The original posting of this article is here.
Be sure to check on the current issue of Explode Your Paradigm here.
I had lunch with a friend from my “Spinning” class recently. He had worked as an engineer for RCA Records in the late 60’s / early 70’s. RCA paid for him to go to law school at night. He received a law degree from Indiana University in 1974 and went to work as a patent counsel for RCA & GE Consumer Electronics. In 1987 GE sold the consumer electronics division and the RCA brand to Thomson Consumer Electronics. He eventually rose to become the General Counsel at Thomson and had the opportunity to live and work at their Paris headquarters for 4 years. He left Thomson in 1997 and worked for a private law firm for 10 years retiring in 1998.
What a career and story. At one point in his career my friend was in charge of managing and licensing to others hundreds of RCA patents. I remember as a child there were few companies that could hold a candle to the innovative power of RCA. I can still remember the picture of Nipper the dog staring at the gramophone with the inscription “His Master’s Voice.”
As many of us know RCA is now a shell of what it once was. Under Thomson the brand faltered, quality suffered, and competition increased.
I asked my friend, “What happened. How could a brand and a company that defined innovation fall from grace?” He explained that during the late 80’s and throughout the 90’s the company invested heavily in videodisk technology that did not pan out. It also built a lot of me-too products. Sony, Panasonic and others were developing better products at a lower price point. Brand loyalty decreased. Market share decreased. The brand (and the consumer electronics department) entered a death spiral that it could not recover. A few years ago Thomson sold the brand and products to a Chinese company.
My friend said the world changed and RCA could not keep up.
A quote that is one of my favorites is “The only thing that is constant is change.” About the only thing we can guarantee is that the world will be a different place in 5 years. In some markets it may be totally different next year or next month. It is a given the world will change and we need to keep up or we’ll found ourselves on the outside looking in like RCA.
So what should we do? What can you do now to keep your company competitive?
My advice to many clients and potential clients is to ask how do you compete? Are you (or your company) known for innovation and innovative products and services or are you a fast follower competing on price? If your company is known for innovation you need to be constantly thinking of how you can improve your products and services. You need to ask what will happen if your competition can sell their product for 50% of your price and/or the key technology that you are using to differentiate our products becomes worthless. What would happen if your customers were able to buy from you (or your competition) in a totally different way (think shopping on-line vs. going to brick and mortar stores, or think automatic downloading of movies instead of going to a video store to rent them)? How would this affect your business? How would you compete? You need to brainstorm solutions. You need to plan for change.
Sometimes the more successful we are today that harder it is to plan for change. A common argument is why spend valuable resources to improve or replace something that is working? How can you fault an executive team that is growing sales and profit?
In many cases the best time to plan for change is when things are going well.
I can guarantee that the world will change. I also guarantee that innovators in your marketplace are planning for that change. How you respond is up to you. If you are or want to be known for innovation how much of your time and budget are you spending on defining and leading your market?
Will someone say in a few years that the world changed and you could not keep up?
Until next time - all the best!
RolandB
Friday, July 2, 2010
Monday, June 28, 2010
Look at it from a different perspective
The original posting of this article is here.
Be sure to check on the current issue of Explode Your Paradigm here
I did something last night I had never done before. My wife and I participated in the NITE Ride, a 20 mile ride through Indianapolis that began at 11:00 PM at night. Wew were joined by about 3000 others many of whom have been participating in the ride, conducted annually by CIBA (Central Indiana Biking Association), for years. I rode through streets and through places that were very familiar to me and that I had ridden around and through for years. What was amazing was I did it at night, with the assist of a small headlamp (until it broke half way through the ride) and a blinking tail light. The surroundings were the same but everything was different. There were policemen on every corner holding up traffic allowing us to pass. Volunteers pointed out potholes and other obstructions and where to turn. Looking ahead was a ribbon of a hundred or so blinking red lights. Looking back, well you didn’t want to look back too often, you may run into a pothole. I came away with a new appreciation for the city of Indianapolis, our police department, and the volunteers that made the event possible. I learned that something very familiar can become even more exciting when looked at from a different perspective.
In a scene from Dead Poets Society John Keating (played by Robin Williams) has his students eat with their non dominant hand. He asks what is different? What challenges does this create. How do you see the world differently?
So what can we learn? What was reinforced to me last night is to look at obstacles, opportunities, and basic responsibilities from a different perspective. You may come up with insights and ideas that you never thought possible.
Until next time – all the best!
RolandB
Be sure to check on the current issue of Explode Your Paradigm here
I did something last night I had never done before. My wife and I participated in the NITE Ride, a 20 mile ride through Indianapolis that began at 11:00 PM at night. Wew were joined by about 3000 others many of whom have been participating in the ride, conducted annually by CIBA (Central Indiana Biking Association), for years. I rode through streets and through places that were very familiar to me and that I had ridden around and through for years. What was amazing was I did it at night, with the assist of a small headlamp (until it broke half way through the ride) and a blinking tail light. The surroundings were the same but everything was different. There were policemen on every corner holding up traffic allowing us to pass. Volunteers pointed out potholes and other obstructions and where to turn. Looking ahead was a ribbon of a hundred or so blinking red lights. Looking back, well you didn’t want to look back too often, you may run into a pothole. I came away with a new appreciation for the city of Indianapolis, our police department, and the volunteers that made the event possible. I learned that something very familiar can become even more exciting when looked at from a different perspective.
In a scene from Dead Poets Society John Keating (played by Robin Williams) has his students eat with their non dominant hand. He asks what is different? What challenges does this create. How do you see the world differently?
So what can we learn? What was reinforced to me last night is to look at obstacles, opportunities, and basic responsibilities from a different perspective. You may come up with insights and ideas that you never thought possible.
Until next time – all the best!
RolandB
Prepare for the Unknown
The original posting of this article is here
Be sure to check on the current issue of Explode Your Paradigm here
What would you do if you knew there would be a major earthquake in China sometime during 2012? Before you say “I would not travel to China in 2012” let me tell you that you are currently in charge of operations of a global trading company that has a large distribution hub in Beijing.
What would you do today or in the next 6 months if you knew that this earthquake could cripple your Asian business? That was the question Dr. Mahender Singh from MIT asked a number of us attending a supply chain conference recently.
After we got through the “how do you know?” questions Dr. Singh asked us to push the I believe button and move on with the exercise. The group decided to get all of our experts together, analyze the problem, suggest alternatives and recommend a solution. We built another distribution center in Australia to handle the load in case the China facility was knocked out.
Well January 1, 2013 came and the predicted earthquake had not happened. You get a call from your CEO stating that your efforts cost the company millions of dollars without a return. Never again would you be trusted. Not a good day ……………
6 months later in July 2013 H1N1 flu pandemic hits China. The entire county is quarantined shutting down trade in and out of the area. Your facility in Beijing is shut down. The distribution center in Australia is not affected however and is able to handle the increased volume. Your company survives and in fact grows by selling to your competitor’s customers that cannot get shipments from China.
Your CEO takes you out to dinner and you get a promotion. If you had not planned for the expected earthquake that never happened you would have not been ready for the unexpected pandemic that did.
Dr. Singh said we need to plan for the known and prepare for the unknown. We are reasonably good at planning for the known. The issue is in many cases we don’t spend the time and the energy to prepare honestly for the unknown. Who would have known that an oil well would explode in the Gulf of Mexico and the resulting spill would foul hundreds of miles of beach and thousand of square miles of fishing grounds. How do you get yourself ready for the future?
The secret according to Dr. Singh is to start with the future, such as the earthquake in China, and bring it back to today. If we know the future what will we do about it today to help get our business ready? As part of your strategic planning exercise create a number of catastrophic scenarios and seriously figure out what you would do.
This was standard practice when I was in the Navy as an officer on a submarine. We would start with the “what ifs” and work backwards to determine the “what do you do”? It took a lot of time and we had many things to do that we thought were much more important. Not doing the exercise was not an option. First we were in the military and we had to do what we were ordered to do. Second we were driving a US warship that was powered with a nuclear reactor. If something happened we had to be perfect. The exercise was successful. We made mistakes, we learned from each other, we were prepared and if any of those unexpected scenarios happened we were ready.
So what can you do to get ready for the future? First, block out time for the exercise. Get away from the hectic day-to-day (i.e. turn off the cell phone) and get your leadership team off site. Dr. Singh asked three questions to help get the discussion started:
Be sure to check on the current issue of Explode Your Paradigm here
What would you do if you knew there would be a major earthquake in China sometime during 2012? Before you say “I would not travel to China in 2012” let me tell you that you are currently in charge of operations of a global trading company that has a large distribution hub in Beijing.
What would you do today or in the next 6 months if you knew that this earthquake could cripple your Asian business? That was the question Dr. Mahender Singh from MIT asked a number of us attending a supply chain conference recently.
After we got through the “how do you know?” questions Dr. Singh asked us to push the I believe button and move on with the exercise. The group decided to get all of our experts together, analyze the problem, suggest alternatives and recommend a solution. We built another distribution center in Australia to handle the load in case the China facility was knocked out.
Well January 1, 2013 came and the predicted earthquake had not happened. You get a call from your CEO stating that your efforts cost the company millions of dollars without a return. Never again would you be trusted. Not a good day ……………
6 months later in July 2013 H1N1 flu pandemic hits China. The entire county is quarantined shutting down trade in and out of the area. Your facility in Beijing is shut down. The distribution center in Australia is not affected however and is able to handle the increased volume. Your company survives and in fact grows by selling to your competitor’s customers that cannot get shipments from China.
Your CEO takes you out to dinner and you get a promotion. If you had not planned for the expected earthquake that never happened you would have not been ready for the unexpected pandemic that did.
Dr. Singh said we need to plan for the known and prepare for the unknown. We are reasonably good at planning for the known. The issue is in many cases we don’t spend the time and the energy to prepare honestly for the unknown. Who would have known that an oil well would explode in the Gulf of Mexico and the resulting spill would foul hundreds of miles of beach and thousand of square miles of fishing grounds. How do you get yourself ready for the future?
The secret according to Dr. Singh is to start with the future, such as the earthquake in China, and bring it back to today. If we know the future what will we do about it today to help get our business ready? As part of your strategic planning exercise create a number of catastrophic scenarios and seriously figure out what you would do.
This was standard practice when I was in the Navy as an officer on a submarine. We would start with the “what ifs” and work backwards to determine the “what do you do”? It took a lot of time and we had many things to do that we thought were much more important. Not doing the exercise was not an option. First we were in the military and we had to do what we were ordered to do. Second we were driving a US warship that was powered with a nuclear reactor. If something happened we had to be perfect. The exercise was successful. We made mistakes, we learned from each other, we were prepared and if any of those unexpected scenarios happened we were ready.
So what can you do to get ready for the future? First, block out time for the exercise. Get away from the hectic day-to-day (i.e. turn off the cell phone) and get your leadership team off site. Dr. Singh asked three questions to help get the discussion started:
1. What are your forks in the road (major decisions that need to be made, short, medium and long term)
2. What are your hidden assumptions? (what are the sacred cows that no one discusses but should in order to fairly evaluate the future?)
3. What are your sensors in the ground? (Facts & trends that may be favorable or unfavorable to your business model)
One last thing. Have fun. Use your innovation and creativity skills. Get to know how your leadership team thinks. Participate fully – it is OK to make mistakes. Think differently – stretch your imagination. Celebrate success.
When the unexpected happens, and it will, you and your team will be ready!
Until next time – all the best!
RolandB
Wednesday, May 12, 2010
A new website - the blog is moving!!
Over the past few days I finally have had time to get out the textbooks, arrange my thoughts and publish the website for EYP Advisors LLC. Now the blog, my biography and the story about what I and my team of networked professionals are trying to do is all in one place at http://www.eypadvisors.com/!!This blog has been copied and renamed Explode Your Paradigm. All future posts can be found at http://eypadvisors.com/?page_id=12
I would very much like to thank my good friend and website guru Carol van Almelo for helping me upload my database and pictures and create my logo. Her willingness to help me is greatly appreciated. More information about Carol can be found on her website at http://www.rock-away.com/
Please check out the new site and let me know your thoughts. I look forward to your comments.
Until next time - all the best!
RolandB
Friday, April 30, 2010
Believe what they do, not what they say. Is Eli Lilly really committed to innovation?
I had lunch with Bernard Munoz recently. Bernard has worked at Eli Lilly for over 29 years. Over his career he helped run Lilly affiliates in Portugal, Austria and France while with the Elanco Animal Health group. More recently he is working as an advisor in the corporate strategy area at Lilly Corporate Center in Indianapolis.
We met at a business function a couple of weeks ago. Bernard introduced himself as a consultant in “disruptive innovation.” I worked at Lilly for over 10 years. I learned a lot about pharmaceuticals, about marketing, about how to build a business in places like Japan and Eastern Europe and about the value of a robust process. What I also learned from Lilly was that change happens slowly in a large company. The fact that Lilly now had an internal consultant tasked with to bringing change to the organization was invigorating. We agreed to meet again to discuss.
Over a plate of Greek food I learned a ton about the current happenings in the pharmaceutical industry.
Bernard has been intrigued with innovation his whole life. His passion is beginning to be noticed by others. In December 2009 he published a paper in Nature Review titled “Lessons from 60 years of pharmaceutical innovation.” He followed the number of new molecular entities (NMEs) that have been approved since 1950 and looked at the changes year to year both in the number of new entities approved and the expense to make it happen. From 1950 to 2008 the FDA has approved 1,222 new drugs. On average the number of new drugs approved each year over this period is roughly the same. In 2008 21 NMEs were approved.
He documents that over the same period the cost of developing new drugs is rising at the exponential rate of 13.5% per year. Same number of products out each year, costs rising exponentially. If nothing changes this is an unsustainable situation.
Many large pharmaceutical companies estimate they need to produce an average of 2–3 NMEs per year to meet their growth objectives. The paper states that none of them has ever approached this level of output. The historical level is close to 1 per year. Bernard’s research points out that statistically the chance to getting to this level with the current pharmaceutical industry’s business model is very low.
There have been a few spikes and troughs over the years. Bernard’s conclusion is that this may have been more a function with the number of companies with applications outstanding. The more companies, the more applications, the more approved NMEs. His paper goes on to demonstrate that M&A activity in the pharmaceutical industry actually negatively affected the number of NMEs approved. In his words 1+1=1.
Bernard argues that we need to increase the number of companies developing NMEs. A larger number of companies accelerate the acquisition of knowledge creating what economists call a spillover – an industry wide benefit that enables all companies to be more effective. He also argues that the pharmaceutical industry needs to fundamentally change the way they develop new products.
Bernard and William Chin, formerly a colleague at Lilly and now at Harvard Medical School published a paper in Science Translational Medicine also in December 2009 titled “A Call for Sharing: Adapting Pharmaceutical Research to New Realities” that points out that today’s innovation increasingly stems from the aggregation of numerous small contributions. The authors argue that companies should compete in areas that offer a viable return on investment, and share where pre-competitive collaboration helps all of us discover new therapies more efficiently and effectively. The authors issue a call for the pharmaceutical industry and governmental agencies to “join hands and intensify sharing in order to help repower pharmaceutical innovation.”
To summarize the pharmaceutical business model is broken and it needs to be fixed. This is something many of us in the industry have been discussing for years. Costs are increasing, pricing pressure is increasing causing sales revenue per NME to decline and the number of new products being developed is not keeping pace with what is required. How much longer will investors continue to support pharmaceutical research? How can we keep the engine that is driving a large section of the economy alive and well?
Bernard told me he has been getting calls from groups in industry and in government requesting information about his ideas. Momentum is growing for change.
Great news - don't you think? Well here is the rest of the story
A senior executive at Lilly told Bernard Munoz this week that his job was being eliminated as of September 7, 2010!!
It is no secret that Lilly is facing patent expirations on a number of their most popular products. The company is cutting jobs. I have friends who have left the company and others who are looking over their shoulder not knowing if their job will be there tomorrow. What concerns me is that it appears Lilly has eliminated the position of a successful executive that has made and is making a name for himself discussing how to move the pharmaceutical industry forward. Lilly could have a voice at the table and they are choosing to turn it down.
Why? I think it is much better to participate in the discussion and be a part of potential solutions rather than wonder what will happen.
John Lechleiter, the CEO of Eli Lilly and Company, in an editorial published in the Wall St. Journal on May 14, 2009 wrote “U.S.-based private industry is the heart and soul of this innovation drama, investing $58 billion in research and development for new medicines in 2007 alone…. Biomedical innovation is not incompatible with the health-care reform goals of universal access, quality improvement and cost control. On the contrary, without new, more effective medicines -- along with new devices and diagnostic tools, and better treatments and surgical techniques -- it will be impossible for larger numbers of Americans to obtain better health care at a manageable cost.”
I think Lechleiter gets the message that Munoz and Chin are preaching that industry, universities and government need to come up with creative solutions to get better medical solutions to the marketplace. I don't know if the message is flowing down to his staff. I wonder if the bureaucracy at Lilly will wise up and get it before more innovators like Bernard Munoz are forced to do their work outside of the company.
Is Lilly committed to innovation?? The proof is in what they do - not what they say.
If you would like to read either of the papers referenced above please follow the links or send me an email at rjbydlon@earthlink.net.
I am interested in your thoughts. Please comment below.
Until next time – all the best!
RolandB
We met at a business function a couple of weeks ago. Bernard introduced himself as a consultant in “disruptive innovation.” I worked at Lilly for over 10 years. I learned a lot about pharmaceuticals, about marketing, about how to build a business in places like Japan and Eastern Europe and about the value of a robust process. What I also learned from Lilly was that change happens slowly in a large company. The fact that Lilly now had an internal consultant tasked with to bringing change to the organization was invigorating. We agreed to meet again to discuss.
Over a plate of Greek food I learned a ton about the current happenings in the pharmaceutical industry.
Bernard has been intrigued with innovation his whole life. His passion is beginning to be noticed by others. In December 2009 he published a paper in Nature Review titled “Lessons from 60 years of pharmaceutical innovation.” He followed the number of new molecular entities (NMEs) that have been approved since 1950 and looked at the changes year to year both in the number of new entities approved and the expense to make it happen. From 1950 to 2008 the FDA has approved 1,222 new drugs. On average the number of new drugs approved each year over this period is roughly the same. In 2008 21 NMEs were approved.
He documents that over the same period the cost of developing new drugs is rising at the exponential rate of 13.5% per year. Same number of products out each year, costs rising exponentially. If nothing changes this is an unsustainable situation.
Many large pharmaceutical companies estimate they need to produce an average of 2–3 NMEs per year to meet their growth objectives. The paper states that none of them has ever approached this level of output. The historical level is close to 1 per year. Bernard’s research points out that statistically the chance to getting to this level with the current pharmaceutical industry’s business model is very low.
There have been a few spikes and troughs over the years. Bernard’s conclusion is that this may have been more a function with the number of companies with applications outstanding. The more companies, the more applications, the more approved NMEs. His paper goes on to demonstrate that M&A activity in the pharmaceutical industry actually negatively affected the number of NMEs approved. In his words 1+1=1.
Bernard argues that we need to increase the number of companies developing NMEs. A larger number of companies accelerate the acquisition of knowledge creating what economists call a spillover – an industry wide benefit that enables all companies to be more effective. He also argues that the pharmaceutical industry needs to fundamentally change the way they develop new products.
Bernard and William Chin, formerly a colleague at Lilly and now at Harvard Medical School published a paper in Science Translational Medicine also in December 2009 titled “A Call for Sharing: Adapting Pharmaceutical Research to New Realities” that points out that today’s innovation increasingly stems from the aggregation of numerous small contributions. The authors argue that companies should compete in areas that offer a viable return on investment, and share where pre-competitive collaboration helps all of us discover new therapies more efficiently and effectively. The authors issue a call for the pharmaceutical industry and governmental agencies to “join hands and intensify sharing in order to help repower pharmaceutical innovation.”
To summarize the pharmaceutical business model is broken and it needs to be fixed. This is something many of us in the industry have been discussing for years. Costs are increasing, pricing pressure is increasing causing sales revenue per NME to decline and the number of new products being developed is not keeping pace with what is required. How much longer will investors continue to support pharmaceutical research? How can we keep the engine that is driving a large section of the economy alive and well?
Bernard told me he has been getting calls from groups in industry and in government requesting information about his ideas. Momentum is growing for change.
Great news - don't you think? Well here is the rest of the story
A senior executive at Lilly told Bernard Munoz this week that his job was being eliminated as of September 7, 2010!!
It is no secret that Lilly is facing patent expirations on a number of their most popular products. The company is cutting jobs. I have friends who have left the company and others who are looking over their shoulder not knowing if their job will be there tomorrow. What concerns me is that it appears Lilly has eliminated the position of a successful executive that has made and is making a name for himself discussing how to move the pharmaceutical industry forward. Lilly could have a voice at the table and they are choosing to turn it down.
Why? I think it is much better to participate in the discussion and be a part of potential solutions rather than wonder what will happen.
John Lechleiter, the CEO of Eli Lilly and Company, in an editorial published in the Wall St. Journal on May 14, 2009 wrote “U.S.-based private industry is the heart and soul of this innovation drama, investing $58 billion in research and development for new medicines in 2007 alone…. Biomedical innovation is not incompatible with the health-care reform goals of universal access, quality improvement and cost control. On the contrary, without new, more effective medicines -- along with new devices and diagnostic tools, and better treatments and surgical techniques -- it will be impossible for larger numbers of Americans to obtain better health care at a manageable cost.”
I think Lechleiter gets the message that Munoz and Chin are preaching that industry, universities and government need to come up with creative solutions to get better medical solutions to the marketplace. I don't know if the message is flowing down to his staff. I wonder if the bureaucracy at Lilly will wise up and get it before more innovators like Bernard Munoz are forced to do their work outside of the company.
Is Lilly committed to innovation?? The proof is in what they do - not what they say.
If you would like to read either of the papers referenced above please follow the links or send me an email at rjbydlon@earthlink.net.
I am interested in your thoughts. Please comment below.
Until next time – all the best!
RolandB
Wednesday, April 28, 2010
Game changing innovation needs a risk-taking environment
In the April 26th Indianapolis Star Michael Goldsby the executive director of the Entrepreneurship Center at Ball State University wrote a very good My View column titled “The game has changed for entrepreneurship.” Dr. Goldsby, an expert on the field, makes the argument that currently policy makers and companies view entrepreneurship as primarily composed of small business startups and that this is a mistake. By only looking at small business we are missing a large segment of the economy since continuous improvement coupled with continuous innovation is the magic formula for a company’s success. He states that companies of all sizes need entrepreneurial thinking to compete successfully in the 21st Century and suggests that schools must craft curricula to teach creative problem solving and innovation that can and will be used to drive innovation in small and large companies.
I agree with everything he is saying. Problem solving, how to effectively manage risk, and more importantly how to think creatively are critical skills that should be taught in every management school in the country. I also add that we won’t succeed in converting our medium to large companies into entrepreneurial powerhouses until we seed and grow a culture with current company management that promotes rapid experimentation and accepts short term failures as a learning event to prepare for long term success.
So why is entrepreneurship composed of mainly small business start-ups? I think a small company is an ideal climate for entrepreneurial thought. The stakeholders are usually willing to bet the farm and risk their jobs and financial wealth on an idea. Successful entrepreneurs have passion and are able and willing to focus on the key success factors for getting a product or service to their customers. The management team is a critical piece of the puzzle. Successful management team members are judged not on what they have done in the past but what they can contribute in the future. Each member must be willing to roll up their sleeves and participate in multiple tasks for the venture to succeed. It is OK to fail as long as information is learned. Timelines are short. Milestones are measured in weeks or months. Who knows where anyone will be in 5 years. The key is to enjoy the moment. If the basics are done right success will follow.
So how does a large company foster an entrepreneurial culture? Many years ago I started my post MBA career at a large company here in Indianapolis. At the time one of the selling points to join the company was that it was managed by consensus. I got an excellent education in business and worked with some of the best individuals I know but one thing I learned very early on was that consensus did not promote or reward risk taking. If 100% of the decision makers had to agree that an innovative idea was worthy of a risk before it was approved there was usually one member willing to kill or postpone it until one of our competitors tried it first. Decision makers were worried about failure. Some found it was much easier to go along with the status quo than try something different and find him or her knocked off their career track.
That is not to say that entrepreneurship in large companies will never happen. 3M is known for spinning off numerous companies based on internally developed technology. Apple over its lifetime has continuously reinvented its product line to lead the field.
I agree with Dr. Goldsby that if large companies in Indiana embrace the role they play in an entrepreneurial society the entire state will thrive. The challenge is how can we encourage them to do so.
I agree with everything he is saying. Problem solving, how to effectively manage risk, and more importantly how to think creatively are critical skills that should be taught in every management school in the country. I also add that we won’t succeed in converting our medium to large companies into entrepreneurial powerhouses until we seed and grow a culture with current company management that promotes rapid experimentation and accepts short term failures as a learning event to prepare for long term success.
So why is entrepreneurship composed of mainly small business start-ups? I think a small company is an ideal climate for entrepreneurial thought. The stakeholders are usually willing to bet the farm and risk their jobs and financial wealth on an idea. Successful entrepreneurs have passion and are able and willing to focus on the key success factors for getting a product or service to their customers. The management team is a critical piece of the puzzle. Successful management team members are judged not on what they have done in the past but what they can contribute in the future. Each member must be willing to roll up their sleeves and participate in multiple tasks for the venture to succeed. It is OK to fail as long as information is learned. Timelines are short. Milestones are measured in weeks or months. Who knows where anyone will be in 5 years. The key is to enjoy the moment. If the basics are done right success will follow.
So how does a large company foster an entrepreneurial culture? Many years ago I started my post MBA career at a large company here in Indianapolis. At the time one of the selling points to join the company was that it was managed by consensus. I got an excellent education in business and worked with some of the best individuals I know but one thing I learned very early on was that consensus did not promote or reward risk taking. If 100% of the decision makers had to agree that an innovative idea was worthy of a risk before it was approved there was usually one member willing to kill or postpone it until one of our competitors tried it first. Decision makers were worried about failure. Some found it was much easier to go along with the status quo than try something different and find him or her knocked off their career track.
That is not to say that entrepreneurship in large companies will never happen. 3M is known for spinning off numerous companies based on internally developed technology. Apple over its lifetime has continuously reinvented its product line to lead the field.
I agree with Dr. Goldsby that if large companies in Indiana embrace the role they play in an entrepreneurial society the entire state will thrive. The challenge is how can we encourage them to do so.
- The first thing is that the company must make a long term strategic decision from the top down that in order to promote game changing innovation they need to accept diversity of thought in their organization and also provide a safety net for entrepreneurs that try but fall short of a goal.
- Second they need to cross pollinate by hiring or contracting with individuals from businesses outside of their traditional environment to provide input to product and/or business development teams. A pharmaceutical company could benefit by hiring someone with a consumer goods background, an airline could hire an individual with an expertise in promoting widgets who also flies a lot, a company wanting to compete using social media should add a few 20-something employees that text their friends rather than call them. These new members should encourage companies to think outside the status quo and consider non-traditional change.
- Finally companies should not expect to change overnight. Mount Everest is not climbed in a day or even a week. The process takes months and involves conquering numerous milestones to get to the top. The road to game changing innovation is littered with hazards. Successful companies are the ones that do their homework, provide a supportive environment, take calculated risks and allow their employees to spread their wings and enjoy the process.
Until next time - all the best!
RolandB
Friday, April 23, 2010
BizTown – the entrepreneurs of the future!
I had the opportunity recently to be a mentor at the Junior Achievement BizTown. For about a day I watched as 100 entrepreneurs created and ran a “town”. They came from a wide variety of backgrounds. Some came from families rich in financial wealth, others qualified for school lunch programs. Some were taking many of their classes in Spanish or French, others were Hispanic where English was their second language. What the students (the citizens) discovered was the joy of learning how business worked and how one business depended on others. They got along. They had fun. What I learned was that I can learn a lot about life from a group of 5th graders.
For those of you not familiar with BizTown it is a simulation where about 80-120 students run a town and all of the businesses that make the economy run. There are businesses that make and sell interesting things, there are banks that loan money to the businesses and collect interest on the loans, there is a power company that sells utilities, there is a newspaper company and sells advertisements and produces and sells an actual paper, there is a radio station with DJs that sells air time to businesses in the town for commercials, there is a post office (FedEx), a Steak and Shake restaurant where students can buy popcorn and soda, the Peyton Manning Wellness Center where students go for medical checkups and learn how to eat healthy, and a city hall where the mayor and police keep the peace. Each company has a payroll. Each company pays taxes. The employees are paid with checks, they pay income taxes, they cash their checks at the bank where they receive a small amount of cash and deposit the rest into their checking account. They use the checking account to pay for the interesting things sold at the retail stores.
This all happens between 9:30 AM and 2:00 PM. Each day a different group of students enjoy the opportunity at the facility. A group of five JA staff make sure the town “runs” correctly. Adult mentor volunteers assist in each business to answer questions. The student citizens make the decisions, do the legwork, sweat a bit and have a lot of fun.
The day I was there we had students from the International School, Saint Phillip Neri and Saint Anthony. Most of the citizens were in 5th grade. Over the previous few weeks each student had filled out a resume and had interviewed for the job they wanted. Each business had a Chief Executive Officer (CEO) and a Chief Financial Officer (CFO) along with 4-6 supporting roles. Each student had a job description so they knew what was expected of them before arriving.
Our citizens came from much different backgrounds. The International School of Indiana is a private school in Indianapolis. According to their website http://www.isind.org/ the yearly tuition is $13,050 per year. Students pick a language track in either Spanish or French and learn most of their coursework in that language. Saint Anthony is an inner city school supported by the Archdiocese of Indianapolis. The average family income is $14,000 per year. Approximately 90% of the student body is Hispanic and most of the students qualify for free school lunches. Very few of the students pay tuition. What I found fascinating and encouraging was that all of the student/citizens regardless of what school they were from participated as equal members. They all worked hard, they communicated, and the system worked.
I’m sure many of the students learned a lot about business, about teamwork, about leadership and a few life skills like how to balance a checkbook. What I experienced as a mentor was how well the students got along, how well the students were prepared by their teachers for the day’s activities, how well they performed in their roles, how hard they worked, and in many ways how once they understood the rules they policed themselves. I learned that our youth when given the opportunity rise to the occasion.
As a marketer I am often the champion for the voice of the customer. The following are the top 10 reasons for BizTown as recorded in JA BizTown Newspaper by the citizen staff.
1. It is fun.
2. You learn how to be an adult.
3. You learn how to do jobs.
4. You learn how to control money.
5. You learn how to write checks.
6. You learn how to balance a checkbook.
7. You learn how to handle breaks.
8. You learn different jobs.
9. You get to spend money and shop.
….. and the final reason
10. You get two paychecks!
What is the value to this adult volunteer of experiencing entrepreneurial spirit in a group of 5th grade students – Priceless!
If you have an interest please consider making an investment in the future by giving some of your time and/or your financial treasure to support a good cause like JA BizTown. It is worth the effort.
Until next time - All the best!
RolandB
For those of you not familiar with BizTown it is a simulation where about 80-120 students run a town and all of the businesses that make the economy run. There are businesses that make and sell interesting things, there are banks that loan money to the businesses and collect interest on the loans, there is a power company that sells utilities, there is a newspaper company and sells advertisements and produces and sells an actual paper, there is a radio station with DJs that sells air time to businesses in the town for commercials, there is a post office (FedEx), a Steak and Shake restaurant where students can buy popcorn and soda, the Peyton Manning Wellness Center where students go for medical checkups and learn how to eat healthy, and a city hall where the mayor and police keep the peace. Each company has a payroll. Each company pays taxes. The employees are paid with checks, they pay income taxes, they cash their checks at the bank where they receive a small amount of cash and deposit the rest into their checking account. They use the checking account to pay for the interesting things sold at the retail stores.
This all happens between 9:30 AM and 2:00 PM. Each day a different group of students enjoy the opportunity at the facility. A group of five JA staff make sure the town “runs” correctly. Adult mentor volunteers assist in each business to answer questions. The student citizens make the decisions, do the legwork, sweat a bit and have a lot of fun.
The day I was there we had students from the International School, Saint Phillip Neri and Saint Anthony. Most of the citizens were in 5th grade. Over the previous few weeks each student had filled out a resume and had interviewed for the job they wanted. Each business had a Chief Executive Officer (CEO) and a Chief Financial Officer (CFO) along with 4-6 supporting roles. Each student had a job description so they knew what was expected of them before arriving.
Our citizens came from much different backgrounds. The International School of Indiana is a private school in Indianapolis. According to their website http://www.isind.org/ the yearly tuition is $13,050 per year. Students pick a language track in either Spanish or French and learn most of their coursework in that language. Saint Anthony is an inner city school supported by the Archdiocese of Indianapolis. The average family income is $14,000 per year. Approximately 90% of the student body is Hispanic and most of the students qualify for free school lunches. Very few of the students pay tuition. What I found fascinating and encouraging was that all of the student/citizens regardless of what school they were from participated as equal members. They all worked hard, they communicated, and the system worked.
I’m sure many of the students learned a lot about business, about teamwork, about leadership and a few life skills like how to balance a checkbook. What I experienced as a mentor was how well the students got along, how well the students were prepared by their teachers for the day’s activities, how well they performed in their roles, how hard they worked, and in many ways how once they understood the rules they policed themselves. I learned that our youth when given the opportunity rise to the occasion.
As a marketer I am often the champion for the voice of the customer. The following are the top 10 reasons for BizTown as recorded in JA BizTown Newspaper by the citizen staff.
1. It is fun.
2. You learn how to be an adult.
3. You learn how to do jobs.
4. You learn how to control money.
5. You learn how to write checks.
6. You learn how to balance a checkbook.
7. You learn how to handle breaks.
8. You learn different jobs.
9. You get to spend money and shop.
….. and the final reason
10. You get two paychecks!
What is the value to this adult volunteer of experiencing entrepreneurial spirit in a group of 5th grade students – Priceless!
If you have an interest please consider making an investment in the future by giving some of your time and/or your financial treasure to support a good cause like JA BizTown. It is worth the effort.
Until next time - All the best!
RolandB
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