Handbook of Principles of Organizational Behavior - Soltanieh ...

572 J. ROBERT BAUM
rewards. Incentive practices are addressed in Chapter 12 of this volume. In particular,
goal - based pay for performance, including the entrepreneur ’s own compensation, is
important. As the organization develops, the range of goals should be expanded to include
product improvement (pace of innovation and level of product and market experimentation),
product quality, and market penetration. Similarly, the range of goal - based rewards
should be expanded to include recognition and increased non - cash benefits, and regular
team/employee sessions should address employee knowledge about goals and associated
rewards.
Again, wannabe entrepreneurs may gain knowledge about goal setting through relevant
venture and industry experience. Management by objective (MBO) seminars are based in
goal theory, and they offer guidance about the types of goals and rewards that are most
effective. I recommend exposure to these programs and emphasize that specifi c challenging
goals are effective for personal and venture success through all levels of the new venture
and through all stages of new venture creation.
Note that early MBO programs failed because managers set their own goals and were
judged only on goal success, so they set easy goals to be sure of personal success while
their firms often failed. To prevent this, goals below the CEO level must be assigned and/
or stretch (very hard) goals should be encouraged with the proviso that goal failure will not
be punished as long as the manager has made a creative effort to improve. At GE, Jack
Welch set minimum goals which were mandatory and also stretch goals which were meant
to encourage innovation but did not have to be met on a regular basis.
EXCEPTIONS
Swiftness is usually better than slow action because more work is accomplished, more value
is added, and learning opportunities appear in advance of competitor ’ s learning. However,
even high growth entrepreneurs have periods when urgency is not great – when sufficient
time and resources are available for a thorough and comprehensive information search
and analysis, and swiftness is not important. So it may be all right to pause, but realize that
downtime can be used (1) to gain advance learning about how to find the needed explicit
information or (2) to find the best way to conduct the evaluation of new ideas.
CASE EXAMPLES
Lad and Hooker Beer
Brothers Hans and Heinrich Stolzfus experimented with beer making when they were
teenagers. Despite their parents ’ concern and complaints, they secretly brewed small
batches and sold it to friends. Their circle of friends grew, and their passion for beer making
was carried to UCLA in 1996. Hans was admitted to the Liberal Arts program and
Heinrich entered the Business School. The brothers set up a small propane brew pot in
their dorm room and sold ice cold home brew privately to their classmates. Their beer
was good and within one semester their volume had grown beyond their wildest dreams.
At the end of 1998, the brothers were brewing a keg a day and the activity attracted
unwanted institutional attention.