Intentional Iteration: Learning from Hard Knocks

Last week, Cliff Oxford of The New York Times weighed in on the ongoing conversation of entrepreneurship education with the article “Introducing the next level: Can you teach entrepreneurship?” In a post in March 2012, I commented on this topic when The Wall Street Journal debated a similar question.  In that post, I suggested that a focus on entrepreneurial leadership is one way of resolving this debate as it involves teaching students more than just cost-benefit analysis.

I return to this topic today because I think Oxford highlights a new question in this debate   –whether he realizes it or not!  As you read Oxford’s article and the responding comments, the interesting question that arises for me is not one of can entrepreneurship be taught but can and how do entrepreneur’s learn?

Oxford makes the statement that entrepreneurship is “90% hard knocks and 10% academia.”  I am not going to debate this point (though I don’t agree with it) rather I want to highlight that hard knocks alone aren’t enough for an entrepreneur to succeed.  Rather an entrepreneur needs to know how to understand his/her “hard knocks”, learn from them, and use this learning to propel new action.  “Hard knocks” have no value if an entrepreneur doesn’t know how to learn from his/her experiences.  To illustrate his point, Oxford quotes Bernie Marcus, co-founder of Home Depot, as saying that for every five decisions his team makes they hope two are right.  Some entrepreneurs may interpret this as meaning, “If we get 40% of our decisions correct, we have a chance of being as successful  as Home Depot.”  The better takeaway is to ask what and how does Marcus’ team learn from the three decisions that don’t go as planned and how do they use this experience to guide future actions.  Entrepreneurship is not just about making more decisions correctly but it is about knowing how to learn from “incorrect” decisions and how to bring that knowledge forward to inform the next decision.

At Babson, we refer to this process of learning from “hard knocks” as intentional iteration.  In today’s unknowable world, an entrepreneur can never know enough to avoid hard knocks.   Rather successful entrepreneurs have developed the thinking to learn from thier hard knocks.  These entrepreneurs engage the act-learn-build cycle to iterate from hard knocks.  For some individuals this is a natural way of thinking, for the rest of us this approach can be learned –be it in a formal classroom, in an executive course, or through coaching and mentoring.  We need to be teaching more entrepreneurial leader’s how to intentionally iterate from hard knocks as this is what will form the basis of their success.

Looking beyond “ramen-slurping garage-dwellers”

Check out this video of Eric Ries, Lean Startup author in a recent Fast Company article by Noah Robischon, entitled Entrepreneurs Are Everywhere. Eric Ries Knows What They Have In Common.

Ries asks us to look beyond the image of the “ramen-slurping garage-dweller” that is often portrayed in movies and other forms of media and to recognize that entrepreneurs are everywhere, in all types of organization.  Ries also provides a broad definition of a start-up: “a human institution designed to create something new under conditions of extreme uncertainty”.

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Auto-analytics -an easy way for entrepreneurial leaders to build their self-awareness

Jim Wilson, one of the co-authors of The New Entrepreneurial Leader, has an exciting article in the September 2012 edition of Harvard Business Review titled “You, By the Numbers.”  Wilson introduces the topic of auto-analytics –a voluntary process of collecting data about oneself in order to improve.  I advocate that all aspiring entrepreneurial leaders, and educators of entrepreneurial leaders, read the article.    Besides the fact that Wilson is a talented writer who always provides his reader with engaging insights, auto-analytics has an obvious connection to helping entrepreneurial leaders develop their self-awareness.  However, as Wilson points out data tracking alone is not useful to developing self-awareness if “observation doesn’t progress to analysis and intervention.”  This statement highlights an important point about self-awareness more generally.

With entrepreneurial leadership, we talk extensively about the need for a leader to take the time to reflect on who they are.  At Babson, we have been revising our curriculum to provide more opportunity for aspiring entrepreneurial leaders to better understand who they are in terms of their skills, style, values, identity, and emotional intelligence.  However, self-awareness, as Wilson points out, doesn’t just end with understanding who you are.  Self-awareness starts with understanding and continues with using that understanding to alter, change, and supplement “who I am.”  Self-awareness based action might involve changes in your behavior, changes in who you work with to better balance your strengths and weaknesses, changes in your view of how identity intersects with your context, or changes in your work flow.  Just as we expect entrepreneurial leaders to integrate analysis with action as they pursue new opportunities, we expect entrepreneurial leaders to do the same when they approach their own self-awareness.

This summer, I took auto-analytics to heart and spent a month (while my 3 children were at overnight camp) documenting my energy flow and engagement in my workday.  I came to some important conclusions about the ebbs and flow of my productivity, the time I needed to for writing and conceptualizing, and how the interaction between meetings and thinking time affected my day.  This fall, as chaos returned to Babson I have made significant changes in my day including how I use email, how I use writing time, when I am willing to schedule personal and professional meetings, and when I work-out.  Two weeks in, I am still feeling levels of engagement and focus that I haven’t felt for a long time.

As you hone your entrepreneurial leadership or look for innovative ways to teach aspiring entrepreneurial leaders self-awareness, I encourage you to consider engaging auto-analytics.   Wilson identifies a number of applications that can be used to better understand your physical, thinking and emotional self.  You might also turn to the work by Gretchen Spreitzer, University of Michigan, who has developed and taught an “energy audit” that provides a less technical approach for analyzing energy flow and its impact on productivity, happiness, and engagement.  Whether you use your smartphone or your pen and paper, taking stock of who you are is the first step towards entrepreneurial leadership but taking action based on who you are is what will make you an entrepreneurial leader.

“Creating innovators” -Another piece to our puzzle of entrepreneurial leadership.

This weekend in the Wall Street Journal, Tony Wagner adds another piece to our puzzle for how to develop entrepreneurial leaders. While Wagner’s focus is on preparing students to become innovators (the title of his new book is Creating Innovators:  The Making of Young People Who Will Change the World), his scheme is quite similar to that of entrepreneurial leadership.  Wagner emphasizes the importance of what he terms the three P’s: play, purpose, and passion.  The three P’s maps directly to the three principles of entrepreneurial leadership –we just weren’t creative enough to come up with the simple terminology! I expect to use it (of course with proper citation) as we go forward in our discussions of entrepreneurial leaderhsip.

While I haven’t read Wagner’s book yet as it will take 2 days to arrive from Amazon prime, I believe from the WSJ article and the excerpt on Amazonis that we are all arguing for the same thing –a new educational system that enables us to develop leaders and innovators who are engaged and pursuing opportunity that will change this world.   While not surprising, it was disheartening to hear Wagner state that “young Americans learn how to innovate most often despite their schooling.”  I would argue that the entrepreneurial leaders we have interviewed would say the same thing about their business school education.  Primary and secondary education, along with colleges and business schools, need to reenvision our educational approach to provide students more opportunities to act their way into situations through hands on experiences and to teach students to rely on their values and passions to guide their actions, their innovations, and their education.  There is a lot of work to be done, as entrepreneurial leaders we need to just get started taking action with our children, in our classrooms, and in leading educational reform.

Auto-analytics for Entrepreneurial Leaders

One of the core principles of entrepreneurial leadership is self-awareness. Yet increasing your self-awareness is notoriously tough to do, as some of us learn the hard way.

In our recent Wall Street Journal article, ”Employees Measure Yourselves,” we describe several new “auto-analytic” tools that aspiring entrepreneurial leaders can use to boost self-awareness. It’s all about gathering personal data.

Here’s an excerpt:

Suppose they could get a breakdown of how much time they spend actually working on their computer, as opposed to surfing the Web. Suppose they could tell how much an afternoon workout boosts their productivity, or how much a stressful meeting raises their heart rate.

Thanks to a new wave of technologies called auto-analytics, they can do just that. These devices—from computer software and smartphone apps to gadgets that you wear—let users gather data about what they do at work, analyze that information and use it to do their job better. They give workers a fascinating window into the unseen, unconscious little things that can make such a big difference in their daily work lives. And by encouraging workers to start tracking their own activities—something many already are doing on their own—companies can end up with big improvements in job performance, satisfaction and possibly even well-being.

The article is the lead story in the IT Leadership section and can be found here.

 

Can entrepreneurship be taught? Yes, if we refocus on entrepreneurial leadership.

In a recent special report in the Wall Street Journal, Noam Wasserman and Victor Hwang debate the age old question of “Can Entrepreneurship be Taught?”    Not surprisingly Hwang and Wasserman did not come to a definitive conclusions on the topic.  However, as I read their debate I saw an easy answer to their question.  The answer is entrepreneurial leadership.

Entrepreneurs are at their core entrepreneurial leaders.  They don’t just need to learn analysis to make “informed decisions” as Wasserman points out and they don’t just need to know how to act their way through the “messiness” and “uncertainty that comes with every aspect of entrepreneurial decision making” as Hwang suggests.   Entrepreneurial leaders need to do both.  They need to be cognitively ambidextrous so that they are able to act their way into unknowable situations and at the same time they need to have strong analytic skills so that they can learn from their actions and make informed next decisions.  By integrating these two distinct ways of thinking and acting, entrepreneurial leaders are engaging cognitive ambidexterity.   Furthermore, entrepreneurial leaders rely on “a deep understanding of people” as Hwang advocates as they take action that considers their networks, relationships, and the contexts in which they are operating.

In reshifting our focus to entrepreneurial leaders, we begin to also realize that it is only by integrating Wasserman and Hwang’s viewpoints that we can come to a comprehensive answer about how to teach entrepreneurial leaders.  In short we need a hybrid approach in which we integrate Wasserman’s ideas of teaching traditional analytics and risk management with Hwang’s perspective that we need to teach leaders to experiment and learn as they act their way into unknowable situations.  Yet, it is not enough to teach entrepreneurial leaders to be cognitively ambidextrou, they also need to learn how to take action based on a fundamentally different world view of business.  Entrepreneurial leaders need to learn how to tap into their passion and dreams to fuel their work and they need to know how to open doors and engage other people in their ideas.  Finally, as Hwang points out entrepreneurial leaders also need to consider the communities around them as they find ways to create value for themselves, their organizations, and the wider society.  If management educators were to focus on teaching students these three principles: 1. how to think and act in a cognitively ambidextrous way, 2. how to engage your passion and the people around you, and 3. how to consider social, environmental, and economic value creation, we would be able to say that yes we can teach entrepreneurship.

The question “Can entrepreneurship be taught?” was the wrong question to ask.  The question needs to be “What do entrepreneurs need to know?” and “How best can we teach them?”  By reorienting our management curriculum towards developing entrepreneurial leaders, I believe we can begin to come to an answer that incorporates the best of Wasserman and Hwang’s perspective.

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A Cup Of Rice Feeds Understanding Of Social Context

In January I  went with a large group of Babson students to Ghana. In the evenings, students meet with individuals who have concerns about their own businesses, most of which are located in a small kiosk, in the market, or on the side of the road. As always, the students find grappling with the everyday problems of poor Ghanaian business people an extreme challenge. One night a student came back from consulting and said to his friend, “It is just so hard;” and this was a student who will be working for a large multinational corporation after he graduates. But he is right, it is really hard.

My favorite story this year was the conversation with a local rice seller. She buys two bags of rice a week on credit for $100, as do two other women in her village. Everyone sells rice for $1 cup, and there are usually between 98 and 105 cups in a bag. She also thought there was enough demand in the village for 8 bags of rice every week, but neither she nor the other women could get any more rice. The woman wanted to know how she could make more money as she wanted to save enough to stop buying bags on credit (a bag is only $80 if one pays cash). For the students, the solution was obvious: if there is excess demand, she should raise her prices. The rice seller thought it was the craziest thing she had ever heard, insisting that simply no one would pay more than a $1 a cup as everyone knew rice was a $1 a cup; everyone in the room agreed.

Later I told this story to a friend who is an agricultural economist working in the developing world. When I asked her if she thought the rice seller was correct, she responded, “Absolutely,” and then proceeded to explain how we need to throw our understandings of supply and demand out the window in these cases as prices for many products in villages are socially determined; if you violate the norms on prices, you will be ostracized.

In The New Entrepreneurial Leader, Lisa DiCarlo and I tried to emphasize the necessity of understanding social context. Working with poor Ghanaians, Babson students come to quickly realize that some things they were taught as basic laws reflecting human nature are really social behaviors and perspectives that have been deeply ingrained in our society; in other societies, even basic economics looks very different. Only by understanding this can one think about truly radical innovation and change.

Stephen Deets, Associate Professor, Politics, Babson College; Chapter Author, The New Entrepreneurial Leader; What Is the Context?  Fostering Entrepreneurial Leaders’ Social Awareness Continue reading

The Underlying Mental Model Of The Entrepreneurial Leader

In Chapter one of The New Entrepreneurial Leader, I wrote, “Entrepreneurs need the skills and the knowledge to define the world rather than be defined by it” (p. 25).

The most thought-provoking and still not completely answered question is how do entrepreneurs define the world? I offer a way of thinking called cognitive ambidexterity that requires two forms of thinking to be used depending on time and context.  One form of thinking is grounded in analysis of existing data—this is called prediction thinking.  The other form of thinking is grounded in action to collect new data—this is referred to as creation thinking.  If we depend on existing and often irrelevant data to make decisions about the future, then we are being defined by the world.  If we take smart action in order to collect new data and then use that data to create, then we are defining the world.

Both forms of thinking are needed but creation is more relevant for defining a world rather than being defined by it. Entrepreneurs define the world…thankfully. 

Heidi Neck
Associate Professor
Jeffry A. Timmons Professor of Entrepreneurial Studies

 

On Analytics And Entrepreneurs

I do a lot of research and writing on analytics, and like seemingly everyone these days I am looking into the world of “big data.” Yesterday I had an interview with DJ Patil, one of the original “data scientists” (he coined the title!) at LinkedIn and a major guru in the big data world. He’s an applied math Ph.D. who once worked on chaos theory in weather prediction, but now helps startups think about how to use their data—particularly those funded by the VC firm Greylock Partners, where he is “Data Scientist in Residence.”

That role (the first at a VC firm, he thinks) probably has something to do with Reid Hoffman, who is a Partner at Greylock, and Executive Chairman at LinkedIn. Hoffman persuaded Patil to come to LinkedIn, and while there Patil’s group developed a lot of cool features for the site, including “People You May Know.” I always find the lists it creates somewhat uncanny—it remembers my friends and colleagues better than I do.

All this reminded me of the chapter I wrote with Julian Lange in the Babson-authored book The New Entrepreneurial Leader. Called “Prediction Logic: Analytics for Entrepreneurial Thinking,” the chapter focuses on the need for entrepreneurs to know and use analytics in their businesses. We didn’t have LinkedIn as an example at the time we wrote the chapter, but it has become one of the most prominent firms that are: a) very entrepreneurial; b) very successful; and c) very analytical.  Hoffman and Patil have declared that “Web 3.0” will be all about data and analytics based on it.

Many entrepreneurs have traditionally made decisions by the seat of their pants rather than by data. They have gone by the famous Alan Kay statement, “The best way to predict the future is to invent it,” or the famous Steve Jobs line, “It’s not the consumer’s job to know what they want.” I suppose if you are a technical genius, like Alan Kay, or a marketing genius, like Steve Jobs, you may be able to get away with ignoring the rise of data and predictive analytics.

However, if you are thinking about starting or renewing or improving a business right now that has anything to do with the Internet—and what business doesn’t these days?—you had better become at least somewhat analytically-oriented. The world is becoming more data-oriented by the minute. Already every customer click on the web creates a stream of data that needs to be analyzed if you want to know what the customer was thinking, and why you did or didn’t make the sale. Even products bought offline often need to be shipped, and before long every package is going to send out lots of data on where it is, what conditions it’s been in, and when you might expect it to arrive. Devices like your thermostat, your microwave oven, and your television are going to start telling the world what they are up to.

In the very near future, every business and every entrepreneur is going to be swimming in data. The most successful businesses will be those that know what to do with it. I hope you know how to swim!

Thomas H. Davenport, President’s Distinguished Professor of Information Technology & Management, Babson College Continue reading