SfXiiVMPY
BEYOND SURVIVAL: RESHAPING

ENTREPRENEURIAL VISION IN

SUCCESSFUL GROWING VENTURES
Steven H. Hanks

L. R. McCarrey
Utah State University

ABSTRACT

This paper addresses the role of vision in the management of organization growth. Effective
growth management requires that founderstexecuti ves envision the firm as a larger entity and

anricipate critical changes which will need to occur. A fiv part strategy for expanding entrep-
reneurial vision in the growing firm is proposed. Elements of that straregy are as follows: (a)
get to know the territory, (b) recognize that change is inevitable, (c) revise your vision in
anticipation of increased size, (d) update your business plan, and (e) share the vision at every
appropriate opportunity.

...the managers of most such (rapid growth) companies are building a company for
the first time. This is about as easy as navigating unchartered waters with an inexperienced
crew while surrounded by a school of sharks. (Ramholtz, 1986)

In building a business venture, entrepreneurs face a number of significant challenges. The

immediate, all encompassing challenge lies in establishing the company as a successful business

venture. Once early success is achieved, a subsequent challenge emerges —the management of
organization growth. Growth brings a new series of problems, requiring different management

skills, priorities and structural configurations (Adizes, 1989; Flamholtz, 1986; Greiner, 1972;

Hambrick & Crozier, 1985; Hanks, 1990; Kazanjian, 1988; Kazanjian gt Drazin, 1991).
Furthermore, new perspectives may be called for by changes in the market place. The

founders'nitial

vision of the firm must change in light of new organizational and environmental

imperatives.

Leading an organization through the growth process is a difficult managerial task. Entre-

preneurial founders, while generally well trained in the technical aspects of their job, often

have limited training and experience in leading organizations and find themselves unprepared

to manage the transition process effectively.

Effective management of organization growth requires new vision on the part of the Eirm's

leadership. Hambrick and Crozier (1985) in their study of rapid growth firms found that the

ability of 'the chief executive to "envision and anticipate" the firm as a larger entity was crucial
to its success. The objective of this paper is to discuss the role of vision in the management
of organization growth. The paper is integrative in nature, drawing ideas from the literatures

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of organization growth, entrepreneurship, leadership and change. The basic premise is that
change-i~rvitabie ig the.-growing firm.

The paper begins with the concept of vision, which is defined, its roots explored, and its
role in the entrepreneurial process discussed. Next, our attention turns to the dynamics of
organization growth and its impact upon the organization and its leadership. Finally, we will
suggest some practical techniques for expanding entrepreneurial visioit in the growing firm.

VISION

The vision construct can be explored through the leadership literature. Kouzes and Posner
(1989) in their study of several hundred leaders identified "inspiring a shared vision" as one
of five critical leadership dimensions. Similarly, Bennis and Nanus (1985) identified "vision"
as one of four key leadership characteristics. Jaffe et al. (1986) noted that "the skill of visioning
underlies each of the key elements of creating inspired performance" (p. 97). Kouzes and
Posner (1989) describe vision this way: "Visions, then are conceptualizations. They are images
in the mind. They are impressions and abstractions.... Just as architects make drawings and
engineers build models, leaders find ways of giving expression to their hopes for the future"
(p. 88).

Vision is important in the leadership formula for two reasons. Firstly, it identifies the
future direction of the organization as a state of being the organization wishes to achieve in
the future. Secondly, vision becomes a rallying point for followers. Bennis and Nanus describe
thi's dimension of vision as follows:

Their visions or intentions are compelling and pull people toward them. Intensity coupled
with commitment is magnetic. And these intense personalities do not have to coerce
people to pay attention; they are so intent on what they are doing that, like a child
completely absorbed with creating a sand castle in a sandbox, they draw others in. (p, 28)

Jaffe et al. (1986) contend that an effective leader is one who has a powerful sense of meaning
and who uses this (o inspire others.

Vision, then, refers to a mental image or picture, which defines the future direction,
position or agenda of the organization and serves as a rallying point for organization members.

Vision and Enlrepreneurship

Vision plays a vital role in the entrepreneurial process. It is the vision of the entrepreneur-
the ability to identify significant needs in the market place and develop a business concept
designed to meet those needs —which leads to the establishment of the organization in the first
place. These are clearly visionary skills.

The genesis of most organizations can be traced to an idea —the business concept or vision.
If the idea shows promise, the founders begin to act upon that vision, marshalling the necessary
resources, developing the product or service and presenting it to the marketplace. Supportive
of this notion, McMullan and Long (1990) identify entrepreneurial vision as the precursor of
organization creation:

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The creative process involves two main developmental phases; first, that of previsualizing
a desired outcome and, second, that of impressing one's creative vision upon a chosen
medium by accessing necessary resources and allocating them to the task. That is, as a
creative actor, an entrepreneur will first attain a holistic vision of the venture to be created
and, second, he or she must mobilize the resources from the environment to transform
and elaborate that vision within the venture medium. (p. 134)

Thus, simply put, entrepreneurship comprises two essential elements, vision and action. Vision
,without action is simply dreaming. Action without vision remains but a shot in the dark. For
true entrepreneurship to occur, both vision and action must be present.

Entrepreneurial vision is often a vital motivator of employee performance. Entrepreneurs
generally lack the resources to provide substantial financial incentives to employees. Instead,
they must inspire exceptional performance by rallying their workers around a compelling vision.
Often extraordinary levels of performance are attained by very ordinary individuals because of
a special challenge or idea. In such cases people frequently expend considerable personal time
and energy to make the entrepreneurial vision a success (Jaffe, 1986).

The Roots of Vision

Where does vision come from? Research on this question has yielded three primary sources
of vision: first, personal experience of the leader; second, learning from others; and third, the
creative process of linking known concepts in new combinations.

One clear source of vision is the personal experience of the leader. Kouzes and Posner
(1988) identify intuition as the "wellspring of vision" (p. 93). Intuition flows from intimate,
hands-on knowledge of the situation, or experience:

The longer we spend in an organization and an industry, and the more varied our experi-
ences, the broader and deeper our understanding is likely to be. Often, when presented
with an unfamiliar problem, we consciously (or unconsciously) draw upon those experi-
ences to help us solve problems. We select relevant information, make relevant compari-
sons and integrate experience with the current situation. For the experienced leader, all
of this may happen in a matter of seconds. But it is the years of direct contact with a
variety of problems and situations that prepare the leader for unique insight. Listening,
reading, smelling, feeling, and tasting the business improve our vision(p. 94)

Often it is not the leader but someone else who is the source of the vision. Kouzes and
Posner asked leaders to identify their "personal best" leadership experience. They found that
in more than half of the cases the idea was initiated by someone else:

Historians tend to write about great leaders as if they possessed great genius, as if they
were capable of creating their visions and sense of destiny out of some mysterious inner
resources. Perhaps some do, but upon closer examination it usually turns out that the
vision did not originate with the leader personally, but rather from others. (p. 95)

Accordittg to Bennis and Nanus (1985), effective leaders tend to be great listeners, learners
and adapters. McMullan and Long (1990) supported this notion, stating, "Entrepreneurs need
to learn their art somewhere, usually from other entrepreneurs" (p. 1341.

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Vesper (1990) in his review of the literature identified several sources of new venture
ideas including prior employment experiences, hobbies,'social encounters, pedestrian observa-
tions, invitations from others, obtaining rights from others and, finally, deliberate search. While
this list is extensive, each source as noted above stems from either the experience base of the
entrepreneur or learning from someone else.

Vision is often the result of a creative process wherein known ideas or processes are
transferred to a new context or applied in a new, unique way (Schumpeter, 1934). A good
example of this is the case of MicroFridge, a start-up venture, whose product consists of a
miniaturized refrigerator-freezer-microwave oven combination, designed for college student
dorms and motel rooms (Mamis, 1991). While the products themselves are not innovative, it
is the combination of these (accommodated in a small space, requiring only one regular wall
plug) which has allowed MicroFridge to create a new niche in the marketplace. In its first full
year of sales MicroFridge earned over $ 1 million in profit on $ 15 million in revenues.

Finally, it must be recognized that the development of vision is often an iterative process.
Timmons (1990), citing the case of Howard Head, who went through 40 different prototypes
in the development of the metal ski, noted that new venture ideas often evolve through a series
of trial and error iterations:

...the new business that simply bursts from a flash of brilliance is rare. What is usually
necessary is a series of trial-and-error iterations, or repetitions, before a crude and prom-
ising product fits with what the customer is really willing to pay for. (p. 34)

ln summary, the roots of vision can be,traced to three primary sources: (a) the experience
base of the entrepreneur or entrepreneurial team, (b) the gleaning of ideas from other people,
and (c) the creative process of applying known ideas in new contexts or settings. Visions often
evolve iteratively and crystalize over time as the entrepreneur or leader begins to test and refine
his or her ideas.

EXPANDING ENTREPRENEURIAL VISION

We have thus far discussed the vision construct, its role in the entrepreneurial process,
and the roots of vision. Just as vision plays a vital role in the entrepreneurial process, it is
equally important in the commencement of organization growth. A guiding but oft-revised
vision can do much to facilitate smooth organization growth. Rockey (1986) in his study of
"visualization" found instances of entrepreneurs envisioning many different aspects of organi-
zation growth, including identifying a product or service, selecting and constructing a facility,
securing capital, selecting personnel, creating a structure for the organization, designing equip-
ment and mechanical procedures, designing operational procedures, designing decor, expanding
the enterprise, and selling the business.

Vision, in the context of the growing firm, has been characterized as follows:

The "anticipation of bigness" is the term that best describes the mentality and actions of
firms which deal effectively with the problems of instant size. Instead of waiting until
the firm is bigger and struggling with its increased size, these firms look ahead to those
problems qpd lay an early foundation for managing a larger enterprize. (Hambrick &
Crozier, 1985, p. 36)

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In an effort to assist founders and executives of growing 'firms, we propose a five part
strategy. Components of the strategy include the following: (a) get to know the territory, (b)
recognize that change is inevitable in the growing firm, (c) revise your vision in light of present
or anticipated changes, (d) update your business plan, and (e) share the vision at every appropriate
opportunity.

Get To Know the Territory

Effective management of organization growth starts with a knowledge of the territory.
The authors have been impressed with the intensity with which would-be entrepreneurs, and
entrepreneurs-in-process acquaint themselves with the entrepreneurship process. Often this
involves a near total immersion in the liturgy of organization creation. Similarly, executives
of fast growing firms must become students (with equal intensity) of organization growth. They
must understand the territory through which they are about to lead their organization.

Certainly the pattern of growth in every firm has unique elements, driven by the personalities
involved as well as other organizational and market dimensions. On the other hand, there are
patterns and challenges which are common to most growing firms at various stages of the
organization lifecycle. Anticipation of these can help the firm to avoid some common stumbling
blocks associated with growth.

Getting to know the territory begins with an understanding of the dynamics of organization
growth. Excellent reviews of the dynamics of organization growth may be found in Adizes
(1989), Bamholtz (1986), and Hanks (1990). Figure I presents the Hanks (1990) Model of
Organization Growth and Decline. This model highlights some of the more significant dynamics
impacting the growth and decline of organizations.

As illustrated in the figure, growth is driven by increasing market/environment acceptance
of the firm's products or services. As an organization experiences increasing market acceptance
(assuming growth is desirable to organization founders), it must scale up to meet increasing
product demand, hiring additional people and increasing production capacity. As the organization
increases in size, it increases in complexity, creating new demands and often rendering existing
organization structures and systems ineffective. Thus, if the firm wishes to continue along the
growth cycle, organization structure and systems must be reconfigured to better fit the company's
current size, complexity and focal problems. A failure to properly reconfigure generally results
in an overload of organization systems, negatively impacting the ability of the firm to effectively
serve the marketplace, ultimately detracting from market acceptance, halting the growth process,
and forcing the organization into a pattern of stagnation or decline.

In the growing firm reconfiguration generally involves increased formalization of organi-
zation processes, greater decentralization of decision making, greater specialization of roles
within the organization, and additional levels of management.

Hanks (1990) argued that each stage of the organization life cycle is represented by a
unique configuration of these dimensions. Growth from start-up to a large diversified organiza-
tion generally involves multiple developmental stages or reconfigurations (Miller & Friesen,
1984).

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Figure 1. Model of rirgoniza/ion grum/h and decline.

Idea

Organization
Formed

Product/
Service

Developed

Overload

Yes No

Reconfig oration Y Reduced
Ability

Growth on iguraf/on
Cycle Increased Market

Complexity
& Size

Yes Yes

Market/Environment
Acceptancey

Proser/ve No No
Renewal

Stagnation
Loop

or Decline
Renews/ Downward

Cycle Sp/ra/
Realignment'2

Yes No

Adaptation
Innovation

Diversification
'Renewal

Reconfiguration Death

Note. From "The Organization Life Cycle: Integrating Content and process" bv S. H.
Hanks, 1990, Journal of Small Business S/ra/egy, J(l), p. 4.

Recognize That Change Is Inevitable

Recognizing the need for change and new vision is often difficult for those leading s»ccessful
new ventures. There are several reasons for this. First, the hectic pace of day to day affairs
leaves little time for thoughtful contemplation. Second, when things are going well, them is
little incerrtive to change (Tushman, Newman & Romanelli, l986). Thus, most organizations
continue operating as they have until they reach some crisis point (i.e. a configuration crisis
or loss of a major account) which provides a wake-up call, signalling the need for immediate
dramatic organization change.

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Change is inevitable in growing ventures and, as illustrated in Figure I (above), two major
types are typically required. The first, reconfiguration, is driven by increasing organization
size and complexity, discussed above. Hambrick and Crozier (1985) argued that these factors
should be incorporated in the leader's vision of the firm:

Only if the larger firm is envisioned can there be any hope of readying the firm for that
state. The process of readying the firm can be substantive —hiring, reorganizations,
opening new facilities. But it is also psychological —mentally and emotionally preparing
everyone for a very different setting. (p. 42)

Thus, size-driven changes are inevitable in the successful growing venture. Wise leaders can
anticipate these changes as the organization grows and incorporate them in their vision of the
future organization.

Other factors driving change, many external to the firm, occur in a less predictable fashion.
Stevenson, Roberts and Grousbeck (1989) identified a number of these unexpected changes
which can impact the successful, growing firm:

One thing is certain —circumstances will change over time, particularly if the venture is
successful. This success will create all sorts of pressures on performance, including
imitative competitors, product substitutions, changing technology, changing customer
preferences, personnel turnover, and changing relationships with both suppliers and
buyers. (p. 23)

Thus, periodically changes occur in the marketplace. Response to these changes generally
involves some kind of realignment —efforts to better position the firm's products or services
in the marketplace. Failure to realign in response to environmental change leads to stagnation
and ultimately decline and organization death. These external changes, at best, can be anticipated
based on subtle cues and trends in the market place. Nevertheless, these too must be monitored
and signift&vnt changes incorporated into the leader's vision.

Longitudinal studies at Columbia (Tushman et al., 1986), and McGill Universities (Miller
& Friesen, 1980) have revealed that organizations seldom change when all is going well. Thus,
it can be expected that most firms will continue with the current mode of operations until they
experience either an organization crisis (system overload) and/or find themselves out of alignment
with the marketplace, placing the organization involuntarily on the renewal cycle (See Figure
1). However, it is also possible that a firm could voluntarily enter the renewal cycle as an
extension of the growth cycle (Proactive Renewal Loop). This is accomplished by proactively
anticipating needed realignments in it products as well as internal configuration, thus averting
stagnation and decline.

Thus, change is inevitable in the growing business venture. Two primary drivers of change
include (a) increased size and complexity which demands periodic reconfiguration of organiza-
tion systems and processes, and (b) environmbntal changes, which demand periodic realignment
of organization products and services. Firms which are able to anticipate and make these changes
continue along the growth cycle. In circumstances where change does not occur, growth is
ultimately derailed, and the organization enters a period of stagnation or decline.

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Revise Your Vision

Once the need for change is recognized, leaders of growth ventures must begin the process
of creating a vision of the firm as a larger entity. As noted earlier in this paper, the roots of
vision can generally be traced to the experience base of the leader or team. For growth firm
executives having significant experience in larger firms (particularly if the present venture is
in the same industry), envisioning their emerging firm as a larger entity may come quite easy.
On the other hand, for executives with little large firm experience, this might represent a
significant challenge. Thus, if the vision of the founder is to be expanded, we must begin by
expanding the experience base of the founder and/or the executive team. This can be ac-
complished internally by broadening the experience base of the founder and/or externally by
hiring individuals with large firm experience.

Expanding vision rbrough benchmarking. One approach for expanding the vision of the
founder or management team is the practice of "benchmarking." While long employed as a
tool for product development and quality improvement, benchmarking can be equally effective
as a tool for expanding the experience base and vision of growth venture executives. Altany
(1991)described benchmarking as follows: 'The essence of benchmarking is really to seek out,
leam, and incorporate new operational approaches by exchanging information with top-perform-
ing non-competitors" (p. 13). Applied to the growing firm, benchmarking involves the identifi-
cation, study, and incorporation of ideas, systems, and processes from larger firms. The process
of benchmarking generally involves three steps; (a) identification of a role model firm, (b)
study of the targeted practice(s) of the role model firm, and (c) bringing the ideas (adapted if
necessary) inside your own firm.

The power of benchmarking as a tool for expanding entrepreneurial vision lies in the
clarity and the richness of the images generated. Real life examples provide powerful role
models for emerging business ventures. One approach involves identification of a "just-like
competitor," a successful firm in their same industry (often a leader in the passing generation
of technology) or a similar industry which exemplifies where the firm would like to be in three
to five years (Multrop, 1990). The model firm's history, growth, development, strategy and
tactics should be carefully studied as a baseline for the benchmarking firm's development.
Benchmarking is easier if the role model firm is not a direct competitor of the benchmarking
firm in that the role model firm is generally more willing to share information and allow site
visits under such circumstances.

A recent article in Inc (Hyatt, 1991)highlights the successes of Manco, Inc, in benchmarking
larger firms. Jack Kahl, the CEO of Manco, identifies the benefits of studying multiple role
models in their benchmarking efforts. Manco studied Walt Disney Co. to learn merchandising
and marketing techniques, they adopted leadership and communication techniques from Wal-
Mart, measurement of innovation from Rubbermaid, and recruitment strategies from PepsiCo.
Says Kahl: "All I know is that if I study excellent companies, I come up with excellent ideas"
(Hyatt, 1991, p. 56), and "I take every opportunity to see a good company" (Hyatt, 1991, p.
57). By studying successful, big companies, Kohl expands his experience base and his vision
as well.

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Hiring a vision. A second vital tool for expanding the experience base (and thus, vision)
of the management team is hiring executives with significant large firm experience. Hambrick
and Crozier (1985) noted the benefits of this approach:

We have found that a substantial proportion of the successful high-growth firms had
brought in one or more senior level executives with big-company ekperience to complement
the owner founder, or that the chief executive had willingly departed or had been replaced
either by an outsider or some other insider who had earlier experience in a major firm.
In conuast, among the firms that stumbled sharply, the founder CEO was almost always
in place at the onset of the stumble... (p. 44)

Thus, two important resources in creating a vision of the firm as a larger entity are benchmarking
the practices of larger firms and hiring executives with larger firm experience.

Update Your Business Plan

The importance of a business plan in the development of a new business venture is well
established. The business plan plays a vital role in crystallizing entrepreneurial vision and in
developing specific plans of action for acting upon that vision. Beyond start-up, Timmons
(1990)noted that the business plan becomes important "as a means of guiding growth" (p. 330).

A business plan can be particularly helpful after start-up... as a means of guiding
growth. One can think of developing a business plan as a flight simulator. The con-
sequences of different strategies and tactics and the human and financial requirements
and the building the venture can be determined and worked through without the risk and
cost of working these out in real time. (p. 330)

Timmons further recognized the need to update the business plan in light of changing cir-
cumstances as the organization evolves:

In any case, creating a business plan is more a process than simply a product, and the
resulting plan is not immutable. By the same token, the business plan for a business is
not "the business." A business plan is analogous to a pilot's cross- country flight plan in
that it defines the most desired, most timely, and least-hazardous route to a given desti-
nation. Yet, innumerable factors, such as unexpected weather and traffic, can significantly
alter the course of the actual flight. Similarly, for new companies, it is common for the
actual course of the business to diverge from that originally developed in a business plan.
(p. 330)

An excellent activity for translating growth vision into reality is updating the business
plan, creating a chart to guide the firm's transition to the next stage of development. The
comprehensive nature of a business plan allows for a thorough testing of your growth vision
before implementation. This allows growth executives to identify places where their vision
remains vague and to develop a well rounded plan for managing growth.

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Share the Vision

The final element of a growth strategy must include plans for sharing the vision. It is
important to realize that the organization's purpose must be constantly clarified. If visionary
leadership is to become a reality, it must permeate all facets of the organization (Jaffe et al.,
1986). All within the organization must share the same vision.

Sharing the vision of the firm is often easy while the firm is small, simple and informal.
In this setting the leader or founder works side-by-side with employees, interacting on an

ongoing basis. However, as more and more people are added to the firm, sharing the vision
becomes a much more complex task, requiring more formalized techniques, and at times,

symbolic events which convey important messages to employees.

Certainly one technique for sharing growth vision is to involve employees in the develop-

ment of the vision in the first place. As the organization becomes more complex and organization
members and stakeholders become more diverse, this sense of shared purpose or vision should
not be imposed upon them by the leadership. Gaffney (1984), citing Peter Senge, has observed

that it needs to emerge through a process of collaboration: "As the process of individual visioning
unfolds among a group committed to a common endeavor, the underlying purpose and vision

of the group begins to emerge.... It is the organization's vision, not the individual's vision,
that matters here" (p. 47).

One technique for creating a shared vision is to involve employees in benchmarking

activities. Let them go, see and share the ideas they have observed. Take a few "folks" along
with you when you go to visit a larger firm..Consider institutionalizing benchmarking in your
organization, encouraging employees at all levels of the organization to be involved in
benchmarking activities for their functional department.

As the firm becomes larger, face-to-face contact between (op executives and employees
becomes less common. Thus, it becomes important to share the vision when such contacts
occur (i.e. management meetings, general employee meetings, interpersonal contacts). Many
chief executives make the error of assuming that a vision need only be communicated once,
when in reality it must become the central topic of conversation in the organization.

As the vision crystallizes, it is important to begin sharing important articles, stories,

pictures, graphs and charts with subordinates. These activities help to keep the focus on various

aspects of the firm you wish to become. Vse displays, videos or any media you can to get your
message across and reinforce that message. Symbolic events and recognition of individuals/units
which undertake activities to move the organization in the right direction are also very important.

Sharing the vision allows employees to catch the dream and become a part of creating the
future organization.

SUMMARY COMMENTS

Vision plays a vital role in both new venture creation and growth. A vision is an image,
a blue-print for organization growth that becomes a rallying point and a target for organization
members. As a firm grows, the founder's original vision must change, and to the degree

10



possible, every effort must be made to envision the firm as a larger entity and anticipate changes

which must inevitably occur. To facilitate expansion of entrepreneurial vision, a five part
prescriptive strategy has been proposed. Its implementation could do much to prepare organi-

zation founders and members for the difficult challenges associated with growing a business

venture.

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