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Introduction
Much has been written by academics and business managers throughout the world concerning the issues of leadership and management skills and the links between these disciplines and that of motivation and entrepreneurship and their contribution to the success of individuals and organisations. Essentially, success is seen as not solely being dependent upon what products and services are brought to market, or the way in which they are brought, but increasingly linked to the leadership qualities of the management in place as well as the inherent culture of the organisation itself, which could be described as innovative and as fostering an entrepreneurial spirit which encourages creativity. As competition across all markets has intensified, organisations appear to be striving to achieve some level of competitive advantage which is often directly related to bringing innovative products and services to the market long before competitors. The speed of change and rapid advances in technologies has further heightened this expectation.
In the following we shall attempt to discuss the theories relating to motivation and innovation in the context of how each of these are embodied through Richard Branson, head of the Virgin Group of companies in his entrepreneurial activities. The analysis hopes to demonstrate through appropriate research and a review of the relevant literature, how motivation and innovation are linked to the theories of entrepreneurship using Branson as a notable example from recent times. It is also evident that individuals such as Branson are not only credited with having inherent innovative qualities, highlighted by his many successful business ventures but are also seen through their achievements and the business models they adopt within their organisations, to possess very distinct and effective leadership qualities which ultimately impact upon the motivation levels they inspire in their workforces. All these factors ultimately have an impact on the subsequent success enjoyed by the organisation.
Literature Review
There has been much research and analysis undertaken on the subject of entrepreneurship, innovation and motivation, both as separate subjects as well as the relationship between the three which often appear as intrinsically linked and difficult to separate. Much of the early thinking stems from McLelland’s work in the 1960s and obviously, as business and management thinking has evolved in what has become an increasingly dynamic environment, many commentators on the subjects have increasingly associated links with successful leadership as epitomizing the other 3 factors. Individuals such as Bill Gates, Anita Roddick and Richard Branson immediately come to mind on any discussion regarding entrepreneurship, innovation and the subsequent motivation they possess and inspire in their workforces which ultimately leads them to building and sustaining successful corporations. Entrepreneurship, the starting of a new business or venture, or even the redefinition of an existing one, is considered to be an essential ingredient of success in many countries, being a notable driver of economic growth and subsequent wealth and prosperity. It is also epitomised by the “American Dream” and perhaps this is the reason that so many philanthropists have emerged from North America, with the drive for entrepreneurship ultimately being intrinsically built into the fabric of North American culture and often directly associated with success. This drive has come to be increasingly evident in many other cultures, particularly in the developed world with Branson being a notable emissary of this idea.
McClelland made a direct correlation between motivation and entrepreneurship with an overriding characteristic being “an overwhelming need for achievement”. Knight and Drucker’s view was that entrepreneurship was generally associated with taking risk with Drucker also focusing on innovation as being a key element. Many views abound regarding the area, though none at first glance appear to emerge as being more accurate than the other, as each tend to possess their own validity. We shall first begin by analysing some of the literature relating to the Motivation theory which is largely covered by McClelland’s work.
Motivation Theory
“It should be possible to trace the motivational connection in much more detail. How specifically does a high level of n Achievement result in more rapid economic development? The link is obviously the entrepreneur --the man who organizes the firm (the business unit) and/or increases its productive capacity.” (McClelland, 1961, Pg.205)
McClelland’s work at the time was considered quite revolutionary in that no one had really analysed in depth the theories behind entrepreneurship despite the existence of so many entrepreneurs within society, especially in the USA. McClelland sought to measure in some way how motivation was inextricably linked to entrepreneurial spirit, in that the embodiment of high motivation levels within individuals was a predominant characteristic of entrepreneurs. As highlighted by Steiner and Miner in later studies in 1986, in reference to the previous research undertaken by other leading academics, most notably, McClelland,
“A Sizeable amount of study has been devoted to the question of the relationship between entrepreneurship and the desire to achieve. The data consistently indicate that people who found new businesses where none existed before and make them survive have high levels of achievement motivation.” (Pg. 164)
Interestingly, Steiner and Miner also emphasise how high achievement motivation is generally found in companies who have grown and succeeded quickly in their respective market segments as well as maintaining that success, a feature that is somewhat lacking in other companies surveyed, whose success levels may be lower and their growth profiles less rapid. It appears that where achievement motivation is high, entrepreneurial activity is more prevalent. Interestingly, this can also be related to the notion of risk taking and an individual’s propensity to take risks. It appears that entrepreneurs are high risk takers, as viewed by Drucker and Knight. This is inextricably linked to the fact that often there is substantial investment on the part of the individual entrepreneur in terms of both time and finance, so it could be argued, that while they appear as more willing to take risks, an inherent characteristic of entrepreneurship given that there is no precedent, they are also highly motivated to achieve success in order to minimise the potential loss of personal wealth. However, the research has also identified that it goes much further than a need to achieve wealth and is generally much more associated with personal fulfilment and success, the result of which usually translates into financial achievement.
Much like Maslow’s Hierarchy of Needs, motivation can be graded in terms of what it seeks to fulfil and much of this will be a reflection of an individual’s upbringing, social environment and personal experience, as demonstrated by Handy’s “motivation calculus.” (1976) Such factors are extremely difficult to quantify and therefore impossible to measure. As Drucker states, “Successful entrepreneurs, whatever their individual motivation – be it money, power, curiosity, or the desire for fame and recognition – try to create value and to make a contribution. Still, successful entrepreneurs aim high.” (2007, Pg.31)
There is a wide range of literature covering the subject and therefore the brief review of the literature provided here is by no means exhaustive. It is hoped however, that it demonstrates the links which have been clearly established on the existence of high motivation levels which tend to be characteristic of entrepreneurship. Arguably, what the literature has shown is that there is a direct link between entrepreneurship and a desire to succeed, whether that success be measured by financial gain or notoriety. Entrepreneurs themselves appear to embody often much higher levels of motivation and determination than may be commonly found among other members of society.
Innovation
The actual word “entrepreneur” is derived from the French “Entreprendre” which significantly means to embark upon. Clearly, innovation is commonly associated with entrepreneurial spirit in the sense that often the result of entrepreneurial effort is to bring something new to society. Clive Sinclair is considered as an entrepreneur yet the innovation he is commonly associated with, the C5, was not a market success, indeed, it was a commercial failure. What is important to note is that entrepreneurship may not necessarily be a completely new invention, but a new method of doing something or an improvement on existing practices or products, clearly demonstrated by Microsoft’s successful defeat of IBM in the pc market. It is extremely linked to the marketing concept in many respects as the identification and subsequent satisfaction of unmet needs amongst consumers, demonstrates the commercial success of many entrepreneurial activities.
Peter Drucker interestingly associates innovation and entrepreneurship with change. Given the advances and dynamic rate of change with which the business environment is largely characterised, this clearly makes sense. Many successful entrepreneurs have been successful through identifying changing factors in the macro environment, which rather than viewing these as threats, have ultimately identified them as opportunities and identified subsequent gaps in the market:
“the entrepreneur always searches for change, responds to it and exploits it as an opportunity…If entrepreneurs exploit change, then they do so through the process of innovation.” (Drucker,2007, Pg. xiv)
Although entrepreneurship is frequently associated to individuals, companies in their quest to attain competitive advantage regardless of how long they have been in business, are striving to be innovative in their activities, searching for new sources of competitive advantage, whether those be new products or new markets, or simply, new business practices which ultimately add value. Research by McKinsey has highlighted the almost insatiable need of business in the last decade to innovate, highlighting that “innovation has become a core driver of growth, performance, and valuation.” (Barsch et al, 2008, Pg. 37) Most notably, they draw attention to the fact that increasingly, innovation is related to improving existing business practices, therefore implying that an entrepreneurial spirit is evident in many organisations today, or at least a desire to possess such a spirit seeing this as a necessary requirement for sustained success. “Other executives see innovation as the most important way for companies to accelerate the pace of change in today’s global business environment. Leading strategic thinkers are moving beyond a focus on traditional product and service categories to pioneer innovations in business processes, distribution, value chains, business models, and even the functions of management.”(Pg.37)
A more fitting explanation of the links between innovation and entrepreneurship is given by De Bruin and Dupuis in developing “the notion of creative opportunism, rather than innovation per se, allows for a much broader range of entrepreneurial activity since we could contend that many people enter business on this basis”. (2003, Pg.6 ) It also complements Handy’s view regarding managing change in the context of fostering innovation and puts the emphasis clearly on the notion of creativity rather than innovation. In a sense it is about exploiting the opportunities available in a way which ultimately leads to something new or different to the market or society as a whole. This is reinforced by Kirzner’s theory regarding “alertness” attributes to be found in entrepreneurs and that the pure entrepreneur is “a decision-maker whose entire role arises out of his alertness to hitherto unnoticed opportunities.” (1979, Pg.38-39)
De Bruin and Dupuis also refer to the earlier work of Schumpeter (1934) and again relate to the idea of an entrepreneur being an “agent of change” (pg. 3), yet again, reinforcing Drucker’s theories. As Schumpeter highlighted in 1934, “Entrepreneurial profit proper….arises in the capitalist economy wherever a new method of production, a new commercial combination, or a new form or organisation is successfully introduced. It is the premium which capitalism attaches to innovation” (Shumpeter, 1991, Pg.113, quoted in De Bruin et al, 2005, Pg. 4) The mention of capitalism is an interesting context for analysing the issue of entrepreneurship. It is not so much that entrepreneurship, at least in the commercial sense, cannot exist without the establishment of a capitalist, or more accurately, a market economy, but serves to highlight that such an environment is certainly one which promotes the concept, and provides the most fitting environment for the pursuit of entrepreneurship.
To conclude this section, Drucker provides what the author views as one of the most appropriate opinions regarding entrepreneurship and innovation, in the sense that he focuses not on an individual but from the perspective of an organisation. So much of the literature appears to be geared towards discussing the issues in the context of one individual, that is, the entrepreneur, and though this is accurate in many respects, ultimately, most successful innovations or new offerings to the market, rely on more than one individual for their successful execution, that is the organisation as an entity. Much has also been attributed to technological innovation and its contribution to entrepreneurship in identifying new opportunities or new ways of doing things but as Drucker explains, the principal effect of technological innovation has been of innovating the discipline of management:
“Management is the new technology…that is making the American economy into an entrepreneutrial economy. It is also about to make America into an entrepreneurial society….And again, entrepreneurship in society…requires above all application of the basic concepts, the basic techné, of management to new problems and new opportunities.” (Drucker, 2007, Pg. 15)
This is probably the impetus behind many organisations’ strategies and their quest to develop innovative products and management practices, believing that the reinvention of existing modes of business is a necessary prerequisite to market success. The review of the literature has led the author to conclude that the role of the entrepreneur, whether that be an individual or in the context of an organisation who may have a visible leader regarded as the entrepreneur, is to act as a change agent in seeking out opportunities from the apparent threats in the environment and “innovating” in such a way as to make a difference to society, to markets, and ultimately, achieve commercial success.
“This means that the time has now come to do for entrepreneurship and innovation what we first did for management in general some thirty years ago: to develop the principles, the practice, and the discipline.” (Drucker, 2007, Pg.15)
Methodology
The approach to the analysis at hand shall be primarily conducted by researching secondary sources of data some of which have already been alluded to in the Literature Review. There is a plethora of literature and research on the subject area and the related topics as well as an abundance of material located within the business press and academic and management journals. Much of what is viewed as being the most relevant has already been identified in the literature review, but many more sources were viewed which were not mentioned in the literature review, merely due to the constraints of the piece at hand. In this respect, the author has chosen to refer to those works which were viewed as offering the most accurate opinions and research conclusions concerning the subject areas, as well as choosing those which are generally deemed by business and academic circles to provide the most valid theories. The author also examined some of the relevant articles written by those providing management education such as leading business schools, particularly within the UK and North America as well as looking at some of the viewpoints held by leading reputable consultancies such as McKinsey. The author has also chosen Richard Branson as a means of looking at the issues from a case study perspective drawing on the experience and success of Branson in a quest to uncover the intrinsic qualities he possesses which have ultimately lead to his success.
Data Capture: Richard Branson
“All the while, the flamboyant and irreverent Mr. Branson has tweaked the business establishment particularly in Britain…he has been, for much of the past 30 years, one of the most admired Britons, and his fame has spread in recent years around the globe as Virgin has expanded its reach and its luster…Mr. Branson loves nothing more than a daunting challenge; he views the impossible as just another business opportunity.” (Rifkin, 1998, Pg.1)
The Virgin Group of companies is a diverse organisation covering many markets, from telecoms to airlines, soft drinks to trains, banking to vodka. Few people in the UK are not aware of the brand and most notably, few people do not immediately associate the Virgin name with its founder and leader, Richard Branson.
“Virgin, a leading branded venture capital organisation, is one of the world's most recognised and respected brands. Conceived in 1970 by Sir Richard Branson, the Virgin Group has gone on to grow very successful businesses in sectors ranging from mobile telephony, to transportation, travel, financial services, leisure, music, holidays, publishing and retailing. Virgin has created more than 200 branded companies worldwide, employing approximately 50,000 people, in 29 countries. Revenues around the world in 2006 exceeded £10 billion (approx. US$20 billion).”
(Source: www.virgin.com, accessed, 22/03/09)
The company grew rapidly from its humble beginnings to be a leading player on the world stage in many of the markets it serves, music and airlines arguably being the most prominent and successful. Over the years Branson has grown the company by acquiring stakes in new ventures and through joint ventures and other strategic alliances. At the same time, he has divested those companies he has seen as not doing so well or perhaps, that no longer provided a strategic fit to his business. He has been careful in his ventures and partnerships to obtain funding externally from the Virgin group in order to finance new ventures and thus, limiting risk and over exposure for the company. Thus, contradicting some of the theory regarding entrepreneurs as being high risk takers. It is true to say that some ventures have performed better than others and not all have been success stories, however, no one can underestimate the power of the Virgin brand – ultimately, that is the product on offer regardless of the market in question.
What is extremely notable when looking at Branson and his group of companies from the analysis of the relevant literature, is that in addition to being highly motivated himself from early on, he is also praised in business circles for his style of leadership and the business model he applies in that these serve to motivate the employees who work with him. Motivation is seen as being a key ingredient to the overall success of the company. For all of his successes, there have also been many “innovations” which he has brought to the market which have failed, Virgin Cola being a notable example. Yet his airlines business served to completely transform the market and provide a unique and differentiated product to that of competitors. He succeeded in doing this in a new and innovative way with an extremely high attention to the service elements of his offering as well as the uniqueness of his brand which was a viable challenge to the incumbents in the industry. Despite some of the failures he has experienced, he remains highly motivated and extremely resilient, constantly striving to reinvent and start again.
As we have mentioned, the Virgin name, its companies, products and various markets, are inextricably linked to Richard Branson himself. As a result, the structure of the organisation, the style of leadership and management, the strategies adopted and the company culture and ethos, have largely come to be as a result of the beliefs and objectives of the man himself. Described by some as “flamboyant and irreverent” (Rifkin, 1998, Pg.1) with a “devilish disrespect for convention” he has become well known for his quite distinctive style of management. He is seen as being vehemently anti-establishment, distrusting of financial institutions, and is said to put employees first before customers and ultimately, shareholders. In short, he is quite unlike any CEO we would see in a multinational company, or indeed, any large company. He is a leader who sees his employees as being core to his success and the success of the organisation as a whole. He appears friendly, approachable, and is portrayed as a “hands-on” type of boss, not one for stuffy boardrooms or the trappings which come with such ivory towers that is the reality of most multinationals today. He believes this to be a much more effective method of management and such a management style embodies the whole idea of what Virgin is and this is communicated effectively to consumers in the market.
Analysis
Others have compared the structure of Virgin to the “Japanese Keiretsu – the brand is all that ties together more than a hundred disparate Virgin brands”. (Rifkin, 1998) Despite the apparent loose structure of the organisation, it can be argued that he still manages to run quite a tight ship, overseeing the daily management of his companies and hand picking the right managers and senior executives to do so in his absence. He is also adamant that “Virgin have no less than a 50% stake in any company bearing the Virgin label and that his managers retain control of their operations.” (Rifkin, 1998)
Other commentators have suggested that Virgin has increasingly become “a brand-franchising operation” (Grant, 2004) and this is a valid observation. What is more important to Virgin, and Branson, is not the structure that is in place, but the “entrepreneurial culture and a strategy that was based upon novel approaches to creating value for consumers.” (Grant, 2004) This company culture emanates throughout all the Virgin subsidiaries even although in accounting or distribution terms, they operate as separate entities. It is the company culture and management style which unites them and is one of the main reasons as to why the brand has been so successful.
Virgin is a private limited company which affords it some leeway in terms of how it presents its information to the market. Because Branson decided to opt for the private route, again, reiterating his distrust of large financial institutions, he does not have to comply with the legislative and other compliance issues of the stock exchanges. The structure and nature of his organisation allows him to do this. It also allows him to focus on the long term. We only have to look at the poor performance of Virgin Rail in the UK to see that if public, the share price and shareholder return to date would have been abysmal. Because Branson is not constrained so rigidly with maximising or improving shareholder value, he has room to manoeuvre and time to turn his fortunes around should he be required to do so – “He argues that the advantage of a private conglomerate was that the owners could ignore short-term objectives and concentrate on long-term profits, reinvesting for this purpose.” (Johnson, G., Scholes K., 2002) In short, his innovation has been the challenge he has presented to the business world in opposing it’s established and accepted norms of doing business.
In short, Branson has created what appears to be a fluid structure within his organisation and its companies. It is an environment which nurtures the free flow of information and ideas and one in which it appears, every individual has a contribution to make, irrespective of position or rank. He believes that in putting his employees first, they in turn, will do a better job for him, and ultimately, this will result in customer satisfaction and superior customer service levels. This is what differentiates him from his competitors who claim to put the customer first as do the majority of firms operating globally today.
The analysis has highlighted certain correlations between the theories regarding entrepreneurship and the characteristics to be identified with Branson and his Virgin Group. The man appears to have been highly motivated from an early start and perhaps encouraged and facilitated by his upbringing and social background. Most notably, he appears to have achieved much of his success from the fact that he rejects established norms and what the majority believe to be “acceptable behaviour” whether that be with regard to social or business environment. In this respect, much more than being seen as innovative and highly motivated, he is a challenger and an extremely visible agent of change.
Many have argued that the nature of motivation and the degree of which each individual possesses, is determined by one’s social and family background (McClelland, 1961). Without gong into such theories in too much depth, the evidence does seem to point to one’s upbringing and formative years in shaping the subsequent attitude towards motivation or one’s ability to embody those elements characteristic of entrepreneurship. Branson came from what would be considered a rather comfortable middle- class background which arguably provided him with a fitting foundation to proceed, but simultaneously, we see other successful entrepreneurs who have excelled in spite of their backgrounds, and in many instances have succeeded despite their social backgrounds, with the quest for success being driven by one’s apparent misfortune in earlier years. In this respect, there can be both positive and negative factors which ultimately help define and determine one’s subsequent motivation levels. It is however, evident, that motivation is definitely a driver of entrepreneurial activity, indeed, it could be considered a prerequisite as generally, entrepreneurial activity in bringing something new or innovative to the market or society is generally more challenging than bringing something already established as there is clearly a precedence which facilitates this and does not exist in entrepreneurial activity.
Branson’s motivation levels are definitely high but inextricably linked to his overriding tendency to challenge existing practices in a quest to do something better, not necessarily bigger than other players in the market. At the same time it is evident that this motivation is an essential part of the Virgin philosophy, inspiring higher motivation levels amongst staff as a consequence. He appears to have created an organisation which is similar in characteristics to his own personality. As a result it is likely that the word “impossible” is rarely mentioned in Virgin circles, the Virgin culture being a reflection of Branson’s own philosophy and high commitment to success. In addition, the issue of change, the effective management of it as well as being an agent of change, is an overwhelming characteristic of Branson and Virgin as an organisation. Change is a challenge which all organisations must manage and respond to, it is the way in which Branson responds to it – often his response to change, or the need to change, ultimately creates change in other areas and in this way he is seen as being innovative in his activities and attitude. By challenging established norms, he creates innovative alternatives which ultimately change the environments in which he is involved. All this is facilitated by his high motivation levels which he communicates and creates throughout his organisation and the networks within.
Conclusion
In the analysis undertaken, the author has clearly been able to identify from the literature reviewed, the links between high motivation levels and innovation to entrepreneurship, all of which are clearly demonstrated through an analysis of Richard Branson and his group of companies. The research undertaken has also identified how the evolvement of business in recent years as well as the wider socio-economic dynamics which have taken place in the wider global environment have also impacted upon the subject and in essence, have arguably led to the existence of more individuals with apparently entrepreneurial skills merely due to the nature of the world we live in today. Indeed, the nature of the environment, and our apparent constant quest for improvement, both social and economic, creates an environment which facilitates entrepreneurial activity. Simultaneously, this new environment of which we are all a part, has also opened up the opportunity to develop entrepreneurial skills, not necessarily in the realm of creating something completely new or innovative, but in establishing new or different ways of doing things. Governments and related agencies put a lot of emphasis in innovation and creativity seeing it as a way to fuel economic growth, and thus, the existence of a wide range of schemes and grants have come to be established which serve to fuel this entrepreneurial thrust. The analysis has shown that it does take a certain type of individual to be an entrepreneur, one who is highly motivated, willing to take risks, and more importantly, one who is not afraid to challenge the accepted norms and basically, rather than react to change, be a creator of it. This is where true entrepreneurial activity can be found.
Bibliography
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