Understand a range of management styles and approaches which support entrepreneurship in the modern workplace

(Level 4) The Entrepreneurial Manager

Learning outcomes

• Understand a range of management styles and approaches which support entrepreneurship in the modern workplace
• Know how to assess a range of management styles and approaches
• Be able to select appropriate management styles suited to particular organisational situations
• Understand the benefits, disadvantages and risks of group innovation and decision making

Introduction

If you were asked to name examples of entrepreneurs, you would probably reply with the names of innovators who have built their own companies. You might name Bill Gates of Microsoft, Steve Jobs at Apple, Anita Roddick of Body Shop, or James Dyson (best known for inventing and developing rotary cleaners). You might also have listed Chinese entrepreneur Zhang Yin, one of the world`s richest self-made women, with an estimated fortune of $1.6 billion. Since the early 1980s she has developed her Dragons Paper business, recycling paper from around the world.

Entrepreneurship and Management Styles

Introduction

As you saw in the Module Overview, the best known examples of entrepreneurs are those that develop a new idea and start their own companies. However, few of us are going to be lucky or clever enough to build companies such as those of Bill Gates, James Dyson or Zhang Yin.

This section looks at creativity and innovation within organisations; activities that are often given the term intrapreneurship. It’s far more common than entrepreneurship and is essential in our world of constant change.

This section begins by looking at the various aspects of entrepreneurship, creativity and innovation within organisations.  The later pages of the section then look at ways in which managers can encourage creativity and innovation by adopting particular styles of management.

Defining the terms

The term entrepreneur was first applied to individuals who:

• Take the steps necessary to turn an innovative product into a marketable commodity (Henry)

or

• Perceive an opportunity and create an organisation to pursue it. (Bygrave et al).

As you can imagine, entrepreneurs are typically described as being achievement-oriented, extrinsically motivated, persistent, able to take risks, and opportunistic. While such people come to the public notice more often if they act independently (like Steve Jobs or Zhang Yin), large organisations increasingly encourage managers and others to act in an entrepreneurial way (sometimes describing them as ‘intrapreneurs’).

The entrepreneurial approach contrasts with the management structures and processes needed to organise routine operations. These tend to be based on long-term goals and short-term financial controls. The aim is to encourage efficient use of current resources and make gradual improvements, but this is unlikely to lead to the radical innovation that the entrepreneur might create.

In-company entrepreneurs

Examples of entrepreneurial approaches occur within many corporations and companies. Three articles that show how the approach has created great benefits for organisations are:

Reinventing the intrapreneur http://www.utdallas.edu/~chasteen/Reinventing%20the%20intrapreneur.htm, which highlights historically important examples of innovation at Intel, IBM, and Microsoft

American Idol: The PwC accounting edition http://money.cnn.com/2011/10/11/news/companies/pwc_powerpitch_contest.fortune/index.htm,  a competition at accountancy firm PwC to find creative ideas

AWS Global Start-Up Challenge Build Your Startup - AWS Startups (amazon.com), a similar competition for Google employees

Study the three articles, and think about two questions relating to your own organisation:

1. What new ideas have people in the organisation had in the recent years (remember that they may relate to new products, new services, new ways of working, etc)?
2. How do we encourage people to think of, and develop, new ideas?

Feedback

If people have not had many new ideas, or if the new ideas have not been developed and implemented, your organisation will remain stagnant. It may seem to be operating efficiently but it is likely that it will experience problems in the future. The business world is ever-changing, and organisations can only keep up by making their own changes, and planning and developing for the future.

When encouraging new ideas, there is a risk that people will think you want a major breakthrough. It is often just as useful if people make suggestions about small changes that will create a commercial advantage: this is the search for continuous improvement.

Types of innovation

Innovation may involve a number of mechanisms, offering a range of advantages to the company. The table in Figure 3.1 is based on Tidd et al (see references). 

Mechanism	Example/s
Novelty in product	The first mobile phone
Novelty in process	The first internet banking service
Complexity	Rolls Royce cars or business support software systems
Intellectual property	Drugs (Prozac, Viagra)
Additional competitive factors	Car manufacturers offering options (CD players, air conditioning) as standard items
Timing	Amazon.com as first-mover in the field
Robust design	The Boeing 747 is continually innovated but sells largely as a result of 30 years of successful sales and safety
Rewriting the rules	Electric lamps when gas lights were the norm
Reconfiguration	Dell selling computers direct to consumers and supplying their precise needs

Figure 3.1 Examples of innovation relating to each mechanism

Forms of innovation

The innovation may also take a number of forms, for example consider the history of the Volkswagen Beetle:

• Its introduction in 1935 was a radical innovation. The new ‘people’s car’ sold for not much more than a motorcycle.
• The model remained in continuous production until 1978. However, the process of incremental innovation meant that no parts remained from the original design by the time the 20-millionth car was delivered.
• In the late 1990s the car was successfully re-introduced. The transformation was almost total and only hints of the original design remained.  It continues in production at the time of writing (2013).

Other examples of radical innovation include the Dyson vacuum cleaner, the first Personal Computer, low-energy light bulbs, computerised booking systems for airlines, and so on.

Transformation is probably the least common of the types of change. It typically involves changing an existing product for a new purpose or for a new market. Examples include re-marketing the health drink Lucozade as a performance-enhancing aid to fitness, and the introduction of low-cost airlines (originally aimed at a new market but increasingly seen as challenging the larger airlines).

In practice, incremental innovation is by far the most common approach. Examples include the continuous improvements made to lubricating oils; the benefits gained when companies adopt Total Quality Management; and the gradual improvements in speed and quality from the succession of Hewlett Packard printers.

Note, however, that even the most radical examples of innovation often involve incremental innovation: the Dyson had 5127 prototypes before it reached the production stage.

For more on the types of innovation, and some examples that will help to clarify your understanding, see:

• Incremental and Radical Innovation: Can User Centered Design help? http://intenseminimalism.com/2012/incremental-and-radical-innovation-can-user-centered-design-help/

What examples can you think of in your own workplace or industry of:

• Radical innovation
• Transformation
• Incremental innovation?

Feedback

The examples listed in the main text were:

• Radical innovation – The VW Beetle, the Dyson vacuum cleaner, the first Personal Computer, low-energy light bulbs, computerised booking systems for airlines.
• Transformation – Lucozade’s re-marketing as a performance-enhancing aid to fitness, and the introduction of low-cost airlines.
• Incremental innovation – The continuous improvements made to lubricating oils; the benefits gained when adopting Total Quality Management; and the gradual improvements in Hewlett Packard printers.

Innovation as a core task

As early as 1989, Drucker criticised the idea that a business should have a single objective (such as profit or market share). Instead, he suggested eight key areas:

• Market standing
• Innovation
• Productivity
• Physical and financial resources
• Profitability
• Manager performance and development
• Worker performance and attitude, and public responsibility.

By 1998, the European Work Organisation Network was writing off ‘innovation as a core task’ that was the responsibility of all employees through continuous improvement programmes, closer liaison with customers and suppliers and all forms of workplace partnership.

Finally, the Organisational Innovation research paper in 2004 commented that:

‘...organizational innovation may be a necessary pre-condition for technological innovation, and thus it is important to take greater account of the role of endogenous organizational forces, such as capacity for learning, values, interests and power in shaping organizational transformation and technological change.’

In other words, managers need to create changes in the organisation itself, and consider factors such as values, power and learning, if they want to create technological change.

Innovation as an organisation-wide process

A number of writers have described the development of innovation since the 1960s. At that time it was seen as primarily the responsibility of a Research and Development Department. Increasingly, innovation has been seen as a constant process that involves all parts of an organisation. It is essential to see innovation as involving many (if not all) of the following:

• Technology push (where research discovers new products, applications or refinements) and market pull (where the market signals a need for a new solution)
• Major breakthroughs and incremental changes
• Changes to components and related links to a wide range of processes (from materials supply, through production to product delivery)

a) Who invented the light bulb? (You may be able to answer that question already. If not, try searching the web for the answer.)

b) Was that person solely responsible for making the product available to the public?

Feedback

Edison created the first light bulb prototype in 1880, a major breakthrough based on technology push.

Over the following 16 years, there was a series of incremental changes to components, production methods and the various processes from materials supply to product delivery. Some of these developments involved Edison, but many improvements were made by his company’s suppliers and by people within his company. These together reduced the price by 80 percent in response to the market pull for a cheaper product.

Although Edison is credited with the invention of the light bulb, the complete story involves a process of constant innovation over a period of years.

Approaches to entrepreneurship

The organisation may adopt many approaches to entrepreneurship. Three common approaches are:

• Intrapreneurship. This encourages individuals within the organisation’s existing structures and processes to identify new ideas and plan new developments.
• Internal organisational venturing. This involves building teams around the intrapreneur. The aim is to develop new businesses while maintaining the existing structures for normal operations.
• Corporate venturing. The organisation itself demonstrates an entrepreneurial approach, identifying opportunities and changing to work towards those opportunities. The organisation of the venture will typically be based around a management team brought together for that single project.

Components of entrepreneurship

You saw earlier that Bygrave defines entrepreneurship as ‘perceiving an opportunity and creating an organisation to pursue it’. The process will typically involve a number of steps, preferably empowering all the members of the relevant team to become fully involved. The steps can be summarised as:

1. Identify a situation (typically an opportunity or problem).
2. Use a network of contacts and information sources to collect relevant information.
3. Creatively identify possible methods of innovation that will use the opportunity or solve the problem.
4. Select the best option.
5. Implement the plans.

Note that the steps involve some crucial tasks and terms:

• Empowering involves employees being given greater freedom, autonomy and self control of their work and responsibility for their decision making. To encourage all members of the entrepreneurial team to participate, become involved and become committed to a venture, they must be empowered.
• Networking involves formal and informal discussion with other individuals and teams to collect and share information and ideas.
• Creativity relates to ideas such as ‘bring into existence’, ‘imaginative’, ‘original’ and ‘flexible’. Creativity is about escaping from old assumptions and discovering new ways of looking. In brief, escaping from ‘mental stuckness’.
• Innovation, in contrast, uses a blend of creativity, planning and the ability to get things done. It’s the means by which entrepreneurs exploit change as an opportunity to offer a new business or service, or to improve old techniques and work methods.

An example of an intrapreneurial breakthrough

In the 1970s, 3M scientist Spencer Silver was searching for a super glue. See how he and Arthur Fry accidentally created Post-It notes in 1980 on:

• 06 Post It Notes: Accidental Inventions Documentary http://www.youtube.com/watch?v=AUX4As-QpdM

Dynamic or static?

How does your company view its approach to innovation and growth? If the world of business is constantly changing, then the organisation itself needs to be ‘dynamic’ rather than ‘static’.

Try thinking about changes in relation to external influences, key stakeholders and the major internal influences of your business.

Some possible external forces might be identified using the PESTEL tool, which encourages managers to look for changes relating to Political, Economic, Social, Technological, Eco-environmental, and Legal factors. Possible changes could include:

• The economy – during a downturn people may want cheaper products
• The law – sales of breathalysers increased in France when it became law to carry them in a car at all times
• The eco-environment – think about the increasing sales of electric cars

You could also consider changes relating to stakeholders (shareholders, managers, employees, suppliers, customers, the government and the local population) and to competitors.

Internally, some key changes might relate to factors such as the skills, competencies and attitudes of employees.

Four types of company

Kirchoff defined what he called the business dynamic of a company, identifying four business approaches:

• Economic core: low-innovation, low-growth companies. These make up the core of the overall economy.
• Ambitious firms: companies that achieve growth through one, or a few, initial innovations. Dell Computers grew on the basis of one innovative idea of selling personal computers online to suit the specific requirements of each user.
• Glamorous firms: companies that produce a constant flow of innovation. Microsoft has produced a continuous stream of innovative products.
• Constrained-growth firms: companies that may either be constrained internally (perhaps an inventor refuses to sell stock to raise the capital needed for further development or innovation) or externally (for instance because investors will not invest in non-fashionable products, or because there is a shortage of suitably qualified staff).

1. Which of those categories best fits your own company?
2. What examples can you think of under the other headings?

Feedback

As explained in the preceding text, most companies are of the Economic Core type. Do remember, however, that even here there is plenty of scope for innovation. Even if your market does not require new products or services, it is quite likely that employees or managers can come up with innovative ideas that will improve quality, productivity, efficiency or create some other benefit.

One other example under each heading would include:

• Ambitious firms:  Zhang Yin’s paper recycling company probably comes in this category. She had a brilliant initial idea and plenty of growth is possible without needing major innovation.
• Glamorous firms: Apple continuously introduces completely new products and further develops the most successful of these.
• Constrained-growth firms: examples of this type occur in, for example, the steel industry. Worldwide over-production has discouraged investors from investing, even in new techniques or products.

Requirements for the entrepreneurial organisation

This page is based on Vandermerve and Birley’s report of a survey of executives of major organisations that had worked through radical ‘customer transformations’.  It assessed to what extent the executives had acted like ‘enterprising leaders’. The companies involved included BT, Ciba Geigy, IBM, ICI, PricewaterhouseCoopers and Singapore Airlines.

The researchers identified certain approaches that the corporate leaders felt were essential for an entrepreneurial organisation. They summarised their key conclusions as follows:

• Develop new, proactive and process skills. This may involve bringing in new, creative people, and also allowing people to trust their instincts and feelings.
• Encourage experimentation and reward success. The leaders defined success by how much the innovation makes the corporation more competitive. There is an associated need to manage failure successfully, an essential requirement since innovation inevitably involves taking risks.
• Work on twin tracks, focussing both on what can be improved immediately and on what will take longer.
• Unlock enterprise and define risk differently, allowing ‘venturesome people’ to make decisions.
• Develop new leadership skills, using language and tools that will continually change to suit present and future needs (rather than being based solely on the past).

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The list of conclusions relates to the work of senior executives. To what extent:

1. Do senior executives in your own organisation follow those suggestions?
2. Would it possible for you to follow similar suggestions when managing your own team?

Feedback

Your responses to those questions will vary depending on your own organisation, as well as the management approaches of senior management and yourself.

One key issue that you may need to consider is the question of consistency. It will be difficult for senior managers to encourage entrepreneurship if middle and first line managers do not adopt a similar approach. Equally, it might be difficult for a front line manager to encourage entrepreneurship within a single team if it is discouraged by senior management.

Note also that these conclusions are based on the thoughts of corporate leaders who have successfully transformed their companies to create entrepreneurial organisations. The researchers did not consider whether existing managers are able to change and adopt these approaches, or whether the new role needs new managers. The research also does not consider those companies where similar approaches have been tried, but have been less successful or have failed.

Blake and Mouton’s Management Styles

The previous pages have shown that the ideas of entrepreneurship, creativity and innovation are all essential in any organisation that is to have a long term future. We now need to look at how the ways that managers work with their teams and other employees is likely to affect creativity and innovation.

One commonly used approach to the leadership styles used by managers was suggested by Blake and Mouton. Their Leadership Grid helps managers to analyse their management style in relation to two factors:

• Concern for production
• Concern for people

They identify five common leadership styles:

• The impoverished manager has a low concern for both people and production. The aim is to avoid paying too much attention to production (which will cause difficulties with staff) or too much attention to the needs of staff (which will create problems with production).
• The authority-compliance manager has high concern for production and low concern for people. The aim is to create conditions of work which ensure high output, and thus create trust and respect.
• The country-club manager has low concern for production but high concern for people. The approach is to create a comfortable, friendly working atmosphere.
• The team manager has high concern for production and high concern for people. The aim is to accomplish work through committed people working well together.
• The middle-of-the-road manager has moderate concern for production and moderate concern for people. The aims are to maintain morale while creating an acceptable level of output.

Note that the various different styles may all be useful, but must be selected to suit the particular situation. For example, country-club managers can spend nearly all their time looking after their team members if they are confident that those team members are doing good work. In contrast, impoverished managers may decide that the best approach to a successful existing team is to let them continue as they were, through monitoring performance and people carefully to identify when the manager needs to intervene.

1. Try the following questionnaire to assess which style you most often adopt:

• Leadership Self Assessment Questionnaire  http://www.bumc.bu.edu/facdev-medicine/files/2010/10/Leadership-Matrix-Self-Assessment-Questionnaire.pdf ]

1. Thinking of the managers that you have seen in action and worked with, see if you can identify examples from each of Blake and Mouton’s categories.
2. Now think about this theory in relation to innovation and creativity. Which of the leadership styles do you think would be most likely to encourage individual employees and teams to think of new ideas, discuss them, and perhaps try them out?

Feedback

Questions 1 and 2

One key idea in this activity is that there is one style that you ‘most often’ adopt. Blake and Mouton emphasise that effective leaders will vary their focus to suit different situations.

On the other hand, they also found that, overall, it was the managers with high concern for both production and people that maximised production and also were most likely to gain promotion themselves.

Finally, Mullins comments that the dominant style of management will be influenced by four factors:

• The nature of the organisation
• The manager’s personal beliefs and values
• The manager’s personal history (for example, the effect of the managerial styles that she or he has experienced in the past)
• Luck - the style chosen will be highly influenced by the manager’s previous experiences, unless the manager has specific training in leadership/management styles

Question 3

Encouraging creativity and innovation needs a focus on people and their needs. The manager needs to encourage individuals to come up with their own ideas, and to encourage them to discuss them and plan how to implement them.

The focus on productivity gives the manager some difficulty in relation to innovation. If the manager focuses only on short-term productivity it can easily lead to comments like “Why are you wasting time on thinking of new ideas? We’ve got targets to meet.” On the other hand, the manager who has a longer-term view could make comments such as “I don’t mind if we miss this week’s target as long as the new ideas increase our productivity over the year.”

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National characteristics

Hofstede suggests five different dimensions that describe differences between people in countries around the world. The two key ones in relation to innovation are:

• Power Distance: the degree to which the less powerful members of a society accept and expect that power is distributed unequally.
• Uncertainty Avoidance: the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity.

Study the two examples shown in Figure 3.2 based on information on the Hofstede website:

	Power Distance	Uncertainty Avoidance
Spain	Score 57 This reflects that hierarchical distance is accepted and those in the most powerful positions are admitted to have privileges for their position.	Score 86 The very high score on this dimension defines Spain very clearly. People like to have rules for everything. Confrontation is avoided as it causes great stress. There is great concern about changing, ambiguous and undefined situations.
United States	Score 40 This low score links to the American ideas of “liberty and justice for all”.  It also reflects the focus on equal rights in all aspects of American society and government.	Score 46 American society can be described as “uncertainty accepting.” There is a large degree of acceptance for new ideas, innovative products and a willingness to try something new or different.

Figure 3.2 Examples of two of Hofstede’s dimensions in two countries

Both of those factors are likely to affect employee’s perceptions of managers, and their attitudes towards those managers and the different styles of management employed.

Go to the Hosfstede’s  website and investigate the scores for your own country. All of the scores will be of interest, but for the purpose of this module, remember that the two key measures are Power Distance and Uncertainty Avoidance.

The relevant page of the website is Countries http://geert-hofstede.com/countries.html. On that page, use the drop down menu to select the country you want to investigate.

Note that once you have the information on one country you can also use the Comparison Country menu to compare your first country with any other in the world.

Likert’s Systems of Management

Likert investigated 200 organisations and tried to find a relationship between the management’s approach (which he called a ‘system of management’) and organisational performance. He defined four management systems:

1. Exploitive authoritative. Decisions are imposed by managers, and responsibility is based on the upper levels of the organisational hierarchy. Motivation is based on threats, with very little teamwork or communication.
2. Benevolent authoritative. Leaders tend to be condescending. Motivation is based on a system of rewards, and there is only limited teamwork or communication. Responsibility is shared between managerial levels.
3. Consultative. Leadership involves some trust of subordinates. Motivation is based on rewards but there is also some involvement and some teamwork. Communication occurs both vertically and horizontally, and responsibility is spread more widely through the hierarchy.
4. Participative group. Leaders trust and have confidence in their subordinates. Motivation is based on rewards for achievement of agreed goals, there is participation and a high degree of teamwork and communication. Responsibility for achieving the organisation’s goals is shared through all levels of the hierarchy.

Likert’s main conclusion was that the participative group approach created a number of benefits. There were likely to be:

• Long-term improvements in staff turnover
• High earnings
• High productivity and organisational effectiveness
• Low levels of waste and low costs

He suggested that organisations that aimed to follow a participative group system needed:

• Supportive relationships among members of the organisation, and in particular between superior and subordinate
• Group decision-making and group methods of organisation and supervision
• High performance aspirations for all members of the organisation

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You can find a more detailed description of Likert’s four systems in:

• Likert’s Management Systems http://managementstudyguide.com/likerts-management-system.htm

Then use your understanding of this web page to complete the following Involve me activity.

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Which of Likert’s systems is most like the management system used in your own organisation? 

Confirm your classification by considering to what extent there are:

• supportive relationships among members of the organisation and in particular between superior and subordinate;
• group decision-making and group methods of organisation and supervision; and
• high performance aspirations for all members of the organisation.

Assess to what extent a participative system in your organisation would (or already does) encourage:

• long-term improvements in staff turnover;
• high earnings;
• high productivity and organisational effectiveness; and
• low levels of waste and low costs.

Feedback

Questions 1 and 2

As with the questions about Blake and Mouton’s grid, the first two questions may highlight differences between different parts of your organisation. For example, while the main organisation might be exploitive authoritarian, a particular manager might run the team in a more democratic way.

Question 3

Likert’s research showed that all these benefits were likely to occur if an organisation was more participative. If you don’t think they would happen in your own organisation, there may be a number of possible reasons; for example:

• Likert’s research was in the US – your national culture may be different. For example, according to Hofstede, Japanese workers are more likely than Americans to accept formal power exerted by managers.
• The choice of approach may vary between different types of organisation, and even within an organisation. For example, many armed forces very carefully use different approaches in different situations: authoritarian when dealing with a large group but participative in a small patrol group. Participation may also be more relevant in an innovative organisation, such as a software company, but less relevant in a traditional industry such as steel making.
• The approach may be different at different levels of the organisation. Perhaps team members can be innovative and participate in planning their own work, even though individual managers are given very little freedom to make their own decisions.

Likert and innovation

Now think about how Likert’s classification may apply to innovation. If you and your organisation want to encourage innovation and creativity, it seems likely that you want employees to feel free to make their own suggestions, to discuss new ideas, and to feel that they can contribute to change that will lead to improvements in factors such as productivity, efficiency or quality.

Those words ‘feel free’, ‘contribute’ and ‘discuss’ all suggest that people working in a participative organisation will be more likely to contribute creative and innovative ideas, and then to plan and implement the changes needed.

1. How much would (or does) a participative system in your organisation encourage creativity?
2. To what extent can you encourage a participative system in your own team or department, even if your organisation uses one of the other systems?

Feedback

As in the previous Involve me activity, you may need to consider three key questions:

• To what extent do Likert’s ideas apply in your own national culture?
• Are there factors in your organisation or industry which suggest that a participative approach may not be the most appropriate?
• Is it possible to use different approaches at different levels (or with different teams) in your organisation?

Conclusion

This section has explained what entrepreneurship is, and how it is based on creativity and innovation. You then saw how the findings of Blake and Mouton, and Likert can be used to categorise management styles and systems. Using those categories, you started to assess how well your organisation encourages innovation and creativity.

In the next section we will look at the specific role of the manager in managing the work of the team or department. The focus will initially be on finding the right balance between managing people and organising the work. Then we will look at the subject of aims, targets and objectives, and the technique of Managing By Objectives (MBO).

The following website gives a fuller description of the leadership grid. See:

• The Blake Mouton Managerial Grid  http://www.mindtools.com/pages/article/newLDR_73.htm

Note one point about the title of this page. When the authors first introduced their grid they used the term Managerial Grid, but after further research they renamed it the Leadership Grid.

A second webpage is based on LIkert’s theory and includes a particularly useful table showing how the various systems would affect the trust, motivation and interaction within each type of organisation:

• A Fast Learner`s Guide to Leadership: Rensis Likert  http://www.odportal.com/leadership/fastlearner/likert.htm

Managing in Practice

Introduction

In the first section you saw how management styles can encourage, or discourage, creativity and innovation within an organisation.

This section looks first at some very common approaches to management. We start by looking at what managers actually do, focusing on the work of John Adair with his ideas of Action-Centred Leadership.

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We then look at Management by Objectives. This approach to management tries to define team and employee aims, and to ensure that they contribute to the organisation’s purpose.

Finally, you’ll use your understanding of management styles and approaches to see how you and your team members can assess their current performance. They can then plan training and development programmes that will lead to greater creativity and innovation in the future.

Functional management

The previous section showed that researchers like Blake, Mouton and Likert investigated how managers carry out their work. It looked, for example, at styles of management. This section, in contrast, focuses instead on what the manager does. In other words, it looks at the tasks and functions of the manager.

One of the most influential writers in this field has been John Adair, with his idea of Action-Centred Leadership.

Action-Centred Leadership

Adair’s model of action-centred leadership groups the actions that leaders take under three headings, as shown in Figure 4.1:

• Task needs: These focus on the common tasks that the group is carrying out.
• Team maintenance needs: The actions needed to maintain and encourage the team.
• Individual needs: These are the tasks needed to deal with the needs of the individuals in the team.

 

Figure 4.1 Adair’s three types of need

Note that the circles overlap, showing that the various tasks are interdependent:

• If the manager ignores individual needs, then the team will suffer and the task may not be completed satisfactorily.
• Ignoring the team may lead to individual problems, and again the task may not be completed satisfactorily.
• Ignoring the task means that the team and the individuals may become dissatisfied if their own task is not clear or if problems occur.

The following pages will explain more about each of these groups of tasks.

Task needs

Adair listed the task needs as follows:

• Achieving the objectives of the work group
• Planning the work
• Defining group tasks
• Allocation of resources
• Organising duties and responsibilities
• Controlling quality and checking performance
• Reviewing progress

The first of those defines what the team is trying to achieve. The later ones list, in a fairly standard way, the approach of the manager, from planning the initial task through to checking progress and making any changes that are needed.

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1. Think of a clearly defined task or project that you and your team have completed recently. Does Adair’s list accurately summarise what you did?
2. Which of the items on Adair’s list would managers need to consider if they were trying to encourage innovation and creativity?

Feedback

1. It’s perhaps easiest to think about the list by thinking what would happen if you did not carry out some of the activities. If you didn’t allocate resources (or define the group’s tasks), it’s very unlikely that you would have successfully completed the task. You will probably have concluded that managers do need to at least consider every item on Adair’s list.
2. When trying to encourage creativity and innovation, the manager may need to redefine the objectives. The team needs to know that you want them to look for new ideas, to find solutions to problems, and to look for ways of improving performance and output. If a new idea is suggested, then the manager and, often, the team members need to work through the remaining items on the list to put the new idea into practice.

Team maintenance needs

Adair defines the different elements of satisfying team maintenance needs as:

• Maintaining morale and building team spirit
• Ensuring the cohesiveness of the group as a working unit
• Setting standards and maintaining discipline
• Creating systems of communication within the group
• Training the group
• Appointing sub-leaders

Consider a situation where one team member thinks of a new way of working. Some people will welcome the idea, but others may not want to change their old ways of working. People who have high levels of risk avoidance (in Hofstede’s terms) may worry about the risks of adopting new plans. As manager, you have to think carefully about how you will communicate the new plans, and whether people will need training in the new methods.

Use the following Involve me activity to think about how the items on Adair’s list might relate to this scenario.

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The following scenario describes a typical situation when a team member suggests a new way of working. Drag and drop each of Adair’s team maintenance needs to show how they relate to each of the elements of the story.

	Manager’s action to satisfy the team maintenance need
Some people are enthusiastic about the change but others are saying, “What’s wrong with the old ways?”	Ensure the cohesiveness of the group as a working unit
A team members comments, “This is really damaging the team. We all want something different.”	Maintain morale and build team spirit
Arvinda, who has planned the new idea, wants everyone in the team to know that she is responsible for overseeing implementation.	Appoint sub-leaders
Arvinda considers that the team needs to have a meeting at which she can explain the plans. Emails will then be used to supply details of the new procedures.	Create systems of communication within the group
Two people in the group will need to learn new skills, and the whole group will learn the procedures during the one week trial.	Train the group
Some team members are very unhappy and say they do not want to adopt the new methods. The manager tells them that they must at least try the new approach.	Set standards and maintain discipline

Figure 4.2 Matching actions to needs

Feedback

This scenario highlights a number of issues that can arise when a team member, or a group of people, suggests new ways of working.

Many of the approaches that a manager adopts will be those used by change managers. These typically relate to words like inspire, explain, consult, involve, and so on.

The manager may also need to think about the various ways of overcoming resistance. One key question here is whether the resistance is justified. It may be that people are resisting simply because they do not want to change; on the other hand, it may be that their resistance is based on serious doubts about whether the change will produce the improvements that are claimed.

Change management

Much of the description of team maintenance needs relates to the topic of change management. It may be that you have already studied this topic, or that you will cover it in a later module. At this stage, if you want to find out a little more about change management, see:

• Change Management http://www.businessballs.com/changemanagement.htm

You can also see a video clip by a highly influential writer on change at:

• John Kotter - The Heart of Change http://www.youtube.com/watch?v=1NKti9MyAAw, note that this video will show you links to many other videos by Kotter.

A video describing Kotter’s eight steps can be found on:

• Eight steps to leading and managing change http://www.youtube.com/watch?v=OxACLCZRoKw 

Individual needs

The final circle in Adair’s model relates to the needs of individuals in the team. Adair list the manager’s tasks as:

• Meeting the needs of the individual members of the group
• Attending to personal problems
• Giving praise and status
• Reconciling conflicts between group needs and the needs of the individual.

Thinking again about the scenario involving Arvinda, the manager might act in a number of ways in response to those needs. For example, he or she might realise that the new way of working posed problems for one team member. Perhaps Angela has to leave work early on one day each week to care for an elderly relative.

The manager may first tell Angela that she can continue to leave early (Meeting the needs of the individual members of the group). He may also explain that she could take time off if the relative has to go to hospital (Attending to personal problems).

The manager may then need to explain why this is being done, and that it will not affect other team members (Reconciling conflicts between group needs and needs of the individual).

Finally, the manager will publicly praise Arvinda for her work in suggesting and planning the change (Giving praise and status).

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Identify examples of how you have carried out each of Adair’s Individual Needs’ tasks in the past.

How effective were your actions? Can you think of any ways in which you could act better in future in similar situations?

Feedback

Thinking about the four items in Adair’s list may have highlighted that the manager can often feel conflicting requirements. When attending to the personal problem of one team member, you may feel that a conflict between solving that problem and meeting group needs arises. In the examples given, allowing Angela to leave early may reduce the output of the team: how will team members feel about that?

Finally, think about Adair’s individual needs in relation to yourself. You have probably seen managers take actions relating to these needs, perhaps in relation to your own problems or needs. How effective were they? What conflicts existed for those managers? Thinking about those questions will highlight that trying to satisfy people’s needs is not always easy.

You can find a book-length source of Adair’s thoughts about leadership on the following website. See:

• Develop Your Leadership Skills https://grabebook.files.wordpress.com/2011/12/develop-your-leadership-skills.pdf

Pages 17 to 25 relate to the three circle model. You should also use the contents page to find additional sections that interest you in relation to leadership.

For a video describing how managers can use Adair’s model in practice, see:

• Balanced Leadership: Team, Task Individual https://www.youtube.com/watch?v=5VHyzxYPnVM

Specialist or manager?

Adair’s model highlights one important question relating to managers. Is their role to be a specialist who has great knowledge about the team’s tasks, or to focus on the people and the organisation of their work?

French and Raven identified five sources of power that a manager may have, and may use when leading the team:

• Reward power. Team members may follow if they think the leader has to power to give rewards such as pay, promotion, increased responsibilities or increased privileges.
• Coercive power. This is based on the fear that the leader can punish the team member in some way if they do not follow instructions. For example, the team member may fear formal reprimand, withholding of bonus payments, or withdrawal of respect.
• Legitimate power. Power may be based on the manager’s role. The team member follows the leader because that person has the title of ‘manager’.
• Referent power. The leader exerts influence because of personal characteristics, reputation or charisma. Note that not all team members may be affected in the same way by the leader’s reputation or characteristics.
• Expert power. The team member may follow a leader because of that leader’s special knowledge or expertise.

You can see from the first three types of power on French and Raven’s list that a manager may be able to influence a team for many reasons that are nothing to do with his or her skills or knowledge of the work itself. In contrast, the manager may have power because of a deep understanding of the work that people do (Expert power).

Referent power may also be based on expertise in the work itself. For example, a manager may have a reputation gained from doing the work. The manager may be able to use reputation as a source of power when promoted to a new managerial role.

You can find more about this theory by going to:

• French and Raven`s Five Forms of Power  http://www.mindtools.com/pages/article/newLDR_56.htm

When you have studied that web page, go to the following Involve me activity and check your understanding. You will also get a chance to apply this theory to your own workplace.

Drag and drop the various types of power to show how they apply to this scenario involving manager Ken and his team of engineers:

	Type of power
“I do exactly what Ken says, because I think he will suggest me for promotion.”	Reward
“Ken is enthusiastic about the work, and he makes you feel good about work.”	Referent
“Ken’s done this sort of work for years. Doing what he says makes sense.”	Expert
“I get to work on time because Ken will reduce my pay if I’m late.”	Coercive
“I always do what managers tell me. They are the bosses.”	Legitimate

Figure 4.3 Matching power to its sources

What are your sources of power as a manager?

Feedback

Your responses will be specific to yourself. However, it is worth noticing that you can often have many sources of power. You may know a great deal about the work, people may be inspired by your charisma, you may have power to reward them, and so on.

Notice also how French and Raven’s sources link to ideas about what motivates people. McGregor suggested that managers may follow Theory X (which suggests that people only work because they are forced to – perhaps using Coercive power). Alternatively, McGregor’s Theory Y suggests that people enjoy work, in which case managers will typically want to use Expert or Referent power.

Finally, note that power often results from an employee’s perceptions. Think of a situation where an employee thinks the manager can increase the employee’s pay. Even if the manager can actually only suggest a pay increase, that manager will have Reward power,  

Management by Objectives

The aim of Management by Objectives (MBO), and similar approaches, is to use a formal system to ensure that all the individuals, teams and departments work towards the same organisational goals. Performance management then involves managing the performance of everyone in the organisation to achieve organisational objectives and goals.

The key to this process is to set objectives at every level of the organisation. This typically involves four stages and three checks, as shown in Figure 4.4.

As you study the chart, it is useful to work through it in two directions:

• Working down the chart shows you how, for example, departmental goals are used when defining team objectives.
• Working up the chart, notice how each stage and check ensures that the targets and objectives really do contribute to the higher level goals.

Figure 4.4 Stages of Managing By Objectives

For a summary of Drucker’s original ideas of Management by Objectives, see the following web page:

• Management by Objectives (MBO) http://www.mindtools.com/pages/article/newTMM_94.htm

Note the importance that Drucker gives to encouraging participation in goal setting. In the MBO model, managers are encouraged to discuss and agree goals with their team members. If team members do not agree to their goal, they are not likely to be motivated, and may not work enthusiastically to achieve it.

Use Drucker’s idea when completing the following Involve me activity.

Study the following hierarchy of aims for 2013 in a small car-manufacturing company:

• Organisational mission: Make and sell 500 cars
• Departmental goal: Install 500 gearboxes
• Team target: Make 600 gearboxes
• Individual objective: Construct 600 gearbox outer casings

Will the hierarchy of aims enable the organisation to achieve its mission for 2013?

Is it the most efficient approach?

Feedback

The hierarchy does enable the company to make its 500 cars in 2013. However, it will also finish the year with 100 spare gearboxes, which is probably inefficient unless they are trying to build up a stock for spares.

That very simple example highlights the importance of looking at the hierarchy, both top-down and bottom-up.

If your organisation follows a hierarchy-of-aims approach, try to find information on at least part of that hierarchy and see whether (a) it works to satisfy organisational mission and (b) you can detect any inefficiencies or other problems

The objective-setting process

The process of setting objectives itself involves four basic steps.

1. Define principal task. This involves asking questions: Why does the work need to be done? What is the overall aim? What work is included (and what is not included)?
2. Define accountabilities. Who will be responsible for the overall task? Who will be responsible for any tasks that contribute to the overall purpose?
3. Define targets. What measurable outcomes will be used to assess progress and performance? What are the timescales?
4. Define performance standards. What levels of output, quality and waste are to be achieved?

Defining targets

When an individual or team is set a target, it must be defined accurately so that it is clear to everyone involved.

Output targets can be stated in financial or numerical terms; for example, “achieve sales of £500,000 by the end of the financial year”. Another approach is to refer to improvements in performance; for example, “reduce waste by 5 per cent by 1st December”.

When setting targets or objectives, it is often useful to use the acronym SMART. This represents the terms listed below. Note that we have used examples based on a sales team in the car industry.

• Specific – Examples of specific targets include Sell over 100 cars; Sell at least 100 cars, of which 20% must be luxury models; Make sales of over £100,000.
• Measurable – Sell 100 cars is measurable: Sell lots of cars is not; the sale staff would not know exactly what levels of sales they were aiming for.
• Attainable – Sell 100,000 cars is impossible for most sales staff. The sales staff will not be motivated by a target so high that they cannot possibly achieve it.
• Relevant – A sales person may achieve the target Sell 50 car-cleaning kits but they will not feel that this target is an important part of their work.
• Time-bound – The sales staff need a target date; for example, Sell 100 cars by the end of June.

Note that some writers use different terms - for example, the term Realistic is sometimes replaced by Resourced (suggesting that the target needs to consider the availability of suitable resources)

If you haven’t met SMART goals before, try watching a useful introduction on:

• How to Write a SMART Goal [Link to https://www.youtube.com/watch?v=YmOS3dj9h0s]

You certainly should study the following web page, which explains how SMART goals relate to research findings about objectives:

• Locke`s Goal Setting Theory http://www.mindtools.com/pages/article/newHTE_87.htm,

Then use the following Involve me activity to see whether your current goals at work are SMART.

Think of one or more targets or objectives that you currently have at work.

Are they SMART?

Feedback

Think of a possible target of an objective from your social life. You might set a target of “To have a holiday in the summer.” It’s not a SMART target and does not really tell you much: Will you stay at home, or fly to an exotic location? How long will the holiday last?

A SMART version might be “To spend 14 days in the company of my partner, on a walking holiday in the Alps, in the middle two weeks of June, at a cost not exceeding £1500.’”

This is Specific, Measurable, Attainable (we assume), Relevant and Time-bound

Define performance standards

For on-going work, it is not always relevant to set timescales. However, you can still set objectives based on standards of performance.

These standards can be measurable, or quantitative; for example:

• Acknowledge written enquiries within three days.

They can also be qualitative; for example:

• Deal with callers (including difficult callers) courteously at all times.

In practice, many performance standards combine both quantitative and qualitative elements:

• Deal with callers courteously at all times, achieving at least 90% positive responses in customer satisfaction surveys.

As a manager, you may find it difficult to define and assess performance in qualitative terms. It inevitably involves making judgements about the standard of performance that you expect and the levels of performance that you see when observing employees.

Although these judgements are often subjective, remember that most employees will have an idea of whether or not they’re doing a good job. However, do note how important it is to be able to clearly explain what levels of performance you expect. You cannot discuss particular aspects of performance if you do not have a clear idea about them yourself.

When defining qualitative performance standards, you might use:

• Pre-defined ‘norms’ for administrative procedures, customer satisfaction, and so on
• Take-up rates for facilities or services
• Reactions of internal and external customers, outside bodies, clients, etc regarding meeting defined standards of accuracy
• Speed of response or activity

Performance management and MBO

A typical performance management system will include an assessment of whether objectives have been achieved, performance appraisals or reviews, and ongoing informal assessment.

Note the need to measure both outputs and performance. Consider what might happen if you only look at output. A person’s individual output will be affected by the supply of resources, the performance of the other members of his or her team, working conditions, and so on. Output alone will not be a fair measure of the work done by that individual.

In other words, organisations need to measure performance not simply in terms of output achieved but also in the level of input, including issues such as employee competence and effort. It means that organisations need to consider the resources, support and skills required to achieve their targets as part of managing performance and allocating work.

In many organisations, the process of setting and agreeing work objectives is
accompanied by development objectives and plans to support the achievement
of objectives. This becomes part of the overall performance management
system.

Performance and rewards

In many organisations, the pay of employees and managers is related to performance. The effectiveness of this approach has been discussed, and there are major differences of opinion about how effective it is.

Studies on motivation suggest that financial reward is only one of the many factors that may influence people in the work place. For example, consider Maslow’s theory that once people have satisfied their need for financial security, they will use work to satisfy needs such as personal or public status, the need for friendship, or the need for a sense of achievement. McClelland suggested that, once people have satisfied their basic needs for food, warmth and safety, they may be motivated by one of three factors: the needs for achievement, authority or affiliation.

For summaries of those two theories on motivation, see:

• Maslow’s Hierarchy of Needs http://www.simplypsychology.org/maslow.html]
• David McClelland`s motivational needs theory http://www.businessballs.com/davidmcclelland.htm

However, many organisations do adopt systems using performance-related pay.

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You can find examples of a wide range of opinions on performance-related pay in the education sector by reading:

• Is performance-related pay for teachers a good thing for students? http://www.guardian.co.uk/education/2012/dec/10/performance-related-pay-for-teachers

The following article highlights some of the key points that employees and managers need to think about when using a system of performance-related pay:

• Performance Related Pay http://www.equalityhumanrights.com/advice-and-guidance/tools-equal-pay/checklists-equal-pay-in-practice/8-performance-related-pay/

If your organisation uses a system of performance-related pay, think about each of the key issues in turn and assess to what extent they may be relevant. The key issues can be summarised as:

1. Whether the system really does reward performance (think of the Simon and Shilah example)
2. The need for consistency across different reward schemes
3. The need to document decisions
4. The need for transparency

If you are unsure about any aspect of this activity in relation to your own organisation, try discussing the issues with colleagues or your line manager.

Training and development

To develop potential, you need to analyse the person’s current competence. This applies whether the target for development is you, other individuals or a team.

The following pages will describe some ways in which managers and employees can identify their own training and development needs.

Personal profile

A common starting point is to draw up a Personal Profile: an accurate assessment of what the person has achieved to date. This will typically answer the following questions:

• What educational/professional qualifications have you gained?
• What is your career history?
• What professional training courses have you attended?
• What are your current job responsibilities and key performance areas?
• What do you think your general skills and abilities are at this stage of your career?
• What have you learnt from psychometric or other analytical tests?
• What previous learning and development has gone well, or badly? Why?
• What are your career plans over the next two and five years?

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From your responses to those questions, what can you learn about your skills at encouraging creativity and innovation?

Feedback

Your analysis can often highlight particular skills, or gaps in the relevant skills.

For example, your work experience, the results or your psychometric tests, or your previous learning and development may suggest that you have difficulty with creativity. It may be that you are very good at checking that people follow procedures, but are less good at thinking of solutions to problems or identifying new ways of working.

If so, remember that being creative is a skill that can be learned.  You’ll find some useful ideas in the final section of this module, and also in the books shown in reading list.

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Mintzberg’s roles

Another approach for the manager wanting to encourage creativity and innovation would be to think about each of Mintzberg’s roles.

1          Interpersonal roles.

• Figurehead - the organisation’s representative; for example, handling public relations, attending external meetings
• Leader - interested in working relationships, what motivates staff and what needs they may have
• Liaison   - networking with others inside and outside the organisation

2          Informational roles.

• Monitor - monitoring the internal and external environment to stay up to date with trends and changes
• Disseminator - giving information and keeping staff accurately informed
• Spokesperson - giving information about the organisation to others

3          Decisional roles.

• Entrepreneur - being creative, managing the risks that the organisation must take, managing change
• Disturbance handler - problem solving and handling conflict
• Resource allocator - controlling and distributing resources, such as people, money, equipment and information
• Negotiator - negotiating in order to successfully allocate resources and meet objectives

Go through this list and answer the following questions, as they relate to your current role and to your hopes for the future.

a) Which of the roles relate most closely to the manager who is trying to encourage creativity and innovation?

b) Which are you particularly good at?

c Which are you least good at, and where are there gaps in your skills?

Feedback

The key roles, with examples from a typical innovative situation, include:

1 Interpersonal roles.

• Figurehead – representing your team to explain a need for funds for developing a new idea
• Leader - interested in what motivates staff to be creative
• Liaison - networking with others inside the organisation who may have relevant knowledge or resources

2 Informational roles.

• Monitor - monitoring the external environment to gather facts relevant to the innovation
• Disseminator - giving information and keeping staff accurately informed
• Spokesperson – telling senior managers about new ideas and plans

3 Decisional roles.

• Entrepreneur - being creative yourself, managing any relevant change and managing the risks associated with the new plans
• Disturbance handler – solving the problems that will inevitably occur, handling conflict
• Resource allocator - controlling and distributing resources needed for the new plans
• Negotiator - negotiating in order to allocate resources successfully and meet objectives

As you can see, implementing an innovative idea will typically use all of Mintzberg’s roles.

The task for you now is to assess where your strengths and weaknesses lie. You will then be able to plan how you can fill any gaps in your skills.

Preparing a personal development plan

A personal development plan is used to identify and record future action relating to the person’s training and development. It thus acts as a planning tool; a way of recording progress and maintaining motivation.

It’s also sometimes called a ‘learning contract’, based on the idea that PDPs and contracts are agreed between the individual and their line manager or coach. Both parties are making a commitment - the individual commits to keeping to schedules and making their own time available, while the line manager provides the necessary finance, resources, time and space.

In most organisations, PDPs are quite simple in design, but to be useful they must contain some essential information. This information will answer the following questions:

1 What is the development goal and is it SMART (Specific, Measurable, Achievable, Relevant and Time-bound)?

2 How will the goal be achieved and are all the main activities clearly listed?

3 Where will the activities take place and are there adequate facilities and resources available?

4 When will the programme start and end, and how often will progress be measured and reviewed?

5 Who’s involved, and have they agreed to the plan?

Think back to the gaps in your skills or knowledge that you identified in the preceding Involve me activity.

How do you plan to fill those gaps?

If possible, answer that question by discussing your needs with your line manager and completing a detailed Personal Development Plan.

Feedback

Your response to that activity will be specific to you.

However, do note the need to consult your line manager and also to keep detailed documentation of your needs and plans.

For more on Personal Development Plans, study the following two websites:

• The art of personal development planning http://www.guardian.co.uk/education/2008/oct/14/students-highereducation. This article gives useful general background on the benefits of planning your development.
• Personal Development Planning Guide  www.leeds.ac.uk/textiles/keynote/pdfs/Keynote_PDP.pdf . This detailed guide contains a great deal of information. Skim read it and focus on the aspects most relevant to your own work and study.

Matching Style to Situation

Introduction

As you have seen in the two earlier sections, managers can adopt a number of different styles when carrying out their role. Using Adair’s approach they can also vary their style to suit different needs.

This section introduces another way of looking at managerial styles and relates it to questions of power and control. How does the manner in which a manager exerts power and control performance affect creativity and innovation in his or her team?

Four leadership styles

Tannenbaum and Schmidt developed a model in which the manager may adopt four styles of leadership. Note that the key aim is to use the style that best suits the particular situation, but every leader needs to be able to use all four styles.

The four styles are:

• Tells: the manager identifies a course of action and tells the person or group what to do.
• Sells: the manager again identifies a course of action, but realises that there may be resistance, so has to ‘sell’ the idea.
• Consults: the manager identifies a problem but listens to advice from the group or person before selecting a course of action.
• Joins: the manager identifies the problem and presents it to the group, allowing the group to plan future action.

As you can see, the four styles show a gradual decrease in the use of the manager’s authority, and a gradual increase in the responsibility delegated to the employee or team.

Sm

The four terms (Tells, Sells, Consults and Joins) act as a really useful reminder of the four approaches. You can find an effective summary on:

• Leadership Styles http://www.functionalconsensus.org/step-three/leadership-styles

Tannenbaum and Schmidt actually expanded their four styles to create a continuum. Studying this continuum will give you a deeper understanding of the theory. See:

• Tannenbaum and Schmidt Continuum http://www.businessballs.com/tannenbaum.htm

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Selecting a style

The manager will select one of these styles in response to a number of forces. These include:

• Forces in the manager - such as their own personality, value systems, inclinations, confidence in the group and level of security.
• Forces in the subordinate - for example the person’s need for independence, their reaction to ambiguity, their understanding of the group and organisational goals, and their skills and experience.
• Forces in the situation, including the type and culture of the organisation, the effectiveness of the group, the nature of the problem and the pressure of time.

For example, think of a manager brought up by authoritarian parents who has very little confidence in his team. This manager will tend to use the Tell approach.

Now think of the subordinate: the team member. If this person is very independent and has a very clear idea of the team’s goals, then the manager might be more likely to use Sell or Consult.

What conditions would be most likely to encourage a manager to use the Join approach?

Feedback

The Join approach would be most likely in, for example, the following situations:

a) The problem was relatively unimportant (perhaps where to have the annual party), the subordinates were happy to make the decision, and the manager trusted them to choose somewhere suitable.

b) The team members have a strong need to make their own choices; for example, about the layout of a new workplace. A manager who trusts the team might use Join in this case, provided there was enough time to make the decision.

c) The manager believes that team work will improve if the team members are allowed to make their own decisions. Joining is likely to work here provided the team members react well to ambiguity and uncertainty, and where the situation is not urgent.

Note that those three examples relate, in turn, primarily to issues of forces in the situation, in the subordinates and in the manager.

How do managers exert control?

The term control is used in two ways in relation to management. The first is the same as its use in everyday speech: a manager needs to be able, when necessary, to tell team members what to do. Managers must control their employees.

The second meaning is used when we talk of controlling processes. A manager will exert control by observing the output, identifying any problems and making changes to improve performance.

It is the first of those meanings that we consider in this section. You saw earlier that French and Raven identified five sources of power that a manager may have, and may use when controlling the team:

• Reward power. Team members may follow if they think the leader has the power to give rewards such as pay, promotion, increased responsibilities or increased privileges.
• Coercive power. This is based on the fear that the leader can punish the team member in some way if they do not follow instructions. For example the team member may fear formal reprimand, withholding of bonus payments, or withdrawal of respect.
• Legitimate power. Power may be based on the manager’s role. The team member follows the leader because that person has the title of ‘manager’.
• Referent power. The leader exerts influence because of personal characteristics, reputation, or charisma. Note that not all team members may be affected in the same way by the leader’s reputation or characteristics.
• Expert power. The team member may follow a leader because of that leader’s special knowledge or expertise.

The following page looks at the links between power, control and leadership style.

Power and managerial style

To see how different managers may use different sources of power, think of an emergency in the work place. In such an emergency, different managers may use very different sources of power.

For example, a manager may exert Reward power by announcing during a meeting about emergencies that “I’ll watch you during a fire evacuation and look for the people who show leadership skills that suggest promotion.”

To consider some of the different ways of using power, use Figure 5.1 to match French and Raven’s sources of power to the comments that might be made by a manager. The previous example is shown on the first row.

Manager’s comment	Type of power
I’ll watch you during a fire evacuation and look for the people who show leadership skills that suggest promotion.	Reward
When I was here during the last fire...	Expert
Come with me. I’ll keep you safe.	Referent
I’m the manager. Jim will go first, and I’ll check that everyone follows.	Legitimate
Anyone who acts foolishly loses a week’s pay.	Coercive

Figure 5.1 Ways of using power

Feedback

Note that the type of power that the manager has may have a major effect on the style that they adopt.

Consider the following examples:

• Managers who are concerned about keeping their authority and maintaining legitimate power may not wish to use the Join approach.
• A team that is used to a manager who uses Reward and Coercion may be confused if a new manager moves too quickly to a Join approach. It may be more effective to start by using a formal Consult style initially.

Power, managerial style and perception

There is, however, one word of caution that is needed in relation to power and managerial style.

You will remember from the earlier description that what matters is the employee’s perceptions of the various types of power that the manager can exert. That can make the question of power and style rather complicated.

Think of the following scenario:

A manager has identified a problem with the quality of a team’s output. He wants to adopt a Consult approach when trying to solve the problem. Some of the team members respond in very different ways:

• Angela thinks that the manager has reward power, so works very hard at coming up with lots of ideas and trying to impress him.
• Bina is scared by the manager’s reputation and so is very quiet during the discussion.
• Carl thinks that the manager has a great deal of expert knowledge, and must know how to solve the problem, so thinks that the consultation is a waste of time.

All three of the team members in that scenario think that the manager has different sources of power.

a) What are the main sources of power that you have as a manager?

b) Which ones do the members of your team think you have?

c) Which ones do you use most often?

Feedback

Your answers to those questions will of course be personal to yourself. The aim of the activity is to encourage you to think about how you use power.

For example, thinking about the questions may highlight that you too often use legitimate power. Perhaps you expect people to do what you tell them simply because you are the manager: it may be more effective if you use other sources of power.

As you saw earlier, looking at questions like those will also encourage you to think about your leadership style. As a manager who stops depending on legitimate power, you may find it easier to use Consult and Join styles. On the other hand, managers who find it difficult to exert power and overuse the Consult and Join styles may find that decision making can be quicker if they more often exert Expert or Legitimate power.

Developing an entrepreneurial organisation

Research on Germany’s small and medium-sized companies in the 1990s suggested that while they represented about 80 percent of the country’s exports, they were ‘showing signs of age’, with outdated organisational structures, outdated management models, slow product development processes, lack of innovation and little value-added.

The researchers selected certain companies that were successful in changing. The aim was to investigate

“how they were trying to become entrepreneurial again in their business processes – how to regain and maintain their capacity to identify and capture opportunity in a flexible and continuous way.”

Their key conclusions were summarised under four headings:

• Performance focus. By clarifying the goals and improving communication, staff had been convinced of the need for strong overall performance.
• Strategic orientation. The companies were clearly aiming to identify and capture opportunities based on the skills and abilities of the organisation but accepting that the opportunity may lead the company in new directions. The aim was value-based (rather than technology-based) growth, to be achieved through iterative processes of small-scale improvement, involving customers at all stages.
• Organisational systems. The companies had moved away from the traditional hierarchical structure. Instead, they encouraged networks linking people with different functions throughout the organisation. Leaders worked aggressively to improve communication and knowledge transfer. The aim was for continuous improvement and change, based on improvements in management information systems to make information widely available.
• Operational systems. The focus was on only those steps of the value chain that were the key to growth. This often led to outsourcing and focussing on operations that maximised added value.

Characteristics of a creative organisation 

The characteristics of a creative organisation have been identified as:

• An open climate that is challenging and trusting.
• Empowered staff who can take decisions and use local resources.
• A flexible structure, flatter and more decentralised than traditional organisational structures.
• Integrated procedures which encourage multidisciplinary teams and parallel developments in different areas of the company.
• Knowledge-sharing systems, including ways of presenting, sharing and reviewing suggestions (for example, through an IT information bank or newsletters).
• External partnerships with suppliers, customers and competitors.

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Does your organisation have those characteristics?

This list clearly links closely to the methods adopted by the German small and medium-sized companies described in the preceding section. For the entrepreneurial leader or manager operating in a particular organisational environment, it leads to two questions:

• To what degree does the organisational environment in which I work have those characteristics?
• If the organisational environment does not have all (or many) of the characteristics, how can a more creative environment be created within my team?

Feedback

Your responses will, of course, relate to your own organisation and team. However, considering each of the points in turn,  The table below shows a few general points that may be relevant.

An open climate that is challenging and trusting.	This can be encouraged in your team, even if it is not true of the organisation as a whole.
Empowered staff who can take decisions and use local resources.	As manager, you can empower people in your team.
A flexible structure, flatter and more decentralised than traditional organisational structures.	In your management style within the team, you can generally avoid taking an authoritarian (Tell) approach.
Integrated procedures which encourage multidisciplinary teams and parallel developments in different areas of the company.	This is difficult, but even within a team you can encourage team members to share skills and new ideas.
Knowledge-sharing systems, including ways of presenting, sharing and reviewing suggestions (for example, through an IT information bank or newsletters).	You should be able to ensure that information is shared with team members.
External partnerships with suppliers, customers and competitors.	All of these should be encouraged, remembering also that you can think of other teams as internal suppliers or internal customers.

Entrepreneurs and bureaucracy

The approach of managers trying to encourage entrepreneurship and innovation can be contrasted with the work of managers in a bureaucracy.

The term ‘bureaucracy’ is used in management theory to define an organisation using two concepts:

• Expertise – each person works according to rules defined by experts
• Administration – working together is based on discipline and the rules of officials

It defines a system which has traditionally been used in government offices, retail banks and insurance companies. The key characteristics are that:

• Tasks are allocated with a clear-cut division of labour and high degree of specialisation
• Authority is clearly defined in a hierarchical structure
• Formally-structured rules ensure co-ordination and uniformity of decisions
• An impersonal approach is encouraged when dealing with clients or colleagues; this is intended to encourage staff to make rational judgements
• Employment is based on technical qualifications
• Employees often see the organisation as offering a lifelong career

Bureaucracy is based on developing structures and then selecting people who will fill roles in the structure.

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Consider each of the two concepts and six characteristics of bureaucracies. How could you use a similar approach to define an entrepreneurial organisation?

 Rewriting that section, you could define an entrepreneurial organisation as follows.

The term entrepreneurial organisation is used in management theory to define an organisation based on two concepts:

• Expertise – each person is assumed to have expertise and to potentially contribute new ideas
• Working together – people and teams are encouraged to work together to develop new ideas and concepts

It defines a system which is able to change to suit changing external conditions, and to enable the production of new products and new ways of working. The key characteristics are that:

• Tasks are often allocated informally and amended by individuals to fit specific needs
• The hierarchical structure tends to have few layers
• The informal approach encourages different ways of working to suit particular situations
• Effective interpersonal relationships are encouraged with clients and colleagues; this is intended to encourage staff to identify new ideas and new opportunities
• Employment is based on people demonstrating openness to new ideas and being creative
• Employees often see the organisation as contributing to an exciting and varied career

The entrepreneurial organisation is based on developing people, creating structures that satisfy current needs, and enabling those structures to change so suit future conditions and opportunities.

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For research into the factors in the ‘organisational climate’ that may affect creativity and innovation, study the following paper:

• Creating More Innovative Workplaces: Linking Problem-Solving Style and Organizational Climate http://www.cpsb.com/research/articles/featured-articles/Creating-Innovative-Workplaces.pdf

As with all reports and papers, it’s best to start at the beginning (The Executive Summary in this report) and then view the end (the In Conclusion section). You can then skim read the whole report, focusing on particular points that interest you.

As you study the report, identify the key findings and add those to the notes you have made during your study of this module.

Individual or Group Innovation?

Introduction

As a final question in this section, we need to ask whether creativity and innovation are more likely to occur in groups or from individuals working on their own.

The classic idea of the inventor is of the, perhaps, ‘mad’ scientist working alone in a laboratory. You may also remember some examples mentioned earlier in this module: James Dyson worked alone to come up with his revolutionary household cleaner; Bill Gates and Paul Allen worked together to set up Microsoft; and 150 years earlier, Stephenson had suggested the innovative ideas that led to the design of the first effective steam locomotive.

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As an example of the benefits of a single person working on an innovative idea, study the following story of Dyson’s development of his household cleaner (quoted by Tidd et al).

Launching the Dyson

Just before the launch of this revolutionary product, James Dyson was receiving large quantities of information about the product, production, distribution, and so on. He had commissioned market research on the prototype which clearly showed that customers disliked the clear plastic body.

Dyson could easily have adopted a conservative approach and followed the clear suggestions of the market; the stakes were certainly huge for him. Instead, following the original path of the true entrepreneur, he followed his subjective judgement and decided to stick with the clear body, believing that it would highlight the revolutionary design and justify the premium cost of the product.

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For more on Dyson’s approach to innovation, study the following website:

• Dyson innovation yields revolutionary products http://www.plm.automation.siemens.com/CaseStudyWeb/dispatch/viewResource.html?resourceId=6187

As you study the three-page article, notice how the process from initial idea through to marketed product goes through the stages described earlier.

Think about a development that has created an improvement in working, in products or services, in your own organisation. Did it follow a similar series of stages?

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Groups and innovation

On the other hand, there are many advantages claimed for innovation by groups. The Development Funnel is a way of thinking about innovation, problem solving or decision making.

It highlights the fact that innovation often involves progressively eliminating ideas until a final plan can be implemented. The approach is illustrated in Figure 6.1.

Figure 6.1 The development funnel

The group might start by brainstorming possible new ideas ­ - these are shown entering from the extreme left. They may, for example, be possible solutions to a problem, or options for new ways of working. Note that, at this stage, the aim is to think of a large number of possible ideas, however strange they may seem. A group looking for a way of reducing energy use might think of switching off the lights, closing doors, perhaps even reducing their use of computer printers, and so on.

Some other ideas may be suggested later in a process known as open innovation. For example, the group that thought of switching off lights might later think of a completely new set of ideas relating to setting the heating to slightly lower temperatures.

Further ideas may be suggested as people develop thoughts into concepts and recycle ideas. For example, the group that thought of switching off lights might later think of switching off computers.

Many of the ideas will immediately be filtered out, but the best ones one will pass on to the next stage. Here they are developed into concepts: some are again filtered out but some pass to the Implementation stage. Some of these will be rejected, but a very small number will be implemented and marketed as new products or adopted as new processes.

The two key ideas of this model are that:

• The process consists of progressively rejecting ideas and concepts until only the most suitable is left
• There are three key stages: only the best ideas are considered when concepts are built; and only the best concepts are considered when planning implementation

The company’s managers need to ensure that the company:

1. Encourages people to suggest and investigate new ideas
2. Has a system for prioritisation: selecting the most promising of those ideas and developing them into business concepts
3. Has systems for planning implementation

These three steps then enable the company to market the product or service, or adopt a new process.

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For a more detailed description of this approach to innovation, including the way in which a company might assess its own procedures and structure, go to the following source:

• The Innovation Pentathlon  http://www.som.cranfield.ac.uk/som/dinamic-content/media/knowledgeinterchange/themedareas/innovation/key%20concepts/Rick_Mitchell/index.htm

On this screen you’ll find a menu. The key section is titled The Elements. Listen to the speaker’s comments about this set of slides, and take notes of the key points.

As an example of the model used in practice, go to:

• Innovation Management Case Study #001 http://www.thechemicalengineer.com/Downloads/Innovation_Case_Study_001.pdf

In particular, study the section where the consultant’s report on the innovation audit, covering each of the five factors in turn.

Then use the following Involve me activity to carry out a similar audit on your own organisation.

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Carry out an innovation audit, considering the following key factors in your own team, department or organisation:

1. Ideas: How effectively is every employee encouraged to come up with new suggestions and ideas?
2. Prioritisation: How effectively does the organisation select the most promising of those ideas and develop them into business concepts?
3. Implementation: What systems are in place for planning and implementing new ideas? How well do they work?

Having carried out the audit, focus on ways in which you could create improvements. If you can identify some major changes that are required, discuss them with colleagues and your line manager. If relevant, develop your own plan for implementing those changes.

Decision making

The innovation process you have just seen can also be used in relation to decision making. The key difference is the initial focus. In the innovation process, you are generally looking for any new ideas that may create a benefit. When making decisions, you are focusing on identifying the options that you have and choosing the best one of them.

One approach to decision making describes it as a logical process, involving nine stages:

1. Define the situation. What is the problem that you are considering: what exactly are you trying to decide about? Just as important, what is outside the scope of your decision-making process?
2. State your objectives. This involves asking questions like: Are you looking for the best solution, the cheapest solution, or the one the will be easiest to carry out in practice?
3. Get the facts. Gather all the facts that you already know, and then try to collect any more that you need. However, note that some decisions may have to be made before you can have all the relevant facts. For example, you cannot accurately predict sales levels of a new product.
4. Analyse the facts. Study the facts with care, making sure that you do this is an unbiased way. Don’t select or emphasise the facts to support your initial favourite option.
5. Identify options. As with the earlier technique of brainstorming, try not to eliminate possibilities at this stage.
6. Evaluate each option. Now you start to assess each option, basing your decisions of factual analysis.
7. Select the best option. Which option best satisfies the objectives that you defined in Stage 2?
8. Implement your plan. This may involve careful planning of resources, timing, use of staff, and so on.
9. Monitor your plan. Observe performance after the plan has been implemented, assess any gaps between planned and actual performance and be prepared to make further changes.

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A group of managers met to think about a new product that would fill a gap in their current range. They agreed to plan a market strategy for the product. 

The marketing manager provided data on marketing of existing products and predicted sales figures for the new product. The managers then assessed how profit levels typically vary with price and location

The marketing manager suggested five possible marketing strategies and the chief executive suggested a fifth possibility. The managers then calculated possible profit levels, the likelihood of achieving sales targets, and so on 

The team decided that one of the marketing manager’s options was the best. The first products were delivered to the retailers and in future meetings the marketing manager presented them with detailed data on sales and costs.

Potential problems in group decision-making

Problems may arise during decision making for a number of reasons. The most likely problems can be summarised as:

• Risky-shift. Some groups are more prepared to take risks than the members would do as individuals. This may occur because people inclined to take risks are more influential in group discussion, or because risk-taking is seen as a desirable cultural characteristic (a possible problem in an entrepreneurial team).
• Cautious-shift. This acts as the opposite to risky-shift; for example, if the company culture is risk-averse. Both cautious-shift and risky-shift may occur within the same group; for example, when discussing a number of topics the group may try to achieve an overall balance of risk.
• Satisficing. This involves taking the easy route to a decision by selecting the one alternative that is least disliked. Note that this may not necessarily be a problem; it may be the best way to taking minor decisions that could otherwise become time-consuming.
• Groupthink. This problem may occur in a close-knit group where the members’ abilities to critically view the problem and come to a considered judgement are blocked by their needs to fit with group norms and to agree about a conclusion. The group has become more important than the decision. The key characteristics of groupthink are:

-   the illusion of invulnerability

-   belief in the inherent morality of the group

-   negative views of competitors

-   pressure on individual members to conform

-   self-censorship to preserve the illusion of unanimity

-   erection of a protective shield, filtering leaders and members from external influences

Many examples of groupthink have been identified in the political field, such as Britain’s policy prior to the Second World War or the United States’ policy before Pearl Harbour. It is interesting to speculate on the possible role of groupthink in the boardrooms of Enron or Worldcom (companies alleged to have illegally exaggerated their profits) in the early years of the 21st century.

• Personal factors. A number of factors dependent on the personalities of individual group members may cause problems with decision making. For example, there may be difficulties separating the wisdom of a person’s views from the status that he or she holds. Some individuals may have a disproportionate affect because of the personal speaking style, the length of time they speak for, or their communication skills.

Conflict within the group

As you can see from the description of personal factors, conflict within the group can affect how it makes decision. Conflict within the group can be categorised under two headings:

• Task conflict refers to differences of viewpoints or opinion about the content of a task or decision.
• Relationship conflict exists where there are interpersonal differences between team members.

Relationship conflict limits group performance and productivity, and may occur between people for a number of reasons. It may also relate to something affecting just one person; for example a team member may feel that he/she has not been rewarded sufficiently for past performance so needs to continually demonstrate their knowledge.

On the other hand, a certain degree of task conflict can encourage the group to be self-critical and creative. In certain situations, members may be encouraged to adopt a ‘devil’s advocate’ position, suggesting an idea that they believe to be unsuitable to intentionally introduce conflict. Excessive conflict, however, is likely to hamper communication and undermine cohesiveness.

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Think of a meeting in which you recently took part.

What examples occurred of task conflict and relationship conflict?

Feedback

When thinking about task conflict, it’s important to assess whether the conflict is constructive or destructive. Constructive task conflict encourages people to look critically and carefully at the ideas being discussed. Destructive task conflict can easily lead to two or more people simply trying to win an argument.

In the case of to relationship conflict, note that it is often important to think about the people who are not talking or suggesting ideas - are they perhaps being quiet because they fear conflict, or because their ideas will not be valued? If you are chairing the meeting, you need to think about ways of minimising relationship conflict and its effects, so that everyone can contribute.

Strategies for conflict management

Here are five styles of handling conflict, each of which could be used in appropriate situations by the entrepreneurial leader:

• Competition - the leader uses formal authority and power to take decisive action where a quick decision is vital.
• Collaboration - merging insights and finding an integrative solution where two (or more) concerns must be accommodated.
• Avoidance - where an issue is relatively trivial, time-consuming or seems likely to cause major disruption, it may be best to avoid the problem, perhaps returning to it later if it is important.
• Accommodation - if a matter is more important to another than it is for you, or where the leader is in the wrong, progress will be fastest if the leader withdraws his or her argument at the earliest opportunity.
• Compromise - if two parties are committed to mutually exclusive goals, they may both be able to achieve most of their aims if both agree to concede some ground.

Note that, as with leadership styles, there is no ‘one best way’ for the entrepreneur; the effective leader will adopt whichever strategy is most appropriate to the situation.

Some of the problems that can occur with groups and innovation are highlighted in the following article:

• How Group Dynamics May Be Killing Innovation  http://knowledge.wharton.upenn.edu/article.cfm?articleid=2487

As you study it, add any key points to your earlier notes on group performance and problems.

After completing your study of it, try to balance the benefits and disadvantages of groups in relation to innovation and problem solving in your own organisation. Try to answer the key question: How can I use groups most effectively for future innovation in this organisation?

We will not be able to give any answers or feedback in relation to this question. However, once you have come up with your own ideas, the best approach may be to discuss them with colleagues and friends.