In this article, I reflect on the impact entrepreneurs have on organizations. Is entrepreneurship an organization’s darling curse? I do agree with the statement, but not without some considerations. In my last reflection, I wrote about the challenges of growth and its relationship with the individuals composing what I called the company’s “soul.” I did not expand my thoughts on the characteristics of the individuals and how they influence such companies, the industry, the nation, or society in general. My first thought is to expand my correlations between business and natural sciences. In this case, the system encompassing all these living organisms is considered an ecosystem. Depending on the purpose of the ecosystem analysis, one can choose to take a broader or narrower view. Depending on the scope, this ecosystem can be an industry, a region, or even our society. 

When looking at ecosystems and their effects on individual organisms, we must refer to Darwin’s observations. After his work, organisms came into great focus at an individual level looking at life as two separate things, organisms, and environment, defined as dualism. This concept supplanted the original unified organism-environment as a whole definition called synergism. (Patten, 1982). For this reflection, I propose going beyond Darwin’s dualism observations that the environment influences organisms and perpetuation. Here I start from the idea that the environment has as much influence on the individual as the individuals have on the environment. I also consider that this bidirectional mechanism influences two different systems. Using my previous analogies, the souls in relationship to the living organism, and the living organisms with the ecosystem to which it belongs. We could further establish a connection between the organism’s soul (individuals) and the ecosystem (industry/society) it belongs to and vice-versa. In such a case, are individuals a reflection of their surroundings? Are ecosystems a reflection of their individual organisms’ actions? How about their souls?

One characteristic that distinguishes humans from animals is our ability to create. Plato asserts that our human nature is that we have the capacity to use our reason to overcome appetite and desire to make rational decisions. In my own words, it is innate to humans to use creativity to overcome day-to-day challenges. When I hear the word entrepreneurship, the first thing that comes to mind is creativity. Penrose suggests a differentiation between managerial services from entrepreneurial, utilizing the criteria that the latter involves new ideas and not just maintaining the status quo. Penrose suggests that companies can be run solely on managerial practices (even if only temporarily). Still, they must have entrepreneurs who can fully utilize the existing production capacity to grow. Fleck goes further to describe that entrepreneurs must have the ability to recognize imbalances and, from there, promote growth. From experience, I believe that even in the most mundane managerial functions inside a company, one faces challenges that require some form of problem-solving, which is then recognized or ignored. Suppose we consider that problem-solving requires creativity, and entrepreneurship functions involve some sort of creative solution. In that case, everyone at some point must have some entrepreneurial skill to offer solutions be it directed to creation, growth, or merely survival. That’s not to say I can’t entirely agree with Penrose. I understand that some functions are purely managerial, and others must be entrepreneurial. I think that individuals must, at different times, act in both ways. I believe that sustained growth comes from enterprises that have in their individuals, at all levels, the ability to recognize imbalances and, regardless of the size, efficiently act on them. This condition of entrepreneurship must be systematic within an organization to sustain growth. I continue to base my views on the fact that growth is unavoidable and to achieve it sustainably, an enterprise should seek to use the strategy Fleck defines as the change in process strategy.

As someone from the creative field, I believe creativity is a teachable skill in all of us and can be expressed through many other skills such as sports, arts, science, and business. I treat entrepreneurship as I do creativity. Penrose divides the functions of an entrepreneur such as “versatility,” “ingenuity,” “ambition,” and “judgment,” therefore I believe they are the skills in which entrepreneurship is manifested. I deem that all skills are teachable, and to master these skills, one must develop and polish them to use them to contribute to society. I also consider that people are born with predispositions to specific skills and have the ability to master them at higher levels than others can. Nevertheless, people with prodigious skills must further develop. How would Pelé or Michael Jordan express their creativity if it wasn’t through their sports? What would we say of Mozart or Beethoven if they had never been introduced to an instrument? How about Nicholas Tesla, Ben Franklin, and Einstein? In other words, as creativity and entrepreneurship make us humans, we must develop the skills to make them applicable to the companies we work for and society.

There are many cases in history where prodigious entrepreneurs were able to create enterprises that experienced much success. Some even sustained it through decades even as the founding individuals who ran the company changed. In the end, I believe that enterprises that can put in place processes that help define direction tend to maintain growth in a sustainable manner for much longer. Although famous for their charismatic leaders, these companies had within their structure entrepreneurs who were versatile and ingenious. We can question if a lower level of ambition made these individuals prefer to be within an organization instead of starting one. Also, as judgment is one of the most challenging skills to attain, could this be the main differentiator for successful entrepreneurs? Let’s consider that the wrong decision triggers a company’s death. We could explain why so many companies that enjoy success have difficulties maintaining it after a change in leadership (main decision-maker) or after significant changes in the business environment, as is the case for Encol. Pedro Paulo Souza enjoyed great success for many decades, but as politics in Brazil changed after the re-democratization, his judgment and ability to continue making the correct decision faltered. 

As I conclude that everyone can be creative or entrepreneurial at some level, we must consider what differentiates individuals to achieve higher skill levels. Of course, I do not believe that if I had practiced soccer intensely since I was a child, I would be able to play like Neymar or even paint like Monet. Our genetic predispositions play a significant role in who we become. But suppose we remove the outliers from this analysis. In that case, I believe individuals, through training, could achieve such skills that would make them an asset in these complex organisms that must grow indefinitely through time. I also conclude that companies must be able to create systems and processes that allow their individuals to judge their imbalances better to grow in a more sustainable manner. What lies next is society’s ability to shape through technology and education individuals so companies can grow in such a way that humanity can enjoy qualitative growth.

Credit: The original work for this article was done for ADM730 – Fundamentals of Strategic Thinking @ COPPEAD – Universidade Federal do Rio de Janeiro in June 2022

References:

• Penrose, E. (1959) The Theory of the Growth of the Firm, Oxford University Press, chap. 3, p. 28-38 and chap. 5, p. 58-77.
• Fleck, D. (2022) The Enterprising Challenge: The Dual Impact of Entrepreneurship on Organizational Survival. Chapter 4, excerpts (forthcoming Book).