Ent

repr
eneur
shi
pdev
elopmenti
nNi
ger
ia:
probl
emsandpr
ospect

Whati
sent
repr
eneur
shi
p?

Entrepr
eneurshi
pi swi delyunderst
oodast hepr ocessofst art
ingandowni ngabusi ness
thatprovidesgoodsorser vi
cestopeopl einexchangef ormoney .A per sonwhohas
createdandownsabusi nessi sknownasanent repreneur.Butsomepeopl ebel i
eve
entrepr
eneurshi
pi smor et hanjustst
arti
ngabusi ness.Itisami ndset
,awayoft hinking
andact i
ng.Entr
epr eneurshipinthismoder nagei nvolvest hi
nkingofnew way stosol ve
problems and creat ev al
ue.An entrepreneur
ialspi ri
ti s sai
dt o be char act
eri
sed by
i
nnov ati
onandrisk-taki
ng.

Br
iefhi
stor
yofent
repr
eneur
shi
pinNi
ger
ia

Historyv eryof tenhasadi r

ectimpactonwhatt henati
oni sf aci
ng i
nt hepresent.
EntrepreneurshipinNi ger
iatodayisnotwhati tusedtobe.Maj or
it
yofNigeriansusedto
beent repreneurs.Beforethecolonizati
onera,alotofNigerianswer emajorl
yinvol
vedin
tr
ading.I nf act,theweal t
hiestatt hetimewer ethetrader s.Evenbeforemoneywas
generallyaccept edast heledgertender,peopl
eexchangedwhatt heyhadi nsurpl
usfor
whatt heydon’ thav e.Entr
epreneurshi
pwasawayofl i
fef ormostpeopl ethen.Nigeri
a
al
way swasf ullofpeoplewi t
habusi nessmindsetandNigeriansalwayshadahi ghmor al
standardandv aluesystem f
ordoingbusiness.

Duringthecolonialera,themodeofent r
epreneurshipchanged.Thecolonialmast
ers
broughtthei
rgoodsandmadeNi ger
ianstheirmiddlemen.Thencamef ormaleducati
on
andt hecompaniesest abl
ishedbyt hecolonialmast er
s.Alotofy oungNigeri
answere
empl oy
edbyt hesecompani es.AsmanyNi geri
ansbegant oacceptf or
maleducation,
mostpeopl ewerebeingt r
ainedtojointhelabourforceandnott obeentr
epreneur
s.The
entrepr
eneuri
almindsetbegant ofadeaway.

Nowaday s,t
hereisahighneedforentrepreneur
shipinNigeri
aandmanyor gani
sati
ons
andthegov ernmenthavebeenwor ki
ngoni mpr
ov i
ngentrepr
eneurshi
pdevelopmentin
Niger
ia.Howev er
,duetot hesetofchal l
engest heentr
epreneur
shipinNigeriaisnot
fl
ouri
shingasinmanyothercount
ri
es.Let'
shav eacloserl
ookattheseprobl
ems

Maj
orpr
obl
emsofNi
ger
ianent
repr
eneur
s

Ast heneedandcal lforentr

epreneur
shipincreasesdaybyday ,thedevel
opmentof
entr
epreneur
shi
phasbeenst al
ledinthelastfewy ears.Thi
sisbecauseoft heprobl
ems
aff
ecti
ng and l
imit
ing it
s devel
opment.Many Ni geri
an entr
epreneursface a l
otof
chal
lenges.Her
e aret he maj
orones t hathav e been aff
ecti
ng the devel
opmentof
entr
epreneur
shi
pinNigeri
a.

1.Lackofcapi
tal

Ther
ear ethousandsofNigeri
answi thwonderfulideasthatcouldbet urnedintoareal
busi
ness.Howev er
,mostofthem lackthecapi
taltopusht hei
rideasintoreali
ty.Thel
ack
ofcapi
talisthenumberoner easonwhyt hedev elopmentofent r
epreneurshi
phasnot
i
mprovedov ert
hey ear
s.
2.Di
ff
icul
tyi
nsecur
ingl
oansf
rom f
inanci
ali
nst
it
uti
ons

Inthefirstpoint,weestabli
shedthatt hefi
rstproblem mostNi gerianentrepreneursfaceis
thelackofcapi t
al.Mostpeoplet hent r
ytot urnt
obanksandot herf i
nancialinsti
tut
ionto
secureloanst ofundtheirideaorbusi ness.Butget t
ingal oani sv erydif
ficultandmost
ti
mesi mpossi bleforaverageNigerianswhoar el
ookingforfundst ostar
tupabusi nessor
whoal readyhav easmal lbusiness.Ther easonforthisist hatt hebanksandf i
nanci
al
i
nstitut
ionfeelitisahuger i
skl
endi ngmoneyt othem.Financialinsti
tuti
onsar enotsureif
entrepr
eneur swi l
lbeabletopaybackt heloan.

Anothermaj orreasonwhysecuri
ngal oanissodi ff
iculti
sther
equir
ementsneededf or
securi
ngt hi
sl oans.Mostofthefi
nanciali
nsti
tuti
onsdemandhugecol l
ater
alandhi gh-
i
nterestratethatsmal lbusi
nessownersorst art
-upscannotaffor
d.Thi
sdi scour
ages
mostNi geri
anent r
epr
eneursandki
ll
smanypr omisi
ngi deas.

3.Poorst
ateofi
nfr
ast
ruct
urei
nNi
ger
ia

The l ack ofgood infrastructuralf aci

lit
ies i
s anot hermaj orpr oblem af fecting t he
dev elopmentofent r
epreneur shi
pi n Nigeri
a.Thenumberonei ssueofi nfrastructure
affect i
ng entrepr
eneurshipi st he unst able powersuppl ythathas f orced a l otof
busi nessest oclosedown.Mostent repreneurshavet orelyongener at
orst or unt heir
busi nesses.Theyhavet ospendal otofmoneyonf ueltor untheirgenerators.Also,lack
ofgood r oads and transpor tsy stem i n anotheri nf
rastr
ucturalchal l
enge pl agui ng
entrepr eneur
shipinNigeria.Thepoorst ateofi nfr
astr
uctureinNi geri
amakest hecostof
runni ngabusinessorcompanyhi gh.Mostsmal lbusi
nessesandst art
-upscan’ taff
or dit.

4.Unst
abl
est
ateofNi
ger
ianeconomy

Thestateoft heNigerianeconomyi sal soamaj orchal

lengeforentr
epreneursinNiger
ia.
Thest at
eofa count ryand itseconomypl ay
sa signifi
cantimpacton t hel ev
elof
ent
repreneurshi
pinanycount ry.Thesoci o-
economicproblemsandt heunstableeconomy
ofNigeri
ahaski l
ledal otofbusi nessesint helastcoupleyears.Allthesemixedwi t
h
pol
it
icali
nstabil
it
yi snothel
pingbusi nessesatall
.

5.I
nconsi
stentgov
ernmentpol
i
cies

Therei sno conti

nuit
yi nNi
geriangovernmentespecial
l
ywhent hereisachangei n
governance.Unfort
unatel
y,t
here ar
e no good poli
cies thatcould cr
eat
e necessary
conditi
onsforthedevel
opmentofent
repreneur
shipi
nthecount r
y.Thegover
nmentneeds
tocreatepolici
esandanenv i
ronmentthatwillgi
vemor efreedom andpossi
bil
i
tiesfor
entr
epreneurs.

6.Poorknowl
edgeonhowt
orunabusi
ness

Notal
ltheproblemsar efrom thegover
nmentorcapi
talrel
ated.Anotherpr
oblem isthat
mostpeopl
edon’ tknowhowt omanageandgr owabusinessproperl
y.Theydon’tseem to
l
earnorhav
et heresourcestolearnhowtomanageandgrowabusi ness.
7.I
nadequat
epl
anni
ngandpoorexecut
ion

Thisistheresultofthepoorknowledgeonhowt orunabusi ness.Mostpeopledon’tplan

properl
ybeforetheystar
tt hei
rbusi
ness.Theydon’tmaker esearcher
saboutthebusiness,
themar ketfort hebusiness,thecostofpr oduction,etc.Manydonotev enmakea
businesspl
an.So, af
tertheystar
tabusiness,t
heygetst uckandt hebusi
nessfai
ls.Also,a
l
otofpeoplest artof
fthewr ongpat
handev entual
lythebusinessendsupf ai
l
ing.

8.Lackofpat
ienceandgr
eedi
ness

Alotofnewbusi nessowner sandyoungentr

epreneur
sarelookingtomakemoneyquickly
.
Theyar emoremoneyor i
ent
edandnotentrepr
eneurshi
poriented.I
nfact,al
otofpeople
goi nt
obusinessbecauseoft hemoneyandt heywanti tfast.Manypeoplewantquick
moneybutasar esult
,theydon’
thaveenoughpat i
encetogr ow abusi
nessthathasthe
potenti
alofbecomi ngbig.Al
so,duetothedesi
reforqui
ckreturnsandgreedi
ness,
alotof
peopletrytofi
ndeasi ermeansofmaki ngmor emoneyi nbusinessandendsupget t
ing
duped.

9.Hi
ghr
iski
nvol
vedi
nst
art
inganewbusi
ness

Manyareafr
aidoftheri
sksandgiveuptheideatostar
townbusiness.However
,iti
s
i
mport
anttounder
standt
hatabusi
nessandr
iskgohandinhand,
nopain,nogai
n.

10.Lackofent
repr
eneur
ial
mindset

Thi
sistheresultoft
hemental
ityt
hatwasbroughti
nsti
l
ledinusinthelastdecades.This
i
show thecol oni
alerai
nfl
uencedthemindsetofmanyNi ger
ians.Aswehav ealready
menti
oned,
mostpeopl ewer
etaughttobei
nthelabourf
orceandnottobeent r
epreneurs.

Whatar
ethepr
ospect
sofent
repr
eneur
shi
pinNi
ger
ia?

Youhav ereadaboutt hepr obl

emsofent r
epreneurshi
pinNi ger
ia.Howev er,youalsoneed
toknow t hatdespit
eal lchal
lengest herearegr eatprospectsf orentrepreneurshipin
Nigeria.Wi ththe pr esenton- goi
ng economi ct r
ansformati
on pl an by the Ni geri
an
government ,sol
idfoundat i
onsforeconomi cgrowthar ebeingmade.Al so,thegov ernment
i
smaki ngef for
ttocr eateanenv i
ronmentt hatwi l
lallow businessesgr ow profit
ably.
Entrepreneurshi
pdev elopmentcanaf fectthefutur
eofNi geri
ainthef ol
lowingway s:

1.Ent
repr
eneur
shi
pwi
l
lpr
omot
eNi
ger
ia’
seconomi
cdev
elopment

Ther oleentrepreneurshipdevelopmenthast opl ayintheeconomi cdev elopmentof

Nigeri
a cannotbe ov eremphasi
sed.Ev en t
hough t here ar
eal otofbar ri
erslimiting
entr
epreneurshipinNi geri
a,i
tisst i
l
lneededf ort hecountrytodevelop.In2009,r eports
showed t hatsmal land medi um- si
zed enterprises (SME) i
nt he i ndustr
ialsect or
contri
butedaboutt hi
rt
y -
sevenpercent(37%)oftheGr ossDomesti
cPr oduct(GDP)f orthat
year.Itwast hesecondl ar
gestcont ri
butoraftert heoilsect
or.So,ent repreneurship
developmenthasgotal ottooff
erandi mprovetheeconomyofNi ger
ia.
2.Ent
repreneur
shi
pwil
lcreateempl
oymentoppor
tuni
ti
esandhel
ptor
educet
hel
evelof
unemploy
menti nt
hecountr
y

Entrepreneur
shi
pcr eatesnew oppor tuni
ti
esofempl oy mentf ormanyNi geri
ans.More
programmesar ebei ng laid outt o encour
ageand f acil
it
ateSmal land Medium-si
zed
businesses(SME’s)inNi geri
a.Inmostdev el
opedcount ri
es,theexi
stenceofSME’ shas
providedmor ej
obsf ortheircit
izens.Andso,ifentr
epr eneurshi
pconti
nuest odevel
opin
Nigeria,moreSME’swillari
seandi ntur nr
educeunempl oymentinNigeri
a.

3.Dev
elopmentofent
repr
eneur
shi
pwi
l
lal
soi
mpr
ovet
hest
andar
dofl
i
vingofNi
ger
ians

Fi
nall
y,wewouldliketosuggestsomemov
eswebel
i
evewi
l
lfost
erent
repr
eneur
shi
p
devel
opmenti
nNigeri
a:

 Thegovernmentneedst oworkwithotherorgani
sat
iontofosterthecreat
inga
bet
terenv
ironmentforent
repr
eneur
shipandthepri
vat
esectorinNigeri
a.Thi
swil
l
i
ncl
udeimpr ov
ingt
helevelofi
nfr
ast
ruct
urei
nthecountry
.

 Also,formaleducat
ionneedstoberevi
sedt
opr
oducemor
einnov
ati
vemi
ndset
s
ratherthanor
dinar
yjobseeki
ngdummies.

 Al
so,easyaccesstocapit
alshoul
dbeprovi
dedbyt hegov
ernmentandfinanci
al
i
nst
it
uti
ons.The gov er
nmentshould al
so incr
ease t
he fundi
ng of f
inanci
al
i
nst
it
uti
onsthatprov
idel
oanstoSME’sandst
art-
ups.

 Modernt echnol
ogyneeds t
o be i
ncor
por
ated i
nthe count
ryand al
so i
nthe
educat
ionalsyst
em.

 The agri
cul
tur
alsector needs t
o be act
ivelyrevi
tali
sed.It has a l
ot of
ent
repr
eneur
ialpot
ent
ial
sanditi
sembeddedi
nt hecul
tureofNiger
ians.

Nigeri
aissaidtohavethesecondl ar
gesteconomyinAf
ri
ca.Sot
hereisagreatpot
ent
ial
and prospectforentr
epreneurshi
p devel
opmentin Ni
ger
ia.Al
lthatisneeded i
sfor
every
onei nvol
vedtoworkt ogetherinadvanci
ngthecour
seofentrepr
eneur
shi
pinthe
countr
y.

HOW t
obecomeasuccessf
ulEnt
repr
eneur

Tobeasuccessf
ulent
repr
eneur
,onehav
etobui
l
donesel
f,dev
eloponesel
fandchar
act
er.

Al
way
sMakeaPl
an

Beforestar
ti
nganybusi ness,i
tisimper at
iveyouhav eaplan.Fir
stl
y,thi
nkofwhaty ou
wanttoachieve.Thinkaboutyourgoal,theendresul
t,whatdoyouwantt hi
sbusinesst o
become?I sitt o provi
de el
ectr
ic solarpowert or emotevil
l
ages,ort o make f ood
accessi
bletoofficeworkersduri
ngwor khours,ort
oi nt
roduceacl ot
hinglinet hatwil
l
appealtoyoungster
si nt
heuniversi
ty,whateveri
tisy
ouhav ethi
nkofamot ive,andthink
upway
stoachi
evei
t,t
hatshoul
dbet
hef
ramewor
kofy
ourpl
an.

Doamar ketresearchorf easi

bil
it
yst udyofthebusi nessyouwisht ostart,fi
ndhowi tis
done,howmuchi twouldcosty ouandsoon.Wheny ouhaveobt ai
nedal lthenecessary
i
nfor mat
ionyousetadat eandt i
mey ouwisht ost art
,theti
meshoul denabl ey outo
prepareandtof indorsav ecapit
al.Makeat horoughcheckoft heplan,f rom A-Z,don’
t
l
eav eanystoneunt urned,becauset hemor ethoughtoutt hepl
ani s,t
hemor eli
kelyyou
willbeablet
oachi eveyouraimsqui ckerandfaster.

Lear
ntoPer
sev
ere

Noonesai dbeinganent repr

eneurisaneasyj ob,youwi l
lmeetwithsomanyr ejecti
ons,
mayl oseal otofmoney ,andmayl osey ourbusinessorcompanyal t
ogether
.Butt he
i
mpor tantt hi
ngistonev erquit,bei
ngpat ientandper severi
ng.Wheny ourbusinessi s
slowingdownorr egressi
ngy ouareexpect edt okeepy ourcalm,t
herearesomet hi
ngs
thatyouj ustcan’
tcontrol
,soyouhav etoletthem pass.Itmightbehardtoswallowbuti t
keepsy ouaheadbymanymi l
esagai nstt hoset hatwilldo somethi
ngrashi nsuch
situat
ions.

BeCr
eat
ive

Agoodent repr eneuriscr eati

veint hesenset hathis/
herproducthassomet hinguni
que,
somet hi
ngdifferentfrom thecompet i
ti
ontomakepeopl ewantit
.It
’snotlikethereweren’
t
anycomput erswhent hef ounderofI BM decidedtostartsel
li
ngcomput ers,attheti
me
theyweremai nl yusedf orscienti
ficpurposesandot hermundanet asks,buthemar keted
hist obusinessowner st el
li
ngt hem itwi l
lbeusef ulandmor eef f
ici
enti nbusiness
calcul
ati
ons,soher epurposedhi sascalculat
or sandsoldint
housands.

BeDeci
siv
e

Youhavet obever
yswi f
tintaki
ngdeci si
ons,ent
repr
eneur
shipi
slikeawarzone,
asi mpl
e
baddecisi
onmayspel ltheendf oryou.Soy ouhavetobecaref
ulwhenchoosi
ngbetween
opt
ionsandmakei tf ast.Youcannotpr ocr
ast
inat
eorlinger
,thatwi
llberegardedas
i
ndecisi
venessandthatalsowi l
lrui
ny ourbusi
ness.

Thepointiswhenapr obl
em comesup,y
ouareexpectedt
odealwi
thiti
mmediatel
ywith
theri
ght/i
nformeddecisi
on.Thi
ski
ndofshar
pintui
tionwil
lmakeyouav er
ysuccessf
ul
entr
epreneur.

TakeResponsi
bil
i
ty

Whensomethi
nggoeswr ongwhichisboundt ohappensoonerorl
aterdon’
tupset
someoneel
se’
sli
febypoi
nti
ngf
inger
s,justsucki
tupandwr
apitaspar
tofyourl
ear
ning
cur
ve,bl
ami
ngother
swon’
tgety
ouany where.

I
t’syourj
obtot aker esponsi
bil
i
tyofy
ouract
ionsandasanent r
epreneuritmeansallthe
acti
onsofall
theot herstoo.Anyti
met
herei
sasl i
pup,don’
tbeafr
aidtofaceit
,thesooner
youembracet hefactt hatyoumadethatmist
akethebett
erandthesoonery ouwi l
lget
backtoyourfeetandcar ryon.
TakeRi
sks

I
fitwer en’
tfortakingr i
sksonewouldnotbeanent repreneurinthefir
stplace.Somet ook
i
tt osuchextremest hattheyqui
tthei
rjobsjusttoventureintosomethingtheybel i
evein.
Youhav etolovet akingriskst
obeanygoodatent r
epreneurship,i
t’
sfullofobstaclesthat
ordinar
ypeopl ewi llsimplyavoi
dmai nlybecauseoft hehi ghprobabili
tyoff ai
lure,but
rememberwi thgreatr i
skscomesgr eatreward.

Pl
aceVal
uei
nYourPr
oduct

Yourpr
oducthastohav esomethingspecialaboutittomakei tt
oappealtocust
omers.I
t
coul
dbeani mmensequal i
ty,beautyoreffecti
veness.Ify
ouar erender
ingaservi
celi
ke
sayabarbi
ngsalon,gi
vingyourcustomersaf inedetail
edcutthati
soutofthisworl
dwill
al
waysmaket hem wanttocomeback, becausey ouaddedvalueint
otheserv
ice.

ConceptofCr
eat
ivi
tyandI
nnov
ati
on

Creat
ivi
tyisthi
nkingnew thi
ngs,theabili
tytodevel
opnew ideasandtodiscov
ernew way
sof
l
ookingatprobl
emsandoppor tunit
ies.
I
nnov at
ionisdoingnew thi
ngs,theabili
tytoappl
ycreat
ivesolut
ionstot
hosepr obl
ems
andopportuni
ti
esinordertoenhancepeople’
sli
vesortoenr
ichsociet
y

Entr
epr
eneur
ssucceedbyt hinkinganddoingnew thingsoroldthingsi
nnew way
s.
Entr
epr
eneur
shi
pisther esultofapr ocessthatappl
ybothcreat
ivi
tyandi
nnov
ati
onto
capi
tal
i
zeonmarket
placeoppor tuni
ti
es.

Entr
epreneur
saret hosewhomar rythei
rcr
eat
ivei
deaswiththepurposef
ulacti
onand
str
uctur
eofabusiness.Char
acteri
sti
csofagoodent
repr
eneur
-Tenaci
ous,Passi
on,Vi
sion,
Self
-bel
ief
,Fl
exi
bil
i
ty,Rulebr
eaking

Bar
ri
erst
oindi
vi
dual
innov
ati
onandcr
eat
ivi
tyi
ncl
udes:

1.Searchingf ortheone‘ right’

answer
2.Focusingonbei nglogical
3.Bli
ndlyfoll
owi ngt herules
4.Constantlybei ngpractical
5.Viewingplayasf ri
volous
6.Becomi ngov er l
yspecialized
7.Avoidingambi gui t
y
8.Feari
ngl ookingf ooli
sh
9.Feari
ngmi stakesandf ai l
ure
10.Beli
ev i
ngt hat‘I’
m notcr eati
ve’
.

Ty
pesofI
nnov
ati
on

 I
ncrementalI
nnovati
on-Thi
si sthemostcommonfor
m ofinnovat
ion.
 Di
srupt
iveInnovati
on-also knownasst eal
thi
nnovat
ion,inv
olvesappl
yi
ngnew
 technol
ogyorpr ocessest
oyourcompany
'scur
rentmar
ket
.
 Archit
ectur
alInnovati
on.
 Ra di
cali
nnovati
on.

Fourt
ypesofi nnov
ati
on:
 Inv enti
on-descri
bedast hecreati
onofanewpr oduct,
servi
ceorprocess
 E xtension-t
heex pansi
onofapr oduct,
serv
iceorprocess
 Du pl
icati
on -defined asrepli
cati
on ofan alr
eadyexisti
ng product,ser
vice or
pr ocess
 Sy nthesis-t
hecombi nati
onofexisti
ngconcept
sandf act
orsint
oanewf or
mul at
ion

St
age1:
IdeaGener
ati
onandMobi
l
izat
ion

Thegenerati
onstageist hestarti
ngl
inefornewideas.Successf
ulideagenerati
onshould
bef uel
ledbothbyt hepr essuretocompet eandbyt hef r
eedom toexplore.IDEO,the
productdevel
opmentandbr andi
ngcompanybasedi nPaloAl t
o,Cal i
for
nia,i
sagood
exampleofanor ganizati
ont hatencouragessuccessf
ulideagener at
ionbyf indi
nga
balancebet
weenpl ayf
ulnessandneed.

Onceanew i deai sgenerated,itpassesont othemobi li

zat
ionstage,wher ei
nthei dea
tr
avelsto a diff
erentphy sicalorl ogicallocati
on.Since mosti nventor
s aren’
tal so
marketer
s,anew i deaoftenneedssomeoneot herthanitsori
ginatortomov eitalong.
Thisst
agei svi
tal
lyimport
antt othepr ogressi
onofanewi dea,andskippingitcandel
ayor
evensabotagetheinnovat
ionpr ocess.

St
age2:
Adv
ocacyandScr
eeni
ng

Thisst ageist heti

mef orweighinganidea’spr osandcons.Adv ocacyandscr eeninghav e
tot akepl aceatt hesamet i
met oweedouti deasthatl ackpot enti
alwi t
houtal l
owi ng
stakehol der
st orejectideasimpul si
vel
ysol elyont hebasi soft heirnov el
ty.Theaut hors
foundt hatcompani eshadmor esuccesswhent heevaluat i
onpr ocesswast ransparent
andst andar di
zed,becauseempl oyeesfeltmorecomf ortablecont r
ibuti
ngwhent heycoul d
antici
pat ehowt heirideaswoul dbej udged.Forexampl e,onesof twareengi neerfrom an
i
nf ormat i
ont echnologyor ganizat
ionsai d,“Oneoft het hingsIhav est r
uggledwi thi s
evaluationsofmyi deas.Someofmyi deaslightupf i
resar oundher e,whileothersar e
squashed.

St
age3:
Exper
iment
ati
on

Theexper i
mentationst
aget eststhesustainabil
it
yofi deasforapar t
icularorganizationat
apar ti
cularti
me— and i n apar t
icul
arenv i
ronment .Att hi
sst age,i t
’si mpor t
antt o
determinewhot hecustomerwi l
lbeandwhatheorshewi l
lusethei nnov ati
onf or.With
thatinmi nd,t
hecompanymi ghtdiscoverthatalthoughsomeonehasagr eatidea,itis
aheadofi tsti
meorj ustnotr ightforapar t
icul
armar ket
.Howev er,it
’simpor tantnott o
i
nterpretthesekindsofdiscov eri
esasf ai
lures— t heycouldactuall
ybet hecat alystsof
new andbet terideas.Washi ngtonMut ualInc.’
srecenti nt
eriorredesignprovidesagood
exampl eofhowsuccessf ulexperimentati
onwor ks.Insteadofappl yi
nganewdesi gnt oall
i
tsbr anches,thebanki ngandi nsurancecompany ,headquarteredinSeattle,Washi ngton,
i
mpl ement edthedesi gni njustacoupl eofl ocationst oseehow i twouldber eceived.
Subsequent l
y,whencust omer sr espondedfavourably,thebankt ooki tsi
nnov at
iont ot he
nextl evel
,applyi
ngt henew desi gntosev eralotherbr anches.Thi sway,t hecompany
didn’
tl osemoneyandt imebyappl yi
nganewi deaal latoncewi thoutknowingi fitwoul d
succeed.

St
age4:
Commer
cial
i
zat
ion

Inthecommer ciali
zationst age,theorganizationshoul dlookt oitscustomerst over i
fythat
theinnovationact uall
ysol vest heirproblemsandt henshoul danal yzet hecost sand
benefi
tsofr ollingoutt heinnov ati
on.Theaut hor smakesur et onot ethat“aninv enti
oni s
only consider ed an i nnovation [once]ithas been commer ci
ali
zed.”Ther efore,t he
commer ciali
zat ionst agei sani mpor t
antone,si mil
artoadv ocacyi nthatittakest heri
ght
peopletopr ogr esst hei deat othenextdev elopment alstage.Forexampl e,onechi ef
executi
veof ficersai d,“ Wel earnedasi mplet hing:Resear chersandi deacr eatorsdonot
appreci
atet henuancesofmar ket
ingandcommer ciali
zati
on.I nthepast,wet ri
edt oget
theresearcher si nvolvedint hecommer ci
alizationaspect soft hebusiness.Theendr esult
waspai nandmor epain.”

St
age5:
Dif
fusi
onandI
mpl
ement
ati
on

Thedi ff
usionandi mpl ement ati
onst agesar e,accor
dingtotheaut hors,“twosidesoft he
samecoi n.
”Di f
fusioni sthepr ocessofgai ningfi
nal,company wideaccept anceofan
i
nnov ati
on,andi mplement ationist hepr ocessofset t
ingupt hestructures,maintenance
and resourcesneeded t o pr oducei t.A good exampl eofa successf ulapproach to
dif
fusion comes f rom I nternati
onalBusi ness Machines Cor p.,whi ch involves i
ts
employ eesearlyint heidea-gener at
ionst ageandconduct sso-call
edi nnovati
onj ams,to
which t heyinvi
te notonl yempl oyees butal so cl
ient
s,business par tners and even
employ ees’famil
ies.IBM aidsl aterdiffusionbygivi
ngev ery
oneast akei ntheideaf r
om
thebegi nni
ng.

Meani
ngofBusi
nessEnv
ironment

Defi
nit
ion-“Thesum totalofal
lindiv
idual
s,i
nsti
tuti
onsandotherfor
cest
hatareout
side
thecontrolofabusinessenter
pr i
sebutt hebusinesssti
l
ldependsuponthem asthey
aff
ecttheoveral
lper
formanceandsust ai
nabi
li
tyofthebusi
ness.
”

Thef orceswhichconst it
utet hebusi nessenv i
ronmentarei t
ssuppli
ers,compet i
tors,
consumer gr oups, medi a, government , cust
omers, economic condit
ions, market
condit
ions,investors,technologies,trends,and mul t
ipl
e otherinsti
tut
ions working
ext
ernallyofabusi nessconstitut
ei t
sbusi nessenvi
ronment.Thesefor
cesi nf
luencethe
busi
nessev
ent
hought
heyar
eout
sidet
hebusi
nessboundar
ies.

Si
mpl
yput
,themai
nfocusf
oraBusi
nessmani
s:

 Administr
ati
onofbusiness
 Sear
chf ortrut
h,Short
-ter
m
 Logi
cal,Li
near,Uti
li
ty,
Increment
al
 Feat
ures
 Fact
s,Verbal,Measure
 Mini
mal Risks,Pr
edict
able
 Small
erRewar ds
 Prof
it

Whi
l
e,ont
hecont
rar
y,t
hemai
nfocusf
oranEnt
repr
eneuri
s:

 I
nv enti
onofbusi ness
 Searchf orwhati sinterest
ing,i
ntuit
ive,l
ong-
ter
m
 Holist
ic,Signifi
cance, Meaning,Leapf or
ward
 Benefits
 Emot i
on, VisualThinking
 Risk,Uncer t
ainty,
 Potentiall
yHi ghRewar ds
 Value

Di
ff
erencesbet
weenaBusi
nessmanandEnt
repr
eneur

Areyouabusi nessmanoranent r
epreneur?Hav eyouev erwonderedwhatthedif
ference
betweent hetwoi s?Businesspeopl eandent r
epreneurshavemanysi mil
ari
ti
es.They
provi
dejobsfortheunempl oyed,gi
vesolutionstotheconsumer s,andhelpi
ndeveloping
theeconomyofacer tai
nnation.Howev er,theyarenott hesameki ndofpeople.The
fol
lowingare10differ
encesbetweenabusi nessmanandanent r
epreneur
:

1.or
igi
nal
i
tyofi
dea

Abusi nessmancanmakeabusi nessoutofanunor i

ginalbusinessorpr
oducti
dea.He
enter
si ntoexi
sti
ngbusi
nesses,suchasfranchisi
ngandr et
ail
ing.Hechoosesahotand
profi
tablebusi
nessidearegar
dlessofwhet heritishi
sor i
ginalideaorborr
owedfrom
someoneel se.

Anent
repreneuri
saninvent
orandthefi
rstcreat
orofaproduct
.Hei nvestst
ime,energy
andmoneyonhi sownidea.Hedoesn’
tstar
tabusinessf
rom anunor i
ginali
dea.Thatis
whyhestart
sonastar
tupwhileabusi
nessmanstart
sonabusiness.

2.pur
poseofdoi
ng
Mostbusi nessmenar edoi ngbusi nessf orpr ofit
,li
veli
hood,forreachingtheirfi
nancial
goals,
andf orbecomingthei rownboss.Though, therearesomebusinesspeopl e,whoare
notprofi
t-or
ientedbutpeople-orient
ed,thati s,theyaremor econcernedont hewel f
areof
thei
rwor ker
sandt hesatisfacti
onoft heircustomer s.Entr
epreneur
sar emor econcerned
onchangi ngthewor l
d.Theywantt opur suet heirpassi
onandachi eveanul ti
mat egoal.
Theyarenotkeenonf inancialreturns;rathertheyar efocusedonwhatt heycanof f
erto
theworld.Theirpur
posef orentrepreneurshipissi mplytomakeadi ff
erenceinthisworld.

3.degr
eeofr
iskst
aken

Businessmentakecal culatedandmanagedr i
sks.Theycannotaf fordt olosemoneyand
suff
erf r
om bankruptcy.Thatiswhyt heyalwaysdot heMat hwheni tcomest obusi
ness.
Entr
epreneursarelikeskydi vers.Theytakecr azyrisks.Theyoftendon’tcar eoflosing
ti
meandmoneyj usttopur suetheirpassi
on.Butsincet heydoitwi
t hlove,
joyandpassi on,
theyoftengainextraordinaryrewards.Entr
epreneurs,sincetheydot hethingstheylove
themost ,t
heydoitwi t
hthebestoft hemselves,resul
tingtogreat
ersuccess.

4.howhet
reat
sempl
oyees

Abusi
nessowneri sanemployerandamanager.Hehir
esempl oy
eesandwor ker
stohel
p
hi
sbusinessgrow.Anentrepr
eneurisafri
endandal eader
.Hef indspeer
sandpeople,
whom hewil
lnevertr
eatasmachines.Hei
nvi
testhem t
ohelpthem grow.

5.howhet
reat
scust
omer
s

Abusinessownerusuall
yseescustomersashissour
ceofsalesandrev
enues.Forhi
m,
cust
omer sar
et heli
febloodofhisbusiness.Anent
repr
eneurseescustomersashis
sour
ceofdutyandful
fil
ment.Forhi
m,customersar
ehi
sownl i
febl
ood.

6.howheseest
hecompet
it
ion

Abusinessownertri
eshar dtobeathiscompeti
tor
sandwinthecompet
it
ion.Healso
consi
derscooper
ati
onratherthancompet
it
iontoachiev
ecer
tai
ngoal
s.Anentr
epr
eneur
tr
ieshar
dtobeathisworstcompeti
tor–hi
mself
.

7.whathet
hinksofmoney

Losingmoneyi soneoft hebiggestwor r

iesofbusinessmen.Mostbusi nessownersr el
y
onagoodeconomyt ostart
,operateandat t
ainsuccessinbusi
ness,especial
l
yintheretai
l,
franchi
singandfi
nanci
ngi ndustry.Entr
epreneursdonotwor ryalotaboutmoneysi nce
theycanalwaysstar
tfr
om ascr atch.Someent repr
eneursdon’
treal
l
ycar eaboutmoneyat
all.

8.howhedeal
swi
tht
ime
Abusinessmandoesn’
twastetime.Healwayscheckst heclockanddoesn’twantany
workorout putt
obedelayedoutofschedule.Hei sfastandal way
sont hego.An
ent
repreneurwor
ksli
keanarti
storascient
istinal ab.Hisproducti
shismast er
piece.
Thatiswhyhecanbeslowandcouldspendal ongerperi
odoft i
met ofi
nishandperfect
hi
sproduct.

9.howheseest
hewor
ld

Abusinessmanseestheworl
dasanopportunit
y.Heseesitasanoppor
tunit
ytomakea
l
i
ving.Healsoseesitasanoppor
tuni
tyhel
pthepeopleli
vi
ngonit.Anentr
epreneursees
t
hewor l
dasadutyrathert
hananopport
uni
ty.

10.howhedef
inessuccess

Abusi nessmandef i
nessuccessast hesuccessofhi sbusi
nessandi t
sstakeholders.Its
stakeholdersincludehimself,co-owners,employees,cust
omer s,inv
estor
s,andev enhi s
communi ty
.Anent repr
eneurdoesn’ tdefinesuccess.Hesi mpl ydoeshi sjobandl et
hi
storydef i
nes the success thathe accompl ished.Remembert hatthisl i
stis onl y
accordingt omyownopi ni
on,andIdon’ tmeant oputoneoft hem ontopoft heot her.
Bothbusi nessmenandent r
epreneursaresupposedt obethekindofpeoplethatourwor ld
needs.A busi nessman needs an ent r
epreneur.An entrepreneurmay al so need a
businessman.

Sol
epr
opr
iet
orshi
p,par
tner
shi
p,cor
por
ati
onor
 co-
oper
ati
ve?

Whenyoudecidetost
artyourownbusi
ness,
youneedt odeter
minewhattypeofbusiness
st
ruct
ure bestsui
tsyourneeds.There ar
ef ourtypes ofbusiness st
ruct
ures:sole
pr
opri
etor
ship,
part
ner
ship,cor
por
ati
onandco-oper
ati
ve.

 Solepr opri
etorshi
p
 Partnership
 Corporat i
on
 Provincialorterr
it
ori
al 
i
ncor
por
ati
on
 Co-oper at
ive

Sol
epr
opr
iet
orshi
p

Wi t
ht hi
stypeofbusi nessorganizat
ion,youarethesoleowner ,andf ul
lyresponsi
blef
or
alldebtsandobl i
gati
onsr el
atedt oyourbusi
ness.Allprofi
tsarey ourstokeep.Because
youar epersonall
yli
able,acredi
torcanmakeacl aim againsty
ourper sonalassetsaswell
asy ourbusinessassetsinordertosati
sfyanydebts.

Adv
ant
ages:
  Easyandi nexpensivet oregister
 Regulat
orybur denisgener all
yli
ght
 Youhav edirectcontrol ofdecisi
onmaki ng
 Minimalwor ki
ngcapi tal r
equiredforstar
t-
up
 Somet axadv ant
agesi fy ourbusinessisnotdoi
ngwell(
forexample,deduct
ing
yourlossesf rom yourper sonalincome,andalowert
axbracketwhenprofi
tsare
l
ow)
 Allpr
ofit
sgot oyoudi rectl
y

Di
sadv
ant
ages:

 Unli
mi t
edliabi l
it
y(ifyouhav ebusi nessdebts,cl
aimscanbemadeagai nstyour
personalasset stopayt hem of f)
 I
ncomei staxableaty ourper sonalrateand,
ifyourbusi
nessi
spr
ofi
tabl
e,t
hiscould
putyouinahi ghert
axbr acket
 Lackofcont inuit
yfory ourbusi nessifyouar
eunav ai
l
able
 Canbedi ff
iculttoraisecapi t
al onyourown

Par
tner
shi
p

Apartnershipisanon-incorporat
edbusi
nessthatiscr
eatedbetweent woormorepeople.
I
napar t
nershi
p,yourf inanci
alresour
cesar ecombinedwi ththoseofy ourbusi
ness
part
ner(s),andputi nt
ot hebusiness.Youandy ourpartner
(s)wouldthenshareinthe
prof
it
soft hebusinessaccor di
ngtoanylegal
agreementyouhav edrawnup.

Inagener alpartnership,eachpar tnerisjoi

ntl
yli
ableforthedebt soft hepar tner
ship.Ina
l
imitedpar t
nership,aper soncancont ribut
etothebusi nesswi t
houtbei ngi nvol
vedi nit
s
operati
ons.A l i
mi ted li
abi l
ity partnershi
pi s usuall
y only avai l
ablet o a gr oup of
professi
onals,suchasl awy ers,account ant
sordoctors.Whenest abl
ishi
ngapar t
nership,
you should hav e a par tnership agreementi n place.Thi sisi mportantbecause i t
establi
shest hetermsoft hepar tnershipandcanhelpy ouav oiddisputeslateron.Hi r
inga
l
awy erorot herlegalpr of
essi onalt ohelpyoudrawupapar tner
shi pagreementwi l
lsave
yout i
meandpr otectyouri nterests.

Adv
ant
ages:

 Fair
lyeasyandi nexpensiv
etof orm apartnership
 Star
t-upcost saresharedequall
ywi thyouandy ourpart
ner(s)
 Equal shareinthemanagement ,profit
sandasset s
 Taxadv antage— ifi
ncomef rom t hepartnershipislow orlosesmoney(youand
yourpar tner(
s)i
ncl
udey oursharesoft hepartnershipi
ny ouri
ndiv
idual
taxr
etur
ns)

Di
sadv
ant
ages:

 Ther
eisnol
egal
dif
fer
encebet
weeny
ouandy
ourbusi
ness
  Unli
mi t
edliabi
li
ty(i
fyouhav ebusinessdebts,per
sonalassetscanbeusedt opay
offthedebt)
 Canbedi ff
icul
ttofi
ndasui tabl
epartner
 Possibledevel
opmentofconf li
ctbetweenyouandy ourpar
tner
(s)
 Youar eheldfi
nancial
l
yr esponsi
bleforbusi
nessdecisi
onsmadebyy ourpar
tner
(s)
;
forexample,contr
actsthatarebroken

 Legali
ssuesf orsmall
business
Doy oureal
lyneedalawy erwhenyoust
arty
oursmal
lbusi
ness?Fi
ndouthowl
egal
counselcouldbenef
ityourbusi
ness.

Cor
por
ati
on

Anothert ypeofbusi nessstruct

ureis acorporat
ion.Incorporati
oncanbedoneatt he
federalorprov i
nci
al/
terr
it
ori
allev
el.Wheny ouincorpor
atey ourbusi ness,i
tisconsi
der
ed
to be a legalent i
tythatis separatefr
om i t
s shareholders.As a shar eholderofa
corporati
on,y ouwillnotbeper sonall
yli
ablef orthedebt s,obligati
onsoract softhe
corporati
on.Itisal
way swisetoseeklegal
adv i
cebeforeincorporating.

Adv
ant
ages:

 Li
mitedl i
abil
it
y
 Owner shi
pistransferable
 Conti
nuousexi stence
 Separatelegalenti
ty
 Easi
ert orai
secapi t
al t
hanitmightbewi
thotherbusi
nessstr
uctur
es
 Possi
bl etaxadvantageast axesmaybelowerforanincor
por
atedbusi
ness

Di
sadv
ant
ages:

 Acor porati
oni sclosel
yregulated
 Mor eexpensiv etosetupacor porati
ont hanotherbusi
nessforms
 Extensivecor poraterecor
dsr equir
ed,includi
ngdocument ati
onfil
edannual
l
ywi
th
thegov ernment
 Possibleconflictbetweenshareholdersanddirector
s
 Youmayber equiredtoproveresidencyorciti
zenshi
pofdirector
s

Co-
oper
ati
ve

Aco-oper
ativ
eisownedandcont rol
ledbyanassociat
ionofmembers.Itcanbesetupas
afor-
prof
itorasanot-f
or-
profi
torgani
zat
ion.Thisi
stheleastcommonf orm ofbusiness,
butcanbeappropri
ateinsi
tuati
onswhereagr oupofindi
vidual
sorbusinessesdecideto
poolthei
rresour
cesandpr ovi
deaccesst o commonneeds,suchast hedeliveryof
pr
oduct
sorser
vices,
thesal
eofpr
oduct
sorser
vices,
empl
oyment
,andmor
e.

Adv
ant
ages:

 Ownedandcontrol
l
edbyit
smembers
 Democr
ati
ccontrol(
onemember
,onevot
e)
 Li
mit
edli
abil
it
y
 Pr
ofi
tdi
str
ibuti
on

Di
sadv
ant
ages:

 Longerdeci si
on-makingprocess
 Parti
cipati
onofal lmember sisrequir
edinor
dert
osucceed
 Possibleconfli
ctbetweenmember s
 Extensiverecordkeeping
 Lessincentivetoinvestaddit
ionalcapit
al

Regi
ster
ingy
ourbusi
ness

 Register
ingy
ourbusi
ness
Learnaboutther
equi
rement
sforr
egi
ster
ingy
ourbusi
nesswi
thdi
ff
erentl
evel
sof
government.

Changi
ngy
ourl
egal
stat
us

Areyoupl anni
ngtochanget helegalstat
usofyourbusi
ness— forexample,fr
om sole
propr
iet
orshiptopart
nershi
p,orfrom part
ner
shi
ptocorporat
ion?I
nmostcasesy ouwill
havetocloseyourexi
sti
ngbusinessnumber(BN)andCRAaccounts,andregi
sterfornew
ones.
Gr
oupDy
nami
cs:
it’
schar
act
eri
sti
cs,
stages,
typesandot
herDet
ail
s|Management

Sour
cesofFi
nance

Sourcesoffinancef orbusinessareequity,
debt,debentures,r
etainedear
nings,
ter
ml oans,
workingcapitalloans,lett
erofcr edi
t,euroissue,venturefundingetc.Thesesourcesof
fundsareusedi ndifferentsit
uat
ions.Theyar ecl
assifi
edbasedont imeperi
od,ownershi
p
andcontrol,andt heirsourceofgener at
ion.Iti
si dealtoevaluateeachsourceofcapital
beforeopt
ingf orit
.

Sourcesofcapit
alaret
hemostexpl or
ableareaespeci
all
yfortheentr
epr
eneurswhoar
e
abouttostar
tanewbusi ness.I
tisperhapst
hetoughestpartofal
ltheef
for
ts.Ther
ear
e
var
iouscapit
alsour
ces,
wecancl assi
fyonthebasi
sofdiffer
entpar
ameter
s.

Havingknownt hatt her

ear emanyal t
ernati
vest ofi
nanceorcapi tal
,acompanycan
choosefrom.Choosingtherightsourceandt heri
ghtmi xoffi
nanceisakeychal l
engefor
ever
yf i
nancemanager .Thepr ocessofselecti
ngt her
ightsourceoff i
nanceinvol
vesi n-
depthanalysi
sofeachandev erysourceoffund.Foranalyzi
ngandcompar ingthesources,
i
tneedst heunderstandi
ngofal lthecharacteri
sti
csoft hefi
nanci
ngsour ces.Therear e
manychar act
eri
sti
csont hebasisofwhichsourcesoffinancearecl
assifi
ed.

Ont hebasisofatimeperi
od, sourcesareclassi
fi
edasl ong-t
erm,medi um t
er m,andshort
ter
m.Owner shi
pandcontrolclassif
ysourcesoffinanceintoownedandbor rowedcapital
.
Int
ernalsourcesandexter
nalsour cesarethetwosour cesofgener at
ionofcapital.Al
lthe
sources have dif
fer
entchar acter
isti
cs t
o suitdiffer
entt ypes ofr equi
rements.Let ’
s
understandthem i
nalit
tl
edept h.

Accor
dingt
oTi
mePer
iod

Sour
cesoff
inanci
ngabusi
nessar
ecl
assi
fi
edbasedont
het
imeper
iodf
orwhi
cht
he
moneyi
srequi
red.Thet
imeper
iodi
scommonl
ycl
assi
fi
edi
ntot
hef
oll
owi
ngt
hree:

LONGTERM SOURCESOF MEDI

UM TERM SOURCESOFSHORTTERM SOURCES
FI
NANCE/FUNDS FI
NANCE/FUNDS OFFINANCE/FUNDS

Pr
efer
ence Capi
tal or
Shar
eCapi
tal
orEqui
tyShar
es TradeCr
edi
t
Pr
efer
enceShar
es

Pr
efer
ence Capi
tal or
Debent
ure/Bonds Fact
ori
ngSer
vices 
Pr
efer
enceShar
es

Retai
ned Ear
ningsorI
nter
nal
LeaseFi
nance Bi
l
lDi
scount
inget
c.
Accrual
s

Advances r
ecei
ved f
rom
Debent
ure/Bonds Hi
rePur
chaseFi
nance
cust
omers

Medi um Term Loans f rom

Ter
m Loans f rom Financial Shor
t Ter
m Loans l i
ke
Financial Inst
it
utes,
I
nsti
tut
es, Gov ernment, and Worki
ng Capi
tal Loans
Gov ernment, and
Commer ci
alBanks fr
om Commer
cial
Banks 
Commer ci
alBanks

Vent
ureFundi
ng Fi
xedDeposi
ts(
<1Year
)

AssetSecur
it
izat
ion Recei
vabl
esandPay
abl
es

I
nter
nati
onalFinanci
ngbyway
of Eur o I ssue, Forei
gn
Curr
encyLoans,ADR,GDRet
c.

GroupDynami
cs:i
t’
schar
act
eri
sti
cs,st
ages,t
ypes,f
act
ors,t
eam bui
l
dingandot
her
Detai
l
s!

Peoplemayunder esti
matetheimportanceofsocietyandgr oupmembershi
psont
hei
r
l
ives.Whilstpeopl
esomet i
mesundert akesoloj
ourneysyetbyandl ar
gemuchofour
experi
encesofli
feinv
olvesbei
ngengagedwi t
hothersandgroups.

Withi
nanor gani
zationwedof indnumberofgr oups.Indi
vidualsjoi
ninggroup( s)i
sa
r
ealit
y–maybef ormalorinformalgroups.Peopl
ewor kingroupsquitefrequent
lyandin
manydi f
fer
entar eas oft hei
rl i
fe e.
g.atwor k,school/
college,sport
,hobbies.The
managersneedtounder standGr oupDy namicsthatcanenablemanager st oadoptthe
r
ightappr
oachofinteract
ingwiththem.

Whati
sGr
oupDy
nami
cs?
Groupdy namicsdealswiththeatti
tudesandbehav i
ouralpat
ternsofagr oup.Gr oup
dynamicsconcernhow groupsareformed,whatisthei
rstruct
ureandwhi chprocesses
arefol
lowedi nthei
rfunct
ioni
ng.Thus,iti
sconcernedwi t
htheinter
act
ionsandf orces
operat
ingbetweengroups.

Groupdy namicsisrel
evantt ogroupsofal lkinds–bot hformalandi nfor
mal.IftheUPA
governmenthassetupGr oupofMi nist
ersforev erygover
nancei ssue,t
heSupremeCour t
ofIndiahas27Gr oupofJudgescommi t
teesov erseei
ngallmannerofnon- j
udi
cialworkin
theapexcour t
.Inanor ganizati
onalsett
ing,thet er
m groupsar eav er
ycommonandt he
studyofgroupsandgroupdy namicsisanimpor tantareaofstudy.

Whati
sAGr
oup?

Everyor
ganizat
ioni
sagroupunt oi
tsel
f.Agrouprefer
stotwoormor epeoplewhosharea
commonmeani ngandev al
uat
ionofthemselvesandcomet oget
hertoachievecommon
goals.I
notherwords,agr oupisacol l
ect
ionofpeoplewhoi nt
eractwithoneanother
;
acceptr
ight
sandobligat
ionsasmember sandwhoshar eacommoni denti
ty.

Char
act
eri
sti
csofaGr
oup:

Regar
dlessoft
hesi
zeort
hepur
pose,
ever
ygr
ouphassi
mil
archar
act
eri
sti
cs:

(
a)2ormor epersons( i
fiti
soneper son, i
tisnotagroup)
(
b)Formal socialst
ructure(therul
esoft hegamear edefined)
(c)Commonf ate(theywillswimtogether)
(
d)Commongoal s(thedestinyist
hesameandemot ionall
yconnected)
(
e)Face-to-
faceinteracti
on( t
heywillt
alkwi t
heachother)
(
f)Int
erdependence( eachonei scompliment aryt
otheot her
)
(g)Self
-defi
nit
ionasgr oupmember s(whatonei swhobel ongstothegroup)
(
h)Recognitionbyot hers(y
es, y
oubelongt ot hegr
oup).

Pr
ocess/
StagesofGr
oupDev
elopment
/Ev
olut
ion:

GroupDevelopmentisadynamicpr
ocess.Howdogr oupsev ol
ve?Ther
eisaprocessof
fi
vestagest hr
oughwhichgroupspassthr
ough.Thepr ocessincl
udesthef
ivestages:
for
ming,st
orming,f
ormi
ng,perf
ormi
ng,andadj
ourni
ng.

For
ming:

Thef i
rststageintheli
feofagr oupisconcernedwithfor
mingagroup.Thi
sstageis
character
izedbymember sseekingeit
heraworkassignment(i
nafor
malgroup)orot
her
benefit
,li
kestat
us,aff
il
iat
ion,power,etc.(
inaninfor
malgroup)
.Membersatthi
sstage
ei
therengageinbusytypeofactivi
tyorshowapathy.
St
ormi
ng:

Thenextst ageinthi
sgroupi smar kedbytheformat
ionofdyadsandt r
iads.Member s
seekoutf amil
iarorsimil
arindivi
dualsandbeginadeepersharingofsel f
.Cont i
nued
att
enti
ontot hesubgroupcreatesadi f
fer
enti
ati
onint
hegroupandt ensi
onsacr ossthe
dyads/tri
adsmayappear .Pai
ringisacommonphenomenon.Therewi l
lbeconfl
ictabout
contr
oll
i
ngt hegroup.

Nor
ming:

Thethir
dstageofgr oupdev elopmenti
smar kedbyamor eseri
ousconcernaboutt
ask
perf
ormance.Thedyads/t
riadsbegintoopenupandseekoutothermembersint
hegroup.
Eff
ortsar
emadet oestabl
ishv ari
ousnor
msf ortaskper
for
mance.

Member sbegintotakegreaterr
esponsi
bil
i
tyforthei
rowngr oupandr el
ati
onshi
pwhile
theauthor
it
yf i
gurebecomesr el
axed.Oncethisstageiscomplete,aclearpict
urewil
l
emergeabouthierar
chyofleader
shi
p.Thenormingstageisoverwi
t ht
hesolidi
fi
cati
onof
thegr
oupstructur
eandasenseofgr oupi
denti
tyandcamaraderi
e.

Per
for
ming:

Thisisastageofaful
lyfuncti
onalgroupwher emember sseethemsel
vesasagr oupand
getinvol
vedint
hetask.Eachper sonmakesacont r
ibut
ionandtheaut
horit
yfi
gureisal
so
seenasapar toft
hegr oup.Groupnor msar efol
lowedandcoll
ecti
vepressur
eisexert
ed
toensurethePr
ocessofGr oupeffect
ivenessofthegroup.

Thegroupmayredefi
nei
tsgoal
sDevel
opmenti
ntheli
ghtofinf
ormat i
onfrom t
heoutsi
de
envi
ronmentandshowanautonomouswi
llt
opursuethosegoals.Thelong-
ter
mv i
abil
it
y
oft
hegr
oupi
sest
abl
i
shedandnur
tur
ed.

Adj
our
ning:

I
nthecaseoftemporar
ygroups,li
keproj
ectt
eam,taskfor
ce,oranyot
hersuchgroup,
whi
chhaveal
imit
edtaskathand,al
sohaveafi
ft
hstage,
Thisi
sknownasadjour
ning.

Thegr
oupdeci
destodi
sband.Somemember smayf eelhappyovert
heperfor
mance,and
somemaybeunhappyov erthestoppageofmeeti
ngwi thgroupmember s.Adj
our
ning
mayal
soberef
err
edtoasmour ni
ng,i
.e.mour
ningt
headjournmentofthegr
oup.

Thereadersmustnotethatt
hef ourst
agesofgroupdevel
opmentmenti
onedabov
efor
per
manent groups are merel
y suggest
ive.I
nr eal
it
y,sever
alstages may go on
si
multaneousl
y.

Ty
pesofGr
oups:

Onewayt oclassi
fythegr
oupsi
sbywayoff ormali
ty–formalandinformal.Whil
eformal
groupsareest abli
shedbyanorgani
zat
iontoachieveitsgoal
s,informalgroupsmer ge
spontaneously.For
malgroupsmaytaketheform ofcommandgr oups,taskgroups,and
funct
ionalgroups.
1.CommandGr
oups:

Command gr oups are specifi

ed bythe organizat
ionalchartand often consi
stofa
superv
isorandthesubordinatesthatr
eportt
ot hatsupervi
sor.Anexampleofacommand
groupisamarketresear
chf ir
m CEOandt heresearchassociatesunderhi
m.

2.TaskGr
oups:

Taskgroupsconsistofpeopl
ewhowor ktogethertoachieveacommont ask.Members
arebr
oughttoget
hertoaccompli
shanarr
owr angeofgoalswi t
hinaspeci
fi
edt i
meperi
od.
Taskgroupsareal socommonlyref
err
edt oast askforces.Theorgani
zationappoi
nts
member sandassi
gnsthegoalsandt
askstobeaccompl i
shed.

Examplesofassi
gnedt asksaret
hedevel
opmentofanewpr oduct,t
hei
mpr
ovementofa
product
ionpr
ocess,ordesigni
ngthesy
ll
abusundersemest
ersystem.

Othercommon t ask gr
oups are ad hoc committ
ees,pr
ojectgr oups,and st
andi
ng
commi t
tees.Adhoccommi tt
eesaret emporar
ygroupscreatedtor esol
veaspecifi
c
complai
ntordev el
opapr ocessar
enor mall
ydisbandedaf
tert hegroupcomplet
esthe
assi
gnedt ask.

3.Funct
ionalGr
oups:

Afunctionalgroupiscreat
edbyt heorgani
zati
ont oaccompl ishspeci
fi
cgoalswit
hinan
unspeci
fied ti
mef rame.Functi
onalgroupsr emaini nexistenceafterachi
evementof
curr
entgoal s and obj
ecti
ves.Examples off unct
ionalgroups would be a mar
keti
ng
depart
ment ,acustomerservi
cedepar
tment,oranaccountingdepartment.

ADVERTI
SEMENTS:

Incontr
asttofor
malgroups,i
nf ormalgroupsar ef ormednatur
all
yandi nr
esponset othe
commoni nter
est
sandshar edv al
uesofi ndividuals.Theyar
ecreatedforpurposesother
thantheaccompli
shmentofor ganizat
ionalgoalsanddonothav easpecif
iedti
mef rame.
Infor
malgroupsarenotappointedbyt heor ganizati
onandmember scaninvi
teothersto
j
oinfrom t
imetoti
me.

I
nformalgroupscanhav east r
onginfl
uenceinorganizat
ionsthatcaneitherbeposit
iveor
negati
ve.Forexample,empl oy
eeswhof orm aninfor
malgr oupcanei t
herdiscusshowt o
i
mpr oveaproducti
onpr ocessorhowt ocreateshort
cutsthatjeopardi
zequalit
y.Inf
ormal
groupscantaketheform ofinter
estgr
oups,fri
endshi
pgroups, orr
eferencegroups.

i
.Int
erestGr
oup:

I
nter
estgr
oupsusual
l
ycont inueovert
imeandmayl astl
ongert
hangenerali
nfor
mal
gr
oups.Member
s ofi nt
erestgroups may notbe partofthe same or
gani
zati
onal
depar
tmentbutt
heyar
eboundt
oget
herbysomeot
hercommoni
nter
est
.

ADVERTI
SEMENTS:

Thegoalsandobjecti
vesofgroupint
erest
sar especi
fi
ctoeachgroupandmaynotbe
rel
atedtoor
gani
zati
onalgoal
sandobjectiv
es.Anexampleofaninter
estgr
oupwoul
dbe
student
swhocomet oget
hert
of or
m astudygroupforaspeci
fi
ccl
ass.

i
i
.Fr
iendshi
pGr
oups:

Fri
endshipgr oupsaref or
medbymember swhoenj
oysimilarsoci
alact
iv i
ti
es,polit
ical
bel
ief
s,reli
giousv al
ues,orothercommonbonds.Membersenj oyeachother’scompany
andof t
enmeetaf t
erwor ktoparti
cipat
ei nt
heseact
ivi
ti
es.Forexampl e,agr oupof
employeeswhof orm afri
endshi
pgroupmayhav eay
ogagroup, aRaj
ast
haniassoci ati
on
i
nDelhi,oraki t
typart
ylunchonceamont h.

i
i
i.Ref
erenceGr
oups:

Areferencegr oupisat ypeofgr oupt hatpeopleuset oevaluatethemselves.Themai n

obj
ectivesofr ef
erencegr oupsaret oseeksocialval
idati
onandsoci alcompar i
son.Social
val
i
dational l
owsi ndivi
dualstojust i
fythei
ratti
tudesandv alueswhi l
esocialcompar i
son
hel
ps individual
s ev aluatethei
rown act i
ons by compar i
ng themselves to others.
Ref
erencegr oupshav east ronginfluenceonmember s’
behav i
or.Suchgroupsar efor
med
vol
untaril
y.Family,fr
iends,andreligiousaff
il
iat
ionsarestrongr ef
erencegroupsf ormost
i
ndivi
duals.

Fact
orsAf
fect
ingGr
oupBehav
iour
:

The success orf ail

ure ofa group depends upon so manyf act
ors.Group member
resources,structure(groupsize,groupr ol
es,groupnor ms,andgr oupcohesiveness),
grouppr ocesses( t
hecommuni cati
on,groupdecisi
onmaki ngprocesses,
powerdynami cs,
confl
icti
ngi nt
eracti
ons,etc.
)andgrouptasks( complexi
tyandinter
dependence)
.
1.Gr
oupMemberResour
ces:

Themember s’knowledge,abi
l
iti
es,skil
l
s;andpersonali
tycharact
eri
sti
cs(soci
abil
it
y,sel
f-
rel
iance,
andindependence)ar
et heresour
cesthegroupmember sbri
nginwiththem.The
successdependsupont heser
esourcesasusefultothetask.

2.Gr
oupSt
ruct
ure:

Gr
oupSi
ze:

Groupsizecanvaryfr
om 2peopletoav er
ylargenumberofpeopl
e.Smal
lgroupsoftwo
totenar et
houghttobemor eeff
ect
ivebecauseeachmemberhasampl eopport
unit
yto
takepartandengageact
ivelyi
nthegroup.Largegroupsmaywasteti
mebydecidingon
processesandtr
yingt
odecidewhoshouldpart
ici
patenext
.

Evidence support
sthe not i
on thatas t he si
ze ofthe group i
ncr
eases,sati
sfact
ion
i
ncr easesupt oacer t
ainpoint.I
ncreasingthesizeofagr oupbeyond10-12member s’
resultsindecr
easedsatisf
acti
on.Itisincr
easi
nglydif
fi
cul
tformembersoflargegr
oupst o
i
dent i
fywithoneanotherandexperiencecohesion.

Gr
oupRol
es:

Informalgroups,rol
esar ealwayspredet
erminedandassignedtomember
s.Eachr
ole
shallhavespecif
icresponsibi
l
iti
esandduties.Ther
eare,however
,emer
gentr
olest
hat
developnat
ural
lytomeett heneedsofthegroups.

Theseemergentr ol
eswil
loftensubsti
tut
etheassignedrol
esasindi
vi
dual
sbeginto
expr
essthemsel
v esandbecomemor eassert
ive.Gr
ouprol
escant
henbeclassi
fi
edi
nto
workrol
es,mai
ntenancer
oles,
andblocki
ngrol
es.

Workrolesaretask-
ori
ent
edact
ivi
ti
est
hati
nvol
v eaccompli
shingthegroup’
sgoals.They
i
nvol
veav ar
iet
yofspecifi
crol
essuchasinit
iator
,inf
ormer,clar
if
ier
,summarizer,and
r
eali
tytest
er.

Maint
enance rol
es ar
e social
-emot i
onalactivi
ti
es thathelp members maint ai
nthei
r
i
nvolv
ementi nthe group and raise thei
rper sonalcommi t
mentt othe gr oup.The
maint
enance rol
es are har
moni zer,gatekeeper,consensus test
er,encourager,and
compromiser
.
Blocki
ngrolesareacti
vi
tiesthatdisr
uptthegr oup.Blocker
swi l
lstubbornlyresi
stthe
group’
sideas,di
sagr
eewi thgroupmember sforpersonalreasons,andwi l
lhavehidden
agendas.Theymayt aket heform ofdominati
ngdi scussi
ons,verbal
lyattacki
ngother
groupmember s,
anddist
racti
ngthegroupwit
ht r
ivi
ali
nformationorunnecessaryhumour.

Of
ten t
imest heblocki
ng behavi
ourmaynotbei nt
ended asnegat
ive.Someti
mesa
membermayshar eaj okeinordertobreakt hetensi
on,ormayquestionadecisionin
or
dertoforcegroupmember storet
hinkt heissue.Theblocki
ngrol
esar eaggressor
,
bl
ocker
,dominat
or,comedian,
andavoidancebehaviour.

Roleconfl
ictsarisewhent herei sambigui
ty(conf
usionaboutdelegat
ionandnospeci fic
j
obdescr i
ptions)betweent hesentr ol
eandt hereceivedrol
ewhi chleadstofrustr
ati
on
anddissati
sf act
ion,ult
imatelyleadi
ngt otur
nover
;inconsist
encybetweent heperceiv
ed
rol
eandr ol ebehav i
our(confli
ctbetweenwor krolesandf amil
yr ol
es);andconfli
cti
ng
demandsf rom diff
erentsourceswhileperf
ormingthetask.

Gr
oupNor
ms:

Normsdef i
netheacceptabl
estandardorboundariesofaccept ableandunacceptable
behaviour,
shar
edbygr oupmembers.Theyarety
picall
ycreatedi
nor dertofaci
li
tat
egroup
surv
ival,makebehav
iourmorepr
edictabl
e,av
oidembar r
assingsi
tuations,andexpr
essthe
v
aluesoft
hegr
oup.

Eachgroupwil
lcreat
eitsownnor mst hatmightdet
ermi
nefrom theworkperf
ormancet o
dresstomakingcomment si
nameet i
ng.Groupsexer
tpressur
eonmember stof orce
them t
oconformt othegroup’sstandardsandattimesnottoper f
orm athi
gherl
ev els.
Thenor msoftenref
lectthelevelofcommi t
ment,moti
vat
ion,andperformanceoft he
group.

Themaj or
it
yoft hegroupmustagreethatthenormsareappropri
ateinorderforthe
behavi
ourtobeaccept ed.Ther
emustalsobeashar edunder
standingthatthegroup
suppor
tsthenorms.I
tshouldbenot
ed,howev
er,t
hatmembersmightviol
ategroupnor
ms
fr
om ti
met oti
me.

I
ft hemajori
tyofmember sdonotadher etothenor
ms,t hentheywi l
leventual
l
ychange
andwi l
lnolongerserv
easast andar
df oreval
uat
ingbehav i
our
.Gr oupmember swhodo
notconformtot henormswil
lbepunishedbybeingexcluded,ignored,oraskedtol
eave
thegroup.

Gr
oupCohesi
veness:

Cohesi
v enessref
erstothebondi
ngofgroupmember sorunity
,feel
ingsofattr
acti
onf or
eachotheranddesi r
etoremainpar
tofthegroup.Manyfactor
sinfl
uencetheamountof
group cohesiv
eness– agreementon group goal
s,fr
equencyofi nter
act
ion,personal
attr
act
iveness,i
nter
-gr
oupcompeti
ti
on,
favour
ableeval
uati
on,et
c.

Themor ediff
icul
titistoobt aingroupmembershi
pthemorecohesivet
hegroupwi
llbe.
Groupsalsotendt obecomecohesi v
ewhentheyareinint
ensecompetit
ionwi
thother
groupsorfaceaser iousexternalthr
eatt
osur
v i
val
.Small
ergroupsandt
hosewhospend
consider
abl
etimet ogetheralsotendtobemorecohesi
ve.

Cohesivenessinworkgroupshasmanyposit
iveeffect
s,i
ncl
udingwor
kersati
sfacti
on,
low
turnov
erandabsent eei
sm,andhigherpr
oduct
ivi
ty.However,hi
ghl
ycohesi
vegr oupsmay
be detrimentalt o or
gani
zat
ionalperf
ormance i fthei
r goal
s ar
e mi sal
igned wit
h
organi
zationalgoal
s.

Highlycohesi
vegr oupsmayal sobemor ev ulnerabletogroupt
hink.Groupt
hinkoccurs
whenmember sofagr oupexer tpressur
eoneachot hertocomet oaconsensusi n
decisi
on making.Gr oupthink r
esult
si n carel
ess j udgment
s,unreali
sti
c apprai
sal
s of
al
ternati
vecoursesofact i
on,andalackofr eali
tytesting.

Evidencesuggeststhatgroupstypical
lyout
perfor
mi ndi
vidual
swhenthetasksinvol
ved
requir
eav ari
etyofski
ll
s,exper
ience,anddeci
sionmaking.Groupsar
eoft
enmor efl
exibl
e
andcanqui ckl
yassemble,achievegoals,anddisbandormov eontoanot hersetof
objecti
ves.
Manyor gani
zat
ionshavef oundt hatgr
oupshav emanymot i
vationalaspect saswell.
Groupmember sar emorel i
kelytopart
ici
pateindecision-makingandpr oblem-sol
vi
ng
acti
vi
ti
esleadi
ngt oempower mentandincreasedproducti
vi
ty.Groupscompl etemostof
theworkinanor gani
zati
on;thus,theef
fecti
venessoftheor ganizati
onislimitedbythe
eff
ecti
venessofit
sgroups.

3.Gr
oupPr
ocesses:

Decision-makingbyagroupissuper
ior
,becausegroupgener at esmor ei
nfor
mationand
knowl edge,generat
es di
ver
se al
ter
nati
ves,incr
eases accept ance ofa solut
ion,and
i
ncreasesl egi
ti
macy.Butitisal
so tr
ue,thatdecisi
onmaki ngi slike‘mundemunde
matirbhinna’.

Decisi
onstakelongerti
me, mi nor
it
yisdominated,
pressur
eisappl
iedtoconfor
mtogroup
deci
sions,and none isr esponsibl
ef ort
he decisi
ons.Group processesal
so i
ncl
ude
communi cati
on,confl
i
ctmanagement ,andleader
shipthatweshalldiscussi
ndet
ail
sin
thechapterstofol
lowhereafter.

Tur
ningGr
oupsi
ntoEf
fect
iveTeams:

Allteamsar egroupsbutnotal lgroupsaret eams.Teamsof t

enaredi ff
icul
ttof orm
becausei ttakest i
mef ormember st olearnhow t o worktoget
her.Peopl einev ery
workplacet alkaboutbui ldi
ng theteam,wor king asat eam,and myt eam,butf ew
understandhow t ocreat
et heexperi
enceoft eam workorhow todev el
opanef fective
team.Bel ongingtoat eam,inthebroadestsense,isaresul
toffeel
i
ngpar tofsomething
l
argerthanonesel f.I
thasal ottodowi thy
ourunder st
andi
ngofthemissionorobjecti
v es
ofyouror ganizat
ion.

I
nat eam- or
ientedenv i
ronment ,
onecontr
ibutestotheoveral
l successoftheorgani
zation.
Onewor kswit
hf el
lowmember softheorganizat
iontoproducet heseresult
s.Eventhough
youhav easpeci fi
cjobf uncti
onandy oubelongt oaspecifi
cdepar tment,youareunified
wit
hot herorganizati
onmember stoaccompl i
sht heoveral
lobjecti
ves.Thebiggerpict
ur e
dri
vesy ouracti
ons; y
ourf unct
ionexi
ststoservethebiggerpicture.

I
tisonr
ecor
dthatt
eamsar
ebet
tert
hangr
oups,becauset
heyar
emor
efl
exi
bleand
responsi
veto dy
nami
cenv
ironment
.A wor
kgr
oup hasno oppor
tuni
tyt
oinv
olv
ein
coll
ecti
vewor
ks.

I
tistheworkt
eam whosemembers‘workint
enselyonaspecif
ic,commongoalusing
t
hei
rposi
ti
vesy
ner
gy,i
ndiv
idual
andmutual
accountabi
li
ty,
andcomplement
aryski
l
ls’
.

Team-buil
ding hel
ps t
oincr
ease int
ra-
group and i
nter
-gr
oup eff
ecti
veness t
o br
ing
member stoget
her,maket
hem shar
ethei
rpercepti
onofeachotherandunderst
andeach
other
’spoi
ntofv i
ew.

Thus,r esolv
epr oblemsand wor kt ogetheri
nacooper ati
veand col l
abor ati
vemode.
Teamscanbeoff ourt ypes– pr oblem-sol
vi
ngt eams( onlymakingsuggest ion),sel
f-
managed, t
eams( operatewi thoutamanager ),cr
oss-f
uncti
onalteams( agr oupofexper ts
fr
om di ff
erentspecialit
ies),andv i
rtualteam (member scoll
aborateonline).Int ermsof
si
ze,teamsmaybei nstituti
onal(compr i
singofhundredsofmember s)andoper at i
onal(a
small
, cooperat
ivegr oup,inregularcontactandcontri
butesresponsi
blytoachi evet askat
hand)
.

Ei
ghtCsf
orTeam Bui
l
ding:

Toshowbusinessresul
tsandpr
ofi
tabi
l
ity
,way
sar
eexpl
oredbyt
heexecut
ivest
oimpr
ove
thei
rpr
oduct
ivi
ty.

Successf
ult
eam buil
ding,
thatcr
eat
esef
fect
ive,
focusedwor
kteams,
requi
resat
tent
iont
o
eachofthef
oll
owing:

1.Cl
earExpect
ati
ons:

Themanagersmustcl
ear
lytel
lthet
eam membersoftheexpect
edper
formanceandthe
team member
smustunderst
andthereasonf
ori
tscr
eati
on.Foritt
heorgani
zat
ionmust
suppor
tthet
eam wi
thr
esour
cesofpeopl
e,t
imeandmoney
.

2.Commi
tment
:

Team membersmustpar t
ici
pateintheteam, feelthatt
het eam missi
oni
si mpor
tant,and
show commi t
ment to accompl i
shing the team mi ssion and expected outcomes.
Commi t
mentwi l
lcome ift eam member s perceivetheirservi
ce as v
aluabl
et ot he
organi
zat
ionandtot
heirowncar eer
s.

3.Compet
ence:

Team member smusthavetheknowl

edge,ski
l
landcapabi
l
iti
es,ther
esources,st
rat
egies
andsupportneededtoaccompli
shit
smissiontoaddr
esstheissuesforwhichtheteam
wasformed.

4.Cont
rol
:

Thet eam musthavenotonl

yenoughf r
eedom andempowermentt
ofeelt
heowner
ship
necessarytoaccompl
i
shitschar
ter
,butalsot
heaccount
abi
l
ity
.Ther
ehastobeadef
ined
revi
ewpr ocess.

5.Col
l
abor
ati
on:

Thet eam shoul

dunderst
andgroupprocessesandworkeff
ect
ivelyandcooperat
ivel
ywith
othermember softhet
eam.Forittheyhavetounder
standt
herolesandresponsi
bili
ti
esof
team member s,t
eam l
eader
s,andteam recor
der
s.
6.Communi
cat
ion:

To maket eam member sclearaboutthepri

ori
tyofthei
rtasks,and r
ecei
ver egul
ar
feedback,t
eam membersmustclearl
yandhonest
lywi
theachother
.Div
erseopini
onsbe
welcomeandconfli
ctsbetakenupposi
ti
vel
y.

7.Cr
eat
ivi
ty:

Thet eam shoul

dv aluecr eati
vet hinki
ng,uni
quesol
uti
ons,andnew ideas;andrewar
d
member swho t aker easonabler isksto makeimprov
ements.Ifnecessary,i
tshoul
d
provi
dethetrai
ning,education,accesstobooksandfi
lms,andfi
eldt
ri
pst osti
mulat
enew
thi
nki
ng.

Thecr eativ
edev elopmentofnew products,new t
echnol
ogi
es,new servi
ces,ornew
organi
zationalst
ructur
esispossi
blebecauseteamsmayhavevari
etyofski
l
lsneededfor
successfulinnov
ati
on.

Team member scanuncov

ereachother
’sf
lawsandbalanceeachot
her’
sstr
engt
hsand
weaknesses.Manager
sshould empowertheteam and makeitaccount
ablefort
he
i
nnovati
onprocess.

8.Coor
dinat
ion:

Teamsshoul dunderst
andtheconceptofint
ernalcustomertowhom theyprovi
dea
productoraserv
ice.Team eff
ort
sneedtobecoordinatedbyacent
rall
eader
shi
pteam
thatassi
stst
hegroupstoobtai
nwhatt
heyneedforsuccess.

Thecross-functi
onalandmul t
i-
depar
tmentt eamsmustworktogetheref
fect
ively
.The
organi
zat
ionshoulddev el
opacust omer-
focusedandprocess-
focusedor
ient
ationand
mov eawayfrom t
radi
ti
onaldepar
tmental
thinking.

Spendti
meandat t
enti
ononeachoftheseeightt
ipstoensureyourworkt
eamscontri
bute
mosteffect
ivel
yt oyourbusinesssuccess.Yourteam member swouldloveyou,your
busi
nesswillseenew height
s,andempower edpeoplewill“own”andberesponsi
bleto
thei
rworkprocesses

I
nfor
mal
Group:

I
nev eryor
gani
sat
ionalongwithformalgroupsther
eexi
stsinf
ormalgr
oupswhi
chemerge
nat
urall
yduet ot
her esponseandcommoni nter
est
soft hemember swhocaneasil
y
i
dentif
ywitht
hegoalsorindependentact
ivi
ti
esofthei
nfor
mal gr
oups.

Someti
mest heeffort
smaybedr i
venbyacommongoalt hatmaycompl i
mentorwor k
agai
nstthegoalsofthefor
malgroup.Ani
nformalgroupcanbedefinedasagroupthat
evol
vesspontaneousl
y,notshownintheorgani
zat
ion’sst
ruct
ure,wit
htheobj
ecti
veof
f
ulf
il
li
ngper
sonal
andsoci
alneedofi
tsmember
s.

I
nfor
mal
GroupVsI
nfor
mal
Organi
sat
ion:

Aninformalgroupisav ol
untarygroupofpeoplecasual
lyacquai
ntedwit
heachotherfor
thei
rownper sonalf
ulf
il
lmentbecausetheyhavesomecommonandshar edbackgr
ounds,
charact
eri
sti
csandconcerns( v
alues/int
erest
s/hobbies/fri
endshi
p).

Whil
stitiseasytodifferent
iat
ebet weenaf ormalgroupandaf or
malorgani
sat
ion,the
di
ff
erencesbetweeninf ormalgroupandi nformalorganisat
iontendtobedi f
fi
cult.The
di
ff
erencebetweeninformalorganizat
ionandinformalgroupisthatinf
ormalor
ganisati
on
i
salargerent
ityconsi
stingofalli
nformalgroupsinanorganizat
ion.

I
nfor
mal
Organi
sat
ion=Si
gmaI
nfor
mal
Groups:

Aninfor
malgroupisthenucl
eusofinf
ormalorgani
zati
on.Whenaninf
ormalgr
oupadopt
s
aformall
ydef
inedstr
uctur
eandgroupprocesses,i
tnolongerr
emai
nsaninf
ormalgr
oup.

I
nfor
mal
Groupv
s.For
mal
Group:

Thet
woar
edi
ff
erenti
nver
ymanyway
s.
Char
act
eri
sti
csofI
nfor
malGr
oups:

1.Cr
eat
ion:

I
tisnotcr
eat
edbyt
heor
gani
sat
ionbutspr
ingsupspont
aneousl
y.

2.Sat
isf
act
ionofNeeds:

Theneedswhichcannotbesati
sfi
edwi t
hintheframeworkoffor
malorgani
sat
ion,l
i
ke
soci
alandpsy
chol
ogi
calneedsofpeopl
e,suchpeoplecr
eat
einf
ormalgr
oups.

3.Vol
unt
aryMember
shi
p:

Nobodyi
scompel
l
edt
ojoi
nani
nfor
mal
organi
zat
ion.

4.Mul
ti
-Gr
oupMember
shi
p:

Amemberofani nformalgr
oupcanbeamemberofmor
ethanonei
nfor
malgr
oupt
o
pur
suedi
ff
erenti
nter
ests.

5.Sy
stemsandPr
ocesses:

Membersofsuchgr oupsfol
low thei
rownnor ms,l eader
ship,communi cat
ion,et
c.to
r
emaincohesi
ve.Thecommuni cat
ionchannelsarerefer
redtoas‘ Grapevi
ne’
.Grapevi
ne
i
.e.
,i
nfor
malchannel
runsver
yfasttospreadtheinf
ormationacrosstheorgani
zati
on.

6.Leader
shi
p:

Everyinfor
malgrouphasaleader,
sel
ectedbythegroup,andwhoi scapableofhelpi
ngto
real
izethei
rgoals.Themomentiti
sreal
i
zedthattheleaderi
sincapabl
e,(s)heisrepl
aced
withanewl eader.

Reasonsf
ort
heEmer
genceofI
nfor
malGr
oups:

1.Peopl
ewor
kingt
oget
hermaycomet
oget
her
.

2.Peopl
ewi
thsi
mil
arv
alues,
bel
i
efs,
att
it
udes,
andi
nter
est
sof
tenf
eelat
tr
act
iont
ocome
toget
her
.

3.Needsat
isf
act
ion–t
obel
ong,
toassoci
ate,
etc.

4.Remov alofmonotonyofrout
inetasks– t
ogetr i
dofmonot onyandpsychol
ogical
fat
igue,job-
rel
atedbor
edom andf
rust
rati
onpr
ovidesanoppor
tuni
tytobehav
einanatural
andrelaxedmanner.

5.Pr
omot
ionofot
heri
nter
est
sandpur
sui
tofgoal
s–Peopl
ejoi
nRot
aryorLi
onsCl
ubt
o
expandt
hei
rcont
act
swhi
chmayhel
pthem t
osat
isf
ythei
rper
sonal
goal
s.

Benef
it
sofI
nfor
malGr
oups:

Thebenef
it
sofani
nfor
mal
groupar
easf
oll
ows:

1.Bl
endi
ngwi
thf
ormal
groupal
l
owspeopl
etowor
kfort
hef
ormal
organi
sat
ion.

2.I
nfor
mal
wor
kgr
oupl
i
ght
enst
hewor
kloadf
ort
hef
ormal
manager
.

3.Br
ingssat
isf
act
ionandst
abi
l
ityt
otheor
gani
sat
ionasawhol
e.

4.Pr
ovi
desausef
ulchannel
ofcommuni
cat
ion.

5.Encour
agesmanager
stopl
anandactmor
ecar
eful
l
y.

Li
mit
ati
onsofI
nfor
malGr
oups:

Thel
i
mit
ati
onsar
easf
oll
ows:

1.Resi
stancetoChangebecauset
heydonotwantt
odev
iat
efr
om exi
sti
ngnor
msand
l
earnnewway s.

2.Informalgroup pr
ovi
des mostfer
ti
le ground forRumourMongeri
ng because of
malici
ousness,l
ackofpropercommunicat
ionsystemsandprocessesandambi guous
ci
rcumstances.

3.Si
nceamemberofani
nfor
malgr
oupi
sal
soamemberofaf
ormalgr
oup,att
imesi
t
cr
eatesr
oleconf
li
ct.

4.Cr
eat
ivi
tyofgroupmember(
s)i
srest
ri
ctedbecauseofst
rongpr
essur
eforconf
ormi
ty
appl
i
edbythegroup.

Rel
atedAr
ti
cles:

1.Gr
oupDy
nami
cs:
Meani
ngandDef
ini
ti
onofGr
oupDy
nami
cs