When an organization has just been launched and only a small number of persons are involved there is generally ample opportunity for face-to-face communication among the members of the group and the need for a formal organizational structure is generally low provided that sufficient attention is paid to strategic planning and setting mutually agreed goals and objectives. As organizations grow from very small (i.e., less than 20 employees) to relatively large (i.e., 80 or more employees), one notes significant changes in the management of workflow and structure becomes an important managerial challenge. At some point the range of activities and tasks that need to be performed within the organization expands to the point where the founders no longer have the time and skill to personally oversee all of them and a key challenge for the firm is the manner in which the founder delegate responsibilities and decision making authority to lower-level managers and new executives who join the founders as organizational leaders. This report discusses some of the steps that should be taken for an orderly transition.
Growth is a key goal and objective for emerging companies and management must carefully determine the best way to combine the core competencies within a firm’s functional departments to provide the firm with the best opportunity for achieving and sustaining a competitive advantage in its chosen environment. This report focuses on the process of setting business level-strategy, which includes (1) selecting the domain(s) in which the firm will be competing for scarce resources (e.g., capital, personnel, technology, inputs and customers) and (2) positioning the firm in each chosen domain so that its function-based core competencies are most effectively leveraged to establish a competitive advantage. The overall goal of business-level strategy is to protect the firm’s position in its current domain and, if possible, enlarge the domain in which the firm can operate with a competitive advantage.
Undoubtedly the primary obsession of investors and the managers of the companies in which they have invested has been maximization of returns on invested capital and this has long driven the decisions of managers as they have developed their strategic plans and objectives. There are, however, other ideas that are quite intriguing. Bryan and Joyce, for example, have argued that managers should expand their traditional strategic focus on maximizing returns on capital to maximizing returns on “people” and that this requires recognition of the important role of organizational design in strategic planning and execution. This report provides an introduction to some of the arguments made by Bryan and Joyce, as well as their suggestions for redesigning organizational structures and human resources policies to take into account the dynamic changes that have occurred in technology that now allow for collaboration and sharing of knowledge.
Extensive time and resources have been devoted to the search for “attributes” and “traits” of effective leaders, as well as characteristics of dysfunctional leaders. Much of this work has been conducted under the umbrella of settling debates about whether leaders are “born or made” and, to the extent that genes are not totally responsible for leadership success, what strategies can be used to teach people how to execute the behaviors though to be associated with effective leadership. Leadership is important to the progress and success of emerging companies and this report provides an overview of some of the more interesting research on "leadership attributes" and the conclusions of researchers that their is hope for teaching persons in leadership roles how to execute the behaviors associated with effective leadership.
A few months ago we featured a report on knowledge-based entrepreneurship in India. Continuing with that theme, it seems relevant in these difficult economic times to take note of the various facilitating factors or framework conditions that researchers have identified for “knowledge-intensive entrepreneurship” to flourish and sustain. For example, the Global Entrepreneurship Monitor has cited ten such factors or conditions, including financial support; government policies; government programs; education and training; research and development transfer; commercial and professional infrastructure; internal market openness; access to physical infrastructure; cultural and social norms; and intellectual property rights protection. Gupta, focusing specifically on facilitating and supporting technology-based entrepreneurship in India, suggested similar types of supporting activities, including creating the right environment for success (i.e., entrepreneurs should find it easy to start a business; ensuring that entrepreneurs have access to the right skills, both entrepreneurial (i.e., how to manage, finance and grow businesses) and functional (i.e., technical, product development, marketing, human resources, etc.); ensuring that entrepreneurs have access to “‘risk capital” and enabling networking and exchange so that entrepreneurs can learn quickly from the experiences of others. Policymakers should heed this advice in developing their plans for re-igniting real economic growth and dynamism.
The tremendous economic success enjoyed by Japan and its companies in global markets during the 1970s and 1980s led to a flood of research and analysis regarding Japanese management systems, including comparisons with the methods used in the US and Europe and prescriptions from commentators as to how Japanese management practices might be transferred to firms in the US in order to boost their performance. The work conducted in this area corresponded with an explosion of global economic activity and it was often argued that international competitiveness could be directly tied to the managerial styles and systems. At the same time, the study of culture began to play a more important role as researcher explored how societal cultures influenced the way that managers coordinated activities in their organizations. This report provides a brief introduction to some of the work that has been conducted on Japanese management systems. Beginning with this post, we are shifting to a new monthly publication schedule that will transition to a newsletter format, although special posts will still be made as necessary for development that we believe merit the immediate attention of our visitors.
A group of Israeli experts ranked the area of financial support in Israel for new businesses higher than all of the other countries included in the global survey of entrepreneurship conducted by the Global Entrepreneurship Monitor (GEM) in 2007 and this report provides an overview of the availability of equity funding and credit for new and growing companies in Israel.
Wealthy individuals have always been benefactors of fledgling businesses, particularly when a company is involved in an area in which the individual has substantial prior experience. In addition, so-called “angel” investors, who are high net worth individuals, often businesspeople or professionals with high incomes or individuals from wealthy families, may have an interest in participating in high-risk/high-return investment opportunities. This report provides an introduction to some of the key characteristics of angel investor preferences and contributions to a firm and describes several financing structures might be appropriate for the company and the members of an angel investor group.
Entrepreneurship is an exciting and dynamic factor in Vietnam and this report provides an introduction to some of the drivers of entrepreneurial activity in that rapidly growing economy, including the influence of cultural and socioeconomic factors and the role of the State with respect to supporting and encouraging entrepreneurism.
By all accounts, China has made a significant investment in “independent innovation” and entrepreneurship as part of an announced effort to break out of its traditional profile as a country that thrives by undercutting competitors and copying their technologies in order to execute a strategy of mass production and routine assembly. Capital has been allocated for research and development, science parks have been established around the country and major Chinese universities have followed the lead of their counterparts in the West by launching “innovation and entrepreneurship” programs. However, The Economist, among others, have been critical about the actual returns on these investments, arguing that the most successful Chinese companies thrive on producing low-cost versions of Western products or adaptation of Western innovations to the Chinese market and that Chinese “venture capitalists” are hardly risk-takers when they choose to focus on established industries (e.g., agriculture and hotels) and support firms relying on copycat technologies. Other apparent problems include excessive intervention by the government in the marketplace through its constantly changing pronouncements on standards and weak intellectual property rights even after cosmetic changes were made in the legal infrastructure in the form of new statutes and regulations.
It should be noted though that not everyone is writing off Chinese innovation. Breznitz and Murphree have argued that while Chine may not yet be as successful as it wants to be with respect to innovation that takes the form of developing and commercializing “breakthrough products”, it nonetheless has become a formidable competitor with respect to several other types of innovation such as “process innovation”, which includes improvements in the manufacturing and distribution systems necessary for efficient production and delivery of products, and “product innovation”, which includes the steps needed to adapt existing products to the requirements of China’s own huge domestic markets. Numerous examples exist for the proposition that, at least for now, Chinese firms are the global leaders in key processing tasks from mass production to logistics and have become invaluable partners for foreign companies looking to introduce their products and technology into a market that now boasts 1.3 billion consumers. The preferences of Chinese university graduates also fit this strategy nicely as schools regularly pump out engineers who arrive at their employers with the tools necessary to further refine and improve production methods and quickly understand the technologies embedded in products first conceived overseas. The long-term viability of this strategy depends on various factors including the possibility that other countries, such as India, will overtake China from a technical perspective and that foreign firms will grow weary of using Chinese companies as “intermediaries” to access the Chinese market. Another risk for Chinese firms dependent on foreigners to create new products is that something may happen at the point of conceptions that slows or stops the process and thus leaves Chinese factories without orders to process and complete.
All of the above is informative for emerging company managers everywhere as they ponder their own innovation strategies. The lesson from Breznitz and Murphree is that there may be more than one way to lead the innovation race and firms need to decide what is best for them and remain relentlessly focused on their strategies. There book, “Run of the Red Queen: Government, Innovation, Globalization and Economic Growth in China”, is available now through Yale University Press.