Monday, September 19, 2011

WARRIORS IN PINSTRIPES

"I would rather live a short life of glory than a
 long one of obscurity."           Alexander the Great

       In 324 BCE Alexander the Great established world domination. His generals encouraged him to return to Babylon to rule his Kingdom. Alexander could think of nothing worse than to live out the rest of his life as an administrator of Babylon. The end of battles did not mean security for Alexander, it meant obscurity. For a year he reluctantly ruled over his kingdom, and in the end he drank so heavily that in his weakened state, at the age of 33, he caught pneumonia and died.

       When a nascent entrepreneur establishes his or her company, so that it is financially solvent they are already thinking about starting another business; when they win the bid or secure the contract they’re off to another negotiation. For people who don’t understand this kind of drive it seems strange that money-makers seldom celebrate their accomplishments. However, it’s not the accomplishment that drives them – it’s the battle. The money-maker has a high need for achievement. If the nascent entrepreneur talks about making the final deal and settling down to enjoy the fruits of their labor, it’s for the benefit of others; a wife or husband that complains about never getting to spend enough time with them. A company that wants to promote an entrepreneur into an administrative role, such as Vice President of Marketing, or Sales VP will find a lot of resistance and often lose one of their best money makers, because the need for achievement in administrative roles is never fulfilled in the same way as it is in the trenches.

         A need for achievement (nAch) is a stable trait to obtain satisfaction by continually striving for a higher standard. When John D. Rockefeller was asked how much is enough he replied, “A little bit more.” McClelland, Koestner, and Weinberger (1989)  viewed nAch as an animal like drive that energizes and selects behavior. In other words, an entrepreneur with a high need for achievement is not driven to succeed by some outer force, but rather is motivated by an internal drive to always obtain a higher standard. For the money-maker the achievement incentive, a term coined by Spangler (1992), is triggered by a potential opportunity to make a lot of money. The potential opportunity is the driving incentive for the money-maker, but without it there is no incentive to achieve. McClelland (1965) conducted a longitudinal study, looking at graduates 14 years after graduation, and found that significantly more of those originally scoring high in nAch were currently in entrepreneurial occupations. This supports the theory that there is a strong relationship between high need for achievement scores and “entrepreneurial” behavior. What the McClelland research did not show us is a correlation between entrepreneurial drive and money-making success. Therefore, nAch alone is not a predictive trait of the money-maker. 

       As we continue to search for money-making traits, it is this researchers belief that the composite nature of successful entrepreneurs will come together like pieces of a puzzle to reveal the predictive characteristics of money-makers.



Thursday, September 1, 2011

LOOKING THE OTHER WAY

            Being a money-maker is often confused with the concept of success. A person can make a company profitable and be considered successful, but being successful doesn’t always mean that a person is a money-maker. Regardless, much of the research on success focuses on the attributes of top level leaders in Fortune 500 companies. Many researchers are enamored by the power of C Street executives and tend to misattribute success traits to them. In other words, researchers assume that if the company is large, influential, and wealthy that the top level leaders of organizations are responsible for the financial success of the company. Is it the leader that makes a company successful or the company that makes the leader successful? To be sure, a top level executive has an indirect effect on the financial success of a company, by establishing policy, casting vision, choosing the executive management team and keeping the stock holders informed of current conditions. Jim Collins (2009) wrote, “Generally speaking leaders that help their companies survive tough financial times must revisit and discuss departmental budgets, create new and more effective marketing plans, and boost customer service to an all time high.” To put Collins statement in perspective, out of 1435 large companies, his research team only found 11 companies that met the criteria of sustained financial growth. Even though leaders of successful corporations possess many entrepreneurial traits it is difficult to identify them as money-makers. Britton et al. (1992) found that profitability in corporations was a poor indicator of success. “Performance indicators are very difficult to measure, says Britton. Efficiency is usually measured by profitability and the calculation of profitability is problematic. There is a lack of correspondence between the theoretical concepts and the available data, as the firm’s calculation of profit is different from the economist’s concept of profit.” In order to build a basis of empirical evidence for predicting financial performance among CEO’s the project requires an assessment process that is comprehensive and comparative to top level leaders in large companies.

            At the other end of the entrepreneurial spectrum the nascent entrepreneur is directly responsible for the financial health of his or her company. Thirty years of research reveals trait-like characteristics for the financially successful entrepreneurs (Kirzner, 1979; Gilad, Kaish, & Ronen, 1989: 48; Hills & Shrader, 1998; Shane, 2003).  If we are to find money-making traits we must first look away from power and prestige and find reliable markers for trait-like attributes of money-makers.