Entrepreneurial Leadership; are you a boss or a leader?
Being a great boss or a leader, is there a difference between the two? The moment you start a new venture, you’re a boss. Whether you start as a self-employed person or a business owner without any staff, you become a boss. At the very least, you have become your own boss. You have to manage yourself. On the other hand, even without any employees, you are a boss because you’re the ultimate one to make the final decision. Your supplier, customer, advisor, mentor, institutions’ representative, entrepreneur coach, and many more people look at you for telling them what you choose.
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Making decisions is one end of the medal; leading people is the other end. The difference with small business management is that with entrepreneurial leadership you guide people. So, an entrepreneurial leader makes connections and communicates with people. Whether that involves sharing your vision for the future, discussing doubts, or addressing different opinions, show others the way forward instead of telling them what to do.
“A boss has subordinates. An entrepreneurial leader has people who believe in them.”Dr. Martijn Driessen – entrepreneur and researcher
Many business owners take their leadership skills for granted. By default, they are the boss. Apart from their entrepreneurial skills and entrepreneurial mindset, doing business has all to do with people, so people skills and entrepreneurial leadership become eminent.
With entrepreneurial leadership, two aspects come into play for the business owner: the kind of leadership style on the one hand and entrepreneurial skills on the other. A leadership style is viewed as a combination of different skills and behaviors that leaders use for interacting with their subordinates (Mitonga-Monga & Coetzee, 2012). There are five leadership styles (Harris, et al., 2007).
- transformational leadership: is all about attracting followers and considering their needs beyond the leader’s immediate self-interests.
- transactional leadership: is based on the exchange of rewards for achieving results. Also called autocratic or authoritative leadership.
- culture-based leadership: leadership that focuses on common shared values, beliefs, ethics, and attitudes.
- charismatic leadership: motivates others to come up with innovation and creativity.
- visionary leadership: is based on painting that vision for the future and inspiring others to follow.
Besides entrepreneurship, leadership on its own involves a lot of fundamental skills – despite the type of leadership – that every entrepreneurial leader needs. These skills are listed below and accompanied by a small description. And you don’t need an MBA to become a great leader.
Entrepreneurial leadership skills
Daryl Koehn (2005) concludes in her research that there is no well-defined definition of integrity. She defines integrity for the entrepreneurial leader by quoting Ford (1976): “A good reputation is a priceless business asset that can be earned only through consistently trustworthy behavior.” followed by: “Integrity properly understood is not some add-on feature for business; it is at the core of sound business.”
Active listening is the ability to focus completely on the speaker and trying to understand their message. Note that active listening is not only directed to the entrepreneur. Active listening is also applicable to the employee. It’s a two-way street, like in a partnership. An entrepreneurial leader encourages and ensures that both speaker and listener comprehend each others’ message.
Clear communication means that messages come across as intended. As simple as this sounds, it’s challenging to achieve. Everyone has a filter, which makes them view the world differently. A filter that is an accumulation of their upbringing, norms, values, character traits, thinking styles, etc. Actually, everything they have experienced in life so far. The way they view the world is their unique way. So, did the other understood your message as you intended it?
Giving constructive feedback means that the other receives informative help and instructions on how someone is currently performing and what someone can do about it to improve their performance. Therefore, it is always intended positively, even if it addresses specific issues or concerns. Employees, in general, seem to forget that sometimes. They are inclined to see it as negative feedback, a judgment. Not as an encouragement to start learning new behavior.
Usually refers to how open-minded someone is. Someone with an open mind enjoys trying new things, hearing alternative views, meeting strangers, and learning new methods. It hinges on aspects of an entrepreneurial spirit: being creative, recognizing an opportunity, and flexibility. For the leader, it means valuing new experiences and new thought processes of the people they work with. In combination with active listening, it can be powerful leadership skills.
Reliability means that people can count on you. You say what you do, and you do what you say. It is closely related to responsibility. A leader who takes responsibility finishes his tasks and follows through to the final detail. Even more important, they communicate back to people in case of delay or problems. It can be troublesome for the more entrepreneurial individuals as they embrace opportunity and end up doing something different.
Working with people can be tiresome because it takes time to understand each other properly. Clear communication is never 100% clear, and it can, therefore, blur communication on tasks, targets, and deadlines and – in the end – organizational performance. It can even destroy relationships and partnerships. It requires a leader to remain committed and be persistent. You need patience for this. In business, it’s a virtue because many entrepreneurial individuals are impatient.
Apart from having a vision for the future of the business, the business leader needs to have the drive to get there. Most business owners want to improve their performance, but that’s very different from having the drive to realize something the company has never achieved before. The business owner can have a clear vision for the future, an entrepreneurial strategy, and the required business and industry knowledge. Still, without a drive to succeed, the entrepreneurial venture is doomed to fail.
Being agile is an essential business asset. Adapting to fast-changing situations, especially in tiring times like the Covid-19 era. Agility is the power of moving quickly and easily. It requires that you need to be able to think and draw conclusions quickly. It can be a temporary detour without losing sight of your vision.
The entrepreneur is creative, by definition, some argue, but should the management of a company be creative too? It is more important for the business leader to create an atmosphere where people can be creative. It is rather managing for creativity than trying to manage people’s creative mindsets. This implies that owner-managers don’t have to be creative themselves, although it would help innovation and the creative process. So, some level of creative thinking is needed.
Entrepreneurship and management are very distinctive from each other. Entrepreneurship is seeing possibilities and exploiting them to create value for the business’ clients and co-workers. Management is controlling the processes towards value creation. The organization is a broader concept than managing the entrepreneurial team to improve the lives of others. Instead, it is execution power to turn big ideas into reality. Seeing the vision and knowing what needs to be done to get there (in the end).
Empathy means being able to understand the needs of others, as well as being aware of their thoughts and feelings. One might argue that active listening is the same as empathy or at least closely related. However, that’s not true. However, it is easier to listen actively when an entrepreneurial leader possesses compassion. But, the other way around is not valid: leaders who listen actively are empathetic.
A successful entrepreneur is decisive, by definition, you might think. Our research with the E-Scan shows a different story. Nevertheless, many entrepreneurs, business owners, franchisees, self-employed people find it really hard to come to a decision. And not making a choice is also a choice; however, it is a decision you can’t control. So, learning to be more decisive is possible and should be part of your leadership development.
An entrepreneurial leader does business for a reason. An intensely felt mission gives them the drive to go and work hard for their company every day. What is it that they want to achieve with all stakeholders of their company? The vision is the concrete image of a point in time in the future, an attractive future picture of a beautiful reality where the lives of others have been improved.
Definition entrepreneurial leadership
So, to conclude, the definition of entrepreneurial leadership is entrepreneurial people – who love to see and seize opportunities, and create value for others – understand that their role is a leading one and they are happy to help others perform to the best of their abilities.
“A small business leader is one who knows the way, goes the way, and shows the way.”by John Maxwell (with many thanks to Maitén Panella for her inspiring small business leadership coaching)
Read more about the differences between skills, abilities, knowledge, and competencies.