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Entrepreneurability

What is Entrepreneurability about?

Traditionally to make a product or provide service you need three primary factors. First, we need resources: like land, water or wind. Let’s call these resources.  Secondly we need time and money, starting or scaling capital.  For the sake of simplicity  let’s referred to this as the monetary component. Third, we need labor resources, or human resources: people.  to create it. Now, these three primary needs: resources, money and people together we  call them input factors. By connecting them we can create. The input factor will indeed make creation possible is the fourth one: entrepreneurial ability.  And this factor is becoming the differentiating factor in our current economy. In this article we will explain what entrepreneurial ability (in short Entrepreneurability) is and how we can plant its seeds, cultivate and grow from it.

Stick and stones

In the first human labor practices we used primarily natural resources like sticks and stones, nature provided us to fulfill our primary needs. As we developed into tribes and later smaller communities, we started to specialize and focus on a particular product (farming, blacksmith etc.) doing so people we no longer able to fulfill in their basic needs by themselves. They would withdraw from consuming to produce their product, in order to do so they would need capital to bridge this gap hence we were introduced to an economy in a smaller scale.To accommodate this withdrawal we created financial institutions like banks to facilitate the exchange of products and service. This resulted in an enormous growth in productivity and wealth (for some).

This worked well for smaller communities, however we were unable to scale to larger groups of people. Until the industrials revolution. This is where we began utilizing the potential of the combined efforts of machine and labor forces. This led to significant economies of scale and enabled organisations to reach a global market. At that point, those who were able to control and utilize these three primary factors were successful. Large corporations dominating the markets because competitors are unable to obtain the natural, monetary and labor resources and to maximize these rewards we adopted numerous ways to optimize them.

Optimizing the primary factors

Since the industrial revolution we have been trying to optimize our production processes. We have created an impressive number of ways to govern it. In the past couple of decades we introduced Projects and Project management frameworks like Prince2, to optimize our productivity we introduced Lean and to facilitate in creative environments we introduced Agile values and principles along with numerous frameworks and practices. All to optimize our labor resources. Capital resources are nowadays heavily regulated and controlled (for obvious reasons) and we try to be more careful in using our natural resources by focussing on circularity.

Applying and optimizing these three factors alone, won’t make your organization a successful organization in these times. Adding entrepreneurship to your mix might do the trick. Here are the key ingredients.

Entrepreneurability

The ability to optimize the utilization of the production factors is entrepreneurship. This involves four elements:

  • Taking initiative – Action oriented and driven by forward motion
  • Strategic business decision making – Based on a clear vision and strategy being able to make decisions
  • Innovation – Exploring and experimenting
  • Bearing risk – taking the consequences of the previous three elements regardless the outcome.

In future posts, we will elaborate on these factors. These four elements determine if a product or service produced will actually come to life. Go to market needs these skills. Improvements to keep going and arriving at a market need this way of thinking. And  with an increase in the number of independent professionals, the purpose economy and a generation entering the workforce that is raised with Entrepreneurability, so the skill are already available too. This might explain why more and more organizations are exploring concepts like ‘ Lean startup’ and organize hackathons to facilitate in Entrepreneurability.

What hasn’t evolved though is the organisational structures of companies and the rewards and compensation structures. So if we need these skills to work, how we will adjust our organisation formats? And maybe more important, how will we rewards people if we expect entrepreneurial behaviour from them. Will we get away with just paying them a monthly salary?

Where the three primary factors generate income through rental income (natural resources), interest (capital) and wages (labor). The fourth factor , Entrepreneurability, is compensated through profit and loss. Owning a company you only earn when profit is made, if not, you get nothing. With the rise of Entrepreneurability in our labour force we need to radically rethink our organisational structures and rewarding and compensation structures.

In practice

Entrepreneurability  is already happening. There are several companies already experimenting with elements of Entrepreneurability.

RYSST

A small student startup RYSST (Rent Your Student Scrum Team) founded by two software engineering student as part of a school assignment. They identified the need for companies to early bind talented engineers and students wanted to have a meaningful job to build experience and earns some money as well. A great combination and continuation for companies since students are available to work at night and during holidays. You rent a team of students and when they graduate you get first pick in hiring them. Onboarding is a piece of cake since they are already familiar with the product. A completely new concept using the rise of popularity of the Scrum Framework and a shortage of software engineers. Within a year they employ over 30 students and starting a new branch in another university city.

ITM Group

A machine manufacturer for among others the tobacco industry. A highly competitive market where ITM is able to do things differently. Self-organising production teams are responsible for the development, assembly and aftercare of a production line. This organisation’s leader took a conscious choice to delegate a portion of the entrepreneurial abilities to their employees.  There is no innovation department.“I honor  personal initiatives from the work floor by challenging my employees to work on innovative projects. They will also be inspired to take responsibility of the future of the customer relations though.” Of course that requires a special kind of leadership.(source)

Incentro

This IT company is only steering on happiness. They believe that when their employees are happy, they make their customers happy. Having a no-policies-policy and teaching people to balance both the personal, company and customers’ interest has resulted in more and sustainable growth in profit and headcount since 2012. While continuously experimenting with stock options for employees (that is not really creative of course) or having employees dividing the budget for raises themselves and where people are encouraged to start new services and adopt new technologies they have expanded their portfolio in various directions. Starting and stopping services when needed and continuously looking for new interesting opportunities, not by a sales team or innovation team but by its own employees. Teaching them to act as an entrepreneur.

Netvlies

An internet bureau with more than 50 internet professionals, with clients like Dick Bruna’s Nijntje, NautaDutilh and Karcher Netherlands. Their bureau does not employ a single manager. Each and every one of their employees applies Entrepreneurability and takes it to a next level. If you are selected to be their client, the work to be done is posted on the intranet, for all employees to look at, who has the most interest, the best fit. When a team has been formed, the client has an official place in the team.

Since teams apply the Scrum framework, each client becomes a Product Owner. Being part of the team, part of the process and always aligned with what’s being created. Often Netvlies adds value to their clients’ teams because they not only deliver the requested product or service, but also a way of working, insights in how to work with high performance teams and maintaining the power of collaboration, while honoring individual talents too.

Challenges

As all these four companies acknowledge that enabling Entrepreneurability is necessary, a great way to work and of course all of them are struggling too. Experimenting to find  the ideal culture and governance structures. We want to help them and inspire them to find formats, models and ideas to enable Entrepreneurability.

We are curious whether you have other examples of organizations experimenting with Entrepreneurability (or elements of it). Please leave a comment.

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Entrepreneurability Generations on the workfloor

“Terrabyte-technology like AI and machine learning need the Millennial workforce”

“So we need to adapt to their needs. Listen to them. Be a one minute manager in stead of continously on their back, provide resources and time, leverage others to let them work and: be a marketing driven organisation. They want to make an impact”, says Dr. Waguih S Ishak, VP & Chief Technologist at Corning Research & Development Corporation Silicon Valley, CA at the Lunch Lecture at High Tech Campus today.

“Be market driven, have sustainable purpose
and let Millennials have the impact”

“Millennials want to make impact and have a sustainable goal. They ask different questions than others. Like: are you paying for my medical? Quit doing that, I’m healthy I will be fine without it. And: I need 60 days of leave, because I like to travel”, says Isahk at the lecture. This workforce tends to be much more entrepreneurial and have different outlook on life. “We just have the courage to do, in stead of talk about things. I do have to say that I’m not impressed by human resource departments. It needs to be updated quickly, to attract students like me”, says Samanta Svolkinaitė, a student looking for an internship a while ago. “If I can easily prepare for an interview by looking up standard questions, I am not challenged. And we do want money, but want other things in our jobs too, business travel and creating a good network.”

“The biggest of all mega trends is not tech: it’s people: The Millennial Workforce.
If you learn to communicate well with them: you’ll get the tech done.”

Without being blind followers, we will need to adapt to those demands. “We need them to be a part of these mega trends to develop: AI and machine learning, the new step in big data for instance. Or building autonomous cars. We at Corning Research & Development need these young engineers, to do the research”, says Ishak. “In the US alone we need 1,5 billion engineer in the coming 10 years. Half of which will work in the Valley. And they will come from China, India, Germany, Hungary and Czech Republic and from Holland.”

“Megatrends like AI and machine learning need
Milllennials to realize them: to connect the two is the essential trend.”

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Entrepreneurability Generations on the workfloor

Why we should let Millennials be our managers

Millennials want only one thing, so it seems: to be a manager, and they want it #now. Their current managers tend to translate that attitude into arrogance and lack of patience. They had to work hard themselves to reach that goal and they are not likely to let go. In the mean time Millennials that don’t see their expectations met and have a different attitude: they just leave. Should managers from earlier generations set aside their ego’s and let generation Y have a go? Yes, they should. And here’s why:

“During the next year, if given the choice, one in four Millennials (yes, 25%!) would quit his or her current employer to join a new organization or to do something different. That figure increases to 44 percent when the time frame is expanded to two years. By the end of 2020, two of every three respondents hope to have moved on, while only 16 percent of Millennials see themselves with their current employers a decade from now.” This global trend was signaled by The 2016 Deloitte Millennial Survey. Nearly 7,700 Millennials, representing 29 countries around the globe, gave some pretty interesting answers on employment. And these are now the facts to deal with. All participants were born after 1982, have obtained a college or university degree, are employed fulltime, and predominantly work in large (100+ employees), private sector organizations. (1). “This remarkable absence of loyalty represents a serious challenge to any business employing a large number of Millennials, especially those in markets—like the United States—where Millennials now represent the largest segment of the workforce.”

[quote author=”” source=””]Managing Millennials? Don’t.
Let them manage you.[/quote]

They will leave anyway, unless…
What is true reason behind them demanding to be the manager? This straightforwardness, stubborn behavior one could say, holds an important message. Wanting a challenging role, while you have no experience what so ever, takes guts. And eagerness to grow and experience your boundaries. This is a generation that states they have underdeveloped skills of leadership and is very conscious about it. Could it be that demanding to just try and learn-by-doing give them this skill? Yes, it can! But do current managers lean into that? No, mostly not. Because they have a different view on making a career and their leadership skills were developed during their upbringing. It needs a very – very! – flexible attitude and some else…. focus on business initiatives, fairness of business and positive impact on customers.

[list style=”list1″ bullet_color=”#999999″]

Top 5 things Millennials value:

  • Employee satisfaction, loyalty and fair treatment (26% of respondents say this is most important)
  • Ethics, trust, integrity and honesty (25%)
  • Customer care and focus (19%)
  • Quality of products, service and reliability (13%)
  • Corporate social responsibility (8%)

[/list]

Long term focus
These top 5 signals a very important message: “we are about long term, and you better be behaving congruent and conform promises you made, or we’re gone.” Their priority for business can be translated in a willingness to invest in growth and driving business initiatives; dealing fairly with suppliers; developing new/innovative products and services and making a positive impact on customers. All ensuring the long-term future of the organization. “Millennials are, thus, in broad alignment with senior executives on initiatives that support long-term success, suggesting that they value approaches that directly impact individuals via jobs, income, skills, or quality products”, says the research by Deloitte.  They are thus embracing profit and do recognize making money as a vital component of business success. The only thing this generation does not tolerate – at all – is short term thinking.

 

[quote author=”” source=””]Take on a mentoring role and guide them. In the mean time showing them the need for business principles to ensure long term results. 

[/quote]

Mentoring 
So how do we manage them? Lead by example. Servant leaders give way to their need to grow leadership skills. They guide a path to growth rather then contain Millennials’ experiences to the maximum that they ‘can handle’. Guidance can be provided by a mentor, so if you have the guts, just like they do: take a mentoring role and guide them. In the mean time showing them the need for business principles to ensure long term results. It seems that this format of leadership gives Millennials a better chance at developing and enhances loyalty, according to the researchers. “Six in ten (61 percent) Millennials are currently benefiting from having somebody to turn to for advice, or who helps develop their leadership skills. Again, this varies by market and appears more prevalent in emerging (67 percent) rather than mature (52 percent) economies. Mentorship levels are particularly low in Australia, Germany, Canada, The Netherlands, and France, where only a minority of Millennials have a mentor. Improving these levels cannot not only advance the careers of Millennials, but it will also go some way toward strengthening loyalty.

 

So yes, let them take leadership positions. And then be there, give advice.Generation X has the power to empower them. Managing means showing leadership. Great leaders show you the path, focus on your purpose and support you to develop skills to tackle obstacles. And remember: Millennials have a different way of saying things: we just need to listen more closely. If they say the want to be a manager: it is because they have an unsustainable drive to grow. Not because they’re hungry for power.

Resources:
(1) https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-millenial-survey-2016-exec-summary.pdf

 

 

 

 

 

 

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Entrepreneurability Generations on the workfloor

How Millennials, labor market dynamics and the purpose economy will disrupt employment!

In a few years time, you will no longer work for a company. You will own it! In fact, we bet you will own over 20 companies! Why? Because the way companies and employees work together is about to get disrupted. Here’s a way to organize companies that fits this transformed way of employment.

Entrepreneurability: skill to be an entrepreneur in company formats

Ideas need skills, talent and expertise to come to life. If a company no longer has employees, but employees with those skills, talents and expertise, own the company, the ideas become the asset base of all involved. The ideas can then be realized by a set of owners that have the fitted skills and knowledge for the idea and an equal benefit to get the best possible value out of it. In exchange for their contribution, these contributors become co-owner of the company with equal shares. Regardless of the amount of effort invested. If the product or service provided is valuable to the market targeted, everybody benefits. If not, no harm done you only spent a few hove it’s already happening and it will become a common way of doing business. Here’s why:

Purpose economy

Why do you do what you do? Why do you do this type of work, what makes you get out of bed in the morning and get to work? Let’s look at the four generations that we have in our labor force now and their drive to work. The baby boomers were looking for a job for life, making sure their families were able to survive, generation X was working on their work-life-balance and they are motivated by the ability to do so within a career and generation Y (also known as Millennials) rather work for a purpose and they need to be flexible and free. Their focus is to work with a company not for a company. So gradually the prehistoric driver of work to earn the money to buy food, living and education (eg.survival), to a profit maximization will disappear. And in it’s place we find: having a purpose for the work that you do. Not just our personal purpose, doing the things we love, picking up new challenges and expressing ourselves. Also a purpose that includes a contribution to others and to the world around us. Making money and doing this is widely accepted as the new way of working.

The purpose economy is mostly a primary driver for Millennials. “While many generations have sought out purpose, Millennials make it a greater priority than ever before, in everything from their consumption to their work to their communities to their relationships” says Aaron Hurst in his book The Purpose Economy, Expanded and Updated: How Your Desire for Impact, Personal Growth and Community Is Changing the World Paperback (2016).The purpose economy is a new context and a set of ways in which people and organizations are focused on creating value, and it defines the organizing principle for innovation and growth. (1)

Over 76% of people participating in the Great Place to Work surveys acknowledge they feel good about the contribution to society they make as a company.(2) It is an important factor in people’s choice to join an organization.

Trend number 1: Entrepreneurial abilities facilitate maximizing purpose. Not only does this work-life-model provide you with the freedom to choose which ideas create value or meaning to you and thus identify you. You have control over the amount of time spent and which benefits it generates.

Labor market development

change_work_population Millennials are tough to manage! Says Simon Sinek.(3) The generation that was raised with the ‘anything-is-possible-concept’ needs a different approach to those raised with limits or with working conditions as the baby Boomers or generation X. Millennials use technology as a mean – not as a purpose – to connect to each other and to anything that maximizes the purpose as mentioned before.  Combined with an enormous amount of information accessible and the ability to change industries by intelligent utilization of technological developments, makes this group very skilled disruptors, even without them realizing it, mostly.  They enter the labor force from a different starting point.

These dynamics change the labor force. And with the baby boomer generation leaving the in the upcoming years, it puts a challenge on how we do our work. The number of jobs keeps on growing while the number of members of the workforce decline.(4) So not only do we have a changed labor force, we also have a lot of pressure on its efficiency and effectiveness.

Trend number 2: Entrepreneurs skill create an opportunity for professionals to more be more efficient and effective in the utilization of their skills and knowledge by adding value to multiple organizations instead of being part of a single organization.

The Gig Economy – Independent Professionals  

iprofs_leaving_companiesThe trend of approaching the markets has already been set. The way employment is organized is changing already.  Younger people do not tend to stick around too long at a single company any longer. We all know that’ lifetime employment’ is a thing of the past. In the 1980’s over 50% of American employees were in their job over 10 years. (5)

The Generation X thrived on the ‘job hopping’ phenomena covering on average 7 jobs throughout their career, Millennials are expect to stay at an organization for less than 3 years.(6) But next to switching jobs there is an even more disruptive change happening..

The number of independent professionals (iPros) has been growing rapidly over the past couple of years.  Where in 1996 roughly 5% of the workforce  in The Netherlands where self employed, in 2014 this was already roughly 10 percent. Although the trend is flattening out (7), more and more highly educated professionals are still making this transition. Research done by Intuit states that in 2020 40% of the workforce will be work on a freelance basis.(8) Why do people take this step? What makes them move away from a sense of security, stability? Especially now the economy is recovering?  

From the Zelfstandigen Enquete Arbeid 2015 three reasons for starting to work as an iPro stand out:

  • Looking for a new challenge (34,4% of total respondents),
  • Autonomy. Making your own decision when and how much you want to work. (25,7% of total respondents)
  • No longer willing to work for a boss (20% of total respondents)(9)

This trend is being referred to as the Gig economy.(10) In this approach to economy temporary positions are very common and organizations collaborate with independent professionals for short engagement.(11) This tendency is the third trend on which Entrepreneurial concepts are built.

It already happens in the current concept of the flexible layer of independent professionals which many organisations use. This benefits both the organizations – who can use skills and knowledge as they need it, and the independent professionals, that can work for multiple companies.

The biggest risk organisations encounter in this rapid changing world, dominated by small start-ups, is employing people. Mitigating this risk by employing people on a need-basis is extremely tempting. You pay for what you use. For the independent professional benefits are rich as well. They are able to share and develop their expertise by applying it in different environments, only adding value when being present and charge accordingly. Like a playing a gig!

Trend number 3:

  • As an idea owner in the a Company of Owners, one of the formats in which to optimize effectiveness, you host gigs for people who can contribute, without the risk of having to employ them on a fulltime basis. You can pull knowledge and skills from a large pool of professionals in the subject area;
  • And as an independent professional you are facilitated in your need to show your purpose and skill in any challenging area and add value without having to work for a boss. You are in control how much and when you will invest your time.

Liberty?

One more thing: why the equal share? Isn’t that a bit too socialistic in the way you’d like to work the market liberation? It certainly looks like it and might be a bit new. Like the story on the right (12). It has it’s roots in the value added base of rewards. Where in marketing it’s fully accepted to have value based pricing, somehow within awarding people’s skills we still value them differently. We base this reward on experience, education, location and some personality aspects but do not take into account the value added to the idea. Anyone contributing to the result is perceived to add value and without their contribution the value will assumably be less.

companies_billing

On the contrary, the current compensation scheme used in organisations is out of balance as well. Over the last couple of decades the compensation of top management has grown completely out of proportion compared to the average production worker. In between 1978 and 2014, inflation-adjusted CEO pay increased by almost 1.000%. Meanwhile, typical workers in the U.S. saw a pay raise of just 11% during that same period.(13)  This has been heavily debated in several countries and attempts are made to regulate this. In addition, more companies look into decoupling the performance review and the any raise in pay. Organisations are discovering new ways to tap into compensation.(14) A Dutch IT company, Incentro, let’s their own employees determine their raises among their peers.(15) These experiments and trends in HR shows that organizations and professionals are ready to reopen the discussion on compensation.

What about the amount of time involved? What if the contributors have a difference in the amount of time they put in. So what? We think it’s up to contributors to organize their way of working. Bottom line is: the result is what counts. And that will be addressed by the idea-holder and the rest of the team. It doesn’t matter if you spent 5 minutes adding value or 5 days. If the idea cannot be created without those 5 minutes of expertise the 5 days invested is useless, same goes the other way around. Think for a minute about the effect it has. What if you organize your work exactly the way you’d like and put in the amount of time and effort you think is necessary, within a time frame that you have influence on as well? How does that make you feel? Exactly: it’s means the liberty to do things your way! Ask Daniel H. Pink, the author of Drive. What motivates people more than anything? The autonomy to do things how they’d like to, develop mastery over their work tasks and do them with a purpose.

Trend 4: So to bring back balance in the rewarding of labor. The Company of Owners values the input of all contributors alike and therefore gives equal shares of awards to the input and skills. This way the process provides a very strong motivator for all – also alike: autonomy.  Furthermore it takes away the discussion about giving a raise based on performance. Performance in The Company of Owners-format is determined by value added of the whole team.

Entrepreneurability: concluding remarks

The above demographic and labor market trends combined, as well as the readiness for disruption for the labor markets thus gives us reasons to believe we are well on our way to optimize Entrepreneurability. This model provides instant feedback on the anticipated added value to the market by facilitating in maximizing purpose. It provides the freedom to choose which ideas to create value or meaning for independent professionals as well as employees that would rather work with a company instead of for a company.  Additionally it gives flexibility over the amount of time spent on each idea or value creation. This makes it more efficient and effective in the utilization of skills and knowledge for both the idea-holder (company) and the professional contributors (owners). The latter get to add value to multiple organizations instead of being part of a single organization and the first are able to realize more ideas. It values the input of all contributors alike and therefore gives equal shares of awards to the input and skills. This way the process provides a very strong motivator for all alike: autonomy. Furthermore it takes away the discussion about giving a raise based on performance. Performance in the format of The Company of Owners is determined by value added of the whole team. And it has a low threshold to contribute or start-up. If you have an idea but no funding or you have a little time to spare you can easily apply this model.  The format of the Company of Owners host gigs for people who contribute, without the risks of employment on a fulltime basis. You can pull knowledge and skills from a large pool of professionals in the subject area. And independent professionals are facilitated the need to work for a purpose and use their skills in a challenging area, staying flexible and developing skills and knowledge along the way.

Sources:

  1. The Purpose Economy, Expanded and Updated – Aaron Hurst
  2. https://agconnect.nl/artikel/it-bedrijven-behoren-tot-de-beste-werkgevers
  3. https://www.youtube.com/watch?v=QXWNChoIluo
  4. https://futurehrtrends.eiu.com/report-2015/profile-of-the-global-workforce-present-and-future/
  5. https://www.fastcompany.com/1802731/four-year-career
  6. https://www.forbes.com/sites/jeannemeister/2012/08/14/the-future-of-work-job-hopping-is-the-new-normal-for-millennials/#2e7078ed13b8
  7. https://www.cbs.nl/nl-nl/nieuws/2016/46/toename-aantal-zzp-ers-stokt
  8. https://http-download.intuit.com/http.intuit/CMO/intuit/futureofsmallbusiness/intuit_2020_report.pdf
  9. Zelfstandigen Enquete Arbeid 2015, ministerie van Sociale Zaken en Werkgelegenheid, TNO, CBS (2015), http://www.monitorarbeid.tno.nl/databronnen/zea
  10. https://youtu.be/bhm2fdQg_Aw
  11. https://whatis.techtarget.com/definition/gig-economy
  12. https://www.smithsonianmag.com/history/charles-proteus-steinmetz-the-wizard-of-schenectady-51912022/
  13. https://fortune.com/2015/06/22/ceo-vs-worker-pay/
  14. https://hbr.org/2015/09/why-more-and-more-companies-are-ditching-performance-ratings
  15. https://www.mt.nl/business/zo-bepalen-incentro-medewerkers-hun-eigen-loon/87810 – Dutch