Entrepreneurial Leadership

Article Written by Mary Kay Whitaker PhD (ABD)
Entrepreneurial Leadership
PART I: LEADERSHIP TAXOOMY AD ETREPREEURSHIP
The interest in entrepreneurship has been an area of leadership that has

been researched and theorized and to date is still in a formative stage as to what
defines an entrepreneur. Theorists vary in their philosophy of what constitutes
or creates entrepreneurial leadership. Research has proposed that entrepreneurs
may be more intuitive, possess unique psychological needs (Baum & Locke,
2004), motivated by a need to achieve (McClelland, 1985), more organized than
others or are prone to taking on high risk challenges (Malach-Pines, et al, 2002).
Whether the theory is motivational, environmental, or innate qualities the argu-
ment is: What traits and behaviors do entrepreneurial leaders have that cause
What traits and behav- them to launch new organizations, services or products that other managers or
business owners have not thought of?
iors do entrepreneurial
To begin the analysis, what behaviors define an entrepreneur? Gartner
leaders have that (1988) proposes that “entrepreneurs create organizations” (p. 11). Lazer (2005)
cause them to launch clarifies this theory by adding that entrepreneurs have the not only the ability to
create an organization but also the skills to gather resources to collectively per-
new organizations, form in an efficient manner. For the purpose of this discussion an entrepreneur
services or products will be defined as a leader that takes action to fulfill an unmet need by creating
and developing a solution that is implemented through the formation of an or-
that other managers
ganization.
or business owners An entrepreneur engages in energetic behaviors in conjunction with so-
have not thought of? cial networking in order to innovate and instill a competitive advantage. (De
Carolis & Saparito, 2006). To support this theory, this author proposes an entre-
preneurial behavioral theory and taxonomy that entrepreneurs are different from
other leaders because: 1) they create; 2) they solve problems; 3) they take ac-
tion; 4) they lead; and 5) they build organizations. Each of these behaviors gen-
erates leadership competencies that differentiate and contrast an entrepreneur
from a business owner or leader. In other words, these five behaviors are consis-
tently visible in entrepreneurial leadership compared to the behaviors of other
managers, leaders or business owners. For example, other types of leaders or
managers may portray only one or two of the five entrepreneurial behaviors.
The leadership theory proposed is that an entrepreneur depicts all five
behaviors with each behavior leveraging into the other until all five behaviors
co-exist to define the characteristics of the entrepreneur as portrayed in the en-
trepreneurial taxonomy (see Appendix).
DEFIIG CHARACTERISTICS
For an entrepreneur to discover an unmet need, create a solution, and implement
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Entrepreneurial
Attracting and Retaining the Leadership
Best Talent
the solution by launching an organization, the individual has acquired a unique

set of behaviors to accomplish this objective. The author proposes five defining
characteristics of successful entrepreneurs to include behaviors of: 1) innova-
tion; 2) achievement; 3) action; 4) leadership; and 5) organizational growth.
These characteristics or attributes of the entrepreneurial leader are proposed
from the research of several thought leaders.
Research indicates that entrepreneurs have a propensity to take on more
challenges, be more persistent and engage in a higher level of risk taking experi-
ences than other leaders (Malach-Pines et al., 2002). As an entrepreneurial
leader, the proposed five behaviors are criti-
cal to success as each validates personal
“Tomorrow’s business leader, it is

character, the ability to handle uncertainty
and the confidence and “organizational
clear, will need to be able to organ-

savvy” to understand organizational strengths
and weakness. In summary, the behaviors
ize for entrepreneurship . . . will provide a foundation for the entrepreneur to
have to know how to anticipate in-

expand not only the formation of a business,
but support the probability as a contributor to
novation and how to make innova-

global leadership (Gregersen, Morrison &
Black, 1998). The following discussion pro-
tion economically effective” vides clarity and evidence of each defining
characteristic within the entrepreneurial lead-
ership behavior theory.
Continuous Innovator
First, an entrepreneur is an innovator. He or she has a keen sense of dis-
covering and creating solutions to unmet needs that others have perhaps not
thought of or considered. “Tomorrow’s business leader, it is clear, will need to
be able to organize for entrepreneurship . . . will have to know how to anticipate
innovation and how to make innovation economically effective” (Drucker,
1969, p. 280). Locke (2000) describes this innate talent as entrepreneurial vi-
sion. The vision, or as Baum & Locke (2004) suggest the “foresight” to un-
cover “the potential of some market, technology, product or service” (p. 596), is
an entrepreneurial skill that defines the initial creation of entrepreneurial leader-
ship. The entrepreneur’s passion to see possibilities, create new paradigms and
pursue their dreams is what drives him or her to the next discovery. Honig
(2001) describes the discovery process as “critical to entrepreneurial activity”
(p. 23). This defining characteristic of entrepreneurial leadership provides the
organization a competitive advantage to pursue business initiatives that others
have yet to foresee, encourage or practice (De Carolis & Saparito, 2006).
Achievement Driven
Now that the vision has been revealed, an entrepreneur is driven by a
compelling purpose to make the new discovery a reality. “Entrepreneurs often
Article Written by Mary Kay Whitaker PhD (ABD))© Copyright 2009. Xcelogic, Inc. All rights reserved. Leadership Development - www.xcelogic.com 2
do seem like special people who achieve things that most of us do not achieve”
(Gartner, 1988, p. 22). Activities such as brainstorming, mind mapping, and
possibility thinking are examples of idea generation that entrepreneurs formu-
late to generate possible avenues toward the envisioned solution. The intensity
and optimistic manner in which an entrepreneur proceeds to theorize and devise
potential products or services ignites a collection of options that may or may not
be feasible, factual or data-driven. This entrepreneurial approach to “strategy
formulation” produces possibilities and levels of thinking that may baffle the
conventional thinker (Covin, Green & Slevin, 2006). This outcome of confu-
sion in conventional thinkers is a component that distinguishes the entrepreneur
from the ordinary leader. In times of confusion, adversity, and anxiety the en-
trepreneur transforms what could be counterproductive emotions to fueling
achievement, commitment and persistence. These entrepreneurial types truly
enjoy channeling obstacles into getting things done almost to the degree of what
Clifford & Cavanaugh (1985) refer to as “obsessive commitment” (p. 13).
Takes Action
An entrepreneurial Managers have ideas, provide suggestions and pursue options that data
leader is committed, reflects will have a greater chance of succeeding than failing. In contrast, entre-
preneurs just do it. In other words, entrepreneurs take action from their gut, in-
passionate and direct
tuition and instinct rather than contemplate over whether the decision or
about their beliefs, recommendation will work. This ability to take action and engage in risk taking
core values and lead- may have advantages and disadvantages. The advantage may be if the decision
doesn’t work the entrepreneurial style is to take action on an alternative deci-
ership philosophy. sion. This aptitude to be proactive, implement and persistently believe in the
proposed solution provides the entrepreneur with an entrepreneurial orientation
that may elevate an organization to a higher level of strategy achievement.
Covin, Green & Slevin (2006) propose the disadvantages to the entrepreneurial
pace to include: 1) engaging in a non-participative style of decision making; 2)
creating a higher rate of failure; and 3) slowing the rate of learning from previ-
ous failures. In contrast, Cope (2005) proposes an entrepreneur has a keen
sense and “an ability to cope with problems and to learn from those problems”
(p. 377). The entrepreneur’s coping ability to learn from past and current mis-
takes enhances their entrepreneurial development and application to pursue fu-
ture business initiatives. The coping skill to take action by being able to
“recognize an opportunity and make the appropriate decision (Cunningham &
Lischeron, 1991, p. 46) may signify and formulate a difference between an en-
trepreneur and a leader. Gartner (1988) suggests that entrepreneurs are experts
in knowing what problems are a priority and those that need not be acted upon.
Authentic Leader
An entrepreneurial leader is committed, passionate and direct about their
beliefs, core values and leadership philosophy. To be authentic is to be true.
Followers respond to leaders that are true to themselves and to others. Self
leadership is being true to one's character. Research indicates that entrepreneurs

are stronger in emotional intelligence by turning adversity into determination,
frustration into motivation and stress and anxiety into self-reflection (Cross &
Travaglione, 2003). Authentic leadership mirrors truth to others. Entrepreneurs
express authenticity by communicating their emotions, addressing situations
head on and expressing their point of view for improvement (Cross &
Travaglione, 2003). Hogan, Curphy & Hogan (1994) suggest “that leadership is
persuasion, not domination. Leadership only occurs when others willingly
adopt, for a period of time, the goals of a group as their own” (p. 493).
Entrepreneurs lead with a passionate style, setting the example, and gen-
uinely replicating the essence of leadership (Hargrove, 2003). This authentic
style of leadership is the outcome for entrepreneurial leaders that create enor-
mous outcomes. From innovation, to achievement to action – an authentic
leader influences others over and over through the substance of their message
and what they stand for.
Organization Builder
When interpreting what an entrepreneur primarily does, research indi-
cates that those thought leaders that have studied the phenomenon concur that
an entrepreneur is an organizational builder (Gartner, 1988). With skills ranging
from business “formation, growth and expansion” (Cope, 2005), the entrepre-
neur pursues and persists to create a unison of people that will help him or her
fulfill his or her innovations and solutions. With this sense of purpose the entre-
preneur works on becoming proficient in organizing and managing a business.
The global business perspective of the entrepreneur differentiates from a leader
as entrepreneurs are typically multifaceted in multiple functions of the business
and fulfill many roles and responsibilities to ensure the organization succeeds
(Lazear, 2005).
An entrepreneur not only physical grows a business they know that peo-
ple are the core of business success. Though coaching and mentoring the entre-
preneurial leader believes that by “knowing oneself” and “continually learning”
they will be able to duplicate themselves through others which will lead to con-
tinuous growth and development, both physically, externally and internally.
This perspective provides the entrepreneur with the freedom to move on to the
next challenge by establishing a culture in which a business may become self-
sustained. The theory proposes that an entrepreneur leads by innovating,
achieving, taking action and being authentic. When all 4 taxonomy levels have
been accomplished an organization grows through the diffusion of entrepreneur-
ial knowledge and social networking.
TAXOOMY ITET AD COCLUSIO

The proposed taxonomy suggests that without innovation or discovery of
an idea the entrepreneur has little to achieve. Once the idea or vision is forming
the entrepreneur becomes achievement driven. Through passion and purpose
the leader promptly takes action. The ability to act and “do it” requires risk and
belief which propels the entrepreneur into authentic leadership. From the au-
thentic leadership experience the entrepreneurial leader attracts followers in
which knowledge is shared, a culture of teamwork is created and an organiza-
tion has been built.
PART II: PROFILE OF A ETRE-

Herb Kelleher is known as one of the PREEURIAL LEADER
most successful entrepreneurs for dis- Herb Kelleher is known as one of the
covering Southwest Airlines. During a most successful entrepreneurs for discover-
ing Southwest Airlines. During a dinner
dinner conversation, Kelleher and his conversation, Kelleher and his co-founder,
co-founder, Rollin King, drew their en- Rollin King, drew their entrepreneurial dis-
covery on a cocktail napkin launching a vi-
trepreneurial discovery on a cocktail sion that would change the airline industry
napkin... forever (Keidel, 2005). This unique exam-
ple of how the business was launched intro-
duces a level of informality that carried
Kelleher through twenty-eight years of prof-
itability in the airline industry. Through Kelleher’s leadership, Southwest Air-
lines reached a level of success that had never been achieved in airline history
(Bird, 2003).
Kelleher’s triumph was driven by his ability to lead and his theories of
leadership. Through Kelleher’s entrepreneurial years there were four primary
leadership guidelines that had driven Southwest Airline’s success. Kelleher be-
lieves that a leader should: 1) Create a culture that “nurtures and allows for
constant change” (Darling, Gabrielsson & Seristo, 2007, p. 5); 2) be humble by
interacting with others on a level playing field; 3) provide opportunities for peo-
ple to have fun at work; and 4) continually inspire and influence the entrepre-
neurial spirit by encouraging employees to make decisions.
Kelleher embraces relationship theories in his leadership style. First as a
transformational leader he focuses on the connections he makes with others
through his personal core values of humility, openness and trusting others to do
their job. He utilizes a transformational leadership style to inspire and engage
the hearts and minds of others to do what he is committed needs to be done.
Second, his charismatic persona is not only his approachability but his essence,
or moral fiber, which people are attracted to. Sankar (2003) defines charismatic
leaders as those that “utilize empowering strategies rather than controlling
strategies to influence followers” (p. 45). This style of leadership reflects Kelle-
her’s character as he portrays not just charismatic communication skills but au-
thentic, ethical leadership. The combination of character and charisma as
proposed by Gibson & Blackwell (1999) is not only what made Kelleher an in-
novator and achiever in relationship to the taxonomy; these attributes also lever-
aged him to the next taxonomy level of authentic leadership. As the thought
leaders state, “Kelleher is an ideal example of a charismatic leader who has

avoided the controversial and ethical dilemmas of charisma” (p.1).
LEADERSHIP CHARACTERISTICS
Upon completing a synthesis of Kelleher’s paradigms for entrepreneurial
leadership compared to the proposed leadership taxonomy, the following discus-
sion reveals that the entrepreneur indeed has components of each taxonomy ele-
ment. The discussion pursues this discovery and suggests that each component
of the taxonomy builds upon the next for entrepreneurial leadership success.
Continuous Innovator
The taxonomy proposes that an innovator is one that continuously en-
gages in discovery, vision and creation. The ability to innovate generates a keen
sense of awareness, insight and creativity to solve unmet needs that others have
perhaps not thought of or considered. Kelleher not only personally practiced
these attributes of innovation, but primarily used a leadership style in which he
influenced others within the organization to become intrapreneurs. His philoso-
phy was that new ideas are generated from associates that are closest to chal-
lenging situations that can help provide solutions to meet customer needs. By
encouraging idea generation and risk taking, each intrapreneur will satisfy their
primary needs for leadership, achievement and affiliation (Clifford & Cavanagh,
1985). The results led to a multitude of intraprenuers within Southwest Airlines
who were encouraged to practice innovative thinking. Kelleher’s approach to
innovation was to provide a safe environment where mistakes are allowed, em-
ployees learn by doing and members within the organization feel they can be
trusted to generate new ideas and decisions that will result in customer satisfac-
tion. Darling & Beebe (2007) refer to this assumption as “a safe/fail” environ-
ment in contrast to “a fail/safe organizational culture”.
Kelleher’s theory of innovation not only created a forum for innovation,
but also provided Kelleher the propensity to trust first before waiting to see if
members could be trusted. By trusting and valuing people, Kelleher was able to
socially engage more members in his vision by increasing his level of delega-
tion so associates could try out their innovative thinking.
Achievement Driven
Now that the discovery of a solution of idea has been created, an entre-
preneur is driven by a compelling purpose to make the new discovery a reality.
“Entrepreneurs often do seem like special people who achieve things that most
of us do not achieve” (Gartner, 1988, p. 22). In Kelleher’s case, his alignment
with the taxonomy components of passion, driving purpose and contrary thinker
are validated in his ability to achieve more than others by socially networking
with competitors, politicians, employees and customers in order to persuade
them toward his purpose. Christensen (2002) proposes that an entrepreneur must
operate within a social network aligned with the organization’s values in order
to pre-empt failure.
As a contrary thinker, Kelleher approaches people with value but will
not hesitate to be firm and short with those that present conflicting recommen-
dations from the principles in which he leads and operates. Impending failure
may cause an entrepreneur to shut down, deviate from their core values, and re-
frain from gaining insights and new knowledge that would guide the entrepre-
neur to a different course of action (McGrath, 1999). Kelleher, the master of
“win/win partnerships” (Gissoni, 2002) notes the value of getting support from
stakeholders both inside and outside the organization to maximize organiza-
tional success.
Managers have
ideas, provide sug- Takes Action
gestions and pursue Managers have ideas, provide suggestions and pursue options that data
or facts suggest will have a greater chance of succeeding than failing. In con-
options that data or trast, entrepreneurs just “do it”. In other words, entrepreneurs take action from
facts suggest will their gut, intuition and instinct rather than contemplate over whether the deci-
have a greater sion or recommendation may or may not work. Herb Kelleher is the essence of
entrepreneurial action.
chance of succeed- In contrast to an entrepreneur that may stagnate at the achievement level
ing than failing. In of the taxonomy, Kelleher goes to the next level by proactively engaging associ-
ates to solve the problems of internal and external customers in order to get im-
contrast, entrepre-
mediate results. Melymuka (1998) refers to Kelleher as a leader that is
neurs just “do it”. “oriented toward results, not process” (p. 70). Examples include investing in
high-tech weather technology and reservation systems to solve problems now
rather than looking for options or alternatives to lower costs. Through this “take
action” mode in which some have referred to Kelleher as the “energizer bunny
of the skies” (Gibson & Blackwell, 1999), he involves others compared to tak-
ing on the mission alone. The ability to influence others is how he gains mo-
mentum by mastering the top two components of the taxonomy: authentic
leadership and organizational builder.
Authentic Leader
An entrepreneurial leader is committed, passionate and direct about his
or her beliefs, core values and leadership philosophy. To be authentic is to be
true. Followers respond to leaders that are true to themselves and to others.
Self-leadership is being true to one's character. Research indicates that entrepre-
neurs are stronger in emotional intelligence components by turning adversity
into determination, frustration into motivation and stress and anxiety into self-
reflection (Cross & Travaglione, 2003
For the vision to flourish a strong leader must exist in contrast to a
strong manager. An entrepreneurial leader provides the foundation for keeping
the entrepreneurial spirit flowing. Specifically, Kelleher sets the stage for open
communication channels by creating an organizational structure where ideas
and information flow freely. This means that all members within the organiza-
tion are to be receptive to anyone’s suggestions, innovative thoughts are to be

proposed to anyone regardless of position, and an update is to be provided back
to the innovative thinker within one week of the proposed idea (Cohen, Watkin-
son, & Boone, 2005). The qualities of commitment, openness and honesty to
people are what generates productivity and validates why Southwest associates
believe their job is important and primary to building the organization (Lucier,
2004).
Organization Builder
When interpreting what an entrepreneur primarily does, as proposed ear-
lier in the taxonomy, those thought leaders that have studied the phenomenon
concur that an entrepreneur is an organizational builder (Gartner, 1988). With
skills ranging from business “formation, growth and expansion” (Cope, 2005),
the entrepreneur pursues and persists to create a unison of people that will help
him or her fulfill his or her innovations and solutions.
Kelleher recognized three areas of leadership vital to success. First, trust
that people will make the right decisions; second, if something isn’t working
abandon it; and third, network and socialize with others to ensure other thought
leaders provide guidance when times get tough.
To accomplish these objectives the entrepreneur must refrain from get-
ting involved in the day-to-day details of running the business. “A primary fac-
tor that prevents the creation of a culture of excellence within many
contemporary organizations is that they are often over-managed and under-led”
(Darling, Gabrielsson, & Seristo, 2007, p.6). Kelleher practiced the art of “let-
ting go” by encouraging people within the organization to take action, learn
from their mistakes and solve their own problems. This ability to trust, be pa-
tient and allow for errors to occur does not come naturally to entrepreneurs
(Matta & Ashkenas, 2003).
Entrepreneurs are notorious for hanging on to their ideas, even if they
are not working. Kelleher suggests that entrepreneurs need to let go of their ego
and stop doing what is not working rather than permit a failure to drain organi-
zational resources. For example, Kelleher uses an analogy of a science experi-
ment. If the experiment fails, then you move on to doing something different to
make the experiment work rather than continue to sustain the same process.
This exercise in humility is a core value that Kelleher espouses within his lead-
ership style and the mission statement of the organization (Bird, 2003). Kelle-
her’s philosophy is that “our primary potential enemy is ourselves, not our
competitors” (Lucier, 2004).
COCLUSIO
This researcher developed and proposed the entrepreneurial leadership
taxonomy prior to selecting Herb Kelleher as the entrepreneur to profile. After
researching the entrepreneurial characteristics of Kelleher in comparison to the
taxonomy components the taxonomy appears to have significant alignment with
the proposed succession of taxonomy elements as well as descriptors. After re-

viewing Kelleher’s profile and conducting research on his leadership style, the
emphasis of his entrepreneurial spirit has been accomplished through others.
Examples include themes of generating value to internal and external cus-
tomers; living life with adventure; joking and having fun; listening to improve
the customer experience; and knowing when not to innovate if the idea does not
generate customer value. With this insight, the taxonomy could be refined by
perhaps reviewing the third tier of taxonomy, “Takes Action”, to include compo-
nents that involve others in contrast to the current emphasis of how the entrepre-
neur individually takes action on his or her vision. More research is needed in
this area prior to making the change to the “Takes Action” component and de-
scriptors as the majority of entrepreneurs may primarily involve others in the
fourth and fifth tier of the taxonomy as it is presently designed.
PART III: GLOBAL IFLUECE O CREATIVITY

Herb Kelleher launched Southwest Airlines at a time when competition was im-
mense, customers were searching for the lowest airline ticket, the unions were
unyielding and the industry itself was suffering from erratic performance. The
pressure to discover, provide and fulfill a need to offer a faster, low-cost service
in contrast to riding a bus or taking a train was imminent. Kelleher took on that
challenge by creating a strategy to “draw travelers not from other airlines, but
from cars, buses and trains, by providing them the least expensive and fastest
service available” (Lucier, 2004, p. 2). For this strategy to come to fruition,
Kelleher became a master communicator that not only influenced others in the
newly formed organization but redesigned the airline industry. For this achieve-
ment Kelleher was awarded the “Lifetime Achievement Award by the Strategic
Management Society (SMS)” (Lucier, 2004, p. 2). The SMS is an association of
global strategists from academia and corporate perspectives.
Kelleher’s dream was an immense undertaking. In 1971 there were eco-
nomic considerations, industry complexities and large barriers to entry within
the airline industry that would have to be overcome in order for this vision to
turn into reality. The following summarizes the global pressures that occurred
during Kelleher’s entrepreneurial journey and aligns the proposed entrepreneur-
ial taxonomy components with Kelleher’s actions as he encountered and created
a strategy in order to obtain leadership success.
CREATIVITY I ACTIO
An entrepreneur’s primary function is to take a thought or sighting and
formulate a solution into a new way of thinking (Darling, Gabrielsson &
Seristo, 2007). This ability to create and innovate may produce a feeling of
overconfidence resulting in the entrepreneur’s decision to underestimate how
long and what resources are needed to fulfill his or her vision (Hayward, Shep-
herd, & Griffin, 2006). This was definitely the situation with Kelleher. Kelle-
her would envision a new strategy of what could be achieved with such an
optimistic spirit that he generated numerous possibilities rather than potential

obstacles. Hayward, Shepherd & Griffin (2006), refer to the “overconfidence
syndrome” as the hubris theory of entrepreneurship. The hubris theory proposes
that by believing anything is possible the prospect of the entrepreneurial venture
to potentially fail is accelerated. In Kelleher’s situation this was not the case. In
contrast to the majority of entrepreneurial tendencies, the authors propose in
their theory that the skill of overconfidence may be tempered through social net-
working by “attracting resources, especially from impressionable stakeholders”
(Hayward, et al., p. 170). Kelleher’s ability to socially network and engage oth-
ers in his vision propelled him to overcome global hurdles that were sure to
cause distraction and complexity as he aspired to continue his aviation mission.
GLOBAL CHALLEGES AD PRESSURE

As Kelleher was launching his strategy to diversify the way the world
would respond to commercial aviation, the environment in which the entrepre-
neur was operating involved many trials and tribulations. DiPietro (2003) pro-
poses that for an entrepreneur to be able to be innovative, two components
much exist. First, a favorable environment; and second, a courageous entrepre-
neur that is not risk adverse. At the time Kelleher launched Southwest Airlines
one of the two components was present – a bold entrepreneur but not a favor-
able environment. Kelleher faced three primary global challenges that show-
cased his ability to not only innovate, achieve and take action (all components
from the proposed taxonomy) but also how to overcome the global pressures of
the airline industries’ greatest obstacles: deregulation; mergers and acquisition
activity fighting for market share; and the constraints of operating under The
Wright Amendment.
DEREGULATIO
Due to deregulation of the airline industry, airlines were forced to rede-
fine their niche in the market. The Airline Deregulation Act of 1978 created
pressure throughout the industry to become “the competitor” as this signified
the location of where airlines would conduct business (Farris & Pohlen, 2006).
According to Toh & Higgins (1985), the preferred strategies to remain competi-
tive were for airlines to make their presence known and become the carrier of
choice within the region. The options Toh & Higgins proposed to be successful
under the circumstances included for the business to: 1) take action by increas-
ing the number of flights offered; 2) acquire a fleet of smaller aircraft; 3) estab-
lish a hub; and 4) offer routes that are exclusive to the carrier.
Kelleher’s model for Southwest Airlines followed this proposal as his
strategy by selecting “Love Field over Dallas-Fort Worth Airport and Hobby
over Houston Airport to avoid losing its feeder traffic to the main airports” (Toh
& Higgins, 1985, p. 16). This entrepreneurial spirit to “take action” on airports
that were less known would in Kelleher’s model provide the opportunity to en-
hance Southwest Airlines presence by establishing hubs, obtaining a fleet of
smaller Boeing 737s, and providing exclusive routes and schedules that would
align customer needs to Southwest’s model. This approach would ensure each
Southwest flight would be filled to capacity. These actions were examples of
Kelleher’s ability to innovate, achieve, take action and build an organization as
proposed in the entrepreneurial leadership taxonomy.
Mergers and Acquisitions

In a two year period between 1985 and 1987 there were twenty-four
mergers and acquisitions (M & As) within the United States jet airline industry
(Jordan, 1988). Southwest Airlines was performing at a profit in 1984 and with
the M & A activity the concern arose that airlines would gain market share and
monopolize the airline industry. New challenges arrived as for some airlines did
not stay profitable due to merger problems. They incurred substantial losses as
they struggled to handle integration troubles associated when companies acquire
one another. Instead of gaining market share as was the purpose for merging,
they were dealing with bottom line losses. This unstable market generated high
levels of uncertainty which resulted in customer dissatisfaction and lesser mar-
ket share for some.
Kelleher was able to overcome the obstacles that came with M & A in-
volvement. For example, in 1986 Southwest Airlines has it highest year in prof-
its while being involved in an acquisition with TranStar (Jordan, 1988).
TranStar was an acquisition and was not merged with Southwest. Because of
TranStar’s ongoing losses Southwest Airlines discontinued TranStar’s services
in 1987.
The factors that contributed to Southwest Airline’s success compared to
those airlines that did not succeed were numerous. Researchers agree that
Kelleher’s business strategy; leadership style; and legendary networking skills
were the entrepreneurial tools he leveraged to take what could have been daunt-
ing obstructions to new processes, technology innovation and organizational de-
sign (Alamdari & Fagan, 2005; Jordan, 1988; Whitelegg, 2005). For example,
Kelleher worked with team members to develop the first on-line reservation sys-
tem in 1996 to ensure his “hybrid low-cost model” returned high profits as well
as satisfying the needs of the consumer. (Alamdari & Fagan, 2005). This inven-
tion drove low-cost airfares throughout the globe and influenced the affordabil-
ity of airfare for people all over the world.
In sum, there is evidence that Kelleher lead Southwest Airlines through
these uncertain times and maintained a substantial profit while other organiza-
tions were floundering; revealing more evidence of Kelleher’s leadership attrib-
utes are displayed in relationship to the taxonomy components.
The Wright Amendment

The outcome of deregulation created The Wright Amendment which was
designed to restrict large aircraft from flying to cities within a designated serv-
ice region. Initially, The Amendment included the states of Arkansas,
Louisiana, Oklahoma and New Mexico and in 1997 the Shelby Amendment
added Kansas, Mississippi and Alabama to the regulations set for the service
area within The Wright Amendment (Farris & Pohlen, 2006). The Wright
Amendment provided a safe haven for Kelleher’s strategy of providing lower
cost airfares with direct flight destinations where larger aircraft were not permit-
ted to fly.
At first while Southwest was growing, The Amendment prevented air-
lines from flying into Love Field that held more than fifty-six passengers which
allowed Southwest to gain control over the market share within the region.
However after 8 years of following The Amendment restrictions, which only al-
lowed Southwest to fly within the boundaries of Texas, Kelleher and his team
went to the Texas Supreme Court followed by the U.S. Supreme Court and ar-
gued that The Amendment was outdated and limited the organization’s growth.
It was through the Southwest’s solid, customer-driven service culture within the
state of Texas that their loyal customers eagerly helped expand the business
once The Amendment was lifted. “To this day Southwest remains the most suc-
cessful airline in the United States and the most copied in the world (Whitelegg,
2005).
COCLUSIO
The taxonomy proposes that an entrepreneur is a continuous innovator
by engaging in the phases and behaviors of discovery, vision and creativity.
What this means is that in order for an entrepreneur to handle the global barriers
to entry they must be a rugged individual that is diverse from others. Entrepre-
neurs thrive on pressure, whether global or internal, as they are achievers that
prefer to work through challenging situations to reap the rewards that occur
throughout the journey. An authentic entrepreneur knows how to create “major
structural social change” (Drayton, 2005). It is through global influences that
Kelleher become a change maker. By being able to handle the ongoing, envi-
ronmental changes Kelleher had the creative influence to turn what some may
have called adversity into prosperity. In his own words, Kelleher (1998) de-
scribes an entrepreneurial spirit as “people who are willing to take a chance for
an unguaranteed future return, people who are willing to upset the present status
quo in the face of criticism, and people who are willing to take a plunge into the
unknown to remake the future” (p. 2). It is through Kelleher’s personal commit-
ment to his vision that he is risk-taker, innovator, creator and achiever that be-
came not only an organizational launcher but also an organizational builder.
PART IV: CHAGE LEADERSHIP AD ETHICS

The premise of the proposed taxonomy is that successful entrepreneurs
innovate and become achievement driven by creating a vision with possibilities
and a purpose for initiating change. In opposition to the taxonomy, there are
those entrepreneurs that may fail to take action on their vision because they lack
the ability to lead change and take action. These types are innovators and
achievement driven but fail to ascertain the elements of entrepreneurial leader-

ship success. This assertion may be illustrated by Michael Leblanc an airline en-
trepreneur that has envisioned and launched three airlines, at three separate
times with one failing after the other. The latest failure was Jetsgo Airlines. All
three entrepreneurial attempts failed by not being able to keep Leblanc’s vision
from facing bankruptcy (Alexander, 2005).
In contrast to Leblanc, entrepreneurs like Kelleher succeed because they
are change agents; they inspire others to believe in their cause in order to ignite
a spirit; and have a conviction in others to engage in their purpose. Graetz
(2000) proposes that this leadership energy equates to the entrepreneur’s charis-
matic style in order to create in others a capacity for change. It is through the
application of the complete entrepreneurial taxonomy that the entrepreneurial
leader discussed in the paper, Herb Kelleher, has shown evidence that all taxon-
omy attributes must be put into practice to sustain the entrepreneurial vision.
Kelleher the Change Leader
Entrepreneurs not only need to personally take on the attributes of being
a change agent in order to lead change; those that are successful involve others
within the organizational structure. Entrepreneurship is creating a “mutually
producing relationship between action and organizational or social structure”
(Walley & Taylor, 2002, p. 33). As shown in Figure 1 the mutual relationship of
structure to entrepreneurial action is the
basis for sustaining change.
Figure 1: Leading Change through Mutuality
Organizational Entrepreneurial
Structure Action
ote: Graphic adapted from The Constitution of Society: Outline of the Theory of Structuration, by A.
Giddens, 1984, Cambridge: Polity Press.
Kelleher realized the importance of creating internal and external net-

works by developing the intrapreneurial spirit at Southwest Airlines with em-
ployees throughout the organization and generating alliances outside of the
organization that would mutually benefit all. Scott (2007) refers to these al-
liances as “exchange networks” or “elite interlock networks” that pool their ex-
pertise together to arrive at a win/win when difficult situations may arise.
To illustrate the ability of Kelleher as a change leader to mutually satisfy

an entrepreneur’s actions within the organizational structure, at one point during
his role as C.E.O. several employees decided to decertify from the union. While
this difficult situation was occurring there was unrest among the workers; con-
cerned that if they did not have union representation perhaps they would lose
their security and hope of being treated fairly. Kelleher proposed that he pro-
vide a personal contract with the workers that outlined how conflicts would be
handled, procedures for communications and a process for arbitrations (Kelle-
her, 1997). The purpose of this change was not to solve the problem through a
written contract. In contrast, the change was to build the trust and bridge the
gap between the perceptions of management and workers. This change was a
stepping stone to building positive relationships that resulted in the organization
not having any grievances for one year after the contract was agreed upon.
The taxonomy suggests the attributes of risk taking, problem solving and
being proactive as essential components for an entrepreneurial leader to take ac-
tion and lead change. This example of Kelleher’s ability to take on a challenging
situation and make a positive, long-term change is evidence that the taxonomy
components are representative of entrepreneurial leadership.
Leadership Style
When the vision is understood and the leader is credible, followers are
able to understand the purpose of the change, how they fit in and what the out-
come of the change will provide for them as well as for the organization. This
form of transformational leadership “builds it path on the leader’s vision” to ig-
nite those within the organization to go “beyond the status quo (Khan, 2006, p.
65). Not only does this style of leadership align with leading change, the entre-
preneurial aspect of purpose and vision is an expectation from followers to aid
them in coping with the proposed change (Woodward & Hendry, 2005).
What are the characteristics of Kelleher that contributes to his success in
leading and managing change? Thought leaders on this subject have unique per-
spectives. Weiss (2001) proposes that leading starts with “absolute integrity”;
Patton (2002) suggests that staying engaged and communicating the vision is
paramount; Bruhn (2004) argues that leading is believing and demonstrating
that “members are the organization’s greatest asset” (p. 133). All three of these
thought leaders have described the leadership characteristics and behavior of
Kelleher’s success. His entrepreneurial leadership and spirit is an example of
how change is successfully led.
The proposed theory of leadership and taxonomy argues that successful
entrepreneurship requires a leader to take action in alignment with the core val-
ues of the organization and the intent in which they lead. According to Sankar
(2003), the melding of empowerment, charisma, abstaining from evil by leading
with integrity is what constitutes a transformational style of leadership. Trans-
formational leadership is a combination of charismatic attributes and authentic
leadership. Kelleher’s style as a transformational leader has driven not only
change but he has also exposed how to become an authentic leader along the
journey.
Authentic Leadership
The proposed entrepreneurial leadership theory suggests that an entrepreneurial
leader is one that takes action to fulfill an unmet need by not only creating and
developing a solution but also by implementing the solution through the forma-
tion of an organization. A successful change leader and entrepreneur is an orga-
nizational builder that networks and appeals to the social needs of the internal
and external environment. The taxonomy reflects that the entrepreneurial leader
has not only the ability to take action and lead change but to lead within the
boundaries of his or her personal core values which in essence reveals the entre-
preneur’s true character.
Challenges to the core values of the entrepreneur occur each and every
day. In today’s competitive market to become more globally accessible, entre-
preneurs may be persuaded to engage in unethical behaviors in order to meet the
demands they perceive are required to do business. This pressure to conform
perhaps incurs from lack of experience in the business market, financial con-
straints, high barriers to entry or a compelling drive to succeed at all costs.
Tonoyan et al., (2006) refers to these influences as institutions within the exter-
nal environment that may cause an entrepreneur to refer to corrupt practices.
Some thought leaders propose the notion that the entrepreneurial spirit encour-
ages unethical choices (Hannafey, 2003). Ranging from how an entrepreneur
formulates his or her strategy to day-to-day decision making, the research from
Hannafey concurs with Tonoyan et al (2006) that environmental factors may
detrimentally influence entrepreneurial actions. In contrast to the environment,
the entrepreneurial role itself is determined to be conducive to ethical behaviors.
This researcher agrees with this conclusion. It is not the entrepreneurial role,
position or spirit that generates unethical behavior it is the lack of discipline and
conviction to stay true to ethical codes of conduct that result in unethical leader-
ship.
Ethics “deals with the distinction between what is right and wrong”
(Morris et al., 2002, p. 332). This means an entrepreneur is capable of making
ethical choices and may often encounter environmental influences to test his or
her convictions. The critical element is that all entrepreneurs do not have the
propensity to employ their values when confronted with unethical situations
(Hannafey, 2003). Through discipline the authentic leader stays true to he or
her values and convictions which are the guiding principles of how he or she
makes decisions. Metzger, Dalton & Hill (1993) remind us that "values are
what you say you believe; ethics are how you actually behave" (p. 32).
Kelleher is an example of behaving as an authentic leader. Through his
many acts of leadership he had demonstrated his commitment to the taxonomy
components of character, core values and self awareness by being “totally true
to himself and totally consistent”; “the public Herb is the private Herb” (Yeh &
Yeh, 2004).
Throughout the research of Kelleher’s leadership style the consistent
message is what you see is what you get. Kelleher has been referred to as pas-
sionate, confident, walks the talk, has fun and is known for making a difference
with those he works with. In his opinion, when it comes to ethics the most im-
portant commitment to ethical behavior is to “be yourself” (Kelleher, 1997).
Although one could conclude or surmise what “be yourself” means; Kelleher
suggests that by using common sense, having fun, and by trusting others a com-
munity of respect and productivity will flourish. Southwest Airlines code of
conduct is based on a casual approach to instilling ethical behavior. Although
they have a written code of conduct, the organization prefers to “treat each other
with common sense – that people would know how to be honest” (Blank, 2003,
p. 2).
A Social Entrepreneur
Kelleher’s experience of entrepreneurial success instilled a need in Kelleher to
craft a strategy for developing a forum in which future leaders could study the
science and the art of entrepreneurship. His vision was to provide entrepreneur-
ial opportunities to future entrepreneurs by forming the Herb Kelleher Center
for Entrepreneurship at the McCombs School of Business located at the Univer-
sity of Texas in Austin.
Kelleher’s commitment to giving back to the community to inspire fu-
ture leaders and organizations is a reflection of his authentic leadership where
his purpose is primarily “to create social value, rather than personal and share-
holder wealth” (Zadek & Thake, 1997, p. 31). His donation of $4 million dol-
lars in 2001 to The University of Texas at Austin in addition to time and
expertise makes public his intention of what Austin, Stevenson & Wei-Skillern
(2006) refer to as the social entrepreneurship framework: integrating people
(students and faculty) with capital ($4 million) to provide a much needed oppor-
tunity (education of entrepreneurship).
In the case of Kelleher it is not the drive of organizational success that
has precipitated his social entrepreneurial aspirations. Kelleher believes that
through his good fortune, ethical values and humility he may influence and in-
still what Mintzberg (1987) refers to as a “cycle of change” (p. 72). In sum,
through strategy, vision, experience and ethics, an entrepreneur has emerged
into a social entrepreneur through his leadership commitment – living his core
values.
RECOMMEDATIOS AD COCLUSIO

Kelleher is not an ordinary entrepreneur that just envisions an idea and
formulates an organization based on meeting the needs of future customers.
Kelleher is an entrepreneur that has made a noteworthy difference and footprint
in the airline industry, in Southwest Airline’s model for success and in the per-
sonal lives of many whom have had the opportunity to work with him. He is a
leader that exudes leadership behaviors which align with all attributes of the
proposed taxonomy. He has propelled himself as a model entrepreneurial leader
in which future entrepreneurial leaders can learn from.
Even though Kelleher is a leader in which one would want to mirror, the
following recommendations from this researcher would aid in duplicating and
multiplying Kelleher’s success in a fashion that would help future leaders and
organizations to grow and develop in their performance. The recommendations
include succession planning, building leadership bench strength, and incorporat-
ing Kelleher’s knowledge of building a powerful and productive culture
throughout the organization compared to becoming the culture magnet to which
members in the organization have become attracted to.
The risk that occurs from Kelleher’s personality of a charismatic leader
is his leadership aura. When a charismatic leader presents a vision of what a
follower wants to hear, the leader becomes the savior, or hero, to the existing
problem that the follower is experiencing (Raelin, 2003). It is not uncommon
that a member of a top management team in an organization to be known for
their charismatic style which causes members to flock to their “pleasing person-
ality” and the notion that this leader is “extraordinary”. The risks that may
occur from this type of leader-follower connection include: 1) follower’s tend
to need the leader’s daily dose of inspiration to keep them motivated; 2) the
charismatic leader is great at inspiring but lacks substance in their message; and
3) when the charismatic leader leaves the organization the followers are lost –
they simply feel a sense of defeat and often struggle to keep the organization’s
momentum in a positive direction. It is this sense of loss in Kelleher’s leader-
ship style that perhaps may be Southwest Airline’s greatest challenge as they at-
tempt to do business without him.
Succession Planning and Development

When Kelleher retired from Southwest Airlines the leadership of the or-
ganization was transitioned to two colleagues that had worked with Kelleher for
over 30 years, Colleen Barrett and James Parker. With this leadership
changeover the organization’s culture started to falter. The organization’s
turnover increased from 5% to 10% as a result of Barrett and Parker having a
significant difference in leadership styles compared to Kelleher. For example,
Barrett and Parker had served as operational leaders and task managers and
when awarded the positions of CEO and COO have come across as more re-
served and business-like compared to Kelleher (Smith 2004). The regression of
the transformational leadership style from Kelleher to transactional leadership
or Barrett and Parker has fractured the culture where perhaps the airline may
suffer challenges in employee morale, productivity and efficiencies compared to
Kelleher’s commitment to engaging the hearts and minds of the people. To pre-
vent this abrupt transition, Kelleher needed to select leaders on the top manage-
ment team that emulated his style of leadership to ensure the transition of
leadership was a smooth as possible. Currently the differences in leadership
styles are being attributed to an abrupt change in culture which is creating insta-
bility in the work force resulting in increased turnover. Khan (2006) reminds
leaders when making this magnitude of change that in order to be successful “it
is necessary that these inconsistencies should be removed and to make it more
credible, an environment of trust and openness has to be created” (p. 64).
Leadership Bench Strength

Kelleher needed to have strengthen his future leaders in entrepreneurial
orientation to ensure the leaders within the organization could continue his strat-
egy of “innovativeness, proactiveness, and risk taking” (Cools & Van den
Broeck, 2007, p. 27). The present leaders tend to have more of a “knowing
style” in which leadership behaviors are primarily logical, and objective which
come across to the organization’s population as impersonal and systematic
(Cools & Van den Broeck, 2007). Although these behaviors are important to as-
pects of managing the organization, the emphasis on culture in which Kelleher
utilized as his primary tool for organizational success must be incorporated to
ensure the leaders lead the organization inconjuction with the skill set of manag-
ing.
Kelleher is an example of a “star leader” where the culture of Southwest
was Kelleher himself in contrast to the culture living within the members of the
organization. When a CEO has the star power to become “the culture” this abil-
ity is effective while the entrepreneurial leader is present; it becomes a liability
when the transition of leadership occurs to the new CEO. Kelleher needed to
create a culture within the intrapreneurs that were challenged to make decisions
on the task side of the business to also take on the responsibility of leading the
culture throughout the network. Since the members relied on Kelleher’s trans-
formational style “to be” the culture the change in leadership had a negative im-
pact.
Knowledge Distribution
Kelleher knew how to grow and build an organization. The problem that
occurred is that he did not teach others how to do it. It is not uncommon for
leaders or experts that are talented in a particular area to have difficulty teaching
others how to duplicate their talent. Although Kelleher set an example in many
ways, the recommendation is that he would have developed a university within
his own organization that specifically was designated to instill within the organ-
ization how to acquire the entrepreneurial spirit in relationship to each member
sustaining the culture. This recommendation is not to be confused with the
training the Southwest provided in the areas of having fun, making decisions
and satisfying the customer. Kelleher perhaps has some aspects or tendencies of
being in the limelight of success rather than being a teacher of building a cul-
ture. Tichy (2002) suggests that the source for leaders must be a “teachable
point of view” comprised of ideas, values, emotional energy and edge. This
means that the framework for leadership is centered on winning principles that
are based on ethical choices and decision making which the leader in turn
teaches others.
In sum, all of the recommendations gravitate around the topic of the im-
portance of the entrepreneurial leader leaving a culture where the organization is
sustained and positioned to continue on the path of success in contrast to weak-
ening and in some cases failing when the entrepreneur leaves the organization.
After researching and reflecting on entrepreneurial leadership theories and mod-
els of success, it is with this consideration that this researcher would add to the
taxonomy element of “organization builder” the leadership behavior of “organi-
zational sustainability”. This additional component of the taxonomy would
complete the entrepreneurial journey to ensure their legacy lives on.
APPEDIX A
Entrepreneurial Leadership Taxonomy
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Article Written by Mary Kay Whitaker PhD (ABD)

The interest in entrepreneurship has been an area of leadership that has

the solution by launching an organization, the individual has acquired a unique

“Tomorrow’s business leader, it is

clear, will need to be able to organ-

have to know how to anticipate in-

novation and how to make innova-

leadership is being true to one's character. Research indicates that entrepreneurs

TAXOOMY ITET AD COCLUSIO

PART II: PROFILE OF A ETRE-

leaders state, “Kelleher is an ideal example of a charismatic leader who has

tion are to be receptive to anyone’s suggestions, innovative thoughts are to be

the proposed succession of taxonomy elements as well as descriptors. After re-

PART III: GLOBAL IFLUECE O CREATIVITY

optimistic spirit that he generated numerous possibilities rather than potential

GLOBAL CHALLEGES AD PRESSURE

Mergers and Acquisitions

The Wright Amendment

PART IV: CHAGE LEADERSHIP AD ETHICS

achievement driven but fail to ascertain the elements of entrepreneurial leader-

Figure 1: Leading Change through Mutuality

Kelleher realized the importance of creating internal and external net-

To illustrate the ability of Kelleher as a change leader to mutually satisfy

RECOMMEDATIOS AD COCLUSIO

Succession Planning and Development

Leadership Bench Strength

Drayton, B. (2005, Spring). Everyone a Changemaker. Peer Review, 7(3), 8-11.

Graetz, F. (2000). Strategic change leadership. Management Decision, 38(8), 550-562.

Keidel, R. W. (2005). Strategize on a napkin. Strategy & Leadership, 33(4), 58-59

Kelleher, H. (1997, Spring). A culture of commitment. Leader to Leader, 4, 20 – 24.

Kelleher, H. (1998). Speech-Herb Kelleher. Competitiveness Review, 8(1), 2.

Lazear, E. (2005). Entrepreneurship. Journal of Labor Economics, 23(4), 649-680.

Locke, E. (2000). The prime movers. New York: Amacom.

Review, 24, 13–30.

Melymuka, K. (1998, September). Sky king. Computerworld, 32(39), 68 – 71

Mintzberg, H. (1987). Crafting strategy. Harvard Business Review, 65(4), 66–75.

Tichy, N. M. (2002). The cycle of leadership. New York: HarperCollins.

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TAXOOMY ITET AD COCLUSIO

PART II: PROFILE OF A ETRE-

PART III: GLOBAL IFLUECE O CREATIVITY

GLOBAL CHALLEGES AD PRESSURE

PART IV: CHAGE LEADERSHIP AD ETHICS

RECOMMEDATIOS AD COCLUSIO