In the sea of criticism of profit-obsessed business school graduates, Jim Poss appears to be an anomaly. In 2003, Poss was watching a trash vehicle on a Boston street. The truck was idling, blocking traffic, and smoke was pouring out of the exhaust. There has to be a better way, Poss thought to himself. He took the problem back to his team at Seahorse Power Co., a company that was identifying innovative approaches to geothermal power plants and offshore wind energy. As his team considered various solutions to the environmental problems of trash vehicles, they began to refocus their attention on how to reduce the need for trash collection. BigBelly Solar, as the company came to be known, began to apply solar technology to the complex problem of trash collection. Specifically, they developed solar-powered trash compactors which hold up to five times as much trash as traditional receptacles. These compactors dramatically decrease the frequency of trash pickup which can cut fuel use and trash-truck emissions by up to 80%. With more than 12,000 components deployed across 30 countries, BigBelly Solar has had a significant impact on wasteful consumption of fossil fuels and has freed up municipalities’ financial and human resources for other activities. In talking about the company, Poss stated, “We are motivated in part because we care about the environment and in part because we know this can be financially successful.”
While many business schools may want their graduates to pursue social, environmental and economic opportunity, few schools are in fact developing leaders who have the skills, knowledge, and passion to do so. The reasons for this shortcoming have been highlighted by both educators and practitioners. On the one hand, this problem is rooted in how we are teaching future leaders to think. As McGill University management professor Henry Mintzberg points out, management education is too analytic and overly reliant on quantitative modeling. Future leaders learn how to plan for and control the future based on past data. Yet, social and economic opportunities are often created in unknowable situations where past approaches are not relevant. To pursue these opportunities, management students need to know how to use creativity, experimentation and action, counter Srikant M. Datar, David A. Garvin and Patrick Cullen in Rethinking the MBA: Business Education at the Crossroads. Beyond how to think, business schools have also been narrowly focused on what they teach students to think about. Too often management education has overemphasized shareholder value creation and underemphasized ethics and social and environmental value creation, according to a New York Times article by Kelley Holland asking, “Is It Time to Retrain B-Schools?” Leaders need to know how to connect to their values and passions if they are to create social and economic opportunities.
Through grounded research across diverse academic disciplines and with more than 1,500 companies, we have concluded that we don’t just need to change our approach to educating leaders, we need to be focused on educating a different type of leader. Entrepreneurial leadership, this new approach, is characterized by individuals who engage a different way of thinking based on a different worldview of business. Entrepreneurial leaders are needed to build startup ventures, to introduce new products and processes in established organizations, to tackle complex social problems in nonprofits, and to create social and political change in our government and NGOs. To explain the three practices that underlie how entrepreneurial leaders think and act differently, we refer back to Jim Poss.
Three practices of entrepreneurial leadership
Relying on self-awareness and social awareness. Entrepreneurial leaders recognize that who they are and the passion, knowledge and skills they bring to a situation will shape the opportunity they create. Futhermore, they recognize that the people and the context also will influence what and how they begin to take action. Returning to Poss, we see how his day-to-day experiences with trash guided his thinking. His interest in the problem grew from his childhood interests and his early realization of the magnitude of the planet’s environmental problems. His passion fueled him to be all-consumed with these problems, even taking pictures of trash on his honeymoon. At the same time, Poss was open to the ideas of others around him. His approach changed direction as he interacted with different experts and assembled his team. He created a team not based on specific skills, but on who had passion and “wanted to help.” His entrepreneurial leadership stemmed from his passion and his awareness and responsiveness to how the opportunity could be shaped by those around him.
Employing cognitive ambidexterity. Entrepreneurial leaders shape new opportunities by switching back and forth between two different approaches to thought and action. On the one hand, they use a traditional “predictive” approach in which they use analysis and action-planning to respond to low-levels of uncertainty. On the other hand, when confronted with unknowable situations, entrepreneurial leaders engage a “creation” approach to take action to generate data so they can begin to act their way towards a new opportunity. One way of thinking can be used to inform and advance the other.
Poss engaged both prediction and creation logic as he moved toward creating BigBelly. Through interaction and experimentation with various stakeholders, Poss used a creation approach to redefine the trash problem from fuel efficiency to trash-collection reduction. He then used prediction logic to gather data on trash fuel consumption and operational efficiency to further refine the emerging solution. By cycling between creation and prediction logic, Poss was able to act his way into a new solution.
Attending to social, environmental and economic value creation opportunity. While cognitive ambidexterity and self and social awareness form the basis for a new way of thinking and acting, this third practice is about a different worldview of business. We use the acronym SEERS (social, environmental, and economic responsibility and sustainability) to define how entrepreneurial leaders look at business differently. Rather than focusing primarily on economic value, entrepreneurial leaders know how to consider the tensions, trade-offs, and potential synergies of building new opportunities that have multiple forms of value creation. Poss worked to develop a solution that would be financially sustainable, have a strong environmental impact, and have a social benefit of freeing up governmental resources for other endeavors. Approaching a problem with this mindset is not easy and entrepreneurial leader must be committed to working through the challenges of multiple forms of value creation.
Educating entrepreneurial leaders
Educators must begin to reorient teaching models toward shaping entrepreneurial leaders. First, we need to move beyond case-based learning to also consider how to teach action and implementation. Educators need to engage simulations, real-life prototyping experiences and action-taking cases. For example, at Babson we have introduced a Product Design and Development Course in which students work with Rhode Island School of Design and Olin College students to experience the process of new product development. They learn how to work across diverse perspectives to co-create new opportunities. Integrated learning opportunities across disciplines are also needed to teach entrepreneurial leaders how to consider social, environmental and economic opportunity. At Babson, we have been working to created integrated learning opportunities across the campus. In a rhetoric course, students write about the social and environmental implications of the business they are involved in during their first year. In a finance or accounting course, students are asked to evaluate and quantify social and environmental endeavors. Academic concentrations in areas such as environmental sustainability or global studies are also integrated as they combine different disciplinary courses on a specific topic. In this way, future entrepreneurial leaders start to develop a more holistic mindset for developing social and economic opportunity. Finally, to develop entrepreneurial leaders, we also need to focus on learning opportunities outside of the classroom. In most education environments, students are involved in a range of co-curricular experiences in which they are doing and learning about leadership. At Babson, we have leveraged these learning opportunities through the introduction of living and learning towers. Whether the focus is on entrepreneurship or green living, students who have a similar passion live and work together to create change at Babson and beyond. By explicitly connecting co-curricular experiences to the curricular learning, students learn to engage the three principles of entrepreneurial leaders.
Entrepreneurial leaders engage a more sophistical understanding of the world that enables them to create social, environmental and economic opportunity. This model of leadership isn’t simple as it demands leaders to develop a different way of thinking and acting based on a different worldview of business. Similarly, it will take significant change in our current educational systems to begin shaping entrepreneurial leaders. However, today’s unknowable world demands nothing less.
Danna Greenberg is associate professor of management at Babson College and holder of the Mandell family term chair. Kate McKone-Sweet is chair of the Technology, Operations and Information Management Division at Babson. H. James Wilson is senior researcher at Babson Executive Education. They are co-authors of The New Entrepreneurial Leader: Developing Leaders Who Shape Social & Economic Opportunity (Berrett-Koehler Publishers 2011).
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