An indispensable part of understanding how EO PIS works is knowing the two main elements that compose the EO PIS system, namely EO (Entrepreneurial Orientation) and PIS (Performance Information System). EO is the organization’s orientation towards risk-taking behavior, opportunism, innovation, and proactivity and is traditionally measured by five main components:
- Innovativeness – is the encouragement of new ideas, products, and/or processes);
- Risk-taking behavior – is the ability to make strong assertions about the uncertainty of events;
- Proactiveness – is the capacity to recognize trends in the future before they become commonly known;
- Competitive Aggressiveness – it is the organization’s willingness to enter competitively into the market place with other organizations on equal footing; and
- Autonomy – teams are empowered to make decisions independently. Businesses that exhibit strong EO characteristics demonstrate a greater capacity to adapt to change and take advantage of opportunities as the arise.
An information system designed to evaluate and manage productive performance (PIS): A performance information system (PIS) is a data-based system that collects and analyses key performance indicators (KPI). It can be implemented at a company-wide level so that managers can keep track of their organisation’s development, assess outcomes, and link the everyday operation of their companies with the company’s strategic ambitions. Typical tools used within PIS include dashboards, performance analytics tools, reporting and accountability systems and feedback loops.
The Integration Effect: When Entrepreneurial & Performance Intelligence Come Together (EO PIS): The EO PIS is unique because it combines the conceptual framework of entrepreneurial thinking with the empirical framework of performance intelligence. While the entrepreneurial mindset fosters a desire for creativity and seeking opportunities, performance intelligence provides a solid base for entrepreneurial decision-making based on timely and accurate data. Therefore, EO PIS creates a balanced system of operation and entrepreneurial thought that provides an environment for fostering innovation while ensuring control and accountability.
EO PIS Provides Significant Value in the Following Areas: The implementation of an EO PIS will provide a quantifiable improvement to many areas within the organization as a whole.
Strategic Decision Making: The integration of EO and PIS will provide a base by which decision-makers can evaluate new and innovative ideas using real-time performance data. Therefore, the use of these systems will eliminate the guesswork in evaluating ideas and, consequently, assist companies in identifying projects with the greatest potential for achieving both strategic and financial returns.
Agility & Responsiveness: The integration of EO PIS will provide businesses with a means to identify and respond to market changes proactively. The identification of new and emerging trends will be accomplished through the use of performance data, while the entrepreneurial mindset will motivate leaders to take immediate actions to gain a competitive advantage before other companies have the opportunity to respond.
Better Accountability for Performance
PIS provide organizations with clearly defined metrics, benchmarks, and expectations that help ensure that entrepreneurial activities are aligned with the overall organizational objectives. The transparency created by the PIS system facilitates accountability and continuous improvement for all teams within the organization.
Sustainable Competitive Advantage
Organizations that utilize EO PIS to its fullest potential benefit by having the ability to produce innovative solutions consistently, while still maintaining operational discipline and control. This combination of consistent innovation and operational discipline enables organizations to sustain growth over an extended period of time, while maintaining competitiveness.
How to Effectively Use a PIS to Achieve Maximum Value from Entrepreneurship
To optimize the value of an EO PIS, organizations should implement a systematic approach for the implementation and utilization of the PIS.
1. Foster An Entrepreneurial Culture
The leadership within the organization must support innovation, experimentation, and calculated risk-taking as cornerstones of the organizational culture. By encouraging open communication and rewarding creative solutions to problems, an organization provides an environment that is conducive to effective entrepreneurship.
2. Establish Performance Metrics
Create KPIs that are aligned with both the entrepreneurial initiatives and the overall strategic alignments of the organization. The metrics used should capture financial performance, customer outcome, operational performance, and innovation impact.
3. Invest In Appropriate Technology
For an EO PIS to function correctly, there must be a robust data infrastructure; analytical tools, dashboards, etc. Investing in scalable technology allows for accurate decision-making, creating data-driven insights.
4. Align Strategy and Execution
EO PIS are most effective when there is a direct relationship between entrepreneurial ideas and quantifiable outcomes. In this regard, performance reviews allow for the continual refinement of the recommended strategies, and for leaders to reallocate available resources as necessary.
5. Support Ongoing Development
The use of performance insight to review what worked and didn’t work supports the continued development of your organization’s ability to learn from experiences and improve your operational processes, thereby making your company a successful and more confident approach to entrepreneurship over time.
Common Obstacles Associated with the Implementation of EO PIS and Potential Solutions
While EO PIS provides many advantages when implemented effectively, there are some issues that may occur during the implementation process.
- Resistance to Changing Methods of Measurement: To deal with this issue, it is critical to communicate the benefits of using EO PIS and involve your employees in the implementation process as early as possible.
- Too Much Information: Rather than collecting potentially valuable data points, focus on using only those that provide meaningful and actionable insights.
- Lack of Clarity Between Innovation Goals and Metrics Used to Track Performance: Be intentional about establishing Key Performance Indicators (KPIs) that are aligned with both your short-term operational and long-term strategic goals for growth and success.
- Timely and Strategic Management: Timely management is essential for overcoming obstacles associated with change and aligning innovative goals with measurable performance results. The establishment of a strong governance structure will assist organizations in effectively managing the transition from a traditional business model to using EO PIS.
Conclusion
Businesses can realize success by utilizing the Entrepreneurial Orientation (EO) Performance Information System (PIS) by adopting a strategic mindset that incorporates an entrepreneurial culture along with data-driven discipline. By combining EO and PIS, organizations will be able to effectively respond to the rapid pace of change within today’s market and create a foundation that fosters continued growth and innovation over time. Organizations that embrace EO PIS will be better positioned to mitigate risks, identify opportunities, and deliver on promises to their stakeholders through the creation of measurable results.
