The successful transformation of small and medium-sized enterprises calls for a change in their leadership and organizational culture.
The success of German industry is based on a balance of different-sized enterprises. Small and medium-sized enterprises play an important role in Germany’s innovation culture. Since the turn of the millennium, the question of effective entrepreneurial behavior has become increasingly important in connection with the debate about the development of young companies and startups. At the same time, disruptive events such as the coronavirus pandemic and the war in Ukraine have led to a growing focus on the resilience of entrepreneurship actors at both the personal and the institutional level. Steinbeis Entrepreneur Professor Dr. Thomas Breyer-Mayländer argues that measures are needed in the realms of organizational and personnel development, training and research in order to create a leadership and organizational culture that fulfills these requirements.
In Germany, both industry and civil society as a whole are strongly characterized by small and medium-sized enterprise structures and successful hidden champions who, as a result of their success, have already transcended the boundaries of SMEs [2] and influence innovation culture in industry. Ensuring that these businesses are robust and able to remain effective in changing market and economic environments calls for resilient entrepreneurship – and this is very strongly driven by leadership. The resilience of both the institutional actors (companies) and the individual actors (the responsible leaders and employees) is important in this context. This ties in directly with the debate that occurred in the 1990s, when there was a shift from managers to entrepreneurs or intrapreneurs [1]. This form of entrepreneurial responsibility also includes the role of management as leadership. In contrast to a simple management model where managers are just temporarily employed senior employees, in this approach they are also responsible for instigating fundamental changes to ensure effectiveness (doing the right things). This calls for entrepreneurial leadership, where management is based on the principles of an entrepreneurially responsible culture.
Entrepreneurial culture: the requirements for individuals, organizations and businesses
It is far from straightforward to describe the different factors that constitute an entrepreneurial approach or mindset in terms of individual and institutional culture. So what are the features of an entrepreneurial culture? At the individual level, they include entrepreneurial talents (as identified by the Gallup Entrepreneurial Profile Assessment, for example), competencies, and the individual background that is key to a willingness to act responsibly and in a goal-oriented manner. At the organizational and company level, they include the management culture, employees and teams, and structures and processes. However, the three cultural levels of artifacts, beliefs and values, and underlying assumptions all play a key role.
Consulting work helping businesses and individuals to develop a sustainably effective leadership and organizational culture has shown that supposedly “soft” factors like these become more important during difficult times of crisis and when there is pressure to transform. The different culture levels in a business can be related to the three levels of organizational culture (artifacts, values and underlying assumptions).
Management innovator Peter Drucker’s assertion that “culture eats strategy for breakfast” underlines our own observation that the soft cultural aspect can be key to consolidating a fundamental realignment of businesses and organizations. This can also be seen in the section on “a culture supportive of organizational resilience” in ISO standard 2316:2017.
Resilience can be understood as the ability to cope with crises and to live successfully and effectively and survive in an uncertain VUCA (volatility, uncertainty, complexity, ambiguity) world. It occurs at three levels: the organization or business level, the team and social group level, and the individual level. Resilient entrepreneurship is based on a healthy leadership and organizational culture, which calls for management and organizational development to address new requirements. External support to help businesses and entrepreneurs strengthen resilient entrepreneurial leadership is typically provided at three levels [7]:
- The leadership culture process level, through specific workshops at all hierarchy levels and including all employees.
- The level of personal development provision for specialists and management. Alongside seminars, the focus here is on transfer into practice.
- The level of managing the overall culture process, where all corporate culture levels are supported e.g. through process workshops.
The three parameters of resilience
Entrepreneurial leadership training should thus combine analytical approaches (for example using Gallup’s CliftonStrengths talent assessment) with professional input, phases of self-reflection (individual coaching and group phases of peer-to-peer consulting) and a strong focus on transfer into practice, in order to enable practical implementation as an entrepreneurial leader. Resilient businesses need resilient individuals at every level. The key factors are:
- Self-reflection: the ability to question your own actions
- Self-responsibility: taking responsibility for your own actions
- Spirituality/transcendence: the ability to look beyond your own actions and recognize more than one dimension to reality, to inspire people to recognize their potential, and to communicate a viable vision with a clear purpose.
These three resilience parameters must be carried across from the individual level to the institutional level of the organization. Instead of focusing on the level of the employees and leaders, this calls for a focus on agility at the organization level. As a part and an outcome of resilient entrepreneurship, a resilient company is built on resilient leaders and a resilient corporate culture. This safeguards the company strategically, enabling robust, crisis-proof negotiation of transformation situations like the operational and strategic challenges encountered during the coronavirus crisis [3].
In order to achieve this training/education goal for entrepreneurs, however, training, research and consulting organizations cannot continue to rely on the traditional way of doing things. In addition to new, customized training and professional development offerings for leaders and organizational development, new institutional concepts are also required. The institutions and individuals in the education and research sectors must be able to gear their own work toward a new form of entrepreneurial culture that includes a culture of experimentation. This doesn’t only apply to tertiary education – it can also be successfully implemented in school education [4]. However, doing so will require changes to the internal leadership culture and leadership systems of education and knowledge organizations [5].
Contact
Prof. Dr. Thomas Breyer-Mayländer (author)
Steinbeis Entrepreneur
Steinbeis Consulting Center for Leadership in Science and Education (Ettenheim)
www.leadership-science-education.de