The making of young innovators

Originally published May 18, 2006.

A reader sent me a thoughtful email about the difficulties for young innovators and the structures of the educational system that don’t seem to lend themselves to developing new innovators and entrepreneurs.  This is a provocative topic, so I thought I’d post a copy of my reply and invite others to join the dialog:

 

Thanks for your comments about my blog and your provocative thoughts about entrepreneurship and innovation.  What are you studying at
Virginia?  I was an Electrical Engineering undergrad at UVA, which gave me the opportunity to take a number of design and invention-oriented courses (and I’d be happy to recommend courses and professors).  I think the Architecture school also has a number of “innovation enhancers” in its curriculum.  I personally know a number of very successful ventures (and serial entrepreneurs) to come out of UVA.I think I understand your concerns about innovation among the twenty/thirty-something set.  Especially as I work around DC now, I feel greatly undervalued by my age – in this town, until you’ve got a crown of gray hair and a record of financial giving (politically) and success (business-ly), it’s hard to be taken seriously.But I also understand that professional innovation is a highly risky venture – those that do it well are celebrated because there’s inherently a high amount of experimentation.  Just starting a new business is a risky venture, particularly for recent graduates which may have limited business networks and experience as well as college debts to pay (to say nothing of rent, food, insurance, car, and other expenses).  New businesses may typically go several years before turning a profit as the venture traverses its own growing pains; business incubators are established all over the country (there’s one at Darden) to help shelter those businesses from the high-risk environment of a start-up. Often times the “risk equation” makes it much more palatable for new young professionals to work several years, develop business acumen and networks, then consider a new business venture (or continue their ascent through corporate ranks).I also think there’s simply a very small percentage of the population with the business sense and creativity necessary to innovate marketable solutions (much less to build successful and growing companies).  It’s more sensible (but not necessarily right) in our economic constructs to “create jobs” than to create innovators.  For most people, who need a lot of support to even enter the workplace, they rely on others to create jobs.  But as for the smaller percentage of the population which is really eager to innovate AND capable of doing so profitably (e.g. with good management, marketing, manufacturing, logistics, etc), I don’t know that there are sufficient development tracks in the educational or professional systems to identify and “incubate” those future business leaders – perhaps there’s an opportunity for innovation!Is there also a sense in which successful innovators buck the system, as did Bill Gates or Richard Bronson?  Would efforts to form a support system for entrepreneurs (who may be fiercely independent) be doomed to fail?  I suspect not, and I would offer the Kauffman Fellows Program as one high-profile example.  But how do we link these programs to undergraduate and graduate education?  How do we identify and actively develop those young business leaders who will transform the world?

VC for alternative energy

Originally published May 17, 2006.

Venture capital investors seem to have one major, common point of reference – the dot come bust of 2000-2001.  That bust followed a record year of VC fundraising – some $106 billion in 2000 among top benchmark firms – and preceded a major fallout of invested dollars across the economy.  The lessons learned all seem to point to greater discipline in VC investments, but that’s not holding back (re-)growth in VC fundraising.  The Associated Press reported in April that venture capital firms had raised some $6 billion in the first quarter of this year, more than 20% over last year’s figure for the same quarter, with projected annual fundraising around $30 billion.  (See the article as published in the Washington Post online: Venture Capital Fundraising Rises in 1Q.pdf.) [Update: The New YorkTimes ran an article suggesting that the renewed vigor in venture capital is not a sign of a new bubble: A Few Signs of Froth Do Not a Bubble Make]

The trends of last year indicated strong venture capital interest in “clean tech” and alternative energy as solar and wind technologies matured and new ventures generated profitable cash flows, buyouts, and IPOs.  In fact, three of the top IPOs of 2005 were solar power companies, as reported by the Wharton Private Equity Review.  [Update: See BW interview with Bill Joy, co-founder of Sun Microsystems and current partner at venture capital firm KPCB: Green: The Next Big Thing.  He thinks greentech is going to provide the next Google in terms of revolutionary wealth-creation.)

Now, the energy market is showing no signs of decreased demand despite continually high gas prices.  As Americans (and others around the world) effectively say “no” to conservation (see James Ellis’ op-ed piece in BW, No Sacrifices, Please), energy demand will continue to grow while limited stocks of fossil fuels (not to mention the political delicacies surrounding the international energy market) keeps a ceiling on supply.  With the proven returns in solar and wind power, and wide interest and policy incentives in ethanol, biomass, and energy storage technologies, the stage could be set for continued successful investment in clean tech industries.

And hopefully in two years the stage will be set to hire this Darden MBA into a successful and growing VC clean tech fund.

Darden’s Career Next Step

Originally published May 10, 2006.

One of the pre-matriculation requirements for Darden students is to complete a battery of self-assessment tests using a product called Career Next Step.  It’s a bonanza of web applications that prompt you to respond to inductive questions (“What kinds of activities energize you?”  “What might this figure (in an ambiguous sketch) be doing?”) in order for you to build a series of analytical statements about your own personality, preferences, and professional “fit.”  The goal seems to be to avoid job search strategies that rely too heavily on following the buck (i.e. who’s hiring now) and focus more on matching your own preferences and predispositions to a suitable and rewarding career.

While the process is lengthy and the web applications seem to be early in their development, Career Next Step does seem to be a marginally useful and comprehensive tool with the aim of creating some target professional goals and profiles for each student by Day 1 on campus.  As I understand it, this Career Next Step process will be complemented by a full Myers Briggs Type Indicator (I’ve come up ENFP twice before), other large scale assessments, and career/industry presentations during the first week.  All of this seems to build towards a holistic, individually-tailored plan for career development that begins the day you set foot on campus to the day you retire.

So, while some students head for MBA-land with the intent to advance their career in a predetermined industry, other career-hoppers like me are hoping to see more of the business world and find a new place in it.  Already, I’m grateful for Darden’s support in finding a career that will match my own sense of happiness, meaning, and success.

Has anyone already benefited from Career Next Step, or another career development process?  Has anyone discovered a whole new career field because of their MBA studies or career coaching?

Corporate Innovation at Darden

Originally published April 14, 2006.

At the Darden School’s recent “Darden Days” welcome weekend for admitted students, I serendipitously met Professor Jeanne Liedtka, the director of Darden’s Batten Institute for entrepreneurship and innovation.  We talked briefly after a “mock case” discussion that introduced the prospectives to the case method, and I learned more about her courses in strategy and research in corporate innovation - my own fields of interest.

Well, BusinessWeek just turned out a few excellent pieces on innovation, so I thought I’d create a little home for them in this blog as well.

I was really caught by surprise by some of the answers in this Innovation Quiz.  (I scored 5 out of 12, apparently good enough for the quiz to recommend me as chief innovation officer for my company.)

There’s also a great Innovators in Our Midst slideshow (one of my favorite features of BusinessWeek online) on corporations leading innovation in all kinds of industries.

Then there’s the fine analytic piece, Innovative Writing on Innovation, offering five themes emerging from a survey of corporate leaders.

Finally, I’ll add the link to 25 Innovators, 6 Industries.

Hope that’s enough to spark the creative business thinker on a rainy Friday afternoon!

Innovation: buzz word or the real deal?

Originally published April 7, 2006.

From the glossy ads of IBM’s new Innovation business area to the whack jobs on American Inventor, it seems like everyone wants to be an innovator (or wants to hire one).  The emergence of Chief Innovation Officers and business school courses targeting innovation suggest that, in today’s tight market for large cap companies and healthy growth for small and mid-caps, innovation may be today’s killer app.  To my mind, this makes sense conceptually: as markets mature, the potential to exploit market openings diminishes and the need to create revolutionary new products, processes, and especially business models becomes a necessity.

In social entrepreneurship, innovation is never an option.  There are rarely opportunities to exploit; rather, whole new paradigms must be introduced, supported, and grown  – often outside the realm of traditional business.  (See The Economist’s article The hidden wealth of the poor (Nov 2005) in PDF.)

Its encouraging to see innovators finding successes in the realms of social entrepreneurship, such as the Washington Area Housing Partnership in Washington, DC, which is “re-branding” affordable housing initiatives as not just social support programs but prudent community development programs for working citizens.  Check out their story in the Washington Post, A Regional Campaign for Affordable Housing.

This innovation is also being cultivated in the young and passionate minds of academia.  As I head to The Darden School of Business at the University of Virginia, I’m especially interested in the innovation occurring within the University’s Engineering and Architecture schools.  I recently learned of an outstanding initiative in affordable housing at The University of Virginia’s School of Architecture: the ecoMOD program to prototype ecological modular housing.  For a heart-warming insight into the ecoMOD program in Gulf Coast restoration efforts supported by Charlottesville’s most famous author (Mississippi native and UVA parent John Grisham), take a look at this Habitat for Humanity Press Release (PDF).

Further interesting information on ecoMOD and other innovative architectural systems can be found at the Charlottesville Community Design Center’s  exhibition showcase and the Rural Studio, part of the Auburn University School of Architecture program of studies.

Venture capital for energy technology

Originally published March 17, 2006.

Advanced energy technologies for clean and sustainable (financially and environmentally) power seem to be a sort of Dr. Jekyll and Mr. Hyde in the United States.  While major corporations, such as Exxon, disavow any interest in trendy renewables, other large cap firms continue to celebrate their profitable ventures into next generation energy technologies.  BP Solar, a subsidiary of the more-recognized petroleum company, achieved profitability in the last two years, with continued prospects for high growth.  GE Energy, part of the venerable General Electric empire, recently announced a partnership with the Department of Energy’s National Renewable Energy Laboratory (NREL) to construct offshore wind turbines with 5-7 MW capacity – among the largest turbines ever built, and could result in extremely cost-competitive grid-tied wind energy at 5 cents per kWh (which would be at the lower end of US electricity prices).

The market for efficient and renewable energy technologies may be a matter of perception, but I’m excited to learn of increasing venture capital interest in the sector.  Nth Power, a prominent energy technology venture capital firm, “believes a classic venture capital environment exists in the energy sector. Experienced management teams are developing disruptive technologies aimed at underserved markets where value can be created in relatively short timeframes and where exits to public markets or acquirers are available and proven” (from Nth Power’s website).  Clean energy, which used to be squarely in the purview of environmental friendliness, is now holding prospects for widespread adoption as a high-growth industry (albeit still on a small- to mid-cap basis).

Nth Power, which receives roughly 500 business proposals each year (and funds 3-6, according to its website),  also released its annual energy-tech venture data report, showing some $917 million of venture capital flowing into 80 companies – a capital increase of 28% over 2004.  This energy tech venture capital represents perhaps 4% of the nearly $22 billion VC market, but that’s an increase from 1% in 1999, according to Nth Power publishing partner Clean Edge.

With the prospects of continued high growth in hydrogen creation and storage, more efficient solar PV modules and technologies, and large-scale, grid-tied wind power installations, efficient and renewable energy may continue to make in-roads as a viable and profitable high tech industry.  And with global business drivers like China and India aggressively pursuing rapid and sustainable energy expansion, the market demand only stands to increase.

Other energy tech and related venture capital links:

GE Energy

BP Renewable and Alternative Energy

Nth Power - Venture capitalEnerTech Capital - Venture capitalRenewable Ventures - Venture capitalKPCB - VC firm portfolio includes giants like Amazon.com and Google, as well as new “Green Technologies” portfolioFA Technology Ventures - Venture capitalThe Altire Group - Venture capital

Technology Partners VC - Venture capitalGreenlight Energy - Large scale wind developerIntrinergy - BIomass distributed generation, founded by Darden MBA graduates

Signs of the Apocalypse: Real Estate in Greenwich

Originally published Marc h15, 2006.

In
Greenwich, CT, Joseph Jacobs recently purchased an 11 acre parcel of land for $5.5 million dollars (yup, $500,000/acre � before any building).  His plan: to build a custom residence with nearly 39,000 square feet of living space (not including the 1,100 sq. ft. pool house), with a frontal building span of 220 feet (as in, the length of a good football drive to get into field goal range).  See artist rendering below (from the New York Times).  But that�s not necessarily the sign of the Apocalypse� 
You see, the prospect of such a large, prominently displayed residence (there is a distinct lack of protective foliage surrounding the proposed estate) had area residents in a furor � despite the fact that they themselves own properties well in excess of 10,000 square feet.So, after the story was published in the New York Times, Mr. Jacobs hired a PR consultant to advise him on the situation.  The pair released a statement saying Mr. Jacobs had abandoned his plans to build on the site (at least for the time being), apparently relieving the neighbors of their anxiety.So now comes the kicker.  Mr. Jacobs, stranded with his $5.5 million patch of dirt, has decided to plop down another $7-9 million for a nearby patch of dirt � this time with a residence of a meager 11,000 sq. ft. already constructed on site.His new plan: to live in the 11,000 sq. ft. residence to tide him over till he can build his dream house (or, if you like, small village) on the original site.  So, if I have this right, the man just strategically downsized to a $7 million, 11,000 square foot residence after dropping $5.5 million on a patch of Earth?  Now I�m not complaining, but for a ready comparison: I couldn�t afford to buy a 900 sq. ft. condo within driving distance; this man will probably have a 900 square foot golf simulator in his own house to measure his �driving distance��

See original stories in the New York Times:

Too Big is Too Bad – Mansion Plan Scuttled

Putting ‘Too Big’ to the Test

Team-oriented leadership

Originally published March 8, 2006.

American business mythology seems to imagine each worker as some sort of pinstriped Sisyphus pushing their resume up the corporate ladder. Those that make it to the top of the ladder are revered as gods. Nobody seems to want to mention the Hades that meets those who fail to reach the top of the corporate ladder (though I suspect it’s not all that bad, especially for those who trade the corporate ladder for the pursuit of their own dreams).

But where are the leaders who will push entire teams to new heights, and all along the way offer praises for the successes of the team? Where are the leaders who embody a fierce devotion to the significance and development of others (not only themselves)? My sad sense is that MBA students are made more to fashion a brand of themselves and demonstrate their individual successes rather than seeking to build the successes of teams they work for and with.

While the design of business education may lend itself to this self-promotion, I currently feel this pressure most acutely from MBA information centers, MBA career advisory firms, and other sources that cater to the power-driven and power-hungry. I don’t want to be a leader who competes to differentiate myself from other individuals. I want to be a leader who builds teams that differentiate themselves from the norm, who rise to incredible challenges and conquer enormously complex challenges. At the end of the day, I’d rather hear praises for the teams I work with and build than personal praise for my role in that team.

In a culture of American individualism, where a company’s CEO may be given sole credit for the success (or failure) of an entire corporation, I often feel that my perspectives on team leadership are out of place. Am I too idealistic? Will American individualism crush the dream of team-oriented leadership? Is a massive reform possible to create opportunities for a new generation of team-builders, of humble giants looking to hoist others onto their shoulders and pave the way for success throughout the corporation and community?

Economics of urban real estate

Originally published March 7, 2006 

The New York Times ran a fantastic column interviewing Harvard economist Edward Glaeser about the inextricable links between urban housing prices and the life of a city.  Provocative insights into the mind of a gifted economist with an eye on the life of people and the places that house them.

NY Times – Home Economics (March 5, 2006)

Special thanks to my dear friend Kristi for forwarding this article…