How an Entrepreneur Can Uild an Adaptive Firm

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Innovation is essential to the success of a firm in today's business environment. "Innovation is the lifeblood of the modern economy" (Bridgman, 2001, p.1). Firms must continue to become more and more adaptive and responsive to today's ever changing business environment if they are going to succeed.

The purpose of this report is to "explain how an entrepreneur can build an adaptive firm that balances entrepreneurial characteristics with managerial style." By researching a number of entrepreneurial texts discussions have been made on how this balance can be best achieved.

This report begins by explaining the great importance of innovation and change, and also the great importance of effective management. The many differences and similarities between entrepreneurs and managers are outlined and discussed. Various ways which change and innovation can be managed successfully while maintaining an adaptive and change responsive firm are then explored. These include the use of Lewin's three phases of planned organisational change, the importance of realising resistance to change and the reasons for resistance, and finally the significance of using flexible leadership styles in different situations. Conclusions are then drawn from these observations and discussions and are followed with a number of recommendations.



The business environment that we operate in today is one of great uncertainty and continuous change. Over the past few decades New Zealand organisations have seen numerous and major advances in such areas as globalisation of business, technology, legislation and probably most importantly the introduction of e-business. To succeed in this ever changing business environment firms must also be adaptive and responsive to change. "Organisations and their managers must continually innovate and adapt to new situations if they are to survive and prosper over the long run" (Shermerhorn, 2001, p.378). This innovation and change must be implemented and maintained well, and this is where effective management is the key.


Entrepreneurs are the people who see new opportunities and act on them. They begin new businesses, enterprises and ventures. Entrepreneurs are essentially risk takers, and may even take risks which do not end in positive results. This is indeed one reason why not all of these ventures and businesses succeed. In fact, the Ministry of Economic Development (2000) states that 60% of all New Zealand's small and medium enterprises fail or stop trading within 4 years of their start-up. Various entrepreneurial texts maintain that another more common reason for this high failure rate is that of mismanagement. "Entrepreneurs see opportunities, have a vision for a business, and set it up; managers put things in place to make the business run smoothly. Entrepreneurship cannot function for long without good management" (Shermerhorn, 2001, p.121). "Enterprise rather than management is the key driver of economies and employment. Management provides the guidance and balance to keep enterprise on track, but it does not generally provide the basic energy on which new ventures and innovative developments are built." (Inkson & Kolb, 2002, p.110) From studying the quoted, and other entrepreneurial theories, it can be concluded that not all entrepreneurs may make good managers.


Inkson & Kolb (2002) believe that the general characteristics and qualities of managers and entrepreneurs are quite different. One such difference outlined is the way in which entrepreneurs and managers conceptualise business. Entrepreneurs are continuously and naturally looking for new business opportunities, while managers tend to focus on the resources they already have. Another difference identified is the difference in personal make-up. Managers are said to have a high need for power and...
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