1.

Maslow's Need Hierarchy Theory

When American psychologist Abraham Maslow set out to quantify human development he

went straight to the lives of the most capable humans of his era, including Albert
Einstein, Eleanor Roosevelt, and Frederick Douglass. His results, published in the 1943
paper, A Theory of Human Motivation, are often summed up in what we now call Maslow’s
Hierarchy of Needs.

But what about a startup’s hierarchy of needs?

"I think the life cycle of an entrepreneur from that initial moment of daring to becoming a
tycoon almost perfectly mirrors the human experience," said the "Shrink for
Entrepreneurs," Peter Shallard, in an interview with Upstart Business Journal. "Entrepreneurs
are some of the only people who will experience the entire experience in a year."

And so we thought it would be interesting to overlay an entrepreneur’s needs on top of

Maslow’s hierarchy, and see what happened. Click on the image to your right to see an
enlarged version of the Upstart Business Journal Hierarchy of Entrepreneurs’ Needs.

We showed Shallard our first take of the hierarchy and following his recommendation added
"office space" to the Physiological level; "mentors" to the Love/belonging level; and
"philanthropy/socialization," to the self-actualization level.

"In my experience when entrepreneurs get to the place where the financial is taken care of—
they have some wealth, they have some freedom—they tend to focus on giving back," said
Shallard, who since 2006 has been working with entrepreneurs. "The top of the pyramid is all
about the humanitarian us.”

Graphically represented, the theory looks like a pyramid depicting our most basic needs at the
bottom, with more sophisticated needs going up. According to Maslow, one can't move up the
pyramid until most of the lower needs are met. Shallard said even if the lowest needs are all
met, an entrepreneur without an office will have "all the symptoms of someone who hasn't
mastered the basics."

Below are our results mixed with Shallard's recommendations, in increasing order of
sophistication compared to Maslow’s original hierarchy. How do you think we did? Let us
know in the comments.

 Physiological:
Original: Breathing, food, water, sex, sleep, homeostasis, excretion

Entrepreneurs: An idea, an employee (the founder), beer, sex, sleep, non-work related relaxing,
letting go of ideas, and people you once enjoyed but are now poisoning the company, office
space
 Safety:
 Original: Security of: body, employment, resources, morality, the family, health, property

Entrepreneurs: Protection of: Employees (salary/benefits), customers, resources, demand,

original supporters, honest communication, equipment
 Love/belonging:
Original: Friendship, family, sexual intimacy

Entrepreneurs: Business partners, original supporters, sexual intimacy, mentors

 Esteem:
Original: Self-esteem, confidence, achievement, respect of others, respect by others

Entrepreneurs: Sense of worth, confidence, meeting goals, respect from customers, respect to
customers
 Self-actualization:
Original: Morality, creativity, spontaneity, problem solving, lack of prejudice, acceptance of
facts

Entrepreneurs: A consistent code, imagination, spontaneity, innovation, clear judgment,

making a product that meets a demand, not the other way around, philanthropy/socialization

A recent criticism of Maslow said the psychologist missed the social component of humanity,
and certainly, some have come to discard the hierarchy altogether. With Shallard's tweaks, we
think the new Hierarchy of Entrepreneurs' Needs looks pretty accurate.

Implication of Maslow's Theory

1. Research has failed to verify the deficit and progressive principles of theory.
2. People are motivated not only by needs but also by perceptions, expectations, experience,
etc.
3. Multiplicity of needs rather than a single need motivate people.
4. Situational factors have been neglected.
 self-transcendence Programs to create mentors

self-actualization College scholarships

aesthetic The arts

cognitive Academic programs

self-esteem Empowerment programs

belongingess Community programs
safety and security School and neighborhood safety

physiological Proper nutrition

Maslow’s hierarchy Example programs that meet

different needs

Maslow’s Hierarchy of Needs for a Small Scale Business

BY 
 TJ
 – OCTOBER 8, 2011POSTED IN: PRE BUSINESS
For those of you who don’t know, Abraham Maslow published a paper in 1943 titled “A Theory
of Human Motivation.” In this work he established a hierarchy of needs that he argued was
fundamental to all humans.  The structure of his hierarchy is often portrayed as a pyramid with
the more basic needs making up the base and the less essential needs towards the top. The needs
in order are:

1. Physiological
2. Safety
3. Love/belonging (social)
4. Esteem
5. Self-actualization

Personification of Business

You may be asking yourself how in the world a personal hierarchy can apply to a business.
Businesses are an outpouring of their founder and as such carry many traits found in the
individual. If you look at any company, large or small, you can trace its origin back to a person
or a small group of people.  Additionally, the company was built to fulfill a need that others
have, making it very much a relational entity. In short, you are your first business. I may explore
this truth a bit more in future articles, but for now the above correlation is sufficient.
Physiological Needs of a Business

For the individual these are the literal requirements for survival; for the business this would
consist of an audience, a need to fulfill, and a value proposition. If any one of these is removed a
business will wither and die. The business is sustained through fulfilling the need of a group of
people by posing its value proposition. Growth will come in the form of compensation.

Safety Needs of a Business

The safety needs of a business tie into how far away a company is from going bankrupt. This
displacement is a function of how competitive the company’s value proposition is, how
diversified its portfolio may be, and how much cash it has to weather unforeseen storms. The
only threat to a business is its inability to turn a profit. So, anything that jeopardizes this would
be in conflict with the safety needs.

Social Needs of a Business

Individuals realize love and belonging needs through friendship, intimacy, and family. A
business is no different. Once a customer-supplier relationship is established through customer
acquisition, the business must continue to invest into each customer in order to grow the
relationship. A competitive advantage can bring new people to a business, but the relationship
that is established is what will keep those people coming back and referring others. Said another
way, the love and belonging needs would be the market’s acceptance and perception of the
business as a member of their respective community.

Esteem Needs of a Business

For the individual, esteem needs speak to the desire to feel respected and to have a good self-
image. For the business, the fulfillment of this need is made evident by expressed industry
standing or awards. Awards and being number one in an industry may win over a few customers,
but they are not required to turn a profit. This is why the esteem needs are further down the
hierarchy. Having these fulfilled will help the business as an entity feel good about itself but are
not required for survival. A company with a high collective self-esteem will cultivate a positive
culture among its employees, which in turn will bring about more successful ventures.

Self-actualization Needs of a Business

Self-actualization is the fulfillment of one’s own potential. Companies that seek this fulfillment
are the ones who so exceedingly meet a demand that they create new markets and innovations.
Apple would be a prime example of self-actualization being fulfilled. In everything Apple has
done, they have pushed the limits of how people create with technology. Steve Jobs directed the
company towards excellence by helping people create in ways they could never achieve before.
Consequently, the iMac, the iPod, the iPhone, and the iPad all played a big role in the
introduction of new markets. The self-actualization need of a business is tied tightly to the man
steering the ship. The CEO of a business will dictate a company’s direction, which may or may
not be towards self-actualization. CEO Steve Jobs led Macintosh through each of its largest
 innovations, but when he left, it began to lose its way and market share. Upon his return,
Macintosh quickly returned to its initial direction and to profitability.

Conclusion

As an entrepreneur or small business owner you would be wise to realize the organic nature of
the business you conduct. Businesses are living entities with needs that, if not met, will perish. If
nurtured, however, they can grow to unprecedented levels, reaching and affecting the lives of
many. As an entrepreneur, I know that there are many things on your plate, but I would challenge
you to filter through the noise and find the one thing that you know you can do exceedingly well.
It will be in that focus that you find your true genius.
I have discussed another benefit to focusing your efforts in the article titled Successful Habits. In
it I explore the ramifications of spreading yourself thin and the inefficiency of multitasking.
When I learned this principle, my world changed, and everyone I have shared it with has also
found it extremely helpful.

McClelland achievement and acquired needs theory

In his in his 1961 book 'The Achieving Society', David McClelland expounds on his acquired-
needs theory. He proposed that an individual's specific needs are acquired over time and are
shaped by one's life experiences. He described three types of motivational need. A person's
motivation and effectiveness in certain job functions are influenced by these three needs.

 n-ach - achievement motivation/need for achievement

The n-ach person is 'achievement motivated' and therefore seeks achievement, attainment of
realistic but challenging goals, and advancement in the job. There is a strong need for feedback
as to achievement and progress, and a need for a sense of accomplishment. People with a high
need for achievement seek to excel and thus tend to avoid both low-risk and high-risk situations.
Achievers avoid low-risk situations because the easily attained success is not a genuine
achievement. In high-risk projects, achievers see the outcome as one of chance rather than one's
own effort. High n-ach individuals prefer work that has a moderate probability of success, ideally
a 50% chance. They prefer either to work alone or with other high achievers.
 n-pow - authority/power motivation /need for power
The n-pow person is 'authority motivated'. This driver produces a need to be influential, effective
and to make an impact. There is a strong need to lead and for their ideas to prevail. There is also
motivation and need towards increasing personal status and prestige.

A person's need for power can be one of two types - personal and institutional. Those who need
personal power want to direct others, and this need often is percieved as undesirable. Persons
who need institutional power (also known as social power) want to organize the efforts of others
to further the goals of the organization. Managers with a high need for institutional power tend to
be more effective than those with a high need for personal power.
 n-affil - affiliation motivation/need for affilation
The n-affil person is 'affiliation motivated', and has a need for friendly relationships and is
motivated towards interaction with other people. They need harmonious relationships with other
people and need to feel accepted by other people. The affiliation driver produces motivation and
need to be liked and held in popular regard. These people are team players. They tend to conform
to the norms of their work group. High n-affil individuals prefer work that provides significant
personal interaction. They perform well in customer service and client interaction situations.
McClelland's acquired needs theory states that most people possess and exhibit a combination of
these characteristics. Some people exhibit a strong bias to a particular motivational need and this
motivational or needs 'mix' consequently affects their behavior and working/managing style.

Mc clelland's achievement motivation theory suggests that a strong n-affil 'affiliation-motivation'

undermines a manager's objectivity, because of their need to be liked, and that this affects a
manager's decision-making capability. A strong n-pow 'authority-motivation' will produce a
determined work ethic and commitment to the organisation, and while n-pow people are attracted
to the leadership role, they may not possess the required flexibility and people-centred skills.

McClelland's motivation theory argues that n-ach people with strong 'achievement motivation'
make the best leaders, although there can be a tendency to demand too much of their staff in the
belief that they are all similarly and highly achievement-focused and results driven, which of
course most people are not.

Need for Achievement and Entrepreneurship

• McClelland further described the profile of an entrepreneur as someone high in
achievement motivation and low in power motivation, while good managers have high
power motivation and low achievement motivation.
• All these needs are acquired and develop overtime as a result of life experience.
McClelland states that the combination of moderate to high need for power and a lower
need for affiliation is linked with senior executive success. In a study conducted in India,
McClelland found that people with a high degree of achievement started their own
business and invested more to expand their business after attending a business training
program.
McClelland's experiment
The Thematic Apperception Test (TAT) --
It consisted of showing individuals a series of pictures and asking them to give brief
descriptions of what was happening in the pictures. The responses were analysed in terms
of the presence or absence of certain themes. The themes McClelland and his associates
were looking for revolved around the following motivators: achievement, affiliation and
power.
• The Thematic Apperception Test or TAT is amongst the most widely used, researched,
and taught psychological tests
• TAT was developed by the American psychologist Henry A. Murray and Christina D.
Morgan at during the 1930s to explore the underlying dynamics of personality, such as
internal conflicts, dominant drives and interests and motives.
 • It uses a standard series of 31 provocative yet ambiguous pictures about which the subject
must tell a story.
• A subject is asked questions such as: What dialogue might be carried on between
characters? How might the "story" continue after the picture shown?
• For this reason, the TAT is also known as the 'picture interpretation technique'.
• Today, the TAT is widely used as a tool for research around areas of psychology such as
dreams, fantasies and what motivates people to choose their occupation.
• Sometimes it is used in a psychiatric context to assess disordered thinking, in forensic
examinations to evaluate crime suspects or to screen candidates for high-stress
occupations.

3. Motivational Factors
The 6Cs that motivate the Entrepreneurs - Change, Challenge, Creativity, Curiosity, Control
& Cash.

1. Change - Entrepeneurs constantly want change and also want to be the bearers of the change.
They are problem solvers and want to disrupt the status quo. They have a vision ("I want to
aggregate the world's information" or "I want to put  a PC in every desk") and go about
attempting to change - some succeed and others don't.
2. Challenge - Many people who like to startup want it for the challenge and want to handle big
problems. For such people, the typical job in a big corp is not challenging enough and too
boring to be worth.

3. Creativity - Running your own business lets you be more creative. For instance, you can
experiment with a new website design, new marketing strategy; create innovative products
that attack a known problem in a different way, create new packaging and new advertising
campaigns. You have an infinite room to bring in your creativity in a small business that you
found.
4. Control - Many guys who startup a business don't want to be pushed around and work in a
product/company in which they have no way to shape the destiny. They want to work at their
own time, own pace, location of their choice, employees of their choice and have an active
role in deciding the direction of the company.
5. Curiosity - Successful Entrepreneurs are always curious and ask - "what if we do X this
way?” They want to understand the customer's minds, markets and competitors. They are
constantly curious to see how their particular theory ("people want to do X with Y") works. In
this aspect, they are no different from a researcher who is searching for the truth. 
6. Cash - The final part is the cash. Many non-entrepreneurs think cash comes first for
entrepreneurs. That is never really true. If that were the case, there is no reason for an Ellison
or Gates to keep pursuing their business aggressively after they have made a billion dollars
 (which could get them almost everything a person could want). However, cash (and multi-
million dollar exits) do play a part in motivation to run a business. Just that if it is the primary
motivation, it is quite likely that the business would either fail or have a premature exit.

Factors for Entrepreneurial Motivation

• Entrepreneurial Ambition:
1. To make money
2. To gain social prestige
3. To secure self employment
• Compelling Reasons
1. Unemployment
2. Dissatisfaction with existing job or occupation
3. To use technical or professional knowledge
• Facilitating Factors
1. Previous Knowledge, experience
2. Encouragement from family members, friends
3. Imitation of successful entrepreneurs
Factors Responsible for the Emergence and Growth of Entrepreneurship
• Background Factors
1. Education Training and Experience
2. Family, role models and association
3. Financial conditions
• Motivational Factors
1. Need for Achievement
2. Personal Motives
3. Business Environment
• Economic Factors
1. Supportive Government Policies
2. Availability of Financial Assistance
3. Ancillary Support
• Reward
1. Recognition
2. Social Status