Comparing Entrepreneurs from Different Industries essay part 2
Comparing Entrepreneurs from Different Industries essay part 1
Analyzing Findings
According to Meredith Belbin’s typology cited in Bornstein (2004), Elon Musk and Jeff Bezos are distinct representatives of shapers. Shapers are motivators, inspirators, and bright charismatics who are able to lead people, to strike a spark with their brilliant ideas. If they are obsessed with some idea, they put their life on it. Thus, for example, Elon Musk believes it initially does not make sense to put unambitious tasks that have little impact on the fate of mankind (Storm, 2014). Indeed, what is more fascinating, the challenge to increase the company’s market share by 10% in 5 years or to build the first private spacecraft and learn how to make interplanetary flights? For example, the idea of PayPal was incredibly ambitious. As Pauline (2012) notes, the company’s founders dreamed that one day electronic money would completely replace the real one. Young businessmen of libertarian views were hoping with the help of their system once to break down the state’s monopoly on the production of money, which would make the world truly free, and every person in it independent. Today, this idea has not yet implemented, but PayPal is the most successful electronic payment system in the world, which in some countries has the official status of a bank or credit institution. In turn, Jeff Bezos is also a generator of ideas and can look at the usual things from a new angle. For example, Amazon was the first company to start selling books online, making it possible to access to a huge catalogue of books, as well as the first to launch a partnership program allowing other companies to post links to books from the Amazon database (Stone, 2014). Following Amazon, their competitors, who previously held a niche in the traditional segment of book sales, had to also enter the Internet market. The ability to change the laws of the market with their ideas characterizes these two entrepreneurs as true innovators.
In particular, one of Elon Musk’s rules of life is not to think by analogies. Wickham’s (2006) survey shows that in most cases the businessmen are just trying to do something better instead of creating something new. Musk thinks in a fundamentally different way: if you want to create something, it is necessary to dissect the reality to its fundamental basis. Thus, for decades space seemed unapproachable for private business. Its development was dependent on huge budgets and remained the prerogative of governments. In turn, Musk was sure that the costs of creating and launching rockets could be reduced tenfold. However, in the beginning he completely reformulated the goal of spaceflights shifting the emphasis from simple delivery of astronauts and cargo into orbit to colonizing other planets, in particular creating a colony on Mars counting 80 000 people with the ticket price of $500,000. As a result, today his Falcon 9 Heavy is already the most powerful American launch vehicle after Saturn 5 apparatus which participated in the US Moon Mission in the 1960’s and 1970’s (Storm, 2014). Musk also still has many unrealized ideas that can change our lives to the ground. For example, Hyperloop public transport, a cross of Concord and a rail gun that can carry passengers and cargo twice as fast as an airplane, or technology of nuclear energy without nuclear waste, or the creation of a supersonic electric aircraft with vertical takeoff and landing that produces no harmful emissions (Elon Musk Official Website, 2014).
Innovation leader in his sector, Jeff Bezos, on the contrary, rather belongs to entrepreneurs who are aimed at improving existing services. At the same time, Bezos often improves thins to the level they are perceived as absolutely different from what others offer, and this keeps Amazon.com among the most progressive companies in the world. A good example is the introduction of Kindle: Amazon’s boss was convinced that millions of people would want to have an e-reader that would download books directly from the Internet very quickly and without any problems with formats. A similar logic rests behind his decision to turn inside out the company’s computer infrastructure, allowing the world to use it for money. Engineers considered the idea insane, but now Amazon Web Services (AWS) launched in 2006 generate $1 billion of annual revenue and is going to double this figure in the near future. Among others, AWS users include NASA (Stone, 2014). During the mission to Saturn, Cassini spacecraft transmitted to Earth about 180 000 photos that were processed on Amazon’s servers in just five hours and for about $200. If NASA used its computing power, it would take 15 days. Moreover, Bezos has recently spent $775 million to acquire Kiva Systems, the manufacturer of small robots which are able to sort the items in a warehouse. According to Bezos, this will allow delivering orders even faster (Rossman, 2014).
Thus, Musk and Bezos are not only innovators but also outstanding visionaries. For example, it is impossible to overestimate the advantages Amazon gained having been launched before major book chains appeared in the Internet. Users of that time were for the most part the very early adopters – the first followers of the new technology every innovative company dreams of: they found Amazon.com, decided that it was good, and spread the news about it all over the Internet. And, basing on Rossman (2014), the fact that these interactive features would play a huge role in the future was predicted by Bezos back in 1996. At the same time Amazon started to restructure its “showcase” for each customer, displaying books in the genres the readers had showed interest earlier, or recommending publications on the basis of purchase history. As a result, Amazon from the very beginning was not just a store but a prototype of a social network for book lovers.
In a similar attempt to get ahead of the competitors and foresee the future, Musk focused on mass production of electric vehicles affordable to everyone. However, in 2003, when Elon Musk together with a group of like-minded people founded the company Tesla Motors, no one treated seriously the plans of some daredevils to develop the market of electric vehicles. As Pauline (2012) states, at the time the existing electric cars were mostly low-power prototypes and single models that appeared in the sale but did not earn trust. Today, Tesla Model S has become the best-selling luxury sedan, ahead of, in particular, Mercedes-Benz S-Class and BMW 7 Series. Moreover, the strategy of Tesla Motors is not only in the release of really high-quality and environmentally-friendly electric vehicles, but also in the creation of the appropriate infrastructure for them, as well as the popularization of such vehicles in the world. At the presentation of Model S, Musk categorically stated that twenty years later more than half of vehicles produced would be fully electric (Elon Musk Official Website, 2014).
In addition, as truly successful entrepreneurs, Musk and Bezos are able to combine several functions. Bezos in his time used to personally package the books ordered on Amazon, and Musk is still working as the chief engineer at SpaceX. At the same time, while Elon Musk is aimed at the internal environment of the company, Bezos gives more attention to external communications. Relying on Storm (2014) arguments, the head of Tesla Motors, primarily claims high demands on employees, appreciates their professional qualities and to some extent treats people as functions. However, while most companies in Silicon Valley make kings of their engineers, Amazon persistently proves the possibility of a different model. So, Bezos woos 164 million consumers fiercer than 56,000 employees. For example, sometimes during meetings Bezos would intentionally leave one of the chairs empty, offering the audience to imagine that their client is sitting there, “the most important person in the room.” In general, the company evaluates its activities by 500 parameters, 80% of which are in one way or another tied to interaction with customers (Rossman, 2014). Algorithms developed by Amazon analyze consumer behavior of one customers turning them into recommendations for others, and the list of best-sellers on the site is updated every hour. Bezos shortly calls it the “culture of metrics,” and it covers the entire company. Users response to Amazon with mutual loyalty. Amazon has long been in the Top Ten companies by the consumer satisfaction ranking compiled by the University of Michigan (Stone, 2014).
Another top priority for Amazon is the maximum savings. In his address to shareholders in 2009, Bezos declared war on muda, which is Japanese for “extra costs” (Stone, 2014). The better we optimize costs, the more attractive prices we can offer to consumer, he declared. The company managed to improve the utilization of space in its warehouses freeing about 2 million square meters. Economy is felt in the offices of Amazon as well in the form of a moratorium on the use of color printers and first class flights. None of the top managers receives more than $175,000 per year, and the salary of Bezos himself froze at the end of 1990’s at $82 000. The team that deals with experiments in Amazon includes the minimum possible number of people, as Bezos believes that the team requiring more than two pizzas is too big a team (Rossman, 2014). In Rossman (2014), we amy find that former employees often describe Bezos as fear inspiring despot issuing piles of orders that make subordinates start running like ants. On the other hand, the “two pizzas” rule allows Bezos start dozens of small innovative projects without spending significant resources.
A similar approach is a top-priority for Elon Musk’s companies. In particular, back at the beginning of work on Space X projects, Musk understood that raw material made 2% of the value of rockets produced in the US (Pauline, 2012). Having overcome bureaucracy of aerospace corporations, Musk produced the rocket 10 times cheaper than American counterparts. His work on the cost of the first electric vehicles is also exemplary: the two-seater sports electric car Tesla Roadster was planned to be sold for $92 thousand, but it turned out that only materials for its production cost $140 thousand. Having fired the co-founder Martin Eberhard along with almost a third of employees, closing the office in Detroit, and pushing as much as possible on suppliers to reduce costs, Musk started selling Roadster for $109 thousand (Storm, 2014). The retail price of Tesla Model S in the US is already $57.5 thousand, and the provided price of the BlueStar project ranges from $30 thousand (Elon Musk Official Website, 2014).
Thus, these two entrepreneurs have common traits like farsightedness, commitment, and innovative approaches both in production and management of companies, which allows them to logically fit into the list of outstanding senior managers of their generation.
Conclusion
Summing up module outcomes, we should conclude that entrepreneurship is currently considered from different points of view: as a style of management, the process of organizing and carrying out activities in the market, as the interaction of market participants, etc. Analyzing the different points of view on this issue, it can be concluded that entrepreneurship is the realization of special abilities of an individual expressed in a rational combination of factors of production on the basis of innovative risk approach (Stokes et al., 2010, Bornstein, 2004, and Zimmerer & Scarborough, 2005). Based on an innovative business idea, an entrepreneur uses the latest techniques and technology in the production, reorganizes the work, and manages differently, which leads to lower individual costs of production that determine the end price. Entrepreneur better defines the market to purchase the most advantageous means of production, or rather “guesses” what product at what time and in what segment of the market will have the most effective demand. As a result, the true entrepreneur gets more profit than ordinary businessmen. In addition, the entrepreneur does not avoid risk, and chooses it deliberately to get more income than others.
Thus, it is appropriate to consider two basic elements in business:
1) Pioneering innovation as entrepreneurial function;
2) Actions of the entrepreneur as a carrier and implementer of this function.
In this perspective, Elon Musk and Jeff Bezos are good examples of true entrepreneurs worthy of wide recognition. Firstly, like other creative geniuses, they literally merge with their work and inventions; self-expression becomes their passion. Secondly, intuitively feeling business prospects using analytical thinking in solving problems, they are intolerant towards common and traditional methods of doing business. Elon Musk and Jeff Bezos give rise to thoughts of a rare type of people who are changing the world and are always looking over the horizon. As leaders and visionaries, they are able to attract with a grand idea and inspire to achieve ambitious goals. And if they believe in the realization of their dream, it will happen due to their insight, energy and desire to go forward. Chosen for a detailed analysis in this paper, they will become an indispensable source of experience and inspiration for our future entrepreneurial career.
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