the entrepreneurial society is that change leadership has little to do with administrative chores and much to do with continuously searching for opportunities for innovation—and putting these in motion. Because the entire leadership corps and the workforce are united in this, continuous change can fuel innovation across the organisation.

Innovation and Entrepreneurship has been largely ignored by the change community and thus the potential lessons may have been missed. Even so, we believe several ideas are worth considering by today’s change leaders. First, perspective matters. A review of the change literature reveals that many change scholars are “admiring the problem too much.” Much is said about difficulties arising from increases in the volume and complexity of change but little about how to use this situation for advantage. The entrepreneurial leader’s perspective is that continuous change is fuel for continuous innovation
.
Second, leadership matters. Entrepreneurial leaders are not “fast followers” of change and innovation but initiators of them. They consider risk but are not captured by it.

Finally, culture matters. Continuous change affects an organisation as a system—and affects different parts of the system differently. Organisations must, therefore, respond to changes effectively and creatively. To accomplish this, the leadership corps and the workforce of the organisation must be united in common purpose: to find change and use it for innovation.

Thirty years after its publication, Innovation and Entrepreneurship challenges us to see change with better eyes. Continuous change is not a problem to be solved, but fuel for continuous innovation.

References
1 Drucker P, 1985, Innovation and Entrepreneurship, New York: Harper, (pgs 28, 35, 155, 157, 254, 255).

2 LaClair J, and Rao R, 2002, Helping employees embrace change, McKinsey Quarterly.

3 Brains S, 2014, 4 Ways to acquire navy seals’ mental toughness.

4 McFarland W, 2015, Managers in the digital age need to stay human. Harvard Business Review, 2015.
 
Ms Goldsworthy and Mr McFarland are co-authors of the award-winning book—Choosing Change: How Leaders and Organizations Drive Results One Person at a Time.
 
IMAGE: 123RF

Ms Susan Goldsworthy is an international executive coach, multiple award-winning author, and former Olympic finalist with extensive global business experience at senior management levels. She is also an associate of Genesis Advisers and World Institute for Action Learning board member.

Mr Walter McFarland is founder of Windmill Human Performance and an Associate Fellow at Oxford University, Said Business School. He is the co-author of Choosing Change and the former Board Chair of the Association for Talent Development.

 

Copyright © 2017 Singapore Institute of Management

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Today's Manager Issue 2, 2017

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