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The Entrepreneurship and Innovation Paradox: 5 Insights to Managing Chaordic Tension

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The Entrepreneurship and Innovation Paradox: 5 Insights to Managing Chaordic Tension

Conducting your own orchestra. Running your own ship. Self-employment. Putting your stamp on the world. Entrepreneurship is a great, noble profession. However, failure rates are well documented. According to the Small Business Administration, about half of all businesses fail within five years. Some statistics show even higher failure rates.

Are entrepreneurial endeavors really that risky? The answer is complicated. Intuitively, yes, entrepreneurship is a risky career path. But on the other side of that equation is the influence of sound business practices, planning, due diligence, and adaptability on business success. I’ve coached literally thousands of entrepreneurs in my twenty years in higher education and the business world, and have owned multiple businesses during that time. Between my research and that experience, I’ve developed some insights into what makes a venture a success or a failure.

Visa’s founder, Dee Hock, coined the phrase chaordic tension to describe the tug of war between order and chaos in organizations. Managing this tension is the key to success in growing and stable organizations—regardless of industry, size, years in business, or profit motive. Here are my five insights on how to manage chaordic tension:

  1. Idea people are more comfortable with risk.

I’m a big believer in the power of assessments. One of the assessment tools we use a great deal is the Basadur Innovation Profile. This instrument measures one’s preferences for engaging the innovation process. The results are presented in a four-quadrant model. People who prefer to use the information to come up with ideas (generators and conceptualizers) are on the right side of the vertical axis. These individuals are comfortable with ideas, ambiguity, and keeping their options open. Not surprisingly, our research indicates generators and conceptualizers are generally not all that scared of entrepreneurial risk and thus report higher intentions to start an entrepreneurial venture.

  1. Evaluative people can execute and sustain ventures.

According to the Basadur Innovation Profile, people who prefer to use the information to judge or evaluate (optimizers and implementers) in the innovation process are on the left side of the vertical axis. These folks tend to frustrate the idea people, but their logic and sense of urgency to perform help entrepreneurs accomplish their dreams. As you can imagine, according to our research, evaluative people are much more hesitant to take risks, and thus report much lower intentions to start a new venture. This is where it gets interesting. We’ve also found that these evaluative types become much more comfortable with new ventures after creativity training and a better understanding of the ideation process. Not surprisingly, they also report higher intentions to start a business, or at least increased comfort with joining an entrepreneurial venture. They tend to like imaginative ideas. The important lesson here is that building cognitively diverse teams—who develop respect for and appreciation of their evaluative/ ideator opposites—is a key to success. The balance maintains company vibrancy while also advancing the business. More on these concepts in insights 4 and 5.

  1. Assumptions and the value propositions must be validated—and developed accordingly.

As with most things in life, a little humility goes a long way, particularly when it comes to entrepreneurial ventures. Former Disney Parks and Resorts executive, Lee Cockerell, often says that feedback is a gift. I happen to think feedback is an especially helpful display of generosity when money is involved. Generators and conceptualizers are generally not overly offended by customer and employee feedback so they can be more nimble in terms of pivoting the offering and value proposition. On the flip side, optimizers and implementers know when to forge ahead with a workable business model and generate all-important revenue and profits.  The yin and the yang of these two distinctly different ways of using information is an important component of failing fast (a lean startup) while also moving the venture in a forward direction.

  1. Quirkiness makes startups special, but transitioning to professionalism grows and sustains businesses.

Entrepreneurial ventures live on the edge. Open office concepts, bikes hanging from the ceiling on makeshift pulleys, and quirky props and toys are pretty much the norm in startups with high-growth potential (especially ones started by generators!). Flywheel in Omaha, Nebraska even has an open beer and wine fridge in its main office. Here’s the thing: Ventures that grow and maintain success will develop some level of professionalism by creating systems and processes that create some order. And it’s optimizers and Implementors who lead the charge when it comes to establishing order and professionalism.

  1. Companies with longevity preserve the entrepreneurial spirit.

Not to be confusing, but having just praised professionalism and order, I’d be remiss if I didn’t close by stressing the importance of preserving the entrepreneurial spirit of growing and stabilized ventures. One of the key ingredients of successful entrepreneurial ventures is the quirky, free-spirited culture they have. They use their personalities as fuel to escape the challenges of the unknown. Losing this is essentially losing one of the company’s most sacred competitive advantages. It’s as if the heart of the organization just stops beating one day.

I recently visited the Flywheel headquarters in Omaha. Since its 2012 inception, the company has grown into a gazelle with more than two hundred employees. It has raised several million dollars in venture capital, and it’s Local by Flywheel platform has reached more than one hundred and fifty thousand downloads. Talking with Dusty Davidson, one of the founders, I discerned that the company is a poster child for mastering that challenging balance between order and chaos, and stifling institutionalization versus free-flowing entrepreneurial spirit.

How does Flywheel do it? It honors both the necessity of systems and processes (order) to build an efficient business model and the sacred importance of quirky personalities and the free flow of ideas. Finally, Flywheel built a balanced team that holds each other accountable for staying true to these two distinctly different but equally important paradigms. Davidson’s message would be that you too can accomplish this—with intentional team-building, humility, adaptability, and a careful dose of professionalism.

Rob Mathews is the Director of the Institute for Entrepreneurship and Free Enterprise at Ball State University, USA. His new book with Michael G. Goldsby is Entrepreneurship the Disney Way. Learn more at www.ELProfile.com.

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