Luke Johnson

A clever entrepreneur I know, called “Peter”, has a favourite parlour game; it works best if the participants are decidedly ambitious. He asks them to choose their personal ranking for three primal motivations: money, power and recognition. Their answer tells them which career steps to take. It is a more practical – and visceral – version of “Maslow’s hierarchy of human needs”, which includes such vague concepts as self-actualisation. Possibly, we should call it “Peter’s hierarchy of human motivations”.

The quiz encapsulates the vital drivers in a blunt but brilliant way. It cuts out the fluff. The ingenuity of the selection is the simplicity: it boils down lots of complicated psychometric testing to three factors. And I like the honesty of the words. Unlike so many questionnaires, it does not pretend that our desires are all worthy. It asks us if we are, in the darkest parts of our souls, avaricious, megalomaniac or conceited.

Some respondents attempt to cheat, and insist their overriding motive is an urge to do good, or a similar affectation. This contest is too ruthless for such stuff. It acknowledges that gentle souls, who really believe in noble causes above all else, are unlikely to rise to the top in business, politics, the media and so forth. They spend their lives working with the underprivileged or the equivalent. And I suspect that they do not meet my entrepreneur friend or read this newspaper.

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Luke Johnson

So, how was it for you? The last set of board meetings I have attended have all been about the likely outcome for 2009 – and the prospects for next year. Mostly, there is a sense of relief that an annus horribilis is almost over, and a modest hope that the future will be brighter. Inevitably, the projections for 2010 have been in essence financial budgets: a set of estimates about how sales, profits and so forth will unfold in the next 12 months. Very dry stuff – and hardly inspirational.

Having been through this ritual ad nauseam over the years, I am coming round to the belief that an annual plan based almost exclusively on numbers is insufficient. So, turn the whole process upside down: start any document with the qualitative points, while the numerical forecasts are secondary.

In a way, the annual budget might turn into something of a new year’s resolution – a list of firm intentions, rather than just lifeless figures. Instead, there must be some dreams – not sheer fantasy but at least a degree of optimism. Otherwise, why even bother? How else can a business exceed expectations, beyond Samuel Johnson’s “limits of sober probability”?

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Luke Johnson

I became a partner in an early-stage technology business run by an ex-soldier this year. Watching him in action has demonstrated to me how many of the qualities cultivated in the armed forces are also valuable in an entrepreneur: discipline, leadership, teamwork, decisiveness, industry – and the art of getting the job done.

This observation is confirmed in a new book called Start-up Nation, by Dan Senor and Saul Singer. It describes how Israel has become a world leader in technology enterprises, thanks in part to the Israel Defense Forces. Military service is compulsory there, and it breeds technologists and successful innovators. Venture capital investment per capita is six times that in Britain, and spending on research and development as a percentage of gross domestic product four times as high. But that money is only productive because there are ideas and individuals to support.

The book’s authors believe the intensive training Israel’s army receives is a vital reason that Intel, Ebay and Microsoft, among others, see it as the most inventive place in the world, next to Silicon Valley.

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Luke Johnson

Partnerships are the oldest form of business structure – they probably pre-date joint stock companies by hundreds of years. But that does not mean they are simple or even genteel places to run. There are myriad ways of organising a partnership, and plenty of ways they can go wrong. I have been aware of more ferocious fights among professional partners than in any company boardroom. But because of the private nature of such arrangements, these disputes rarely break cover.

Historically, partnerships were an income vehicle for the participants. In the good times earnings could be lucrative, but there was no opportunity to accumulate significant capital. The goodwill in the organisation was handed over to the next generation of partners, which ensured the business attracted the finest talent.

Typically, in accountancy or legal firms, the senior figures benefit from the sweat of their junior colleagues; but the implicit contract is that for those who work hard enough for long enough, eventually a partnership will beckon, and then the good times will roll.

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Luke Johnson

A recent New York Times blog and a business book published last year cover the same territory: the many ways you can kill off your business. The former is written from the perspective of the entrepreneur; the latter takes a corporate manager’s viewpoint.

Entrepreneur Jay Goltz’s blog post – “Eleven easy ways to destroy your company” – includes warnings against such things as not carrying enough insurance or hiring the wrong accountant.

The book, The Ten Commandments for Business Failure, is by Donald Keough, former president of Coca-Cola. It identifies errors such as ceasing to take risks, isolating yourself. being inflexible and loving bureaucracy.

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Luke Johnson

I recently participated in a debate entitled “The good society: virtues for a post-recession world”. A couple of my fellow panellists emphasised the importance of promoting happiness rather than material wealth as a true measure of human progress. They believe that advances in gross domestic product are an inferior way to achieve greater wellbeing, and that a concept such as “gross national happiness” might be a better tool.

As I listened to their definitions of happiness, I realised that not many coincided with my view of what made entrepreneurs tick. I have spent decades partnering entrepreneurs, trying to understand their psychology and motivation. I find them hugely exciting to work with, because it is only thanks to their ambition and ingenuity that enterprises are started and fresh wants satisfied.

There is no stereotypical personality, but one can identify characteristics that most entrepreneurs share. At heart they are highly competitive. They do not seek security as their main goal – rather, they actively seek risk, and enjoy overcoming stressful challenges. They are not sheer gamblers, but they embrace dynamism and are willing to invest in spite of the possibility of failure – to have the chance to win.

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Luke Johnson

What motivates high achievers? Is it money, status or power? Perhaps it is none of these. Perhaps the strongest urge is simply the overwhelming desire to escape boredom.

Unquestionably, the executive suite embraces melodrama with more enthusiasm than any other activity. Making sales, hiring new staff, generating a profit are all very well – but what really excites the boardroom is corporate intrigue. After all, even in business, the key players are not robots but humans, impelled by emotions and irrational dreams of glory or revenge. Life in many ways is but a brief play, or possibly a tragedy, and most of us are acting some imagined role or another half the time anyway.

The actual stuff that makes most companies function is mundane: producing and delivering the goods every day, efficiently and at a decent margin, can be deadly dull. So the favourite form of escapism in most organisations is to conspire and manipulate with and against colleagues like the cast in some low-budget thriller. It is a tendency that is especially pronounced among the leadership class; after all, lots of them are exhibitionists with outsized egos and a thirst for the limelight.

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Luke Johnson

F Scott Fitzgerald said: “There are no second acts in American lives.” An awful lot of entrepreneurs, investors and executives must hope he was talking nonsense.

The past 18 months have seen many reputations ravaged, plenty of high-profile sackings and a lot of business failures. I am afraid that in this digital world, such blemishes are recorded for all time.

Not many of us will emerge entirely unscathed from the battering of this downturn – a great deal of mistakes of different sorts have been exposed. So we should all maintain an optimistic belief that the world is more forgiving than is commonly supposed.

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Luke Johnson

I watch with semi-detachment the energetic manoeuvrings of entrepreneurs and executives around the world of politics. Why do businessmen (and women) strive so hard to get close to ministers and political parties? Do they have public service in mind? A deep urge to be at the centre of things? Or do they think such influence can benefit their commercial interests? Perhaps they just want a knighthood or a peerage as a bauble, the next achievement in their career plan? How many have unadulterated motives?

My six years at Channel 4, a public corporation controlled by the state, have made me jaded when it comes to seeing government in action. Ministers come and go, while civil servants try their best, but the system is flawed: legislation appears to be a process of petty ritual, procrastination and compromise. Politicians seem obsessed about staying in power and keeping their seats, often to the exclusion of the noble intentions they once had. Everything takes far too long, decisions are watered down, and fear of negative publicity infects the entire circus. Meanwhile, state control too often means the malign influence of regressive trade unions, and perverse incentives.

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Luke Johnson

Optimism is the elixir that makes everything possible. It sparks confidence – and that fuels ambition, which in turn triggers action. It leads to new inventions, new companies, new jobs and a higher standard of living. Without this sense of hope in the future, life is a grim affair, a kind of regression back to the Dark Ages.



About the authors

Stefan Stern writes a column on Tuesdays on management. He is winner of the 2010 Towers Watson award for excellence in HR journalism, and has previously won awards from the Work Foundation and the Management Consultancies Association.

Ravi Mattu is the editor of Business Life, the FT's management features section, and a former editor of the Mastering Management series. He joined the FT in 2000 from Prospect magazine

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