THE OBJECTIVES:

1. To know the Psychological Theory of Motivation by Dr. McClelland and Dr. Atkinson
2. To know the Difference between Management and leadership
3. To know the Themes of

Module 1: The Entrepreneurial

Mind

        Some people say that there is a specific psychological or motivational theory in

entrepreneurship, but that is not true. However, some entrepreneurs have different

opinions in achieving a success in new ventures or enterprises such as talent and skills.

There are several issues about in the world of entrepreneurship. There are several myths

about it, some of them will be tackled in Chapter 2.

The Psychological Theory of Dr. McClelland and Dr. Atkinson

        This theory is accepted on entrepreneurial behavior. The theory states that people

are motivated by three principal needs:

        1. Need for Power - is an urge to control others: to be able to influence them and

make them do things which perhaps they would not have done if left to themselves.

McClelland identified four stages within the power orientation:

1. Drawing inner strength from others - being a loyal follower and serving the power of

other people.

2. Strengthening oneself - trying to dominate situations.

3. Self-assertiveness - trying to manipulate situations so as to use other people to achieve

one‘s own target.

4. Acting as an instrument of higher authority - identifying with some organizations and

employing the methods learnt in stages 2 and 3 but now being able to claim formal

legitimacy.

        2. Need for Affiliation - concerns the desire to be associated with specific people and

groups, to have a greater sense of belonging and place. It can play a role in variety of

human interactions and in the formation of bonds and friendships. A low need of affiliation

can be part of a more independent personality. People who do not feel a strong desire to

affiliate with others may have difficulty finding support.

        3. Need for Achievement - is the urge to excel, to accomplish in relation to a set of

standards, to struggle to achieve success. The individuals with high achievement needs
are highly motivated by competing and challenging work. They look for promotional

opportunities in job. They have a strong urge for feedback on their achievement.

The Difference between Leadership and Management

        Leaders have been characterized as inspiring or charismatic, but one rarely hears of

inspiring or charismatic managers. In the minds of many, management is associated with

words such as efficiency, planning, procedures, control, and consistency. Leadership is

associated with words such as vision, creativity, dynamism, change, nd risk-taking. But

are there real differences between managers and leaders? Between leadership and

management?

        According to A. D‘Souza, here are some distinctions:

1. Managers are concerned with the present. Leaders look to the future.

2. Managers make sure details are taken care of. Leaders set broad purposes and
directions.

3. Managers exercise control to make sure that things work well. Leaders create

commitment that things may work better.

4. Managers solve today‘s problems by addressing difficulties caused by changing events.

Leaders create a better future by seizing opportunities stimulated by changing events.

5. Managers focus on the process. Leaders focus on the product.

6. Managers focus on problem behavior and try to improve it through counseling,

coaching, nurturing. Leaders focus on what is right and praise it.

7. Managers make sure people put in an honest day‘s work for their pay. Leaders inspire
people to do their best.

8. Managers organize and plan to meet this year‘s objective. Leaders create a vision of

the years down the road.

9. Managers create efficient policies and standard operating procedures. Leaders go

beyond the need for standard procedures and create a more efficient system.

10. Managers focus on efficiency. Leaders focus on effectiveness.

         In his Seven Habits of Highly Effective People, Stephen Covey stated:

“Management is bottom-line focus: How can I best accomplish certain things? Leadership

deals with the top line: what are the things I want to accomplish? Management is

efficiency in climbing the ladder of success; Leadership determines whether the ladder is

leaning against the right wall.“

         Most current thinking seems to suggest that all managers should become more
leadership-oriented. Managers should not be required to become more like leaders, nor

should leaders should come to value and emphasize the unique strengths of each other in

order to tap the natural tension between them to produce a “one plus one equals three“

outcome. This requires blending strong management and strong leadership into one

integrated whole where the strengths of leaders combine with, rather than clash with, the

strengths of managers, thereby minimizing the weaknesses of both.

Leadership and Management Skills - A Comparison

         Both leadership and management skills are needed to build a successful

organization. It is also important to realize that the way situations are viewed depends on

whether it‘s from the leadership or the management perspective. The best advice is to

look at situations from both perspectives so that all aspects are understood.

         The comparison that follows is presented by Anthony D‘ Souza, to assist with the

understanding of these two seperate functions. In this way the best possible attributes

from both perspective can be used, and a multiple viewpoint will become the rule rather

than the exception:

1. Leaders gain power through their actions and personal relations. Managers have

positional power on which to rely.

2. Leaders are found throughout an organization. Managers are found in the

organization‘s higher echelons.

3. Leaders have followers who desire to be on the team. Managers have subordinates

who have been assigned to them

4. Leaders depend on people for success. Managers depend on the system for success.

5. Leaders provide vision in terms of “the real benefit to you“. Managers use the “this is
your job.“ approach.

6. Leaders have self-conceived goals to better the organization. Managers attempt to

meet tbe goals provided by the organization.

7. Leaders strive to change the organization to best meet needs as they perceive them.

Managers work to maintain the organization‘s status quo.

8. Leaders often view rules and procedures as bureaucratic red tape. Managers view rules

and procedures as necessary controls to provide order.

9. Leaders work for results. Managers follow directives.

10. Leaders work through their people. Managers work with charts and computer print-out

         Effective leaders build a climate of trust where people can freely express their ideas

and concerns. Such an atmosphere requires sensitive leaders who are secure in their own

knowledge, skills, and relationships rather than feel threatened by differences or

resistance. If used creatively without resentment or suppression, resistance and

differences of viewpoint can become a source of new ideas by forcing re-examination of

objectives, plans, and implementation.

         Effective leaders are not only skilled in the dynamics of planned change and goal-

achievement; they also empower others. Without shared vision there would be no

common direction. Without empowerment of others, there would be no excellence in

performance. Leadership is the simultaneous provision of direction and empowerment.

Themes of Desirable and Acquirable Attitudes and Behaviors

Commitment and Determination

         Entrepreneurial behavior is primarily self-determined behavior, that is, individuals

decide for themselves what courses of action they will follow. Self-determination of its own

accord is insufficient to support a claim that an individual is behaving entrepreneurial. An

individual could act in a self-determined way for any number of behavioral roles and

reasons which can be easily identified through the individual‘s dedication to ask and

conviction to principle

         Determination identified by four essential qualities:

1. The individual acts autonomosly - central to the construct of self-determination is the

notion of autonomy which is defined by Stainton as; ‘the capacity to formulate and pursue

plans and purposes which are self-determined.‘ Thus, the person‘s recognized position or

status within any given context or role determines whether they are able to decide

unilaterally on a course of action.

2. Their behavior - the individual needs the requisite knowledge, skills, and experiences to

implement their decision. Entrepreneurial behavior relies quite heavily on the individual‘s

perception of themselves as being autonomous as well as having the confidence and

competence to behave entrepreneurially.

3. Self-regulated - is include self-management strategies, goal setting and attainment

behaviors, problem-solving behaviors, and observational learning strategies, all of which

the individual needs to be entrepreneurial. Self-regulation furthermore enables the

protection of the entrepreneurial opportunity by controlling the flow of confidential

information to others and timing opportunity exploitation for maximum affect.

4. The individual acts in a self-realizing manner - they use a comprehensive and

reasonably accurate, knowledge of themselves and their strengths and limitations to act in

such manner as to capitalize on their liabilities. It is also influenced by evaluations from

significant others, reinforcement, and their beliefs in themselves regarding their own

behavior.
         Entrepreneurs base their self-determination not only on their values but also on

natural inclinations, interests, and curiosities. Entrepreneurs are thus said to be

intrinsically motivated, that is, they behave as they do because the individual finds these

behaviors inherently interesting, enjoyable or satisfying. Intrinsic motivation is the key

ingredient for self-determined behavior.

Leadership

         Leadership and communication are constantly growing together, being intertwined

into one another to help develop an organization. To be an effective leader,

communication has to be defined in the organization for it to be successful.

         Leadership in Entrepreneurship can be defined as “process of social influence in

which one person can enlist the aid and support of others in the accomplishment of a

common task.“ in “one who undertakes innovations, finance and business acumen in an

effort to transform innovations into economic goods.“ This refers to not only the act of

entrepreneurship as managing or starting a business but how one manages to do so by

these social processes, or leadership skills. Entrepreneurship, in itself, can be defined as

“the process by which individuals, teams, or organizations identify and pursue

entrepreneurial opportunities without being immediately constrained by the resources they

currently control“. This leads us to see that an entrepreneur must have leadership skills or

qualities in order to see potential opportunities and act upon them. An entrepreneur, at the

core, is a decision maker. Such decisions often have an impact on an organization as a

whole, which is representative of their leadership amongst the organization.

        According to Fisher, there are four phases of decision making:

1. Orientation Stage - is where the members involved are becoming aquatinted both with

themselves as well as the problem at hand.

2. Conflict Stage - is where the problem is analyzed with several possibilities presented to
resolve problem.

3. Emergence Stage - decision is made about which solution is to be used.

4. Reinforcement Stage - is the supportive of the decision.

         With the growing global market and increasing technologies throughout all

industries, the core of entrepreneurship, the decision making, has become an ongoing

process rather than isolated incidents. This becomes knowledge management which is

“identifying and harnessing intellectual assets“ for organizations to “build on past

experiences and create new mechanisms for exchanging and creating knowledge“. This

belief draws upon a leaders past experiences that may prove useful. It is a common

mantra for one to learn from their mistakes, so leaders should take advantage of their

benefit.

         In cultural differences, the success and failures of entrepreneurs can be traced to

how leaders adapt to local conditions. With the increasingly global environment, a

successful leader must be able to make these adaptations and have insight into other

cultures. Corporate visions, in response to the environment are becoming transnational in

nature due to the changes an organization must make in order to operate or provide

services or goods for other cultures.

Opportunity Obsession

         One interpretation of entrepreneurial behavior suggests that is characterized by a

‘proactive search for opportunities within a market and the propensity to take risks in order

to achieve a certain goal‘. One of a goals of entrepreneurial behavior is the recognition of

an opportunity, then there is a need for a closer examination of what constitutes

opportunity identification. In order for there to be entrepreneurship there needs to be an

opportunity which is either discovered or created.

         Entrepreneurial opportunities are therefore perceived to be discovered, created or

both. It is what motivates the individual to actively seek out opportunities or to create them

that is under investigation. Entrepreneurial opportunity recognition by one individual differs

from opportunity recognition through collaboration with others for two reasons. First, some

individuals have better access to information about the possibilities of an entrepreneurial

opportunity. Access to key information comes about as a result of a number of factors

such as; job, experience, searching capability, social networks and the individual‘s

absorptive capacity. Second, some individuals are simply better than others at processing

the same information because they have a better equipped cognitive capability. The ability

to process and categorize that information efficiently and effectively relies primarily on an

individual‘s capacity and motivation to think entrepreneurially as well as their self-efficacy.

         Entrepreneurs are obsessed with opportunity. Having an entrepreneurial mindset

would help established businesses to successfully identify and exploit opportunities.

Entrepreneurs look for changes in the political, economical, social, and technological

environment that disrupt the equilibrium in the market place and consequently create new

business opportunities. Similarly, customers‘ dissatisfaction with the ability of existing

products and services to meet their needs indicates an opportunity that begs for

exploitation. A company should look for an opportunity that meshes well with its core

competency. For an entrepreneur, personal expertise is an excellent source for a new

opportunity. While an entrepreneur may have no shortage of “ideas“ and may think

passionately about those ideas, it pays to assess an opportunity before spending the time

and effort to start a business only to see the idea fall flat with target customers.

Tolerance of risk, Ambiguity, and Uncertainty

         Entrepreneurship means risk. The risk of walking away from security and career

path to create something new. The risk of taking yourself and your family into an

unfamiliar storm of stress and uncertainty. The risk that you‘ve miscalculated an

opportunity, or your own internal resources as you plunge into a new venture.
        To seriously consider taking the entrepreneurial leap already sets a person apart

from the vast majority of men and women, who will never come close to actually leaving

the world of wages. But even for the brave-of-heart, the reality of risk that comes with that

leap when the last paycheck is left behind and life is reduced to a single do-or-die mission.

It is the most naked moment in a working life. It can be a powerful energizer. It can also be

overwhelming if you are not, at some level, prepared.

         Here‘s the tips for facing the storm of risk that accompanies launching a new

venture:

1. Assess your tolerance for risk before you dive in - serious entrepreneurship is not blind

adventuring. But even when you‘ve done everything you can to minimize risk, it will stil

show up, alarminly, at some point in your effort. Imagine how you are likely to respond.

You may misjudge, but a tough exercise in self-awareness is good preparation.

2. Brace your home life - the pressures of an new venture are nearly impossible to

compartmentalize. Despite your best efforts, they are almost certain to roll into your home,

your family, your love life. Loved ones deserve a big heads-up, and your

acknowledgement that to no small degree they are being drafted into your dream. Their

support will be critical. Their alienation could cost you more than a new business.

3. Dont take the entrepreneurial leap simply for money - entrepreneurs want to be

successful but follow a real passion in your venture, whatever it may be. That passion will

carry you through the days when risks and obstacles seem insurmountable.

         One important aspect of entrepreneurial behavior is the willingness to take risks.

Many theoritical models have therefore assumed that entrepreneurs are less risk averse

than non-entrepreneurs. However, empirical evidence regarding risk propensity has

produced inconclusive results. One reason for these different results might be that most

studies consider risk propensity as an individual trait that should be stable over time.

         How about ambiguity and uncertainty? Entrepreneurs need vision. If you want to
become a successful entrepreneur, you need to be able to say: “See that hill? That‘s an

important hill. We need to take that hill!“ And you need to say it with enough conviction

that people will join with you. But if you have the instincts of an entrepreneur, what you‘ll

do next is surprising. As soon as your merry band sets off toward the hill, you‘ll say to

yourself: “That‘s probably not the right hill. I bet I‘m wrong. I need to be looking for clues

that we need to change course.“

         The ability to hold this illustration, to commit to charging ahead while looking for

evidence to prove you are wrong, shows a high “tolerance for ambiguity.“ It‘s an

entrepreneur‘s willingness to paint a compelling vision and charge ahead that creates

order out chaos obe step at a time. It‘s a willingness to be open to new information and

make mid-course corrections that mitigates risk. The ability to do both of these at once, in

the face of great uncertainty, is a tolerance for ambiguity that sets an entrepreneur apart

from the rest of the world.

         The best way to develop a tolerance for ambiguity is to make mistakes early,

cheaply, and often. To learn that failure is a blessing, if it helps you grow. To learn that

failure in pursuit of a worthy goal is noble and that questions are more important than

answers.

          In essence, learning to know is important but only if it helps you learn to do and

learn to be. Life is a matter of becoming who you were meant to be by using your gifts to

do somethibg that matters to you and others. That‘s the real hero‘s journey of a principled

entrepreneur.

         Resolve now to seek out small challenges towards a greater vision and to steel

yourself to welcome the small failures that make you stronger. Begin to increase your

personal tolerance for ambiguity, and you‘ll be well on your way to strengthening that

rarest of all entrepreneurial traits.

Creativity, Self-reliance, and Ability to Adapt

         The seed of entrepreneurship is the ability to see things differently. Whether it‘s with

new products or new processes, entrepreneurs are driven by the uncanny knack to see

holes in the marketplace and devise innovations to fill them. Though it‘s not the only

essential quality to success, creativity may be the foundational mental skill. Entrepreneurs

ask the “what ifs“ that drive inquisitiveness, and they‘re able to let go of what they already

know to source fresh information and new ways of thinking about a problem.

         Some business owners however have a hard time adjusting to change and are

reluctant to adapting to new technology or even new internal changes needed for

increased sales and growth.  The world of business is full of surprises and unforeseen

events. Using the habit of adaptability allows business owners to respond to

circumstances with the ability to change course and act without complete information.

   

Motivation to Excel

         What is your motivation? Regain your motivation by understanding the big “why“

behind what you do. To be fully engaged in your life, you must have bigger and bolder

goals. Why do you do what you do? Do you really know? Do the people around you

know?

         Comparison between individuals whose motivation is authentically self-generated

and those who are externally motivated typically reveal that the former, relative, to the

latter, have more interest, excitement, and confidence. Intrinsic motivation flourishes when

circumstances permit. Thus, an individual who identifies an entrepreneurial opportunity will

act on it when they perceive conditions are favorable to its exploitation

         Entrepreneurial behavior is not, however, exclusively intrinsically motivated. There

will be occasions when entrepreneurial behavior will be the result of a combination of both

intrinsic and extrinsic motivation. In other words an individual will engage in

entrepreneurial behavior because they are intrinsically motivated to do so as well as for

the potential extrinsic rewards they stand to gain from doing so.

         Values are consequently antecedent to intrinsic motivation and provide the individual

with a sense of control over how they think and act. Individuals subjected to a more

controlling approach not only lose initiative but operate less effectively, especially when

the work they are doing requires conceptual and creative processing capability. The

individual‘s focus to their best and to be more excelled.

         So can everyone have an entrepreneurial mind? Probably not. But with time and

practice, you can begin to think more like entrepreneurs. You can start to make subtle

shifts in old, reflexive thinking that keeps us from exploring a new idea or taking  the leap

and launching your own business. Entrepreneurial thinking may be less of destination and

more of a journey as you push your own boundaries and explore exactly what you‘re

capable of.