By Matthew Grimes, Reader in Organisational Theory & Information Systems and Academic Co-Director of the Entrepreneurship Centre at Cambridge Judge Business School.
Although our impressions of entrepreneurial leadership are typically informed by way of media coverage of entrepreneurial celebrities and the “cult of personality”, such impressions are prone to important biases, which cause us to overlook the hard work that is often involved in disrupting the status quo.
Whereas inventors focus on building new products, entrepreneurial leaders focus on building new systems.
The work of entrepreneurial leadership thus involves architecting and building integrated systems (e.g., networks, platforms) that are capable of bringing together heterogeneous elements in order to co-create new value.
When you think about entrepreneurial leadership, what immediately comes to mind? As I have raised this question with aspiring entrepreneurs across the last decade, I have been struck by how quickly and how frequently these individuals want to point to other various well-known entrepreneurs as top-of-mind examples of entrepreneurial leadership. Let’s call them entrepreneurial celebrities - individuals like Steve Jobs, Elon Musk, and Jack Ma, whose charisma, foresight, and entrepreneurial good fortunes have catapulted them into stratospheric levels of renown.
However, what explains our tendency to equate entrepreneurial celebrity with entrepreneurial leadership, and are we right to do so? In trying to ascertain the qualities of an entrepreneurial leader, one of the challenges that we face is that we tend to be bombarded with information about entrepreneurial success stories and their founders but generally lack information about entrepreneurial failures. This skewed availability of information tends to result in two different biases which scientists often refer to as “availability bias” and “survival bias”, logical errors in which our conclusions are being drawn on the basis of a narrow and non-representative set of cases (e.g., successful IPOs, “unicorns”). A classic example which illustrates such bias is that of the U.S. military, in which after examining all of the planes that had successfully returned from battle in World War II, wrongfully concluded the need to reinforce those areas of the plane which had taken the most artillery fire. In fact, it was the opposite. Those were the most resilient areas of the plane and required the least reinforcement, as evidenced by the fact that they had been shot and yet still returned home. Yet because the military did not have access to those planes which had failed to return, they were missing a key part of the story. What I would like you to consider is that the same thing may be happening in the context of our understanding of entrepreneurial leadership. We have a lot of information on entrepreneurial successes and even more information on the biographies of those individuals who founded the corresponding ventures. Yes, Steve Jobs was charismatic, yes, he was a perfectionist, and, yes, he was resolutely committed to a particular vision. But for every Steve Jobs who has exhibited such characteristics, we could likely find 50 startup founders who exhibited the same traits and yet failed. Stated simply, while celebrity and the “cult of personality” have tended to inform our understanding of entrepreneurial leadership, it would be preferable instead if a deepened understanding of entrepreneurial leadership informed our celebration of particular entrepreneurs.
So, how are we to gain such a deepened understanding of entrepreneurial leadership? With this in mind, I would like to propose to you an alternative to the celebrity-informed and personality-centred approach to entrepreneurial leadership. When we conceptualize leadership as having to do with individual personality traits like charisma, we tend to minimize the task to one of inspiring employee motivation. While such inspiration is indeed part of the task of entrepreneurial leadership, it is certainly not the entirety of the task. As I have studied entrepreneurial leadership, I have found that the central task of such leaders is to architect and build integrated systems that are capable of bringing together heterogeneous elements in order to co-create new value. Inventors focus on building new products, entrepreneurial leaders focus on building and mobilizing new systems.
To illustrate this, let’s return briefly to the myth of Steve Jobs. His entrepreneurial leadership cannot be understood through the lens of personality; instead, we need to understand it through the lens of system building. As Bajarin (2004) wrote:
At Macworld in early 2001, Apple chief executive, Steve Jobs, used his keynote address to introduce what has become a most important concept in the world of personal computers. He unveiled a diverse set of multimedia applications such as Itunes, Imovie, Idvd and Iphoto and told thousands of the Apple faithful that the Mac would become the digital server of their homes – their creative nerve centre.
People with digital tools such as cameras, MP3 players, digital movie cameras and PDAs would use the new software to manage their digital photos, music, movies and data. Later that year, Apple even launched its iPod MP3 player and later tied it to the Itunes online music store. This made Apple a leader in the innovative use of ‘digital lifestyle’ technology.
Jobs’ vision of a digital ecosystem that would bring together heterogeneous services, suppliers, and even industries into a seamless and valued customer experience was indeed inspiring, and not merely for Apple’s employees but for all of those organisations that saw the opportunity to co-create such value. And the real aspect of leadership, in this sense, involved the hard work of identifying the obstacles (e.g., digital rights management) which had to date kept these heterogeneous elements apart, and then working to identify and negotiate innovative solutions to overcome those obstacles.
Such ecosystems represent networks of influence. As entrepreneurial leaders establish these ecosystems and locate themselves at the heart of those systems, this allows those leaders to not only shape the creation of value but also keep consumers, suppliers, and partners locked into those ecosystems. Architecting these networks of influence and mobilizing the co-creation of value is no easy task, and it requires much more than a psychological predisposition to risk-taking or a compelling turn-of-phrase.
As an entrepreneur, I am certain that you frequently get asked the following question: “So, what are you building?” The tendency of course is to respond with your elevator pitch and a 30-second synopsis of your core product. However, allow me to conclude this article with a challenge to consider a different response. The next time somebody asks you what you are building, tell them instead that you are building systems. Tell them about the different actors, organisations, and services that you are bringing together to disrupt the status quo. Tell them about the obstacles that you have overcome in order to make those relationships work. And recognize that as you do so, you are exhibiting entrepreneurial leadership.