Unveiling his plans to BBC staff a day after starting work as the BBC's 15th director general, Entwistle called on employees to "challenge themselves to deliver more creative and distinctive output for licence fee payers".
He also announced a series of further management changes that are aimed at turning the BBC into "a more creative organisation, led and managed in a radically simplified way".
"I intend to change the way we're led to put the emphasis where it belongs - on creative people doing creative things; on our audiences and the exceptional quality of work they deserve," he told staff across the BBC.
Entwistle inherits from previous director general Mark Thompson a BBC that has been hit by major funding cuts following the government's decision to freeze the TV licence fee for six years up to 2016/17.
But it is likely that Entwistle's BBC will face further financial scrutiny as it looks towards the renegotiation of the Royal Charter agreement and the level of the licence fee in 2016.
Speaking from a studio in New Broadcasting House where Newsnight and The Andrew Marr Show are filmed, the new BBC boss said that he felt privileged to have been asked to lead the "finest broadcasting organisation in the world".
He pointed to the recent London 2012 Olympics as an example of the value of the BBC in pulling everyone together around coverage of major events.
Copyright: PA ImagesThe two-week spectacle of the Games brought huge audiences to the BBC with its television coverage, but also demonstrated the value of online platforms, a key area of growth for the future as media consumption shifts to digital.
However, the former boss of the BBC Vision television production division also challenged the BBC over areas that fail to meet audience expectations.
"Though our best is often brilliant - in some of our output, we do settle for less than we should," he said.
"So I believe we owe our audiences a determined effort to raise the creative quality of what we do."
Whilst the BBC was praised for its Olympics coverage, it was criticised from various quarters over the Queen's Diamond Jubilee, including Stephen Fry branding the coverage as "mind-numbingly dull".
> George Entwistle: Big challenges facing new BBC boss
Speaking on the BBC's internal video channel, Entwistle said that he wants the BBC to focus on being more creative.
He told staff: "I want to make a promise - to listen to you and to work tirelessly on fixing the things that get in the way of high creative quality, making the BBC a place where you really can do your best, and deliver the best of British creativity to our audiences."
Entwistle said that he would reduce the BBC's management board from 25 down to just 12.
He explained that this will result in BBC chief operating officer Caroline Thomson, who was his rival for the top job, leaving the BBC at the end of September.
The move is part of a merging of the finance and operations division at the BBC into a single business division.
"With immediate effect, I'm reorganising the BBC to group all the operational and finance functions in one business division under the Chief Financial Officer," he said.
He also called on front-line content makers to take more responsibility for cost savings, but gave them the incentive that some of this fiscal prudence would free up funds to go back into output.