Injecting Innovation into Intractable Systems [Entire Talk]
Laurene Powell Jobs, Emerson Collective
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Collection (9 items)
High-Impact Entrepreneurship Today
High-growth entrepreneurship and technology innovation hold the promise of a better tomorrow. But success isn’t as simple as news headlines make it sound. All along a startup’s journey, from the initial idea to the growth of a venture into a mature business, challenges arise. This collection focuses on how to navigate the hurdles entrepreneurs face when launching and leading tech startups.1 of 9
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Entrepreneur Tracy Young and Doug Leone, global managing partner at Sequoia, discuss the nature of a harmonious relationship between a startup’s founders and the VC firm investing in them. Young is co-founder and CEO of PlanGrid, which allows construction managers to oversee projects via their device. She and Leone speak with Toby Corey, a lecturer in Stanford University’s School of Engineering.
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Business classes are not a prerequisite for entrepreneurship, and yes, some of the most storied startup founders were college dropouts. But many others say they benefited from academic courses and experiential learning opportunities that focused on the fundamentals of entrepreneurship.
Joshua Reeves, the soft-spoken CEO of a payroll and benefits startup called Gusto, began one talk on entrepreneurship by saying he attended the Entrepreneurial Thought Leaders Seminar at Stanford University 14 quarters in a row while majoring in electrical engineering.
Kevin Systrom and Mike Krieger, the founders of Instagram, met as students in an entrepreneurship work/study program that combines classes, mentoring and other immersive experiences. They and other entrepreneurs who went through the nine-month Mayfield Fellows Program, also at Stanford, say it was the most insightful experience they had as students.
Other alumni of the program include startup founders like Kit Rodgers of Cryptography Research, Avid Larizadeh of Bottica and Google Ventures, David Merrill of Sifteo and Bobby Lee of BTCC. Each one of them possesses innate talents and drive, that along with insights they gained as students, propelled them to entrepreneurial success.
Elon Musk may embody the notion of a naturally gifted entrepreneur, but the aforementioned founders are proof that the necessary skills and mindset can be learned. The thought-leaders seminar and fellowship program are both offered through the entrepreneurship center in Stanford’s Department of Management Science & Engineering.
The late Peter Drucker, one of the leading management thinkers of the 20th century, said it best: “The entrepreneurial mystique? It’s not magic, it’s not mysterious, and it has nothing to do with the genes. It’s a discipline. And, like any discipline, it can be learned.”
Yes, some will argue that entrepreneurship is still more art than science, at times requiring improvisation in the face of unique and uncertain situations. But there are obvious characteristics that successful entrepreneurs tend to share. Among them are:
- a personal passion to solve a problem
- a vision for what’s innovative
- the skills to build a product or service, and a business around it
- the tenacity to constantly seek feedback, iterate and pivot
- the ability to empathize with and inspire those around you.
Emergence of entrepreneurship education
Donald Kuratko, a professor of entrepreneurship at Indiana University, Bloomington, traces the history of the academic field back to 1971, when the University of Southern California first launched a concentration in entrepreneurship for MBA students. By the early 1980s, more than 300 universities offered courses in entrepreneurship and small business, and over the next decade, that number grew to 1,050 schools, Kuratko states in his article, “The Emergence of Entrepreneurship Education: Development, Trends, and Challenges.”
When it was published in 2005, entrepreneurship education had exploded to more than 2,200 courses at over 1,600 schools around the country. Kuratko also counted more than 100 established and funded entrepreneurship centers at the time, noting emerging trends in “experiential learning” such as class projects, startup competitions and field trips exposing students to industry.
“Today, the words used to describe the new innovation regime of the 21st century are: dream, create, explore, invent, pioneer, and imagine!” Kuratko wrote. “Entrepreneurship educators must have the same innovative drive that is expected from entrepreneurship students.”
However, Kuratko notes — as do others — that more progressive universities are offering entrepreneurship courses across a wide range of schools and departments. In particular, “it is critical to expand entrepreneurship education to engineering and science departments where most of these technologies originate,” entrepreneurship professors Tom Byers (Stanford) and Andrew Nelson (University of Oregon) state in the Chicago Handbook of University Technology Transfer and Academic Entrepreneurship.
Byers and Nelson, along with Richard Dorf, an engineering professor at the University of California, Davis, wrote the textbook Technology Ventures: From Idea to Enterprise. And in it, they explain why they focus on the tech sector, and on educating science and engineering students as well as those studying business:
“The technology sector represents a significant portion of the economy of every industrialized nation. In the United States, more than one-third of the gross national product and about half of private-sector spending on capital goods are related to technology. It is clear that national and global economic growth depends on the health and contributions of technology businesses.”
At the university that spawned Silicon Valley, Stanford’s engineering school offers courses, fellowships and other learning opportunities to help students develop the knowledge, skills and behaviors to be entrepreneurial in life. And through Stanford’s involvement with the National Center for Engineering Pathways to Innovation – known simply as the Epicenter – students and faculty far beyond the valley have brought entrepreneurship and innovation to their campuses and curriculum.
Funded by a $10 million grant from the National Science Foundation, the Epicenter led initiatives that turned thousands of college students and faculty around the country into inspired advocates for bringing a focus on entrepreneurship and innovation to engineering education — touching about 300 U.S. institutions over the past five years.
The Epicenter’s leaders recently sat down and discussed how far entrepreneurship education has come in the last 20 years, and what the future holds for integrating more of it into engineering curriculum.
Creating innovators, not experts
In one instance, an entire engineering college is devoted to graduating innovators by tearing down the academic silos that have historically kept students narrowly focused on their major. Olin College of Engineering, in Needham, Mass., does this in recognition that the next Steve Jobs won’t be an expert in just one discipline — and that the late CEO of Apple didn’t even major in engineering.
At a recent Entrepreneurial Thought Leaders talk at Stanford, the president of Olin College described how the traditional model of higher learning separates the disciplines and forces like-minded students to stick together. When instead, Richard Miller said, what aspiring innovators need is to be exposed to a diversity of perspectives.
Citing research out of Stanford, Miller explained that innovation happens where three objectives overlap: feasibility, viability and desirability. But at a typical university, most of the students who focus on feasibility (can it be done?) are in the engineering school, while the students concerned with viability (is it financially possible?) are working on MBAs. Meanwhile, the students who care most about desirability (people’s emotions) are usually found in the humanities and social sciences.
“If we’re going to create innovators, we need to do a better job of integrating these in the same head, so that one person can see the whole picture,” said Miller, a leader in the movement to revolutionize and reshape engineering education. “The big message for engineering schools: No amount of doubling down on math and science courses is going to improve the output of innovators.”
The point is that the most important traits in entrepreneurship aren’t necessarily inherited or the result of total luck. While charisma and happenstance certainly play a role, prominent educators agree that people can learn to be entrepreneurs.
Fortunately, there is no shortage of programs, organizations and universities that want to prepare the next generation of innovators – and the need for them has never been greater.
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Meg Whitman, president and CEO of Hewlett Packard Enterprise, describes how she learned to lead companies big and small to success by adjusting to different environments, building on what a business does best, and approaching work with urgency and initiative. In conversation with Stanford Professor of the Practice Tina Seelig, Whitman recounts the explosive growth during her time as president and CEO of eBay, the challenging turnaround of storied tech giant HP, and her 2010 run for California governor that revealed deep political insights that still resonate.
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Today, the cool factor of entrepreneurship has spread around the world as technology startups have grown from fledgling ventures into global forces that can redefine our times. The founders of Facebook, Google, Tesla and Uber are practically celebrities.
For better or worse, all this entrepreneur worship has given rise to the “wantrapreneur,” someone who seeks to launch a startup just for the money and acclaim. Never mind that they don’t have a great product idea — or more importantly, the business skills to spend capital wisely or responsibly lead a team of hardworking early employees.
So, if there were a step-by-step process that any aspiring entrepreneur could follow, would that be a good or bad thing? In the tech sector, some say such a formula is being taught: the lean-startup methodology, an approach to entrepreneurship that consists of clearly defined steps for discovering customers and developing a product or service.
Over the past five years, the lean movement has spread beyond the traditional tech sector to being taught within the government to publicly funded scientists so they can better translate their research into commercial innovations. At the National Science Foundation and the National Institutes of Health, this entrepreneurship-training program is called I-Corps (Innovation Corps).
Now the Lean LaunchPad is being used to address national-security and foreign-policy concerns. After a successful pilot class at Stanford University last spring, the course “Hacking for Defense” will be taught to college students around the country as a way to develop solutions to critical national security problems for the national-defense and intelligence communities. And this fall, another lean-startup course at Stanford debuts, called “Hacking for Diplomacy,” where students will work on challenges faced by the U.S. State Department.
From tech startups to government-funded research and now national defense and international diplomacy – are there no limits to the lean approach? Devotees say its widespread adoption and track record of success are proof that it works. Others say the methodology doesn’t make sense for certain sectors. So, who’s right?
A ‘lean’ history lesson
In 2005, retired Silicon Valley entrepreneur Steve Blank came out with The Four Steps to the Epiphany, which first stated that startups are not smaller versions of large companies, but nascent ventures in search of a business model. Four years later, a Swiss business theorist, Alexander Osterwalder, introduced the world to a new tool to help startups design their business model, called the “business model canvas.”
By then, Blank had become an educator, teaching entrepreneurship at Stanford. He combined Osterwalder’s business-model canvas with the customer-development process he defined in Four Steps and began teaching what he called the “Lean LaunchPad” methodology in 2011.
Today, countless students and entrepreneurs who have come across his books, including the 2012 bestseller The Startup Owner’s Manual, credit their success to Blank’s insights. The movement was also advanced by the 2011 book The Lean Startup, by Eric Ries, and continues to grow as the federal government now teaches the lean-startup methodology to scientists at its national labs using the curriculum Blank developed.
An eight-time serial entrepreneur, Blank is the first to admit there is no rule book in Silicon Valley. What his Lean LaunchPad approach does is help entrepreneurs avoid some of the most egregious failures, which he explains are often caused by hubris.
“It’s all the attributes of a world-class founder — passion, resilience, velocity, urgency — that make most of them fail because they end up confusing a faith-based enterprise with a fact-based enterprise,” Blank said. “You need faith to start, against all odds. But what you rapidly need to do is replace the faith with facts.”
The cornerstones of the lean methodology include:
- proposing a business opportunity in the form of a “hypothesis” about a need in the market
- defining the essential building blocks for the proposed business (key partners and resources, customer segments, revenue streams, etc.)
- quickly testing the assumptions about the market and customer needs by getting out and talking to lots of people
- using “agile development” to adjust the product or service based on all the feedback, and then launching a “minimum viable product” to find product/market fit.
From there, continued feedback intake drives product improvement and, if necessary, any changes in the direction of the business — otherwise known as a “pivot.”
Government goes lean
The approach worked for Jason Oberg, who, in 2013, was working on a Ph.D. in computer science at UC San Diego. Along with a post-doc at UC Santa Barbara and professors from both campuses, Oberg was researching a basic technology that would help computer-chip makers find vulnerabilities that could result in data leaks and other security issues.
That year, they received a research grant from the National Science Foundation and went through NSF’s I-Corps training program. They followed Blank’s core mandate to “get out of the building” and talk to at least 10 people per week — potential customers and other stakeholders. For Oberg’s team, this meant venturing off campus and chatting up chip makers, chip buyers, potential partners and more. By the end of the 10-week I-Corps program, Oberg realized that his team could indeed build software that finds chip vulnerabilities, and that customers would pay good money for it.
Oberg is now CEO of San Diego-based Tortuga Logic, a startup founded by the members of his I-Corps team. They now have nine employees, secured phase two of the NSF grant and are bringing in both early investment money and revenue from clients.
“If we had not gone through I-Corps, it would not have pushed us over the edge to build a product and become entrepreneurs,” Oberg said. “I probably would’ve ended up working at one of the big software companies.”
The NSF offered the first I-Corps training in 2011 and has since grown into a huge success: Over 800 teams from 192 universities in 44 states have completed the NSF training, according to Tom Kalil, deputy director for technology and innovation in the White House Office of Science and Technology Policy. Each I-Corps team includes a university faculty member who is a research scientist and acts as the principal investigator (PI), a graduate student (entrepreneurial lead) working in the PI’s lab, and a mentor from their local area with domain expertise.
More than 320 companies have been created by those I-Corps alumni, Kalil said. “It’s taught scientists and engineers about this similarity between the scientific method and the entrepreneurial process,” Kalil said. “So I see this playing a really important role in providing some entrepreneurial as well as experiential learning that provides a clear and logical framework.”
Limits to lean?
However, some feel that would-be entrepreneurs are becoming overly concerned with following the formula, while losing sight of more practical business matters. Mike Pozmantier, a technology-transfer expert who managed the U.S. Department of Homeland Security’s Transition to Practice program, says he has seen a number of dabblers over the years adhere to the process in lieu of actually solving the issues they encounter.
From his time in government, Pozmantier is well aware of its enormous efforts to understand and adopt the mindset of the private sector. And he acknowledges that I-Corps does a good job of pushing researchers to get out and speak to people — and of teaching one of the few well-defined methodologies for putting people on an entrepreneurial path.
“Process is clearly helpful, but I’ve seen too many people rely on it to the detriment of actually doing what they need to do,” Pozmantier said. “There is a place for lean, but entrepreneurs should look at it as a tool in their toolbox — and not as the toolbox.”
Perhaps the biggest critique skeptics voice about the lean-startup approach is that it threatens to change the entire trajectory of entrepreneurship. No longer is it about developing a profoundly novel and complex technology over several years, remaining focused on a specific idea for a product that can actually live up to a cliché mission statement about “changing lives” or “making the world better.”
Instead, critics say the lean approach is increasingly skewing entrepreneurship toward the creation of products and services that lend themselves to rapid market releases, iterations and exits. Why embark on the daunting journey of developing some heavy technology that could take years and many millions of dollars just to prototype, when you could design the next Pokemon Go? The smartphone and app ecosystems have already been built, and thumbs are literally twitching for that next digital distraction.
“When the technology is deep and new, you do not start with those advantages,” said Mike Lyons, a longtime lecturer on entrepreneurship at Stanford and veteran of the Silicon Valley tech scene. “The companies that drive GDP in the valley, including Facebook and Google, were not built that way.”
One field that seems to defy the lean methodology is med-tech. Setting aside biometric-tracking devices, wellness apps and the like, much more time and capital are needed to build a product or service that will diagnose or treat a medical condition, says Gordon Saul, executive director of the Stanford Byers Center for Biodesign.
He acknowledges the value of the customer-development process’s mandate to walk out of the lab and talk to as many people as possible — especially when it comes to academic research, which Saul says can be “very inward looking.” But in the case of, say, a Class 3 medical device — a category that includes the highest-risk products such as surgical implants — the wide array of stakeholders, regulatory issues and immense development costs don’t fit into rapid iteration and pivot cycles.
“Developing medical technology is enormously expensive,” said Saul, adding that costs to get a Class 3 medical device to market can soar as high as $80 million. He notes that a significant proportion of those costs are spent clearing regulatory hurdles, some of which arise early in the development cycle, such as the documentation of design controls and decisions.
“Many of these very specific regulatory hurdles don’t exist in other industries, especially consumer products where the lean methodology got its start,” Saul continued. “Similarly, with medical devices, there’s not just one end user to target. Patients, doctors, healthcare facilities and insurance companies all have a say in whether a new technology will be adopted.”
The result is that it’s just not that simple to build, test and iterate a minimally viable product in the med-tech field, Saul says.
In fact, the center teaches its own proven, repeatable process for health-technology innovation – a step-by-step approach for identifying and evaluating important unmet healthcare needs, inventing new technologies to address the most compelling ones, and then helping innovators prepare to bring those technologies into patient care.
Since 2001, the center’s trainees have founded 41 health-tech companies from projects originated within the program, and treated over half-a-million patients with technologies invented at Stanford Biodesign. The innovations range from a neonatal resuscitation device to solutions for arrhythmia, enlarged prostate and post-menopausal challenges in women.
“We do adapt some of the lean methodology’s focus on outward discussions and disciplined gathering of input to help drive decisions, but in a more typical framework that we would see in medical-technology development,” Saul said.
A flexible framework
Adaptation has also been key in teaching the lean approach to publicly funded researchers working in the life sciences. Tom Kalil at the White House Office of Science and Technology Policy said the National Institutes of Health have successfully tailored the NSF’s I-Corps program in order to train teams that receive NIH grants to develop therapeutics, diagnostics and medical devices. But it wasn’t a simple copy-paste.
“The FDA is involved. Medicare is involved,” explained Kalil, who also serves as Senior Advisor for Science, Technology and Innovation for the National Economic Council. “In fact, it’s going to be different depending on — within the life sciences — whether you are talking about a diagnostic, a medical device, a drug, a vaccine or a health IT solution.”
Blank blogged about prototyping I-Corps for life-science innovators. The 10-week class was held in 2014 at the University of California, San Francisco, and in his post, Blank includes video of a physician who described how valuable the customer-development process was for his team’s medical-device startup.
But again, Blank says the Lean LaunchPad does not guarantee a successful startup. He points to outliers like Steve Jobs and Elon Musk, whose achievements resulted more from their unique talents than any formal education. What made the lean methodology stand out, Blank explains, is that it wasn’t a better version of something else — but a radical shift in thinking described as never before.
“It’s not the methodology, it’s a methodology,” Blank said, “and like most things, hopefully something better and more efficient will come out of it.”
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Today, technology entrepreneurship and the arts are often characterized as clashing forces in society. As tech startups proliferate in a city, we hear the familiar cry that gentrification will sterilize the creative and artistic soul of the community – and that rising housing costs will put artists out on the street.
But both disciplines play a crucial role in shaping our world, so wouldn’t it be better to start from a place of empathy, rather than rivalry? Artists and entrepreneurs have so much in common: Each discipline requires creativity and vision to bring an idea to life, and whether you’re a musician or a technologist, without passion you’ve got nothing. Even the underlying strategies and satisfaction felt from a dream realized are similar.
Take Meow Wolf, a Santa Fe-based art collective and production company. It started as a group of artists with a desire to create a space to host music shows, make art, and be expressive in their community. As their installations started gaining traction, the artists began looking for a way to support the collective financially, which was the beginning of their journey into the world of scalability and entrepreneurship.
“As artists, we emerged as entrepreneurs largely because we were looking for alternatives to the traditional art world model,” said Sean Di Ianni, co-founder and chief operating officer at Meow Wolf. “What fueled our ability to make opportunities for ourselves was both a sense of strength in numbers and also a real enjoyment of the unpredictability of working collaboratively.”
Furthermore, Di Ianni’s experience as an artist helped prepare him for the world of uncertainty that startup founders often face: “As an artist I always seem to be solving strange or unexpected problems to push my work forward. I think the work I’ve done in building a business is an extension of that process of propelling myself into unknown creative territory.”
More similar than not
In one of his blog posts, entrepreneurship educator Steve Blank begins by presenting two kinds of artists: composers and performers, where the former are the ones who create and latter are those who execute that creative vision. “Founders fit the definition of a composer: they see something no one else does. And to help them create it from nothing, they surround themselves with world-class performers,” Blank writes.
“This concept of creating something that few others see – and the reality distortion field necessary to recruit the team to build it – is at the heart of what startup founders do,” he continues. “It is a very different skill than science, engineering, or management.”
Blank’s colleague, Stanford Professor Tom Byers, concurs. The holder of the Entrepreneurship Professorship endowed chair in the university’s engineering school, Byers has taught students the art and science of technology venture formation for over 20 years – drawing from his faith in higher education and experience in the startup world before coming to academia.
When he first graduated, however, Byers was a guitarist for several touring blues bands. He performed in over 100 gigs, all in his 20s, and yet can still easily see the similarities between being a musician and an entrepreneur. “To me, they bring the same sort of joy. When performing, I felt in flow, I felt joy, I felt like I was having impact,” Byers said. “Putting together a band and making a living – the feeling that I was doing something I was born to do, that’s the same feeling I got when I decided to pursue entrepreneurship and academia.”
Beyond these feelings of individual joy and passion, Byers explains that the two biggest components of innovation – creativity and teamwork – are the foundation of both music and entrepreneurship.
“Innovation in both music and technology entrepreneurship is rooted in creativity and teamwork. Finding the harmony between creativity and teamwork, and developing a culture and a mindset that cultivates both of those things, is essential,” said Byers, a faculty director at the Stanford Technology Ventures Program (STVP). “If you have one and not the other, you have no impact. That’s absolutely the case, whether you’re performing with a band or creating a company as a startup team.”
Arts and tech in higher education
Stanford is a familiar theater in this supposed war for relevance, with much ink spilled in the debate over whether the emphasis on a liberal-arts education has been overshadowed by Silicon Valley’s need for technical innovators. The university has launched numerous interdisciplinary initiatives in recent years that have brought arts and humanities departments closer to engineering, but even at the level of individual faculty members, the spirit of mutual respect is obvious.
Rich Cox, a lecturer at Stanford in the engineering school and Graduate School of Business, takes the intersection of art and science to heart in his own venture, a management-design firm he founded.
“We think there is something magical about the intersection of the research and theory from academics, the embodied learning from the arts, and the practical application from business,” Cox said. “Academics organize knowledge into usable frameworks, the arts thrive in giving elegant answers to ambiguous questions, and business grounds theory and expression giving concrete results.”
Art is innovation
Indeed, unique disciplines can literally go hand in hand. In his book The Innovators, Walter Isaacson explains how no less than Leonardo DaVinci, Albert Einstein and many other geniuses engaged deeply with both the arts and sciences at the peak of their inventiveness – themselves citing this interplay as the reason for their success as innovators.
“When Einstein was stymied while working out General Relativity, he would pull out his violin and play Mozart until he could reconnect to what he called the harmony of the spheres,” Isaacson writes.
Perhaps the best example of arts and startup communities coming together is the emergence of incubators outside the high-tech sector. Alice Loy, co-founder of Creative Startups, founded the company in 2007 because she realized the potential for innovation in the often-overlooked creative population.
“For a long time, there’s been this falsehood perpetuated that artists struggle with business,” Loy said. “What I would argue is that artists bring a unique perspective and creativity that allows them to see market opportunities before others see them, and then go after these opportunities in a unique and defensible way.”
Beyond their innate entrepreneurial abilities, “creatives” also have ideas and perspectives that Loy believes benefit society in the long run. She mentions data showing that entrepreneurs make social change happen. This begs the question: Who are the chosen entrepreneurs who get to shape the future? What kind of world do you want to see?
Loy adds that given how creative expression such as art, music and film are the foundation of the communities we all love to live in, we should invest in artistic entrepreneurs to build more of the world that we want to live in.
Back in Santa Fe, Meow Wolf seems to be a positive example of what happens when these types of entrepreneurs do get a chance to shape the world. “People of all ages and many walks of life have reacted with overwhelming positivity to what we’ve done with our first permanent installation,” Di Ianni said. “This is in part because people crave raw, unique, expressive experiences just as much as artists crave a place to be expressive.”