The Promoter Entrepreneur Leadership Style

According to reports, PT Barnum once stated, "I am a showman by profession... and all the gilding shall make nothing else of me'. Unbeknownst to him, this quote is highly relevant to a distinctive leadership approach observed in numerous small businesses, non-profits, and political settings.

In my Entrepreneurial Management class for MBA and other postgraduate students at the University of Wisconsin - Madison School of Business, one of the most well-received subjects revolved around examining leadership styles of Entrepreneurs/Founders in small businesses. During our discussions, we delved into three distinct styles - the Craftsperson, the Administrator, and the Promoter. The leadership style known as the Promoter/Entrepreneur was first recognized by the late Emeritus Professor Alan C. Filley at the Wisconsin School of Business in the 1970s.(discussed in his book The Compleat Manager) and later discussed by such entrepreneurship educators like Professor Howard Stevenson at Harvard Business School.

The Promoter/Entrepreneur is commonly associated with Market/Innovation type organizations, which are known for achieving initial success through distinctive innovations like patented technologies, unique business models, or proprietary processes that offer long-term competitive advantages. Leaders of such firms are usually skilled salespeople, charismatic individuals who can persuade others effectively. Moreover, these Promoters prefer to have all decisions routed through them and often rely on their intuition when making choices.

This blog post discusses the Pros and Cons of being a Promoter-Entrepreneur. Typically, the journey for the entrepreneur and their company doesn't conclude smoothly and often involves significant challenges.

Leadership

In a Market/Innovation organization, a charismatic entrepreneurial leader takes on the leadership role, often seen as a 'hero' in the firm's early stages. This leader typically exhibits a high need for achievement, struggles with authority, and excels at decision-making in uncertain situations. They may blur the line between themselves and the organization, embodying what Filley and Aldag call the 'promoter-style' of leadership. The promoter/entrepreneur's personal influence shapes the flat organizational structure of a Market/Innovation-centered firm. The entrepreneur typically maintains direct contact and influence over all members, acting as the central communication hub and primary decision-maker. This results in a minimal hierarchy where everyone reports to the entrepreneur.

As the organization grows, the promoter works longer hours, including weekends and holidays, leading to procrastination on non-urgent tasks and reduced focus on planning. To manage time better, the promoter hires staff, often referred to as assistants or executive secretaries, to handle tasks as directed without authority or responsibility.

Objectives of the Market/Innovation Centered Firm

The Market/Innovation Firm reflects the personality of the promoter/leader, setting exaggerated goals like becoming rich, owning stock options, reaching billion-dollar status, and driving luxury cars. This enthusiasm creates a unique excitement and motivation among members, particularly in the early stages of development.

Policies and Planning

In Market/Innovation-centered firms, formal mechanisms like policies and procedures are minimal or non-existent. Day-to-day actions are improvised based on leadership whims, with organizational charts and strategic plans often just on paper. The leader's personal contact with employees allows for informal communication. These firms are designed for quick change to leverage innovation, earning high gross margins due to limited competition.

Potential Issues with the Market/Innovation-Centered Firm

As the Market/Innovation firm grows, issues emerge. Its competitive advantage is based on a unique innovation, which poses a risk of extinction if the innovation is copied or becomes obsolete. The firm's unique structure, with the leader at the center of decisions, hinders growth as complexity increases with sales. Fast sales growth and high margins can lead to neglect of cost control measures, resulting in financial losses when competition rises. Operations becoming out of control affects employee morale.

Over time, responsible decision-makers tend to leave due to the founder's control, leaving behind followers who idolize the leader. Morale stays high during success but drops during downtimes. The founder's effectiveness diminishes due to various reasons. The founder transitions from hero to anti-hero, failing to fulfill promises, leading to disenchantment. Management systems are implemented during company struggles, often with external help, causing strain in employee relationships. Charismatic leaders attract followers seeking change but often disappoint them. This common pattern results in morale fluctuations, loss of staff, and attempts to unionize.

Conclusion

Promoters, known for their charismatic and visionary approach, can be found across a wide spectrum of organizations and environments. From the hallowed halls of religious institutions to the bustling corridors of political entities, from the dynamic world of public corporations to the intricate workings of private businesses, Promoters bring their unique leadership style to bear. Their ability to inspire and promote ideas is particularly valuable in driving the growth and success of nascent organizations, where sales and promotion are pivotal in establishing a foothold in the market.

However, the success of Promoters is not guaranteed, as their strengths can sometimes be their downfall. Without a solid and structured administrative framework in place, the enthusiasm and creativity that Promoters bring to the table may lead to chaos and inefficiency within the company. The lack of clear processes and systems can result in missed opportunities, disorganization, and ultimately, unfavorable outcomes for the organization as a whole. Therefore, while the Promoter's visionary leadership is essential, it must be complemented by a strong foundation of organization and structure to ensure sustained success and growth.