Motivation

According to Kristine Geimure, “Highly Motivated and Energetic” is one of seven key qualities of a success entrepreneur. To meet that quality, we must find out what motivation is and its importance.

McShane and Travaglion (2005) state that motivation is the physical strength of a person that impacts “his/her direction, intensity and persistence of voluntary behaviour”. Additionally, Coulter and Robbins 2002, p.424 also stated that “The willingness to exert high level of effort’s ability to satisfy some individual need”. Generally, motivation refers to the forces that influence a person’s behaviour and performance to satisfy one’s needs.

Among many motivation theories, we will have a look at one popular theory: the Motivator-Hygiene theory (or Two Factor Theory), developed by Frederick Herzberg. The motivation was defined that inside factors related to job satisfaction and motivation, whereas outside factors connected with job dissatisfaction (Coulter & Robbins, 2002). The following diagram is clearly illustrated what contents in the theory:

The motivators (job satisfaction) are produced by growth fulfilment and work outcome, while the hygiene (job dissatisfaction) is made up by work content. Therefore, that is the reason why motivators are not the same with hygiene. Then improving motivators does not mean that it will decrease job dissatisfaction and similarity in another way (McShane & Travaglione, 2005)

Why is motivation important? Most humans are directed, i.e. we don't walk aimlessly; we walk in a certain direction for a certain reason. Not just things in the here and now, but things in the future we cannot yet see. Motivation is the direction we choose to take. According to McShane and Travaglione (2005), motivation affects work performance. For example, someone who has clear objective, right skills and supportive work environment but without enthusiastic (motivation) probably leads to task incompletion.

As a result, to be an entrepreneur, you must always be on the move, full of energy and highly motivated. Based on a study done by Subodh Bhat and Richard McCline of San Francisco State University, the entrepreneurs were motivated primarily by the desire to create something new, the desire for autonomy, wealth and financial independence, the achievement of personal objectives and the propensity for action ('doing') (2005)


References

Bhat, S. & McCline, R (2005). What motivates an entrepreneur? Retrieved 12-05-2008 from http://www.rediff.com/money/2005/apr/19spec.htm

Coulter, M and Robbins, S. P. 2002, Management, 7th edn., Prentice Hall, New Jersey, U.S.A

Geimure, K. 7 Key Qualities of a Successful Entrepreneur. Woopidoo!. Retrieved 12-05-2008 from http://www.woopidoo.com/articles/geimure/entrepreneur-article.htm

McShane, S. & Travaglione, T (2005) Organisational Behaviour on the Pacific Rim, enhance edn., McGraw Hill, Australia.

Leadership: Reflections on "Middle Management" Guest Lecture

The guest lecture “Middle Management – Real Life” discussed about the significant role of middle managers in today’s business environment. It was presented by Mica Wulff Kamm, The Head of Global Product Management, Home Services, BU Broadband, TeliaSonera.

Who are “Middle Managers”? Steward states that middle managers are employees who have subordinates and manage other people directly, but still with top management above them in the hierarchy (1988).

Until recently, the middle managers were being derided, rejected, disempowered and downsized (Sethi, 1999). They had been the target in downsizing activities of organizations for many decades. However, the middle managers role within today’s organization has changed considerably. According in our guest lecturer, “in knowledge intensive industries middle managers are definitely needed”. Sethi asserts that there is no doubt that middle managers can play a critical role in the success of an organization (1999).

Middle managers play an important role in the change process. Their role as “change intermediary” (Balogun, 2003) will “continue to increase in importance as organizations become increasingly” (Balogun & Johnson, 2004). Mica gave us an example of Skype from her own experience to prove that besides executing decisions made by senior management, the middle managers do have a voice in the decision making with the company (2008).

The middle managers also have a critical role in communication within the firm (Westley, 1990). Role of middle managers as communicators increases significantly when change is under way. They must “strive for clarity” (Mica, 2008) from the top management and break down information in a way that makes sense to the subordinates. Mica agreed that information should be available to everyone. However, Mica added, it would be difficult for a middle manager to define what ought to be closed or open. Therefore, information should be provided in a comprehensible and timely manner (Mica, 2008). If it does not communicate effectively, employees will make assumptions and fill in blanks, which results in gossip and rumors senior management and the organization; that obviously obstructs the change process.

I am really impressed with Mica’s suggestion for the middle managers, which is “getting involved”, being accessible anytime, having an open landscape with no walls, no doors. She mentioned employees usually wanted to talk to the middle managers, who “are structurally closer to their employees and so are likely to be more attuned to their subordinates' emotional needs” (Huy, 2002).

One of the cons that Mica said about middle managers is “no time for refinement” because “the middle managers had a lack of time for this activity due to their coordination/management roles” (Balogun, 2003). From Sethi’s research, to perform the role successfully, the middle managers need to develop or enhance the following critical competencies: Self-awareness and 360-degree awareness; Relationship skills/emotional competence; Advanced communication, coaching & influencing skills; Strategic and creative mindset; Career management skills; Continuous learning; Self-esteem. If middle managers invest in themselves to build those competencies, they will not only help their organizations thrive, but will also develop their own careers (1999).

In summary, this guess lecture was very interesting with valuable shared information / personal experience from the presenter, a successful middle manager. I would say “middle manager” is a strategic asset to any organizations because it serves “as a bridge between the visionary ideals of the top and the often chaotic reality of those on the front line of business." (Nonaka & Takeuchi, 1995)


References

Balogun, J. (2003) From Blaming the Middle to Harnessing its Potential: Creating Change Intermediaries, British Journal of Management, vol. 14, 69-83.

Balogun, J. & Johnson, G. (2004) “Organizational Restructuring and Middle Manager Sensemaking”. Academy of Management Journal. Vol 47, 523-549.

Huy, N. Q. (2002) Emotional Balancing of Organizational Continuity and Radical Change, Administrative Science Quarterly, 47(1), 31-69.

Kamm, M.W. (2008). Guest Lecture November 24th, Middle Management - Real Life, Retrieved 2008-11-27 from Jönköping International Business School’s website

Nonaka, I & Takeuchi, H. (1995). The Knowledge-creating Company: How Japanese Companies Create the Dynamics of Innovation", Oxford University Press

Sethi, D. (1999). Leading from the middle. Human Resource Planning. 22(3) , p. 9-10.

Stewart, R. (1988). Managers and their Jobs (2nd Edition). London: MacMillan Press.

Westley, F. T. (1990) Middle Managers and Strategy: Micro-Dynamics of Inclusion, Strategic Management Journal, Vol. 11 (5), 337-351.

2008 Innovation Lecture by Tristram Carfrae

While searching information for a blog post, I found a really interesting lecture "The Art & Practice of Engineering in a Digital World" presented by Tristram Carfrae in "Warren Centre 2008 Innovation Lecture" session which was held in Australia in June, 2008. Tristram Carfrae received Innovation Heroes Award 2008 for outstanding Australian innovations in engineering technology.

Tristram Carfrae, a structural engineer and Principal at Arup Australasia, is known for challenging established ways and exploring better solutions, and for the design of award winning buildings. He is regarded internationally as a leading designer of sporting stadia and lightweight long-span structures.Tristram is behind the design of The Water Cube - Beijing’s National Aquatics Centre for the 2008 Olympics. He also boasts an impressive portfolio of facilities created for the 2000 Sydney Olympics, including the RAS Exhibition Halls, the Dunc Gray Velodrome and the Olympic Tennis Centre. In 2001 Mr Carfrae was recognised as Australian Professional Engineer of the Year by the Institution of Engineers Australia. Carfrae is also an adjunct professor in the School of Built Environment at the University of New South Wales, Australia.

2008 Innovation Lecture
"The Art & Practice of Engineering in a Digital World"
http://www.warren.usyd.edu.au/il_intro.html

Enjoy!

LUSH - Driving forces & Why?

Lush Fresh Handmade Comestics, a UK-based producer and marketer of ethical beauty products with around 500 stores worldwide, had effectively differentiated itself from its competitors through its strong ethical stance, products and packaging, and the way in which it conducted its business (Purkayastha, 2008). We are going to discuss about the internal and external sources of innovation for Lush, based on the Innovation case seminar several weeks ago.

Constantine sold all his rights on C&W products to Body Shop for £6 million and invested the money in Cosmetics to Go, a mail order catalogue of beauty products (CTG). However, CTG was not as successful as expected. He went bankrupt with a large debt. Constantine and his team then set up a new venture called Cosmetic House with £14,000. With a small amount of money, they improvised with irregular tools in Constantine’s kitchen to produce cosmetics. The first natural handmade products of Cosmetic House came into view in a creative way. The unexpected CTG failure was an important source of the innovative production – improvised cosmetics.

Constantine, with a strong ethical standpoint with long-standing commitment to eco-friendly natural products, anti-animal testing, and fair and ethical trade, has been the main driver of innovation at Lush. He successfully drove the message downwards to his staff, committed employees who share their founders’ passion for the values promoted by Lush brand. A superior leadership strategy motivates people to do more, dream more and learn more. Constantine and his team have the strong desire for growth. They are altogether making the innovation to occur.

One driver of innovation is the customers themselves. According to Gary Hamel – the world's leading expert on business strategy, “Every industry on the planet is being reinvented from the customer backwards. Companies need to bring as much innovation to the demand chain as they brought to the supply chain.” (Kirkpatrick & Hamel, 2004). Lush has implemented the same strategy. The name ‘Lush’ came from a customer in Edinburgh as a result of the company competition to find a name. The customers have been continually involved in Lush product development. Lush’s fanatics, called ‘Lushies’, participate in lively discussions on company’s forum, speak their minds, propose new products, vote on alternatives and suggest names such as "smitten," "whoosh," "aurora" to inspire the cosmeticians to create new products. (Conley, 2005).

Public opinions and customer demands are key drivers. People were becoming aware of the need to protect the environment and increasingly expressing the value they attribute to environmental protection through shopping behavior. They understood the impact of packaging in terms of the environment and their responsibilities to diminish the amount of waste. The ideas of ecological and social responsibility have become more and more important. That was the key factor for Constantine to drive his business with an innovative strategy that met customer and public demands: environmentally friendly packaging.

Competition is one of the external sources for innovation. With strong competition from famous cosmetic brands (Body Shop, Origins – Estée Lauder, Sephona – Louis Vuitton), Lush spent many efforts and resources on innovation initiatives with its own creative team led by Mo, Constantine’s wife. It drove the market by offering innovative products and training the customers how to use them. Lush differentiated itself from its competitors by innovative products, superior customer service, unconventional marketing approach and uncompromising ethical stance.

The regulatory environment also has a strong influence on Lush innovation. Constantine saw “climate changes” as an opportunity and made the necessary innovations ahead of the legislation changes. Before selling C&W to Body Shop, he once got into an argument with Roddick when she decided to replace unbreakable glass containers with plastic containers that could not be recycled. Lush products have minimal packaging or no packaging at all. The “green” packaging is one of the most considerable strategies of Lush. Lush is passionate about the environment and promotes campaigns that encourage environmentally friendly behaviors. In mid July 2007, in a campaign, the brave shop workers educated passers-by on the devastating environmental impact of packaged goods sold in cosmetic shops, supermarkets, and other retailers.

Climate change has generated a huge range of environmental policies and legislation at global and national levels. Packaging Regulations issued in 2003 (Exhibit VII) have supported Lush’s strategy and given it the competitive advantage with existing ‘environmentally friendly’ packaging.

In early days, the high cost of packaging cosmetic products made Lush think of a new resolution. The need was obvious, and the creative team then came up with ”no packaging” or ”minimal packaging” solution. This approach allowed Lush to save money and spend more money on high quality ingredients.

Why innovation? Beckeman, our guest lecturer, stated that one of the main reasons was to create competitive advantage. Michael Porter identified two types of strategies used by companies to obtain competitive advantage: low cost and differentiation (Porter, 1980). Low cost is based on increasing efficiency and cost reduction. In early days, Lush decided on no packaging or minimal packaging because of the high cost of packaging cosmetic products. The money saved could be utilized to put high quality ingredients. Lush was successful in differentiating from its competitors through strong ethical stance, innovative products, “green” packaging and in-store experience. Environment related investments can become sources of competitive advantage (Bonifant, Arnold & Long, 1995). Waddock and Bodwell also mentioned that responsible environmental management can provide a solid basis for competitive advantage, especially for early movers (2004). Lush is very keen on environmental issues by aiming at reducing unnecessary packaging and protecting the environment. Lush does have its competitive advantages over its competitors.

In the next post, I’m going to talk about Lush’s main competitor - The Body Shop: How Anita Roddick started her business and how innovation it was.

References

Beckeman, M. “Innovation within the packaging industry”

Bonifant, B., Arnold M. & Long F. (1995). Gaining competitive advantage through environmental investments. Business Horizons 38/4: 37-47.

Conley, L. (2005). How Lush Cleans Up. Retrieved October 28, 2008 from http://www.fastcompany.com/magazine/96/lush-cosmetics-fasttake.html

Kirkpatrick, D. & Hamel, G (2004, September 6), Innovation Do's and Don'ts, FORTUNE Magazine. Retrieved October 28, 2008 from http://money.cnn.com/magazines/fortune/fortune_archive/2004/09/06/380347/index.htm

Porter, M. (1980). Competitive Strategy: Techniques for analyzing industries and competitors, The Free Press, New York, NY.

Ethics – Key to leadership success

Ethics is about good and evil, right and wrong, and of duty and obligation in human conduct; and how we reason and make choices about them (Hicks, R.). Ethical leadership plays a major role in creation of an entrepreneurial team. Northouse (2007) suggested that ethical leadership is founded on respect, service, justice, honesty and community. Ethical leaders treat other people’s decisions, ideas and values with respect; allow other to be themselves with creative desires. The leaders listen to them attentively, empathize with them and are tolerant of opposite opinions. Furthermore, the leaders place people’s benefits ahead of their own, foster others’ visions and integrate all of them to contribute to a common goal. They have a responsibility to attend to others and be a service to them (Northouse, 2007).

It is said about Robbie Hardy, president of Chapel Hill-based IntraSoft and North Carolina’s Entrepreneur of the Year 1997 by Business Leader magazine, that “She knows what people can do best and empowers them to make the most of their talents." Her colleague confirms, "She gets true satisfaction from helping staff and associates reach higher and perform better. She knows what she does best and what she doesn't, and enthusiastically shares responsibility and power." Hardy’s ethical leadership is evidenced by the fact that she set up a superior entrepreneurial team; and the original CI Technologies (CIT) team stayed together for CI Partners (CIP) and has reformulated itself for Intrasoft (Lester, 1998).

With respect, support, trust and encouragement from leaders, subordinates can feel competent about their work and many innovative ideas come into world without fear for failure. Justice and honesty are also important characteristics of leaders. Leaders keep issue of fairness in mind when making decisions. They do not lie nor do they tell the truth in a destructive way.
Respect, support, honesty and justice are extremely substantial in entrepreneurial teams as they are the key ingredients in developing trust and cooperative relationships between leaders and subordinates which are very important to a successful enterprise process.

Beside their own and followers’ objectives, ethical leaders need to take into account the community’s goals. Leaders have to be sensitive to the world in which they operate. They pay attention to how the firm will affect the community, society and environment. What leaders and their subordinates contribute to community may become sources of competitive advantage, one of the vital drivers for innovative team growth and development. Lush Cosmetics is a typical example. Constantine, founder of Lush, has strong ethical stance of anti-animal testing, “green” packaging (minimal / no packaging) which give Lush the competitive advantage, and help to differentiate Lush from its competitors (Purkayastha, 2008).

In conclusion, the best leaders should exhibit their ethics in their leadership style and actions. Ethics is considered as a secret of leadership success.
Let me leave you with words from Guy Kawasaki, a managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Entrepreneur Magazine: “Given a choice, most people would rather work for an ethical company” – under an ethical leadership (Perry, 2004).


References:

Hicks, R. Ethics and Leadership. Retrieved 2008-11-15 from http://level2.cap.gov/documents/Ethics_and_Leadership_Brief.pdf

Lester, M. C. (1998). 1997 Top Gun Enterpreneur of the Year. Business Leader Magazine. Retrieved on October 31, 2008 from http://www.businessleadermagazine.com/Index.aspx?page=ui.article&PID=7707

Perry, D. (2004). Ethics, Leadership and Success. Retrieved 2008-11-15 from
http://www.perrymartel.com/PDFs/Ethics%20Leadership%20and%20Success.pdf

Purkayastha, D. (2008). Sustainable Packaging Practices at Lush Fresh Handmade Cosmetics. ICFAI Center for Management Research.

Financial Crisis and Entrepreneurs

Most of the world is experiencing a financial crisis of historic proportions. Without question, the crisis will not be over in the short time and the international consequences will be deep and lasting. We all have been stressed by that economic downturn. And via communication channels, we easily realize that the credit crisis has hit small business owners particularly hard.

How can smal business owners cope with the crisis? They should not panic, and try to focus on the solutions to help their companies get out of the difficult time. Howard Anderson, management professor at Massachusetts Institute of Technology's Sloan School of Management, says the first and only rule is to make sure the company doesn't run out of money (Klein, 2008). Some suggestions from Scott Shane (2008), Professor of Entrepreneurial Studies at Case Western Reserve University are:
1. Extend less credit to your customers: provide less trade credit to customers and reduce accounts receivable.
2. Borrow from different sources (Community banks which did not get involved in the toxic mortgage mess, peer-to-peer borrowing)
3. Bootstrap, or raise equity
4. Cut your costs: leasing instead of buying; look at consultant who has not added enough value but costs much or employee who has not shaped up despite warnings…

Although it is considered as one of the biggest threats to most of the world, the situation could change depending on how we react to this. During such a crisis, actually, opportunity often arises.

“This is a time of great opportunity,” Bill Warner - founder of Avid Technology and Wildfire, one of the most successful entrepreneurs in America - said. “This is not a pep talk. This is reality.” Warner started his best-known company, digital media hotshot Avid Technologies, in September 1987, a month before the stock market crash of that year (Kirsner, 2008).

There is no better time to start a company for a number of reasons. Because highly paying jobs have disappeared and employment opportunities in general have decreased, previously unaffordable talented people are now available to. Operation cost for a business (rent, equipment…) is reduced. New business opportunities may be created and can be captured by startup companies. Therefore, entrepreneurs should stay motivated and not give up dreams. Do not delay starting company until the economy is stronger because someone may beat you in the market (Finn, 2008)

Economic crisis is a part of life and business. Those who react to a crisis passively wilt after the crisis passes, but those who react proactively and assertively to it ultimately succeed.

I’d like to end my post with a quote from Horace, a Roman lyric poet & satirist:
“Adversity has the effect of eliciting talents, which in prosperous circumstances would have lain dormant.”


References:

Finn, M. (2008, October 1). There is opportunity in crisis. Retrieved November 3, 2008 from http://the4eblog.com/home/2008/10/2/there-is-opportunity-in-crisis.html

Kirsner, S. (2008, October 2). My Notes from Today's Innovation Unconference. MassTLC Innovation2008 unConference. Retrieved October 30, 2008 from
http://www.innoeco.com/2008/10/my-notes-from-todays-innovation.html

Klein, K. (2008, October 8). How Small Business Owners Can Cope with the Crisis. BusinessWeek. Retrieved November 1, 2008 from http://www.businessweek.com/smallbiz/content/oct2008/sb20081010_904259.htm

Shane, S. (2008, October 6). What can Entrepreneurs do to Deal with the Credit Crisis? Retrieved October 30, 2008 from http://www.smallbiztrends.com/2008/10/what-can-entrepreneurs-do-to-deal-with-the-credit-crisis.html

Flat Organizational Structure – Think about it...

In the article – “The heart of entrepreneurship” by Howard H. Stevenson and David E. Gumpert (1985), the authors discuss about the best organizational structure for a venture and come up with a reasonable answer and explanation. The management structure should be flat, decentralized with multiple informal networks, to enhance communication and decision making process, and mobilize people.

In 12Manage – The Executive Fast Track website, it is stated: “A flat organizational structure is an organizational structure that features relatively few layers of managers between the top of the corporation and the normal employees".

This structure supports innovation at the unit level, provides more effective communication processes and increased flexibility to deal with rapidly changing environment. The decision making process is quicker because of less approval levels. Employees have more responsibility, independence and authority. It is unnecessary for supervisory management to step in unless the plan is off track and an effective corrective action is needed.

My previous company applied the flat organizational structure with few management levels. Due to equally distributed authority, all employees built up a small society of mutual trust and support. We communicated openly, shared thoughts and learned from each other. With support, trust and encouragement from managers, many creative ideas come into world without fear for failure. We once failed to deliver a software product to client. After serious meetings about that failure, the manager realized that the goals should have been discussed, deliberated and adjusted based on communication and feedback among all related employees.

According to Robbie Hardy, president of Chapel Hill-based IntraSoft and North Carolina’s Entrepreneur of the Year 1997 by Business Leader magazine, building and maintaining a flat organization is one way to keep the best employees. “Keeping the team and founders in touch is really important in creating an atmosphere that's healthy where people feel they can do anything”. “You can't expect your people to read your mind,” Hardy said. ”And you can't expect them to create innovative solutions if you're not fostering creativity.” IntraSoft developed a progressive and creative environment in which employees are challenged to use cutting-edge technology to create a unique and innovative product line (Lester, 1998)

Harold Leavitt, professor emeritus of organizational behavior at Stanford University and author of Top Down: Why Hierarchies Are Here to Stay and How to Manage Them More Effectively, highlights one inevitable fact about flat organizations: ”The more you flatten, the less you control” (Henricks, 2005). Besides, Ingvar Kamprad, founder of IKEA, emphasizes that Time is an Entrepreneur’s Best Asset (LaBarre, 1999). Therefore, I think an entrepreneur should be aware of the advantages of ”Flat Organizational Structure” and consider to apply it for the purpose of Empowering people and Making faster decisions.


References:

12Manage – The Executive Fast Track. Flat Organizational Structure. Retrieved August 31, 2008, from http://www.12manage.com/description_flat_organizational_structure.html

Henricks, M. (2005). Falling flat? How flat is too flat when it comes to management? You'd better find out before it's too late. Entrepreneur. Retrieved October 31, 2008, from http://findarticles.com/p/articles/mi_m0DTI/is_/ai_n8688088

LaBarre, P. (1999). Success Here's the Inside Story. Retrieved October 31, 2008, from http://www.fastcompany.com/magazine/29/bookpage.html?page=0%2C1

Lester, M. C. (1998). 1997 Top Gun Enterpreneur of the Year. Business Leader Magazine. Retrieved on October 31, 2008 from http://www.businessleadermagazine.com/Index.aspx?page=ui.article&PID=7707

Stevenson, H.H. & Gumpert, D.E. (1985), "The heart of entrepreneurship", Harvard Business Review, Vol. 85 No.2, pp.85-94.

(Photo from http://www.thesykesgrp.com)