Overview

In recent time the rise of entrepreneurs and innovative business ideas have made it
essential to examine the key characteristics of an entrepreneur and the defining
attributes of a successfully innovative company.
This report seeks to provide an analysis of an entrepreneur and an innovative
business in the context of two of the entrepreneurial models.
Ernst & Youngs (known as EY hereafter) model (Appendix 1) of decoding the DNA of
an entrepreneur acknowledges that there is no universal description of an
entrepreneur. However, entrepreneurs share many similar qualities; but what makes
them successful is the complex interaction of internal and external factors,
including timing, geography, culture and sometimes luck. EY believes that at the
core, entrepreneurs have a distinct attitude towards risk and failure, an
opportunistic mind set combined with a locus of control. (2011) These core traits
are surrounded by six guides to action and further contributed by ten more
attributes common in leaders of exceptional enterprises which ultimately sets them
apart from the rest.
Churchill & Lewis five growth stages (Appendix 2) is a more general take of Greiners
model of firm growth but without the crisis of leadership, autonomy, control and red
tape mentioned in Greiners model.
Ernst & Young Nature of Nurture Decoding the DNA of the Entrepreneur
1.0

Introduction

Anthony Frances Fernandes (better known as Tony) is a Malaysian businessman born

in 1964 and the co-founder of Tune Air Sdn Bhd, the parent company of AirAsia Sdn
Bhd. After 14 years in business, AirAsia is now Asias largest low cost carrier (AirAsia,
2015). Recently, it has also been named worlds best low cost carrier for the eight
consecutive year. (Skytrax, 2016)
When Tony was younger, he followed his mother who sold Tupperware at
Tupperware Parties which proved to be his role model with her enterprising skills.
His dream to own a budget airline came about as he recalled a telephone
conversation with this mother telling him flight tickets are too expensive for him to
return home to Malaysia during his boarding school days in Epsom College, England.
Tony eventually graduated from the London School of Economics and pursued a
career in accounting with his passion in music at Virgin Records and Warner Music.
(The Star Online, 2016)
Tony has had a slew of honours and titles bestowed upon him in Malaysia and
abroad, such as Tan Sri in Malaysia, CBE by United Kingdom (Chen, 2011),
Commander of Legion of Honour by France (Motor Sport Press, 2013; AirAsia, 2010).
He was the winner of Forbes Asia Businessman of the year award in 2010 (Mertens,
2010) and was named Time Magazines 100 most influential people in the world
(Branson, 2015). Incidentally Tony was also awarded as Malaysia's Ernst & Young
Entrepreneur of the Year 2006. (Macrokiosk, 2006)

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1.1

Opportunistic Mind set

Tony has displayed his opportunistic mind set several times since he started his
business. The first was acquiring AirAsia which was an ailing airline with debts
totalling to USD 11 million at only USD 0.26 cent (Carney, 2004). Right after he
bought the airlines, the 911 terrorist attack occurred in USA which meant many
people no longer wanted to fly. Instead of being discouraged, Tony saw it as an
opportunity to hire experienced staff which other established airlines were laying
off, the incident also meant aircraft leasing costs fell by 40% which was perfect
timing for his plans. (The Star Online, 2016)
1.2

Acceptance of risk and potential failure

Tony had confidence is his business concept and mortgage his house and used his
personal savings to finance it. According to French scholars Michel Villette and
Catherine Vuillermot, successful entrepreneurs are risk minimizers who evaluate
their opportunities carefully (Ernst & Young, 2011). Tony exhibited this trait by
providing a portfolio risk management and managed to convinced General Electric
(GE)s 2000 risk analysts that two of AirAsias plane versus 2600 stable credits is
worth the risk because if AirAsia failed they can repossess the planes but if AirAsia
succeeds GE might very well sell another 1000 engines to them. (The Star Online,
2016)
1.3

The locus of control

Tony also has a strong locus of control he seizes his opportunities when they come.
In his early years, this aspect of his personality is evident when he failed his job
interview at Virgin Television but seized the opportunity to speak to Richard Branson
who was passing by and managed to land the job after having a coffee with him.
(The Star Online, 2016)
1.4

Behaviours around the core

1.4.1 Drive, tenacity and persistence

Despite sceptical airlines analysts Tony lobbied then Prime Minister Mahathir
Mohamad to an open skies deal with neighbouring countries such as Thailand,
Indonesia and Singapore which ultimately expanded his market tremendously
(Bloomberg, 2004; AirAsia, 2015).
1.4.2 Be the architect of your own vision: passionate and focused
Tonys vision, passion and focus is reflected in AirAsias vision which was to be the
largest low cost airline in Asia and their mission is To be the best company to work
for, create a globally recognised ASEAN brand, maintain the highest quality product
and to attain the lowest cost so that Now everyone can fly! (AirAsia, 2015)
1.4.3 Build an ecosystem of finance, people and know-how
Tony also knew that in order to succeed in a foreign market he needed business
partners who had strong connections and finances in the country and with that came
the birth of Thai AirAsia, AirAsia Indonesia, India, Japan and Philippines AirAsia. On
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top of that he hired experience staff who knew the business (AirAsia, 2015). He also
built a very good company culture amongst his AllStars (AirAsia employees) who
are committed and passionate about their jobs, which makes them go the extra mile
at work and in turn build loyal customers.
1.4.4 Seek out niches and market gaps
Easyjet and Southwest served as Tonys inspiration. He recognized that there is a
huge market gap and that he needed to introduce the budget airline model in Asia
who had 3 billion underserved people which could not afford to travel due to the
high airline prices. (The Star Online, 2016)
1.4.5 Live what you believe: build success culture and values
Tonys strong believes that employees are the companys greatest assets, AirAsia has
been always praised for good quality service despite it being a low cost carrier
because happy employees equals to happy customers. (Cheeseman, 2014)
1.4.6 Nonconformist and a team player
Tony did not did not believe in partnership with travel agents and launched an online
booking website instead. He also believed his air stewardesses do not need to
conform to a uniformed hairstyle unlike other traditional airlines. In order to
understand the functions of different operations and departments, Tony has also
personally worked in some to get a better understanding of their roles. (The Star
Online, 2016)
Conclusion
Although EY did not address certain aspects of an entrepreneur such as education,
resources and vicarious experience which was mentioned in several other models
such as Davidssons (1995), EYs entrepreneur model is a complex one and has many
similarities to other entrepreneurial models. It suggests that entrepreneurs
encompasses a lot of the imperative traits such as vision, resilience, teamwork,
innovation, passion, leadership, integrity, quality, customer focus and flexibility. EY
admits that there is no universal characteristics of an entrepreneur but it is believed
that entrepreneurs are ultimately managers nurtured from their experiences. (2011)

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Churchill and Lewis, The Five Stages of Small Business Growth

2.0

Introduction

The coffee and tea culture in Malaysia has always been prevalent due to its British
colonial past. However, as western coffees had bitter tastes, Malaysian white coffee
was developed to suit the taste buds of the local Asian palate. In western countries,
white coffee simply means coffee with milk and sugar. However for Malaysians it
means a very different tasting coffee compared to the west. A unique ingredient has
been added to the coffee bean during its roasting process. Margarine gives the
coffee beans an extra caramel flavour which has slowly become a national drink.
2.1

Stage 1 - Existence

OldTown had humble beginnings from a tiny classic coffee shop in the small old
mining town of Ipoh in 1958. The growth of creativity was fuelled by co-founder Goh
Ching Mun who was involved in the family business since 1983 and wanted to make
OldTown White Coffee easily available for anyone instead of making a special trip
to Ipoh just to savour it. White Cafe Sdn Bhd was eventually co-founded in 1999
together with Tan Say Yap who was instrumental in the formulation of the blend of
white coffee and beverage manufacturing business of the group. (OldTown Berhad,
2011)
2.2

Stage 2 Survival

There was steady growth in its business leading to an expansion in their range of
their premix drinks and exporting it Singapore and Hong Kong in subsequent years
after being founded. In 2001 Lee Siew Heng was appointed as managing director, he
was instrumental in their business expansion.
Malaysians have been enjoying their coffee in hot non air-conditioned coffee shops
called kopitiam until Starbucks opened in 1998 with more competitors following
behind. (Starbucks Malaysia, 2016) They were the premium coffee outlets with
comfortable sofa seating and air-conditioning which was an important commodity
for a tropical country. OldTown recognised the big price gap between the kopitiam
and western cafs.
In 2005, they opened their first chain of caf outlets based on the concept of their
original coffee shop setting and ambience but with air conditioning, cheaper drinks
(compared to Starbucks) coupled with local menu offerings (OldTown Berhad, 2011)
and thus creating a blue ocean in an uncontested market place. (Kim and
Mauborgne, 2004)
2.3

Stage 3 Success / Profitability & Growth

With the rapid expansion of their products to more neighbouring countries and
diversification into the food & beverage sector. OldTown Group of Companies was
finally incorporated on 30 November 2007. It also expanded its business operations
of their caf chain to handle food processing in order to put quality control in place
for outlet franchise of its own caf outlets. With the companys ambitious plans,

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they need more investors in order to expand rapidly especially looking for the right
business partners for the overseas outlets.
2.4

Stage 4 Take-Off

In order to continue their ambitious growth plans, Oldtown Berhad was finally public
listed on 13 July 2011. Their vision was to be Asia Pacifics leading white coffee
brand. Their mission is to nurture their communities, delight their consumers with
their products, do their part in saving mother nature, value the people that growth
together with the company and last but not least to prosper their investors.
(OldTown Berhad, 2011 & 2016)
OldTown have grown into the largest Malaysian style caf, with 40% market share in
Malaysia and ranked number two after Nescafe in both Hong Kong and Singapore
(Kenanga Research, 2012). As at 31 March 2016, OldTown exports its products to 15
countries as far as USA and Canada. Its caf outlets have also expanded its wings to
Singapore, Indonesia and Australia. (Robert, 2016)
The company has a sound business strategy and had key management focus. Their
caf chain attributed to 62% of their revenue and the other 38% by the
manufacturing of beverages segment. (OldTown Berhad, 2011)
2.5

Stage 5 Resource Maturity

With their success, they have stream lined their business by merging two central
kitchens and therefore making it more cost efficient whilst reducing the impact of
increase of raw material expenses. With challenges in shortage of foreign labour and
soft market sentiment, the company embarked a trial transformation to a semi selfservice concept caf. (OldTown Berhad, 2016)
Having a strong management as well as sound strategy meant they have a high
demand in outlet franchising which stands at 56.6% of their total outlets. To ensure
the companys number 1 position in the white coffee segment in Malaysia for
manufacturing of beverages and further focus on the export market due to the slow
economy in Malaysia, OldTown have subsequently appointed DKSH and Yee Lee
Trading & Co. Sdn Bhd as their distributor have shown increase in product
dissemination. (DKSH, 2016)
OldTown is currently nurturing the next generation of customers by introducing
junior meals at their caf outlets and increase in product varieties.
Both founders and executive directors Goh & Tay are currently co-advisors to the
Group Managing Director in regard to FMCG matters. (OldTown Berhad, 2016)
Conclusion
Churchill and Lewis believes that during the initial stages of business, the owner is
the business but as it continues to grow the business and owner needs to be
eventually separated in terms of operations and financials so that the business turns
into an organisation (Deakins & Freel, 2009). It assumes that owner has no
business ability with low execution capabilities and thus need to delegate their jobs
by hiring experienced people in order for their businesses to take off. The model is
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also rather simplistic and encompassing, disallowing a marriage of stages or

backpedalling of businesses. It also focuses on the internal environment of the
organisation, perhaps incorporating either Porters 5 Forces, SWOT or PESTEL
analysis of the external environment would complement the model together and
give a clearer outline on the evolution of the business.

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Appendix 1

Ernst & Young, 2011 pg. 15

Appendix 2

Churchill & Lewis, 1983 (Adapted from Harvard Business Review)

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