Leading Rapid Growth, Crises and Recovery - DhiEcondhiecon.yolasite.com/resources/W12_Leading Rapid...
Transcript of Leading Rapid Growth, Crises and Recovery - DhiEcondhiecon.yolasite.com/resources/W12_Leading Rapid...
Leading Rapid Growth,
Crises and Recovery
Business Entrepreneurship (BUS 301) Faculty of Management and Computing
The Maldives National University
Week 12
Chapter 17
17-2 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
New Organisational Paradigm
• Flat structure.
• Adaptive/flexible.
• Interlocking circles.
• Integrate with customers.
• Learning and influence.
17-3 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Leaders not Managers
• Opportunities focus.
• Allocating resources.
• Encouraging innovation.
• Different set of assumptions.
17-4 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Traditional General Management
• Pyramidal/hierarchical.
• Incremental improvement.
• Risk avoidance/embrace
stability.
• Avoid and punish failure.
• Resource allocation,
budget driven.
• Central command and
control.
• Resource optimisation.
• Cost oriented.
• Linear, sequential.
• Local focus.
• Compensate and reward.
• Manage and control.
• Zero defects/error free.
17-5 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Entrepreneurial Leadership and
Organisation
• Flat, flexible, think/act like
an owner
• Stepwise and disruptive
change
• Fearless, relentless
experimentation
• Specialize in new mistakes
• Opportunity obsessed
• Frontline, customer driven
• Creativity – capital
• Resource frugality and
parsimony
• Systems and nonlinear
• Global perspective
• Create and share the
wealth
• People want to be led, not
managed
• Manage risk, reward and
fit.
17-6 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
17-7 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Core Leadership Modes
• Employees
• Sales
• Doing
• Managing
• Leading team leaders
17-8 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
17-9 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
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Core Leadership Modes
• Opportunity overload:
• Choosing from among an abundance of sales or new market opportunity.
• Abundance of capital:
• Evaluating investors as ‘partners’ and the terms of deals with which they were presented.
• Misalignment of cash burn and collection rates:
• Cash burn rates racing ahead of collections.
17-16 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Core Leadership Modes
• Decision making:
• Executing functional day-to-day and week-to-week decisions, rather than strategising.
• Expanding facilities and space . . . and surprises:
• Coping with surprises, delays, organisational difficulties and system interruptions spawned by space or facility expansion.
17-17 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
17-18 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
External Causes for Failure
• Recession.
• Interest rate changes.
• Changes in government policy.
• Inflation.
• The entry of new competition.
• Industry/product obsolescence.
17-19 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Internal Causes for Failure
• Inattention to strategic issues:
• Misunderstood market niche.
• Mismanaged relationships with suppliers and customers.
• Diversification into an unrelated business area.
• Mousetrap myopia.
• The big project.
• Lack of contingency planning.
17-20 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Internal Causes for Failure
• Leadership issues:
• Lack of management skills, experience and know-how.
• Weak finance function.
• Turnover in key management personnel.
• Big-company influence in accounting.
17-21 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Internal Causes for Failure
• Poor planning, financial/accounting systems, practices, and controls:
• Poor pricing, overextension of credit, and excessive leverage.
• Lack of cash budgets/projections.
• Poor management reporting.
• Lack of standard costing.
• Poorly understood cost behaviour.
17-22 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
17-23 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Non-quantitative Signals of Trouble
• Inability to produce financial statements on time.
• Changes in behaviour of the lead entrepreneur.
• Change in management or advisors, such as directors, accountants or other professional advisors.
• Accountant’s opinion that is qualified and not certified.
17-24 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Non-Quantitative Signals of Trouble
• New competition.
• Launching of a ‘big project’.
• Lower research and development expenditures.
• Special write-offs of assets and/or addition of ‘new’ liabilities.
• Reduction of credit line.
17-25 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Telltale Trends of Organisations in
Trouble
• Ignore outside advice.
• People (including and especially, the entrepreneur) have stopped making decisions and also have stopped answering the phone.
• Nobody in authority has talked to the employees.
• Rumours are flying.
17-26 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Telltale Trends of Organisations in
Trouble
• Inventory is out of balance.
• Accounts receivable aging is increasing.
• Customers are becoming afraid of new commitments.
• A general malaise has settled in while a still high-stressed environment exists (an unusual combination).
17-27 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Turning Around a Troubled Company
• Diagnosis of the problem:
• Strategic analysis.
• Management analysis.
• The numbers.
17-28 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Cash Flow Analysis
• Steps in identifying and quantifying the profitable core of the business:
• Determine available cash.
• Determine where money is going.
• Calculate percent-of-sales ratios for different areas of a business and then analyse trends in costs.
• Reconstruct the business.
• Determine differences.
17-29 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Potential Cuts/Improvements
• Most common areas for potential cuts / improvements:
• Working capital management.
• Payroll.
• Overcapacity and underutilised assets.
17-30 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Potential Cuts/Improvements
• Systems and procedures.
• Asset plays.
• Creative solutions.
17-31 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Organisational Climate
• Six basic dimensions:
• Clarity
• Standards
• Commitment
• Responsibility
• Recognition
• Esprit de corps
17-32 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Common Approaches to Successful
Leadership
• E-Leadership:
• Roles, tasks, responsibilities, accountabilities, and appropriate approvals clearly defined.
• Leadership based on expertise, not authority
• Emphasis placed on performing task-oriented roles.
• Consensus Building:
• Emphasis placed on overall goals.
• Emphasis on participation and listening.
17-33 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Common Approaches to Successful
Leadership
• Communication:
• Information sharing.
• Willingness to alter individual views.
• Encouragement:
• Encouragement of innovation and calculated risk-taking.
17-34 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
Common Approaches to Successful
Leadership
• Trust:
• Do what they say they are going to do.
• Traits include openness, spontaneity, and straightforwardness.
• Development:
• Develop human capital.
17-35 © McGraw-Hill Australia Pty Ltd 2011 PowerPoint slides for New Venture Creation: Entrepreneurship for the 21st Century (A Pacific Rim Focus) by Timmons et al.
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