To pivot or not to pivot…

It seems that the best strategy for a startup is longer a matter of if, or even when, but now how many times you pivot before you make it rich. Pivoting, a term the enterpreneur-turned-entrepreneurial sage Steve Blank recently popularized, now threatens to become the next business buzzword. Forget open innovation, what’s your pivot strategy? That’s dangerous.

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The Breakthrough Bias

We associate innovation with dramatic technological or market breakthroughs that revolutionize industries overnight. So much so that despite continuing evidence to the contrary—that both today’s most succcessful organizations and most revolutionary technologies were not new—organizations, policy makers, and the public show a breakthrough bias when pursuing, funding, or anticipating innovation. This bias becomes even more salient in the pursuit of sustainability, reflected in outrageously ambitious “goals” that, as a result, create significant challenges for those trying to manage the innovation process.

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Risk, Uncertainty, and the Challenge of Sustainable Innovation

Innovation is risky business. For companies pursuing sustainable innovations, these risks take on the scale of the effort and the context of the problems, the politics, and the markets involved. The most important aspect of this challenge to sustainable innovation is understanding the nature of risk at work. Without this understanding, innovation efforts are paralyzed and innovation policies—especially those intending to promote new investments—stifle them instead.

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Faster, better, cheaper: Pick any two.

Is it time to revisit (or visit for the first time) some of the central challenges of developing and launching sustainable innovations? With the demise of Solyndra and Beacon Power still recent memories; with Ener1 entering bankruptcy; and the recent disclosures that EV makers Fisker Automotive and Tesla are troubled, it may be long overdue.

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Cash or Connections, Valley of Death II

On the heels of my post on the Valley of Death, Ben Horowitz of venture capital firm Andreessen Horowitz posted on Ron Conway
and his network (Ron Conway
Explained
) and the value of social capital (connections) more than financial capital (cash) to help startups get off the ground.

Conway is one of the Silicon Valley's uber angels, and I have often spoken about the key role he has attributed to his own social networks when evaluating the potential of new startups. In essence, anyone can invest cash in a new venture, so if cash isn't scarce, the distinctive advantage will go to those new ventures with the best networks connecting them to other future employers, lawyers, investors, and customers. 

In investing, Conway asks: "can my network make this company successful?"

If we're truly interested in understanding and supporting the emergence of new ventures we must recognize the primacy of connections.  As the story Ben related shows, connections are key to finding cash.  In theory, cash can help you find connections, but not always with the right people or for the right reasons.

As public agencies step up their funding of small technology-based businesses, they would be wise to make sure cash isn't their only contribution.  The DOE, SBA and the variety of SBIR/STTR programs that are ramping up funding of university and laboratory research commercialization should match these cash investments with their clout in convening the broad ranging networks in which they sit.

The challenge is in replicating and scaling what Conway does.  Individually, he can manage how everyone behaves in his network (including rewarding good networking behaviors and punishing bad ones). As Ben Horowitz suggests (and I abridge here), Conway is good at this because he has:

• A ridonkulous work ethic—If Ron’s awake, he’s working…
• Pure motives—Ron does what he does, because he likes helping people succeed in business…
• Super human courage—Ron fears no man and he definitely fears no phone call…Ron’s network is always on.
• A way of doing business—This is the unspoken key to Ron’s success…he acts with extreme prejudice when it comes to the proper way to conduct oneself in a relationship.

Try to imagine putting this into a job description. As a formal job the ability to own and manage in this way goes out the window. Instead, there need to be more structural approaches to achieving the same objective. This is the challenge for all of us.

Thinking and doing

One of the central tenets of our Center for Entrepreneurship's programs is that bringing ideas to reality and to the broader market is about effectively combining thinking with doing. Joseph Schumpeter said it well:

To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside the routine tasks which everybody understands and secondly, because the environment resists in many ways… This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done [italics added].

Obviously, there is a great deal of "thinking" involved with getting things done, but none of it counts for much without the "doing." Perhaps more importantly, it's not about how well you think before you do but rather how well you integrate the two very different activities so that they support and build on each other. A longer post on this is overdue, but suffice to say there is a need in higher education—and the MBA in particular—for a new focus on "getting things done."

Rick Reis's Tomorrow's Professor email newsletter shared this quote from, and link to, a very apropos essay on the need
for college education to embrace the art and science of doing—not just
thinking.

"Analytical thinking is an incomplete educational agenda in part because it disconnects rationality from purpose, and academic understanding from practical understanding or judgment. In order to prepare for decision and action in the world, students need to develop not only facility with concepts and critical analysis but also judgment about real situations in all their particularity, ambiguity, uncertainty and complexity. They need to develop practical reasoning."

The essay appears in this month's Carnegie Perspectives, by Senior Scholars Anne Colby and William M. Sullivan write and is adapted from an article with the same title that appeared in the winter 2009 issue of Liberal Education, published by the Association of American Colleges and Universities. Both come from the Carnegie/Jossey-Bass book, A New Agenda for Higher Education: Shaping a Life of the Mind for Practice.