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The world is currently eyeball-deep in a period of technological disruption that is unparalleled in human history. This is creating a smorgasbord of opportunities for those entrepreneurs who have the balls to innovate, writes Steve Anderson.
Dan’L Lewin, Corporate Vice President of Strategic and Emerging Business Development at Microsoft, was the keynote speaker at the Australian Innovation Shoot Out held in Mountain View, California last week. In his address, he stated his view that this coming decade, 2010 to 2020, will be the greatest technologically-disruptive period the world has ever known.
The audience of well over 300 included many Australians, such as Queensland Premier Anna Bligh; Victor Perton, Commissioner to the Americas from Victoria; and the host and chairman of the event, Nigel Warren, Australian Consul General & Senior Trade Commissioner. And they all beamed with pride.
Lewin’s statement was, in fact, a challenge to entrepreneurs and inventors around the world, though he was careful to position such disruption as inevitable and thus a great opportunity for entrepreneurs.
The US venture capital industry seems to be on the same page as Lewin, with fund managers finally beginning to loosen the strings after a period of sustained stasis.
Technology investors in Silicon Valley raised about US$14 billion in 2009 to finance new companies. That is down from US$36 billion raised in 2007, according to the National Venture Capital Association. However, investments went up from US$3 billion in the first quarter of 2009 to about US$4.25 billion in the third quarter of 2009. That trend line suggests continued increases into Q4 of 2009 and Q1 2010.
A serious question is on the table: What will it take for entrepreneurs to be successful in this challenging decade?
Entrepreneurs as risk takers: Not so
There has been a strong case made that entrepreneurs are unique individuals who succeed despite the environment surrounding them. They are risk-averse predators.
Two French scholars, Michael Villette and Catherine Vuillermot, have produced a study called “From Predators to Icons” in which they found that successful entrepreneurs look for customers or partners to a transaction who do not share the same value of the goods or services exchanged (they under-value what they sell to him or over-value what they buy from him). The entrepreneur repeats this sequence until the opportunity disappears. And most interesting is that throughout the business cycle the entrepreneur hedges his bets and minimises risk and the chance of failure.
In the case of technology entrepreneurs, from a business standpoint, they should minimise their business risk as much as possible. But the highest risk in technology is developing not just a product that is needed but a product that the customer over-values and perhaps never thought was possible to own. Taking risks on innovation is necessary.
Innovation and questioning everything
Innovation is critical to entrepreneurial success. Given the profound expectations of this decade, innovation has a very high value.
Successful, serial entrepreneurs tend towards disrupting the status quo as a starting point. Steve Jobs is famous for stating that he wanted to “put a ding in the universe”.
Busting the status quo requires one to question everything, turn it on its head and inside out.
Start by trying a real-life experiment with an innovative product or concept and test with several real people in different potential customer segments — the broader the better. The idea receives fast, reliable feedback from many different and potential customers long before it hits the high risk marketplace, which may very well turn a cold shoulder to it.
If the problem is discovering new ideas, spend time with a lot of people outside your immediate work and social networks; people from other walks of life, even other parts of the world.
The concept of seeing other parts of the world includes seeing how people do things either in their workplace, at home, at leisure, or getting from one place to another. Seeing first hand and observing how people function provides the raw data to ask: Why do they do it that way? Is there a better way?
Another way to help stimulate creative and useful thoughts is to connect seemingly disparate ideas or issues drawn from widely different fields. The resource is simply exposing oneself to experiences, things and people that bring entirely different perspectives and hierarchy of interests to you. The wisdom in this is that the more frequently you can attempt to understand, categorize, and store new knowledge, the easier it is to consistently recombine these to create innovative ideas.
Underlying all of this is “questioning the unquestionable”, as Ratan Tata, chairman of the Tata Group, expresses it. There are many examples of serial entrepreneurs questioning the status quo of everything to see what would happen if they changed it. Taking away what is currently done and creating a new way to achieving the same outcome is a challenging stepping stone to innovation.
Steve Anderson started as a journalist, working first at The New York Times and the next 30 years interpreting business to investors. He is now Managing Partner, Marquis Advisory Group (San Francisco and Sydney).
