Musings on Entrepreneurship and Innovation
Friday, June 11, 2004The Democratization of Entrepreneurship
The study of entrepreneurship is rife with hero worship. Notwithstanding recent analyses of the interconnected networks and communities of practice that define, for example, Silicon Valley, it seems the popular image of entrepreneurship is of the visionary, persistent, brilliant, driven individual. Although it has become axiomatic among venture capitalists to think in terms of great teams, the scope remains limited to key senior executives. To the extent that these perspectives were ever terribly useful, have they become archaic?
Consider the following:
A quiet anti-authoritarian revolution is gaining momentum in the world of business as it becomes apparent that management that does not respect the dignity of workers is counterproductive in knowledge-based enterprises. Businesses now need creative and self-motivated employees. Command and control may work for an assembly line, but it severely handicaps information-driven enterprises. (Somebodies and Nobodies: Overcoming the Abuse of Rank by Robert W. Fuller)
Big Chief or hierarchical decision making might seem to be more expedient and efficient, and in some cases might be. However, time saved by these types of decision making is often lost to correcting the inevitable mistakes that arise from the narrow range of vision of a single, rank-based decision maker. This is especially the case for complex situations and issues, where the inclusion of many different perspectives is not only helpful, but often necessary, to fully define the problem and identify solutions…Those organizations that value and reward peer-based thinking will be more successful in acquiring and maintaining competitive advantage and so achieve strategic success. (The Myth of Leadership: Creating Leaderless Organizations by Jeffrey S. Nielsen)
A robust information-processing network, therefore, is one that distributes not only the production load but also the burden of information redistribution as evenly as possible…hierarchies, although they make highly efficient distribution networks, are extremely poor at redistribution…In a pure hierarchy operating in an ambiguous environment, the burden of information processing is so unevenly distributed that unless something is done to accommodate it, the hierarchy will fail…organizations designed to operate in truly ambiguous environments must contain “teams” at different scales…A direct consequence of this multiscale connectivity, therefore, is the distinction between a knowledge worker and production worker becomes blurred. (Six Degrees: The Science of a Connected Age by Duncan J. Watts)
While centralized hierarchies are in no danger of going away, new technologies are now making it more feasible—on a scale never before possible—to make more and more business decisions in more decentralized ways, through loose hierarchies, democracies, and markets. (The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life by Thomas W. Malone)
Although we entrust the management of a country of nearly 300 million people to democratic institutions, we find it inconceivable to consider truly democratic management of our businesses. Why? Notwithstanding the challenges of peer-based management, it would seem to offer considerable strategic advantages in a fast-paced, ambiguous environment. If small, flat companies are more entrepreneurial than large, hierarchical corporations, is it not possible that fluid democratic networks of peers can be more entrepreneurial than small companies dominated by "big chief" founders?
