March 8, 2007

Entrepreneurship v/s Management ....The war continues !!!

Just started reading "Make the Move" and after reading the first chapter in the book , it just struck me to write something on "Entrepreneurship and Management".There were some inputs taken from my readings in Business Gyan as well!!!.In "Make the Move" it is said:
Entrepreneurs are leaders who are the heart of Business and Managers are the brains of the business.So,Entrepreneur has the responsibility to create those aims and objectives and motivate his managers to accomplish the goals.
So keeping this big difference in mind, let us go to the micro level to see the differences:

are people who are thinkers behind the creation and execution of any idea.They are people who have a blend of technical as well as management skills.They are the final verdict behind the business and their level of thinking decides whether the business would reach the shore or would sink in between
Managers are people who are the drivers of the organization.Management is basically divided into various stages of the ladder which is described in my previous post.They focus more on goals and drive the team to achieve those goals/milestones on time.

thinking is more on innovation and it is more "means driven" and less "result driven" For example:Why can't we create an "application A" which has not been developed by any other company!!!Taking the example of cooking a recipe Business Gyan says,"Entrepreneurial thinking is like designing a new menu with the ingredients in hand.Hence,Entrepreneurial thinking focuses more on creativity.
Managerial thinking focusses more on targets and have fixed steps to achieve it.Taking the same case of a recipe,"Managerial thinking is like cooking items on a pre-defined menu with the help of a recipe book".Hence,Managerial thinking focuses more on efficiency.

's mind craves to do new things even if they turn out to be wrong.Taking the first step is more important than getting worried about the end result.
Manager's focus more on doing things right and doing the right thing.The end result is much more important and it does not matter on how you achieven your target.In short "Doing the right thing is most crucial in this case"
Business Gyan has a very good example of a failed product-the Post-It by 3M which was tried with some more innovation and became a hit.Post-It is one revolutionary product which is used in our day to day office life.You can read about the invention of Post-It here.Here(in case of Post-It), entrepreneurial thinking helped and it not only asked "What can we do with what we have?" but goes beyond in asking "What else can we do with what we have and what we are unexpectedly landed with?"

Entrepreneurs are less resource dependent.Sometimes,scarcity of resources turns out to be a boon for the entrepreneurs.For example Ebay was built with the intention to build a robust self sustaining platform on which millions of people could trade at the same time(which was'nt available at that time) and the other reason being, the Ebay founder did not have any venture capital funding rolleyes
Managers on the other hand are more resource dependent.The performance of the manager is heavily dependent on the performance of the team members, which means if the team fails,the manager also fails!!!

Entrepreneurs are risk takers and they they leverage risk as an opportunity to prove their capability.They are always prepared for the unexpected and they think "If something is likely to go wrong,it will !!!".Entrepreneurial thinking challenges the assumption that there is a predictable relationship between risk and reward.Hence,High returns can be achieved irrespective of the risks associated with the venture by transforming the unexpected into a growth opportunity smile
Managers are also risk takers but take less risks as compared to an entrepreneur.The risk lies on the decision of the manager and management focuses on ways to reduce risks-through Non Disclosure Agreements(NDA), written contracts etc.

Managerial thinking is predictable and hierarchy sensitive. For managers,future is decided from the learnings in the past and for them,"Past data is the ultimate resource to decide the future"
Entrepreneurial thinking is highly unpredictable and network oriented.For them,learning from failures encountered by other fellow entrepreneurs is important but that is not the ultimate resource to decide the future!!Entrepreneurs argue that "Past is a reliable indicator to decide the future but only to the extent that the entrepreneur is not taken into account"
For example:In 1967,Harvard economist J K Galbraith stated that "The era of small entrepreneurs was over-just a couple of decades later entrepreneurs like Bill Gates(of Microsoft) and Steve Jobs(of Apple) built some of the largest new ventures,the world has ever seen surprised

Entrepreneurs have to prove to themselves(that wrong can sometimes be right,if wrong is done correctly) and than to the entire world.
Managers also have to prove to themselves and than to the organization where they are serving.The organization in turn would its capability to the world hence,Manager is just a small medium in this case!!!

Note:If you have some more differences,they are most welcome...Do add them in the comments section

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At Mar 8, 2007, 7:08:00 AM , Blogger Lakshman Srikanth said...

hey man nice post! very informative, well i would say that you should read this book " The Difference Between GOD and LARRY ELLISON" ....its an awesome book !

At Mar 8, 2007, 1:35:00 PM , Blogger Manish said...

Yes it is a good comparison.

a. I feel that top level management thinks more like an entrepreneur.

b. and c. Creativity, innovation and intuition are required to envision the organization. It should be also supported by data, market trend, projected demand, price, cost and few genuine assumptions. Many times the success depends upon how valid are those assumptions.

d. Yes resource constraints is for everyone. Unlimited wants and limited resources. However the entrepreneur can relax this constraints in his mind and can think innovative ideas. Then he finds the alternatives to overcome the constraints. Like Dhirubhai thought to use people’s money by stock market and by ADR. Yes in the context of organization, managers have many constraints.

e. and f. Yes, the entrepreneur knows that how to drive the business in the unknown territory and uncertain industry trend. He takes calculative risk. While managers may more involve in resource allocation in the context of their department. So they need forecast. As per me, the entrepreneur made valid assumptions to predict the data. Still data is important to support one’s argument for both.

Like you quote from “Make the Move”, an entrepreneur needs strategic thinking to define goal, mission and vision. And he is responsible to get work done from different managers. A founder shapes the culture with help of HR mangers, define marketing strategy with help of directors and marketing experts and make sure for operational efficiency with help of middle level and line mangers.

I would also like to suggest to read a book. “Maverick” (If you have not read) . It describes in a traditional hierarchy based, family owned business organization, how a person brings change, with innovative ideas to motivate people and bring entrepreneurship in them, restructure the organization and react to external environmental forces.

Best Regards


At Mar 11, 2007, 11:17:00 PM , Blogger Himanshu Sheth said...

@Lakshman:Thanks very much for the information.I would definitely have a look at that book.
@Manish:Thanks very much for the detailed reply.It was very informative.Just had a few points on what you have pointed out.
a. Resource constraints are everywhere and the way we recruit is also very important.The entrepreneur is responsible for creating a vision and it is the responsibility of the Managers to enhance the In short,Hiring right people in terms of attitude is very important since if a co-worker does not have the attitude than his knowledge is also not used properly.
b. As you have told Entrepreneur takes a calculated risk but I disagree that Managers take risk.Managers have past data(if any) in which case the risk is minimal whereas in case of a new project(for which the data is not readily available) the risk is involved but it is not so much.

Hope you agree to these two points.



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