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Question: Many new ventures are founded by entrepreneurial teams. What are the challenges that entrepreneurial teams face? Drawing on relevant examples, please explain how entrepreneurial teams can be effective.
Entrepreneurship is the core activity of identifying an opportunity and seizing it by laying the foundations of a business venture to capitalize on the opportunity that is to be targeted. An individual embarking on this journey on his own would be tagged as an “Entrepreneurial Individual”. However, due to some complex dynamics of the changing business environment around the world, these like-minded individuals, with different competencies yet similar objectives in regards to the opportunity, may decide to come together and form an “Entrepreneurial Team”. (Kuckertz and Berger, 2017)
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An Entrepreneurial Team is basically two people or more who are interested in the success of a venture and provide a commitment to ensure that success in terms of financials and other aspects as well. All members work individually but still the overall process of the work that needs to be done for the success of the venture is completely interdependent on one another. (Diakanastasi, Karagiannaki and Pramatari, 2018)
We will explore this subject in further detail through the analysis of entrepreneurial teams, the determinants of their efficiency and the challenges they face while operating their venture or building up a team.
II. The Entrepreneurial Team (ET)
The Entrepreneurial Team is a set of motivated individuals, chasing the same goal and trying to achieve it by contributing their core competencies to the company and help the team endeavor. (Greer, 2018)
An entrepreneurial team has to be a mix of individuals with different capabilities, such as in marketing expertise, operations, engineering knowledge, web-designing, and financial prowess. But it isn’t solely about the personal capabilities, the team also has to be comprised of different personalities of the team members that combine and complement well with each other in the team aiming to start an entrepreneurial expedition. (Greer, 2018)
Figure 1: The Entrepreneurial T-E-A-M (Greer, 2018)
The team should have a healthy balance of different individual personalities and expertise, as it will help the team have a well-diversified approach to business decisions (Cooney, 2005). Usually, within a team, there is a lead entrepreneur who envisions the business opportunity and prospect and assembles a team of such like-minded individuals (Timmons (1994) and Ensley et al (2000)).
Figure 2: Process of Enterprise Formation (Cooney, 2005)
The above figure explains systematically, the formation of an enterprise, particularly when a team is being considered. Its occurrence happens at the time of generation of an idea or an event trigger, and then further on it develops and changes as a team is formed to evaluate the idea in greater detail. This process is often subject to redirection and change due to the various external environmental factors that are constantly affecting the business. (Cooney, 2005)
III. Determinants of an Efficient Entrepreneurial Team
It is well known by everyone the revolution Henry Ford introduced in the automotive industry by creating assembly line production and changing the industry, as we know it now. However, this wouldn’t have solely been possible if there wasn’t an efficient likeminded entrepreneurial team backing Henry Fords’ vision. His team formed up of the lead developer – Clarence Avery, Head of assembly- Peter Martins and others as well (Motavalli, 2019). Hence it is not be said that Ford didn’t build his own business at all, he built a large part of it and built a well functional team with members of different capabilities who worked well together and made the company a success, together.
This was a major disruption in an existing industry, moving to today’s time, the concept of ET was well applied by a group of New Yorkers when they made the company “Casper”, a mattress firm. Their main aim was to tackle customer issues such as delivery, purchase, and comfort. The people involved were Philip Krim who sold mail order bedding from his university accommodation with his friend Nitin Parikh, from which the idea of mattresses came about, Luke Sherwin who interned at marketing experts “Saatchi and Saatchi X”, Flateman who had knowledge of web design, Chapin who worked briefly at IDEO the innovation solutions firm. This team of motivated and driven members with one vision led to the foundation of a successful company and due to their impeccable execution, they were able to meet their first annual revenue projection in just a single month. (Motavalli, 2019)
Figure 3: The team behind Casper (Casper.com, 2019)
There are certain things that need to be paid attention to, to create a successful ET.
Figure 4: Composition of the ET (Krieger and Lethbridge, 2017)
An effective ET needs to be free of any clone members, in the sense of their expertise or skill. All partners need to have skills or personalities that complement their fellow team members’ and help create better team dynamics. These differences may at often times create hurdles for the team due to different perspectives but it is imperative to overcome them in order to create a successful venture. (Krieger and Lethbridge, 2017)
There is a need to create a structure of expectations and requirements for each team members’ role. This will help diminish any confusion and act as a motivator for members to perform their respective roles. The harder they wish to work and more risk they are willing to take in the best interest of the company a fair remuneration structure would be rewarding for the team member to push his boundaries for the benefit of the business. (Krieger and Lethbridge, 2017)
The leader entrepreneur especially, along with his team needs to be far-sighted and plan for problems the business may face internally or externally. This would help them deal with issues more constructively and efficiently when they do occur and not disrupt the core environment of the team. (Krieger and Lethbridge, 2017)
IV. Challenges faced by ETs’
As an ET needs to be formed from a diverse set of people with different competencies, this may sometimes result in the lead entrepreneur sometimes choosing people with completely different thinking. This would create a dysfunctional team that doesn’t gel well and this may lead to destructive and affective conflict amongst team members causing delays in decision-making and even break down of communications. (Schjoedt, n.d.)
But this doesn’t necessarily mean that homogeneity and like-mindedness of group members too much, is a good thing for the ET. Members may have similarities in terms of their cognitive thinking and decision-making process or may even be of a similar demographic sect in terms of their homogeneity. This can lead to an ET not develop new ideas and be more accepting of ideas that are similar to their homogenous counterparts, hence cause the problem of “group thinking” (Janis, 1972). Thus will make the organizational one-directional and may cause serious issues down the road causing impairment of ET in dealing with issues and even a possible termination of the entrepreneurial business (Schjoedt, n.d.). Hence, there should be a balance of homogeneity and heterogeneity in the ET, as it is necessary but too much of it can be disastrous for the venture.
The ET members should be clear and aware of their roles, functionalities and responsibilities and the importance of their participation in the success of the team. Each member should be focused and driven to achieve the same vision and accept the opinion of other members in decision-making areas concerning the entire business. If the team doesn’t work as a single unit with each wheel doing its job effectively, then the venture is bound to collapse. Hence it is imperative to have clear communication between the members and have a healthy discussion of opinions rather than having clone decisions.
In summary, as explored, an “entrepreneurial team” must be a well balanced and diversified functional unit, with all capabilities focused towards achieving a common organizational goal. From the various examples discussed it is clear that all the members should have the skills that will help the organization as a whole, positively, and also there is a need to be prepared for any circumstance that may arise in the future. Existence of group thinking and level of homogeneity are key factors in determining whether an entrepreneurial venture would be a success or a failure.
- Casper.com. (2019). Find the Best Casper Mattress – Free Shipping & Returns | Casper®. [online] Available at: https://casper.com/home/?rvcs=1 [Accessed 18 Jul. 2019].
- Cooney, T. (2005). Editorial: What is an Entrepreneurial Team?. International Small Business Journal: Researching Entrepreneurship, 23(3), pp.226-235.
- Diakanastasi, E., Karagiannaki, A. and Pramatari, K. (2018). Entrepreneurial Team Dynamics and New Venture Creation Process: An Exploratory Study Within a Start-Up Incubator. SAGE Open, 8(2), p.215824401878144.
- Greer, C. (2018). The Perfect Entrepreneurial T-E-A-M [Infographic] – Launchopedia. [online] Launchopedia. Available at: https://fundingsage.com/entrepreneurial-team-infographic/ [Accessed 13 Jul. 2019].
- Krieger, É. and Lethbridge, A. (2017). The secret to efficient entrepreneurial teams. [online] Changeboard. Available at: https://www.changeboard.com/article-details/15607/the-secret-to-efficient-entrepreneurial-teams [Accessed 19 Jul. 2019].
- Kuckertz, A. and Berger, E. (2017). Entrepreneurship: Entrepreneurial Individuals and Entrepreneurial Teams. Germany: Yasar University European Union Research Center, pp.112-124.
- Motavalli, J. (2019). 5 Inspiring Companies That Rely on Teamwork to Be Successful. [online] SUCCESS. Available at: https://www.success.com/5-inspiring-companies-that-rely-on-teamwork-to-be-successful/ [Accessed 18 Jul. 2019].
- Schjoedt, L. (n.d.). ENTREPRENEURIAL TEAMS: DEFINITION AND DETERMINANTS. Masters. University of Colorado at Boulder, Leeds School of Business – Management Division.
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