Understanding Innovation

Successful entrepreneurship is, in many respects, a “perfect storm” of strategic planning, market opportunity, hard work, perseverance, the right team and countless other factors – some within your control as an entrepreneur, and some that aren’t.  One factor that often plays a large role in the early success of start-up ventures is “innovation.”  The good news is that it’s one of the factors that can be controlled. 

Thinking about (and attempting to define) “innovation” as a broad, abstract concept is a bit much to wrap your head around, but looking at it as an identifiable, finite moment in time – the “a-ha moment,” if you will – makes it a bit easier to grasp.  The Kauffman Foundation’s VP of Advancing Innovation (ed: great title…) Lesa Mitchell has recorded a number of good, short videos delving into this exact topic – they’re available on the Kauffman site and I’ve linked to them below. 

Click here for Lesa Mitchell Videos

 

We recognize the substantial role that entrepreneurs have played in leading the recovery of past recessions – and the role they’re currently playing and WILL continue to play in recovering from this one.  Because of that, one of the things we’ve attempted to do is to identify a model that illustrates the steps that bridge the gap between purely academic research and entry into the commercial marketplace that many technological, high-growth entrepreneurs and innovators experience on their path to success. 

- What factors contribute to the transition?
- What factors aid/hinder it?
- What are the traits of those start-ups and individuals who can consistently do it?
- Are there any common practices, pitfalls or approaches on which we can help shed some light? 

That’s essentially the goal of all these efforts to better understand the processes behind the art and science of innovation – to shine a light on what’s being done and bring the knowledge that we can gleam from those insights to entrepreneurs, policy makers and business-people everywhere.  

 

What do you think?  CAN innovation as a component of the entrepreneurial life cycle be weighed, measured, quantified and – ultimately – understood deeply enough to be taught?

Entrepreneurship Is “Boom-ing”

“Economists know that entrepreneurship will drive the economy back to health, but many people may be surprised to learn that the baby boom generation is behind the wheel, according to a new study by the Ewing Marion Kauffman Foundation.”

As detailed in this recent Kauffman Foundation press release, the findings of our latest study, "The Coming Entrepreneurship Boom," show that the most active segment of our population – entrepreneurially speaking – is the Baby Boomer segment.  While the common perception of today’s “new entrepreneur” is typically a 20-something wünderkind, dropping out of college, and dropping in on the business world – think of headline-makers like Facebook’s Mark Zuckerberg – the reality is actually probably best described as “that kid’s dad.” 

With many (and I use this term reluctantly, painfully) “older” adults finding themselves directionless, at the crossroads of their career and our uncertain economy, they’re turning to entrepreneurship – and leveraging their lifetime of business experience to achieve success.  As one expert put it, entrepreneurship is booming, “not in spite of an aging population, but because of it.” 

And that’s potentially good news for the nation, the economy and the “E=R: Entrepreneurs = Recovery” Campaign.  According to Kauffman’s Vice President of Research and Policy, Robert E. Litan, "the fact that the largest age group of our population is also the most entrepreneurial bodes well for the United States' economic future."  So while the bright young minds behind iTunes and Napster may be getting all the front page ink (or “home page pixels,” if that metaphor is too outdated for you), it appears that when it comes to entrepreneurship, there’s still a thing or two they can learn from the Woodstock generation.

Talking about BusinessWeek's "The Case for Optimism"

Taking a look at the newsstand lately, it may seem as if the covers of major periodicals are not - pardon the pun - on the same page.  Only a week or two after Newsweek proclaimed "The Recession is Over," Business Week has followed with "The Case for Optimism."  Similar sure, but whereas Newsweek certainly IS being optimistic, I think Business Week has a great point for entrepreneurs: "Sure, it has been a harrowing storm. And now is no time to discount the dangers that still exist. But opening your mind to optimism can help you seize the opportunities ahead."  

While it can be tempting (and perhaps safer) to hang back and wait out the recession before making any big business plans, Business Week's Peter Coy argues that now is the perfect time to forge ahead. "Practical people should open their minds to the opportunities to be seized just as much as to the dangers to be dodged," he writes.  The online version even has a short slideshow detailing the signs of life for business owners. 

In setting the stage for his "Case for Optimism," Coy brings up the following problems:

• The loss of (just) a quarter-million jobs in July was greeted as good news.
• Long-term unemployment and foreclosures continue to mount.
• This is the worst economic downturn since the 1930s.
• Health-care costs are out of control and an aging population around the globe is driving government spending through the roof.
• Scientists say we need an expensive crash program to fight global warming or we'll incinerate ourselves.

With stuff like this going on every day, every WHERE, perhaps it's easy to side with the 53% of Americans from a recent Gallup poll that think the U.S. economic outlook is getting WORSE.

Things are always darkest before the dawn, and the two points Coy brings up for cautious optimism support that thinking: 

1.) "Recessions such as this one... set the stage for future growth. As economist Joseph A. Schumpeter wrote in 1942, "creative destruction" shakes loose people from old, dying businesses and forces them to figure out new ways to be useful."  Green-collar jobs, anyone?   

2.) "Ingenuity is addictive. Equipping one or two billion more of the world's people with higher education and better technology... has increased humanity's ability to solve hard problems. The next world-changing breakthrough may come from China, or India, or Eastern Europe." 

And it's in that spirit that I'll be operating for the next few months - as I encourage you to do as well, if possible - as we lead up to Global Entrepreneurship Week.  I blogged this past summer about getting to see first-hand entrepreneurship taking place in Morocco, and this fall is certain to be an exciting time in the entrepreneurship arena as well. In the months and weeks since then, I've seen it from those in the Mediterranean, Middle East, and all around the world.  

The recession's been tough, sure, even grueling at times.  It's lasted longer and hit harder than many thought it would.  But entrepreneurs have been doing their part - and we've been chronicling it here, every week - so I'm optimistic that the second half of the equation - E=R: Entrepreneurs = Recovery - will follow in time.

The Entrepreneurial Paradox: Profit or Power?

For many entrepreneurs, there’s some part of their personality – their drive, their adept deal-making ability, their stubbornness – that becomes a crucial component to the early success of their venture.  But all too often, the time comes when the tables are turned, and it’s no longer about what they bring to the table, but what they don’t.  As Paul O’Donnell puts it, it’s “the point when a founder realizes the business needs something he or she can’t offer to keep it going.” 

For many entrepreneurs, there’s some part of their personality – their drive, their adept deal-making ability, their stubbornness – that becomes a crucial component to the early success of their venture.  But all too often, the time comes when the tables are turned, and it’s no longer about what they bring to the table, but what they

In the Summer 2009 issue of The Leading Edge, O’Donnell writes about the tough decisions that need to be made when a founder and his or her business reach that crossroads.  In many cases, the release for the pressure that this situation builds is to bring in investors, partners or outside counsel and expertise.  As a result, the founder must usually cede some degree of control over “their baby.” 

As I’d said in the article, at some point, you look at your baby and say, “I want more for you and I don’t have the skills to get you there.”  It’s never an easy call to make – especially for first-time entrepreneurs.  The tenacity, passion and commitment that made you a successful entrepreneur in the first place are now the stumbling blocks in your way as you wrestle with taking a different role and must – to some degree – let go.  The outcome may determine your company's next stage. 

Also from the article, here are my Five Key Considerations for Founding Entrepreneurs at a Crossroads:

1) Know Thyself – Take an honest inventory of your own strengths and weaknesses.

2) Get a Thick Skin – It’s not personal, and that applies to you as well.

3) Step Outside Your Business – Ask, “do you have the right players in the right positions,” including yourself?  Are the people you have on board helping you get from A to B?

4) Be Honest With Your Goals – Write them down and visit them frequently.

5) Be Jealous With Your Time – As an entrepreneur, you can waste a lot of time, even if you have good intentions.  There is an opportunity cost to everything, including your time.

 

Have any of you ever been in this position and had to choose?  What did you do?  Do you have any other tips for others?

It might never be an easy choice, but maintaining an honest, objective point-of-view on the situation is the key.

Social Entrepreneurship By Those In Developing Countries

The ‘Invisible’ Entrepreneurs

Social entrepreneurs from developing countries are seldom known. This is hardly because developing countries lack entrepreneurial talent; it is because many, especially those who have initiated entrepreneurial projects to lift themselves out of poverty, simply go unrecognized. The field of social entrepreneurship conventionally gives recognition only to MBAs and investment bankers, the elite group who have acquired specialized training in an institutional setting, but not to the poor and disenfranchised. It is time that they are recognized as legitimate practitioners of social entrepreneurship, and be given the necessary support and resources. No longer satisfied with just being the clientele of social ventures, the poor, too, want to participate actively in improving their own lives.  

Social Entrepreneurship: A Survival Tactic for the Poor

"The true social entrepreneurs are ghosts that never claim the glory for themselves, that work for their goal like their lives depend on it, because actually, their lives do depend on it. They don’t work to be counted. You don’t find them in congresses, seminars and forums. They don’t read literature about social entrepreneurship; they don’t study it. They just are social entrepreneurs because they need to be. They live for it and by it.”– John Alexis Guerra Gomez

For many of the poor, social entrepreneurship is a vocation of necessity, not of choice. In an effort to eke out a living, many rural poor have unknowingly become what Western academics term social entrepreneurs. These entrepreneurs have low or maybe even zero visibility in the field of social entrepreneurship because they do not actively engage in public relations, or they do not have resources like Internet access or even the necessary language skills to discuss their ideas. Yet, they are contributing in significant ways to the betterment of their communities. Their social ventures may not achieve a scale significant enough to trigger a paradigm shift, as is conventionally the desired outcome of social entrepreneurship, but they nevertheless still have a huge impact on their immediate surroundings, especially on the poor people around them.

Contrary to popular belief, most poor people do not want to get by on charity; they want a sustainable way of making a living. Given the tools and resources, they too can become successful social entrepreneurs. Only when they can generate a consistent income to guarantee their own financial security, and their own families’ economic stability, are they then willing to use their skills and resources to serve others in the community through their social ventures. “Individual ownership is the key to sustainable economic development,” says Kickstart, a nonprofit that fights poverty.

Community Members as Social Entrepreneurs

It is common perception that most social ventures are initiated by foreigners who see a social problem and decide that something should be done. However, local people cannot and do not rely on the initiative of foreigners. Instead, local people themselves take the initiative to develop their own entrepreneurial plans of action in response to social problems. Moreover, they possess unsurpassed experience and knowledge of their immediate surroundings and needs, and therefore are in a good position to take action.

A powerful synergy can be created by harnessing the entrepreneurial talent of local people to develop social ventures in collaboration with social entrepreneurs from developed countries who can provide the funding and other resources. Unite For Sight, for instance, depends on such a synergy for its success; it cultivates and invests in the talent of local eye care leaders who have the determination and skill to create social enterprises that serve their community's poorest people. Unite For Sight's partners include Ghanaian ophthalmologist Dr. Thomas Baah, who founded Save The Nation's Sight Clinic to bring eye care to the doorsteps of the rural poor. Unite For Sight is also a partner of Kalinga Eye Hospital in Dhenkanal, Orissa, India, which was founded by Sarang Samal to provide low cost, high quality eye care to some of India's most difficult to reach patients.

Karrus Hayes, a Liberian refugee and the founder of “Vision Awake” Africa For Development, is another example of a “local” social entrepreneur. The 1989-1997 Civil War in Liberia was a period of unimaginable turmoil. Fleeing for their lives, thousands of Liberians have now settled in refugee camps in neighboring countries. But the living conditions in these camps are often deplorable, and residents suffer from the effects of poor sanitation, polluted land, and contaminated water. In one such refugee camp, Buduburam Refugee Camp in ghana, Karrus Hayes realized that many children could not go to school. Seeing an unfilled education need, he decided to set up a free school. He had no money, but he had an entrepreneurial spirit. With a loan of $50 and some donated church space, he started the refugee camp's only tuition-free school for needy children. Today, his organization runs several programs, including a community college, microfinance and orphan assistance programs.

“It really touched me, but I didn’t have control over it…I’m a refugee too. I don’t have any means of helping. But I knew that I would do something because I had an idea.” – Karrus Hayes

 Supporting Local Entrepreneurial Talent

“To define people by their conditions rather than their abilities is dehumanizing. When you look past the poverty, you see abilities, resources, and desires. The poor are extremely hard-working and entrepreneurial – they must be just to survive. They don’t want or need to be rescued. They want an opportunity to create a better life for their families.”

It is clear that local entrepreneurial talent should be nurtured and developed. In order to do so, the field of social entrepreneurship must reach out to the “invisible” social entrepreneurs whose talent remains untapped. Ashni Mohnot has several ideas on how this could be done. In particular, she suggests that entrepreneurship conferences, like the Skoll World Forum, should encourage participation from these “invisible” social entrepreneurs in developing countries. More funding should also be made available locally to fund their social ventures.

The Role of Innovation

Social Entrepreneurs as Engines of Innovation

Just as business entrepreneurs are willing to take risks and play around with ideas until they find one that works, social entrepreneurs must dare to innovate even if it means treading where no one has ventured before. Of course, not all social innovations are successful. But even so-called failures are usually blessings in disguise because they inform the social entrepreneurs what to avoid in a future enterprise. Since social entrepreneurs often work in a variety of different social contexts throughout their career, with each new situation demanding a different approach or even a different solution, they must be flexible in the way they think and approach problems.    

Innovation – A Tool to Better the Whole Society 

There is no doubt that innovation plays a vital role in any entrepreneurial enterprise. While the ability to generate innovative ideas is important, this alone cannot make the social entrepreneur successful. Many people can think creatively and generate a lot of ideas, but many tend to rest on their laurels once their own problems are solved. According to William Drayton, the social entrepreneur effects a paradigm shift in the whole society:

“There are many creative, altruistic, ethically good people with innovative ideas. However, only one in many thousands of such good people also has the entrepreneurial quality necessary to engineer large-scale systemic social change. Entrepreneurial quality also does not mean the ability to lead, to administer, or to get things done; there are millions of people who can do these things. Instead, it refers to someone who has a very special trait -- someone who, in the core of her/his personality, absolutely must change an important pattern across his/her whole society. Exceedingly few people have this driving motivation. Most scholars and artists come to rest when they express an idea; many managers relax when they solve the problem of only their company or institution; and most professionals are happy when they satisfy a client. It is only the entrepreneur who literally cannot stop until he or she has changed the whole society.”(1)

A Case in Point: Andrew Carnegie & the Birth of the Library System

“Imagine that Andrew Carnegie had built only one library rather than conceiving the public library system that today serves untold millions of American citizens. Carnegie’s single library would have clearly benefited the community it served. But it was his vision of an entire system of libraries creating a permanent new equilibrium – one ensuring access to information and knowledge for all the nation’s citizens - that anchors his reputation as a social entrepreneur.” (2) – Roger L. Martin & Sally Osberg in the Stanford Innovation Review

Social Entrepreneurship and Eye Care

Unite For Sight supports eye clinics worldwide by investing human and financial resources in their social ventures to eliminate patient barriers to eye care. The village and slum communities where Unite For Sight and the eye clinic partners now work had not previously had access to eye care due to many patient barriers. Unite For Sight's model enables the local ophthalmologists to create real change and a sustainable impact for those living in extreme poverty. With Unite For Sight's support, the local ophthalmologists develop and lead eye care programs that provide high quality, cost-effective care to the world's poorest people.

Unite For Sight’s programs are sustainable because emphasis is placed on nurturing and developing local potentialities so that eye clinics can meet local eye care needs on a long-term basis. Unite For Sight provides the necessary support to cultivate leadership, talent and ideas among its eye clinic partners. Not only are eye care programs led by local staff, but local volunteers are also trained to serve as support staff at local eye clinics. To nurture local talent, visiting specialist volunteers, such as ophthalmologists, optometrists and ophthalmic nurses, provide training to local specialists. Unite For Sight’s model is able to significantly increase the number of surgeries provided by local eye clinics annually. 

Unite For Sight works with partner eye clinics to provide local solutions, identifying, and overcoming community-specific barriers to effective healthcare delivery, such as transportation and communication. Patients are transported to and from the eye clinic. Moreover, local community leaders and members are involved in outreach activities, raising awareness and providing education regarding eye care to those who would otherwise not have access to eye care. Unite For Sight’s model has been employed successfully in a variety of different social contexts in Ghana, Honduras and India.

Social Entrepreneurship vs. Charity

Social Entrepreneurship: Not Just Charity

Social Entrepreneurship cannot be confused with charity. While charity reflects the benefactor’s compassion for humankind and is measured in terms of the generosity of donations to the less fortunate, social entrepreneurship reflects more than the good intentions of its practitioners, who are not merely driven by compassion, but are also compelled by a desire for social change. Oftentimes, charitable organizations survive at the mercy of their donors whose contributions vary with the economic climate. A nonprofit that practices social entrepreneurship, on the other hand, relies less heavily on donor funds because it creates social programs that are meant to be self-sustaining. Social entrepreneurs manage donor contributions in an effective manner, investing in social ventures which can then generate their own revenues to sustain themselves.

In other words, while charity uses donor funds to buy food to ease the poor’s hunger, albeit only temporarily, social entrepreneurship uses its funds to make a lasting social impact, creating instructional programs that teach the poor how to grow their own food so that they can take care of themselves in the long run. In a world of scarce resources, it is no longer enough to simply donate out of good intentions. Rather, Greg Dees emphasizes the need for people to value the social impact that their donations are actually having:

“In society, I’d like to see more value placed on social impact and success than on good intentions or effective marketing or the severity of the need you’re claiming to serve. I’d like to see a fundamental change in ethics or culture around that. We still have the lingering effect of a culture of charity, which honors people for their sacrifice—how much they give and the purity of their motives. The word charity comes from the word “caritas,” which is Latin for love or compassion. We’re rewarding people for demonstrating their love of humankind, but we’re not often looking to see whether it has the intended impact. So I’d love to see an ethics change, so that we honor people for the impact they’ve had directly, or indirectly in choosing to support programs and organizations and individuals that have had impact, not just for how much they give or how generous they are.”

Moreover, social entrepreneurs have to identify opportunities that have the potential to change the world. In the words of Martin J Fisher & Kevin Starr, the authors of Real Good, Not Feel Good:

“We can no longer afford to spend scarce funds on things that simply feel good. Instead we need to support initiatives that do real good, and that have the potential to generate large-scale and lasting solutions to the world’s biggest problems.”