Type III
The third type of situation is one in which “the problem definition is not clear-cut, and technical fixes are not available.” This type of problem is particularly messy in that it is not only difficult to define the nature of the problem but also difficult to know when the problem is actually solved. Heifetz suggests that this type of situation requires new learning on the part of everyone participating in its solution. Furthermore, “changes in people’s values, attitudes, or habits of behavior” are required if progress is to be made on problems nested in this type of situation.
What about entrepreneurship in this third type of situation? We would suggest that the participating entrepreneur is most appropriate, for everyone is a learner when confronted with situations in which there is neither a clear problem definition nor readily available solution. The participating leader is right for this job precisely because she encourages members of her group or organization to dwell in the gap between the real and ideal and to tolerate the ambiguity that is inherent in tackling Type Three problems.
Nature of External Environment
Many of today’s closely-held enterprises must survive highly turbulent and unstable conditions. For a variety of reasons, however, many other closely-held enterprises consistently encounter a stable and often unchanging environment. These two different environments require quite different approaches to entrepreneurship.
Stable Environment
Some enterprises operate in stable and essentially unchanging environments. They may be located in a very conservative society that honors tradition and continuity. Alternatively, these organizations may operate in heavily regulated settings. Many small human service agencies and professional practices fit into this category. These are closely-held enterprises that must comply with many regulations. Organizations with long histories of success in a particular market or with a monopolistic hold on a particular market may also experience very little change in their environment.
