Research Paper on "Diversification Strategies"

Research Paper 5 pages (1516 words) Sources: 5

[EXCERPT] . . . .

Entrepreneurial Leadership

The two entrepreneurial leaders on whom I want to focus are Larry Page and Sergey Brin from Google and Anita Roddick from the Body Shop. These leaders were able to combine a focus on earning profits and match this with a set of ethical principles that has guided decision-making, and helped to shape the company and its organizational culture. Google was initially not a profitable company, but had developed a superior search engine. At the time, searching on other engines was a crapshoot -- hence Google's "I'm feeling lucky" button. The company had a superior product, but this was a product that had yet to be effectively monetized (Entrepreneur, 2008). Over time Google developed an advertising model. The company's drive for freedom of information has led it to provide numerous other information-based services. Google has run into problems with that -- for example censoring information in China where the company has had a lot of issues over the years (Carmody, 2012) and privacy issues with Google Street View that seems to contradict the company's 'do no evil' ethic (Kwek, 2010).

Roddick founded the Body Shop with more of a marketing strategy, but realized that to differentiate the company she could focus on socially consciousness. So her strategy led to the creation of the Body Shop, including eschewing animal testing, and using natural ingredients as much as possible (Entrepreneur, 2008). Roddick's approach was more directly oriented to making a profit, because she realized that there was an untapped market for her idea, and her ethics were specifically tied into her differentiation strategy.

Google, in a way, saw its philosophy as part of its differentiation strategy as well, in that the provision of more information freely was seen as something beneficial and attractive. Whether Page and Brin specifically saw their upstart as something that could be monetized is an interesting question. There was certainly venture capital floating around Silicon Valley, but the business model had yet to be fully fleshed out. Nevertheless, they had the luxury of using the venture capital to build the company and buy time until the revenue model was determined, at which point the company quickly became wildly profitable.

2. For the founders of Google, their leadership style(s) were based on fostering technological innovation, and the reason the company became so successful is because they were the best. The leadership at Google has always remained focused on information and ethics, however, even when those things are not especially profitable. This commitment is in part captured by the idea that creating something good will eventually allow for profits. A company that has never really worried about access to capital has the luxury of taking this approach.

Roddick, on the other hand, was forced to take her company's main competitive advantage and build it into the company. Her leadership style, much like that of Google's founders, was based on building teams and creating a positive atmosphere at the company. The ethics had to be ingrained into everything the company did, because any company that stakes out a higher ethical ground is going to be subject to extra scrutiny -- as the Body Shop's issues with its palm oil supplier in Colombia illustrates (Syal & Brodzinsky, 2009).

Thus, with both of these companies, the ethics were built into their systems by their founders. The founders not only set the ethical tone for the company but they also set the vision, which all others within the organization subscribed to. The fact that these leaders had built the company with their own abilities also enhanced their ability to build ethical leadership into their systems -- they set the ethical tone and the rest of the company was inspired to follow it. For Google, the freedom from having to worry about money allowed the company to expend more energy on its principles. Even with the China censorship issue, Google had the ability to walk away from that market for a period of time, because it did not need the money. The Body Shop's ethical principles were sustained because they were a major part of its competitive advantage. Google's ethical principles were sustained because the company had the time to place emphasis on ethics first.

3. Arguably, I relate more to Roddick's approach that to Google's. I love the ethics at Google, but I understand that they had the ability to focus on ethics to a much greater degree. Few companies have the ability to put ethics front and center, not because it is integral to their business model, but because they have a platform for doing it. Roddick never really had that. I relate more to her circumstance because she was more pragmatic about it. Where Google is a young Charles Foster Kane who can afford to be a champion for the poor, but Roddick's ethics were necessary to make the business model work. She took ideas from her travels, blended them with her own personal ethics and felt that the market would respond (Entrepreneur, 2008). She was right, but it was the ability to see the opportunity there that I relate to a little bit more than somebody who is nice because they have no worries.

It is interesting to see how the challenges faced by these entrepreneurs as their business has evolved highlight the role that ethics has played in these organizations. For Google, it was the China censorship situation, which clearly placed the company in an ethical dilemma, forced to very overtly choose between its mission and making money. For a while Google did the wrong thing, then it did the right thing and left that market, but eventually it came back to China, unable to resist the potential revenue. I actually find that this does not reflect on their ethics all that well, that perhaps not doing evil is something they will do when it is convenient. It makes me wonder if, when they started, they had to abandon ethics early if they would have done so. Perhaps Google has always maintained its ethical position as a luxury.

The Body Shop faced its own tests, but seems to have come out a little bit better. The company was bought by L'Oreal a few years ago, and Anita Roddick has passed away. Given L'Oreal's longstanding ethical problems (animal testing, supporting Vichy France), this takeover provided a serious test to the Body Shop. Yet, the ethics of the company has held fast, even without its inspirational leader and being run by a company with a distinctly different set of ethical principles. The Body Shop's response to the Colombian problem was to cut ties with that supplier entirely, for example, and there is still no animal testing. For my money, the Body Shop's ethical principles are a lot more ingrained in the way that the company does business than Google's are, and that is an impressive feat.

4. I think that some interesting resources I would like to use are case studies, which can help me to gain inspiration for my own ethical model. I like the idea of benchmarking in general, and while I have my own ideas about ethics I also respect the fact that those who have gone before me have a lot to teach me about instilling ethics into every aspect of a business. Case studies highlight real world challenges and examples, so they are quite valuable for that.

I believe that knowing some things about how social and ethical systems work is important. It is one thing to announce a policy, it is another to achieve total employee buy-in, especially to the level Body Shop achieved where it still holds those ethics after the founder has passed on. It takes a keen understanding of a lot of different dynamics to make ethics stick in an organization,… READ MORE

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