1. The Institute for Innovation and Entrepreneurship at UTD Leveraging the power of ideas and technology to create new ventures and add economic, social and cultural value to our community Alcatel-Lucent AT&T University Entrepreneurial Leadership: From Entrepreneur to CEO May 20, 2011

2. 2 You’ve Cleared the Hurdles – You’ve Won the Race – What Now? You’ve cleared the eight hurdles – Congratulations!! You’ve cleared the eight hurdles – Congratulations!! But there’s one more challenge ahead: you’ve got to make the transition from entrepreneur to CEO – facing personal challenges along three dimensions. But there’s one more challenge ahead: you’ve got to make the transition from entrepreneur to CEO – facing personal challenges along three dimensions. To meet these challenges, the entrepreneur must simultaneously: To meet these challenges, the entrepreneur must simultaneously: Extend his time horizon (from today and next week, to months and years in the future) Extend his time horizon (from today and next week, to months and years in the future) Change predominate behavior patterns from doing and deciding, to delegating and managing, to leading and inspiring Change predominate behavior patterns from doing and deciding, to delegating and managing, to leading and inspiring Shift his focus from the internal and operational aspects of the company to the external and strategic elements of the broader competitive environment Shift his focus from the internal and operational aspects of the company to the external and strategic elements of the broader competitive environment

3. 3 What is Leadership? The entrepreneur must make a successful transition to the role of CEO – become a leader! The entrepreneur must make a successful transition to the role of CEO – become a leader! What is leadership? What is leadership? The most admired leaders… have strong beliefs about matters of principle… an unwavering commitment to a clear set of values… passionate about their causes. The most admired leaders… have strong beliefs about matters of principle… an unwavering commitment to a clear set of values… passionate about their causes. Leadership is a relationship – between those who aspire to lead and those who choose to follow Leadership is a relationship – between those who aspire to lead and those who choose to follow Leaders mobilize others to… get extraordinary things done in organizations – [they] create a climate in which people turn challenging opportunities into remarkable successes” Leaders mobilize others to… get extraordinary things done in organizations – [they] create a climate in which people turn challenging opportunities into remarkable successes”

4. 4 Leadership as Personal Attributes values, competence, emotional intelligence Leadership as Purpose context, opportunity, vision, direction, change Leadership as Relationship Trust, inspiration, credibility Leadership as Process as Process roles, power, influence, tasks, techniques What is Leadership?

5. 5 The Life Cycle of an Entrepreneurial Firm TIME SALES Period of Transition Strategy, product positioning, marketing, resources, management team, infrastructure, management systems, culture, leadership roles, risk management Startup Product, Initial Customers Sustained and Profitable Growth Expansion, diversification, new product development Maturity The Corner: a critical turning point 3 yrs 5yrs $50M

6. 6 Caitlin & Matthews: Leadership Roles in the Life Cycle of the Firm TIME SALES Initial Growth Direction Setter Drive Sales & Market Share Startup Doer/Decision Maker Markets & Products Rapid Growth Lead the Market Team Builder: Acquire, Integrate & Align Resources Continuous Growth Organizational Builder Strategic Innovator Chief of culture

7. 7 The Challenges of Growth Classic Entrepreneurial Strengths Classic Entrepreneurial Strengths Visionary and pioneering Visionary and pioneering Always searching for new opportunities and challenges Always searching for new opportunities and challenges Passionate and energetic Passionate and energetic Driven to achieve Driven to achieve High standards of excellence High standards of excellence Creative, innovative Creative, innovative Proactive, future-focused Proactive, future-focused Smart, capable, decisive Smart, capable, decisive Sense of urgency Sense of urgency Confident risk-taker Confident risk-taker Problem solver Problem solver Determined to create wealth and make a difference Determined to create wealth and make a difference In order to succeed, the entrepreneur must also learn to: In order to succeed, the entrepreneur must also learn to: Plan, balancing short-term and long- term goals of all constituencies Plan, balancing short-term and long- term goals of all constituencies Communicate to produce alignment Communicate to produce alignment Build a team and facilitate their working as a team Build a team and facilitate their working as a team Resolve conflicts Resolve conflicts Understand that people and culture are your key assets Understand that people and culture are your key assets Learn from every success and failure you have, and from mentors and other successful entrepreneurs Learn from every success and failure you have, and from mentors and other successful entrepreneurs

8. 8 Startup Stage Company Goals Company Goals Understand your personal goals and objectives Understand your personal goals and objectives Figure out product and concept that customers want to buy Figure out product and concept that customers want to buy Identify initial customers and build relationships Identify initial customers and build relationships Develop limited organizational capabilities Develop limited organizational capabilities Leader’s Role Leader’s Role Doer/Decision-maker Doer/Decision-maker Clearly in charge; making all of the Clearly in charge; making all of thedecisions Rest of the organization reports Rest of the organization reports to one leader TIME SALES

9. 9 Key Questions: Is it Right for You? Amar Bhide argues that, for entrepreneurs, setting a direction involves personal as well as business choices. Amar Bhide argues that, for entrepreneurs, setting a direction involves personal as well as business choices. He suggests that entrepreneurs must continually ask themselves what business they want to be in and what capabilities they would like to develop. He suggests that entrepreneurs must continually ask themselves what business they want to be in and what capabilities they would like to develop. Developing a strategy consistent with the entrepreneur’s personal strengths and objectives is critically important. Developing a strategy consistent with the entrepreneur’s personal strengths and objectives is critically important.

10. 10 Setting the Direction: Personal Goals Before they can set goals for a business, entrepreneurs must be explicit about their personal goals: Before they can set goals for a business, entrepreneurs must be explicit about their personal goals: Why do they want to launch their new venture? Why do they want to launch their new venture? Achieve independence? Control my own destiny? Serve others? Achieve independence? Control my own destiny? Serve others? What are your financial objectives? What are your financial objectives? Quick profits? Build a sustainable enterprise to pass on to my children? Quick profits? Build a sustainable enterprise to pass on to my children? What is the end game? Do you have an exit strategy? What is the end game? Do you have an exit strategy? Only when entrepreneurs are clear about what they want from their businesses does it make sense to ask three key questions: Only when entrepreneurs are clear about what they want from their businesses does it make sense to ask three key questions: What kind of enterprise do I need to build? What kind of enterprise do I need to build? What risks and sacrifices does such an enterprise demand? What risks and sacrifices does such an enterprise demand? Can I accept the risks and sacrifices? Can I accept the risks and sacrifices?

11. 11 Initial Growth Stage Company Goals Company Goals Set the direction (articulate a strategy) Set the direction (articulate a strategy) Launch differentiated product (competitive advantage) Launch differentiated product (competitive advantage) Capture market share Capture market share Grow revenues Grow revenues Leader’s Role Leader’s Role Delegator/direction-setter Delegator/direction-setter Monitor progress Monitor progress Ultimate decision-maker for major decisions Ultimate decision-maker for major decisions TIME SALES

12. 12 Initial Growth Stage Key Challenges Key Challenges Articulate and reinforce your vision for the company Articulate and reinforce your vision for the company Understand your personal goals for the long term Understand your personal goals for the long term Use scarce resources creatively Use scarce resources creatively Watch critical performance indicators, especially financial ones. Watch critical performance indicators, especially financial ones. Integrate input from stakeholders with your own perspective Integrate input from stakeholders with your own perspective Hire multitalented people whose values match yours Hire multitalented people whose values match yours Use mentors Use mentors

13. 13 Initial Growth Stage Personal Changes in Leadership Role Personal Changes in Leadership Role Focus, focus, focus Focus, focus, focus Manage proactively, not reactively Manage proactively, not reactively Begin delegating responsibility, establish systems and structure with clearly defined roles, responsibilities Begin delegating responsibility, establish systems and structure with clearly defined roles, responsibilities Stop making all the decisions, solving all the problems, answering all the questions Stop making all the decisions, solving all the problems, answering all the questions Trust others – and hold them accountable for results Trust others – and hold them accountable for results Start planning for the future instead of reacting Start planning for the future instead of reacting Share the credit and limelight with others Share the credit and limelight with others Spend more time working on the big picture Spend more time working on the big picture

14. 14 Rapid Growth Stage Company Goals Company Goals Gain significant market share Gain significant market share Become a market leader and ward off competitors Become a market leader and ward off competitors Build infrastructure and team for aggressive growth Build infrastructure and team for aggressive growth Hire and integrate a lot of new people Hire and integrate a lot of new people Leader’s Role Leader’s Role Team Builder Team Builder Coach Coach Planner Planner Communicator Communicator TIME SALES

15. 15 Rapid Growth Stage Key Challenges Key Challenges Hire people who are smarter than you to fill gaps in functional expertise Hire people who are smarter than you to fill gaps in functional expertise Define new roles/responsibilities – build a management team that works together Define new roles/responsibilities – build a management team that works together Lead team to create a strategic market-focused vision and plan for growth Lead team to create a strategic market-focused vision and plan for growth Create processes to align employees with company’s vision and culture Create processes to align employees with company’s vision and culture Develop a meaningful communication process Develop a meaningful communication process Be a champion for the customer Be a champion for the customer Listen to and consider the views of all constituencies Listen to and consider the views of all constituencies

16. 16 Rapid Growth Stage Personal Changes in Leadership Role Personal Changes in Leadership Role Use the company’s plan to focus and track its efforts Use the company’s plan to focus and track its efforts Shift your focus from doing work to managing and coaching others Shift your focus from doing work to managing and coaching others Stop being the ultimate decision-maker – develop a consensus-oriented decision-making style Stop being the ultimate decision-maker – develop a consensus-oriented decision-making style Learn to facilitate effective teamwork Learn to facilitate effective teamwork Encourage all ideas to be heard in a healthy debate Encourage all ideas to be heard in a healthy debate Stop tolerating organizational misfits Stop tolerating organizational misfits Admit you don’t have all the answers – focus on unleashing the creativity of others Admit you don’t have all the answers – focus on unleashing the creativity of others Be a champion for effective, efficient processes Be a champion for effective, efficient processes

17. 17 Continuous Growth Company Goals Company Goals Dominate the industry Dominate the industry Expand to new markets and grow new niches in current markets Expand to new markets and grow new niches in current markets Move from products to “solutions” Move from products to “solutions” Brand the company and its people as thought leaders Brand the company and its people as thought leaders Leader’s Role Leader’s Role Change catalyst Change catalyst Organization builder Organization builder Strategic innovator Strategic innovator Chief of culture Chief of culture TIME SALES

18. 18 Continuous Growth Key Challenges Key Challenges Recognize the need for fundamental change and proactively lead the discovery and implementation of a strategic plan for dramatic new growth Recognize the need for fundamental change and proactively lead the discovery and implementation of a strategic plan for dramatic new growth Develop the executive team so that each member becomes a company leader; empower the team to run day-to-day operations while you focus only on strategic issues Develop the executive team so that each member becomes a company leader; empower the team to run day-to-day operations while you focus only on strategic issues Find and develop high-level partnerships and relationships to leverage for growth Find and develop high-level partnerships and relationships to leverage for growth Institutionalize the culture and values, and ensure that reward and recognition programs are effectively aligned Institutionalize the culture and values, and ensure that reward and recognition programs are effectively aligned

19. 19 Continuous Growth Stage Personal Changes in Leadership Role Personal Changes in Leadership Role Spend all your time working on the big picture, not on the day-to-day aspects of the business Spend all your time working on the big picture, not on the day-to-day aspects of the business Make strategy and culture your primary focus Make strategy and culture your primary focus Hold the management team accountable for sharing strategic leadership Hold the management team accountable for sharing strategic leadership Constantly refine and redevelop the organization and culture Constantly refine and redevelop the organization and culture

20. 20 Caitlin & Matthews: Leadership Roles in the Life Cycle of the Firm TIME SALES Initial Growth Direction Setter Drive Sales & Market Share Startup Doer/Decision Maker Markets & Products Rapid Growth Lead the Market Team Builder: Acquire, Integrate & Align Resources Continuous Growth Organizational Builder Strategic Innovator Chief of culture

21. 21 Building a Management Team Building a management team is critical to the survival of the enterprise: it requires careful planning, a clear understanding of both organizational and personal objectives, a willingness to accept help and criticism, the confidence to give up control, and an abundance of personal humility. Building a management team is critical to the survival of the enterprise: it requires careful planning, a clear understanding of both organizational and personal objectives, a willingness to accept help and criticism, the confidence to give up control, and an abundance of personal humility. The skills, aptitudes and motivations required to launch a new venture are very different from those required to lead and manage a rapidly growing firm in a competitive market environment The skills, aptitudes and motivations required to launch a new venture are very different from those required to lead and manage a rapidly growing firm in a competitive market environment Making that transition is frequently the toughest challenge for a young entrepreneur! Making that transition is frequently the toughest challenge for a young entrepreneur!

22. 22 Letting Go The development of CEO-level managerial and leadership skills requires experience, mentoring and practice that frequently spans decades of personal growth The development of CEO-level managerial and leadership skills requires experience, mentoring and practice that frequently spans decades of personal growth It is asking a great deal of a young entrepreneur, focused on overcoming technical, marketing and financial challenges to simultaneously acquire the full portfolio of managerial and leadership skills necessary to ensure the success of his venture as the challenges shift from early growth to operational effectiveness, market leadership and a successful exit. It is asking a great deal of a young entrepreneur, focused on overcoming technical, marketing and financial challenges to simultaneously acquire the full portfolio of managerial and leadership skills necessary to ensure the success of his venture as the challenges shift from early growth to operational effectiveness, market leadership and a successful exit. It is frequently essential for the entrepreneur to recognize his limitations and turn over the reins to an experienced manager, in order to ensure the ultimate success of the venture he has nurtured from inception. It is frequently essential for the entrepreneur to recognize his limitations and turn over the reins to an experienced manager, in order to ensure the ultimate success of the venture he has nurtured from inception.

23. 23 References Caitlin & Matthews: 2001. Leading at the Speed of Growth. Hungry Minds, Inc. NY. ISBN 0-7645-5366-6 Caitlin & Matthews: 2001. Leading at the Speed of Growth. Hungry Minds, Inc. NY. ISBN 0-7645-5366-6 Bhide: 1996. The Questions Every Entrepreneur Must Answer. HBR 96603. November-December 1996 Bhide: 1996. The Questions Every Entrepreneur Must Answer. HBR 96603. November-December 1996

24. 24 Contact Information Joseph C. Picken, Ph.D. Executive Director The Institute for Innovation & Entrepreneurship at UTD The University of Texas at Dallas PO Box 830688 SM 43 Richardson, TX 75083-0688 (972) 883-5990 innovation@utdallas.edu http://innovation.utdallas.edu