Tuesday, March 31, 2009

NY Roots: Beer and Blue Sweaters

As my regular bleeps know, I practice "intersectional reading," which basically means that I start reading stuff, get interrupted, then start reading something else, coming back to the other stuff later. Sometimes, it creates interesting insights. And, by hanging a Medici mystique over it, it sounds like an intentional act of serendipity. Like I really should be a professor.

Friends have passed me two interesting books about innovative businesses based in New York. I am a recovering New Yorker (left Upstate in 1976), and one reason I headed West was a sense that the East Coast was a "closed system," too dependent on your family name and where you went to school. But really, the main reason was that the mountains were bigger.

Anyway, Beer School (2005) tells the story of Brooklyn Brewery through the eyes of its founders Steve Hindy and Tom Potter. If you like beer and entrepreneurship, this book is for you (NOTE: I actually drank New Belgium beer while reading this book. But, that is OK karma-wise because someone at New Belgium lent the book to me.) A cool aspect of this book is that the co-founders wrote different chapters , and the other founder chimes in at the end of each chapter with his (sometimes different) perspective. They also grade themselves on how well they built different aspects of the business. It is clear that they had a strong partnership and friendship, but that that this was at times an arduous journey. Dealing with the mob, robberies and almost going broke. My favorite quote from the book:

"There Are No Entrance Exams for Entrepreneurs. No one but you can tell you not to start a business. There are no gatekeepers, no personnel directors and no entrance exams that will keep you out of the entrepreneur's circle. You don't need an MBA; you don't need to have been class president; you don't have to have money. But you do have to decide if you're up to the challenge."

The other book is The Blue Sweater by Jacqueline Novogratz. This book traces the author's work in Africa and how that led to her starting the Acumen Fund, the first non-profit venture capital fund (well, intentionally non-profit, as many VCs are struggling to stay "positive"). I highly recommend this book, for several reasons. First, humility. Novogratz is honest about her experiences and how her initial motivations (to help others; change the world) sometimes reduced her effectiveness. Second, patience and persistence. She discusses patient* capital, referring to financial capital (money). But hers is also a story of patient human capital. That it takes time to learn, build networks, build trust, figure out how to nudge the system. Jacqueline more than put in her 10,000 hours. Third, role model. There is a dearth of well known women entrepreneurs. And few have told the story of their journey. Fourth, inspiration. Her story, and the stories of other entrepreneurs she has known, will inspire you. She kept going, both unlearning and learning as she went. The first step of starting something is to choose to get going. Press the "Go Button" as Francisco Noguera says.

So, the intersectional theme of Beer and Blue Sweaters? Of Brooklyn Brewery and Acumen Fund? Well, it's not just the Big Apple. It is that starting a new venture is a journey. A quest. It is hard work, and at times, tremendously rewarding. When they started, craft brewers and venture philanthropists were little known concepts. Oxymoronic. Crazy intersectional ideas. Now they are both important parts of my world.

Mary Oliver asks a haunting question "So, tell me, what is it you plan to do with your one wild and precious life?" These stories provide Tom, Steve and Jacqueline's answers. What's yours? Whether it is beer or BOP, you won't know until you push the button. There is no entrance exam. Are you up to the challenge?
*Mitesh Gala believes successful social entrepreneurs need a high "ph factor"- patience and humility. I like "p" for persistence.

Sunday, March 29, 2009

Innovation, Creativity & MBAs

"If you are not prepared to be wrong you will never come up with anything original." Sir Kenneth Robinson (TED 2006).

I had the privilege of hearing Robinson talk at the NCIIA conference in 2008, and he is a great champion of the need to overhaul our educational system.

It's not a bad system, for what it is. In fact, if you wanted to study organizations that are really "Built to Last" you might want to study universities. Some have been around for close to a thousand years! But don't confuse durability with innovation. The nature of the university beast is slow change. Discussion. Consensus. Tenure. There is no real incentive for rapid change. And it is important to be "right" (well, not politically).

It's a shame. Because the university's role is to train the next generation. As Sir Kenneth points out, they do a good job of training the next generation of faculty members, but not the next generation of innovators. It seems to take decades to start new departments, disciplines or degrees, and yet today's fast moving world demands more creative and interdisciplinary people, with skills in team work and cross cultural collaboration.

Universities have survived other crises, and most will survive the current one. But they don't lead society out of crises, and, in fact, may perpetuate the thinking that leads to these crises. Some are wondering if it is time to significantly change MBA programs. I'd add that the founders of America's tech companies did not have MBAs (Gates, Jobs, Brin, Page, etc.).

Robinson talks about 3 leverage points for changing education: curriculum, pedagogy (a term thrown about on campuses but nowhere else) and assessment. These are, to a large extent, controlled by faculty. So I am will not hold my breath for any big changes from the "top" MBA schools. They will continue doing what they are doing.

The changes on these 3 points may come from elsewhere. Clayton Christensen has pointed out that many disruptive innovations come from non-traditional competitors, and has discussed the impact of community colleges on higher education in recent articles. Often disruptive innovations are offered to less valued customers and are perceived as "good enough." A few trends that may be harbingers of MBA disruption: online programs (criticized by many faculty as lacking rigor), foreign students opting for international, rather than come to US schools (who started many of our Silicon Valley start ups?), the growth of partnerships between international schools, and schools such as Bainbridge and Presidio with their sustainability focus. All are trying new approaches to curricula, pedagogy and assessment. While some are seeking just to join the upper tiers, others are trying to reshape the way business is taught, and to make it accessible to more students. Seth Godin has started a free "alternative" MBA.

As with many institutions that are disrupted, the American universities and their business schools may never see it coming. If the recruiters and donors return, many deans will stop wringing their hands. But as business schools trim their budgets in light of endowment drops and state funding cuts, they would do well to remember that now would be a good time to invest in new approaches, rather than perpetuating past practices. I am not sure the planet, our society or our communities can take much more Business As Usual.

Thursday, March 26, 2009

What's your BHAWG?

In Built to Last, Jim Collins and Jerry Porras suggested that successful companies use BHAGs ("Big Hairy Audacious Goals") to articulate their vision and engage stakeholders. Some of the companies lauded in BTL have fallen on tough times in the decade since the book came out. But there is no question that the guiding principles outlined by the authors have had a huge impact on business people, politicians and other leaders. And among the stickiest is the BHAG. It is now part of the vernacular (even if it still isn't in dictionary*). I think it is on almost every buzzword bingo card.

I have a modest suggestion. BHAG needs a tweak. Sure, goals can inspire and focus people. I like thinking "big"... "hairy" is OK... and "audacious" is a great word. And yet... Citigroup had a BHAG. BHAGs can go wrong. Author Paul Carroll (Billion Dollar Lessons) points out in his blog that BHAGs can distort behavior and points to IBM. Carroll suggests "If you’re going to establish a BHAG, first think about all the ways it could lead to problems... Proceed with humility." (Can you be audacious, yet humble?) He concludes, "it's easy to get a BHAG wrong."

My advice? Entrepreneurs and BOPreneurs should set BHAWGs- Big Hairy Audacious WORTHY Goals. Make your goods good, your services serve. Use the inherent advantages of business to achieve positive impacts. Do good, and be great at it.
*side note, evidently "bhag" is in some dictionaries as the Sanskrit root for "hot"... and is also a proper name.

Monday, March 23, 2009

Extreme March Madness

"A person needs a little madness, or else they never dare cut the rope and be free." Nikos Kazantzakis

As always, NCIIA held a great conference. Made more special this year in D.C., with the March Madness of the Mind held at the Smithsonian. I also like that each year there seem to be more students in attendance at this conference, in part because of the Sustainable Vision and VentureWell programs.

At this conference, the NCIIA also announced its sponsorship of Design Revolution 100 (DR100) which is an idea from Paul Polak to get 100 colleges and universities offering courses and programs in "Design for the Other 90%." Paul was unable to attend at the last minute, but it was exciting to see the interest that the conference attendees (faculty and students) showed for this new initiative. They also provided good feedback on how to help them create and build this at their institutions.

I was pleased to see several friends rewarded for their work. First, Andy Hargadon was recognized as an Emerging Leader for his work at UC Davis on entrepreneurship and clean technology. Then Gifford Pinchot and Jill Bamburg from Bainbridge Graduate Institute (BGI) were recognized for their work in building the first sustainable MBA program.

My favorite part of the conference is getting to meet student entrepreneurs. I was fortunate to spend time with passionate students working on projects in Rwanda, Ghana, India, Guatamala, Philippines and Peru. To see them light up about their ideas for better medical devices, cleaner energy, fungal insulation or better drinking water systems.

Lastly, I want to congratulate Powermundo, a GSSE team from Colorado State, for winning the William James Foundation business plan competition, as well as participating in VentureWell. Mike and Jacob did a great job of infecting others with their innovative ideas for bringing helpful clean technologies to the rural poor in Peru. Ian Fiske and the team at William James put on an a very well run competition, with a number of amazing teams and panelists participating.

Inspiring and encouraging young entrepreneurs to use business as a tool for social and enviromental change is important work. It was great to see NCIIA and WJF doing this work so well. I hope that March Madness encouraged a few of these students to "cut the rope and be free!"

Monday, March 09, 2009

Slumdogs, Millionaires & Value

ILD president Hernando de Soto discusses the similarities between Wall Street's financiers and developing countries' slum dwellers, both stuck in shadow economies where basic facts, such as ownership, are impossible to determine. Link to article.

Sunday, March 08, 2009


And now, for something completely different:

Economic Tsunamis and Changing Business Climates

In today's NY Times, Thomas Friedman writes:

"We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese ...

He goes on to state that 2008 marks the Great Disruption, where both the market and the environment say "no more." I like Friedman, but he's a bit breathless in this "discovery". However, Friedman often represents the leading edge of the main stream. Either he is prescient, or so influential that his writing shifts opinion. What I find intriguing about this article is not the idea that our economy is exceeding the carrying capacity of our ecosystem, but rather that, through Tom, the idea is now reaching lots of people.

Friedman may call it the Great Disruption, but for many it may seem like the Great Deception. For 60 years, the answer for most problems has been economic development. Growth is good. A rising tide lifts all ships. A superficial concept, as any rising tide in a closed system (like Earth) means a falling tide elsewhere. But due to the way we keep score (GAAP and GDP), the falling tide was hidden. Or perhaps, like those people getting fish during the falling tide before the tsunami, we were just unaware of the danger. It was deceptively calm before the wave hit.

I am underwhelmed by the predictive power of Friedman or other pundits. As Taleb says in Black Swan, "what is surprising is not the magnitude of our forecast errors, but our absence of awareness of it." So I don't know if 2008 was the inflection point of a Great Disruption (although if it is, I am sure Friedman will take credit for telling us so).

In the article, Friedman claims to be optimistic about the positive changes he is seeing. Since I am an unrepentant optimist, I am too. But I am optimistic for the entrepreneurs, not the dinosaurs. While Friedman sees climate change being the dominant force in "Hot Flat and Crowded," I think that the changes in the business climate may be faster and more furious. As a Washington Post article reported in 2005, "19 of today's 25 largest U.S. companies didn't exist four decades ago." It is instructive to look at how companies have evolved in the Fortune list. Is the period from 2005-45 likely to be more tumultuous than 1965-2005? Where should you get a job? Invest your IRA?

Here are the 2008 Top 10 largest US companies:

1. Wal-Mart Stores, 2. Exxon Mobil, 3. Chevron, 4. General Motors, 5. ConocoPhillips, 6. General Electric, 7. Ford Motor, 8. Citigroup, 9. Bank of America, 10. AT&T

See any dinosaurs in their death throes due to "business climate change" on this list? I do. If Friedman is right about the Great Disruption, these companies may also be those most disrupted by economic and ecological climate change. They all appear to be leaders in the business model described in Friedman's quote at the beginning of this post. Grabbing fish at the low tide. Growing off roots deep in the petro-consumptive business model.

As for those emerging firms that may prove more adept in the new economic and ecological climate, you may be able to find them in lists such as Fast 50, Social Capitalists or Global 100. Or maybe at your local algae farm or brewer. Those that grow from more regenerative business models. But hey, I'm no pundit. Just trying to figure it out for myself, rather than letting so-called experts figure it out for me.

Saturday, March 07, 2009

Why Entrepreneurs Don't Sleep

This video is about our GSSE program and one of the teams, SEED.

I am so fortunate to work with students like these! And it is the good kind of insomnia!

Hint: the answer to the title is in Part 2.

Part 1 (9:56)

Part 2 (7:53)

Friday, March 06, 2009

Hacking Ivy and Going Local

A little educational arson for these tough economic times.

The Ivy League and other high falutin' schools are sending out acceptances now.

For those that get accepted by one of these very competitive schools, congratulations. But before you go through the door marked with a Varsity letter and high status t-shirt, I'd urge you to take a second to review where you are.

Malcolm Gladwell and Paul Graham have both weighed in on the importance, or lack thereof, of where you go to college. So, what should you do if you get accepted at a top school? I think it provides the opportunity for an elegant hack, as well as an opportunity to "go local" with your education.

No doubt, you have won the lottery. The chances of getting into these schools are slim. The differences between those accepted and those rejected are miniscule and not apparent to many. You have probably been told that you got in because of your talents and experience, but recognize that luck also played a huge role.

In any event, you are a WINNER. Because, with your acceptance, you have already received some of the benefit of an Ivy league education (I've heard some cynics say it's the "only" benefit). Part of what these institutions do is pre-qualify people for positions in industry, academia and government. And they do at least part of that with their admissions.

See, the application process is the university's loss leader- they spend a lot of time qualifying the "best and the brightest" to fill the class of 2014. Just think, for a mere $65 and a few hours on your application, you have been judged to be Harvard material (or Yale, Princeton, Dartmouth, and just to be inclusive, Stanford and MIT). This is an incredible return on your investment. And you should definitely take advantage of your hard work and good fortune.

But, smarty pants, the next step is not a no-brainer (did you follow that double negative?). In an article in the Chronicle of Higher Education in 2000, Ben Gose found that "students who spurned the elites and attended the less-selective colleges actually earned more money. " That's right, once you get in, the smartest thing to do is go somewhere else. Lower investment and higher return. See Harvard doesn't necessarily make you smarter. And in this economy, one might argue that is even more true. If you decide to go, you are signing up for a cost of over $50,000 a year.

When should you attend an Ivy? If you have a good reason to go. Their brand is not that reason. The aspiration of your parents is not that reason. The fact that your significant other is going to school in the same area is not that reason. The fact that you will be in school with a bunch of smart, hard working people is not that reason (although it is a good one). The fact that people will think you are smart if you go there isn't that reason. But if you want to work with Amy Smith at MIT, that is a dang good reason. Or if you want to study economics at U Chicago, well, I can't stop you (but I might argue that if you are of that persuasion a better test would be attending a school with a more liberal bent, and vice versa).

Sure, if you go, and work hard at these schools, you will get an excellent education. But it may be possible for some of you to get a better education for less money. And, just to remind you, saving money now is just like earning it in the future.

For instance, if you were financially disciplined you could attend one of many fine state schools (or slightly less selective schools that offer you excellent funding) and buy yourself a much better education. For instance, an Ivy is likely to cost $35-40,000 more than your home state institution (tuition at Colorado State is $5870). Now, I know you don't have that difference in your pocket, but you still might be able to set aside several thousand dollars each year, and that buys you freedom and flexibilty.

During the summer, you could travel. You could write companies or non-profits that you really want to work for and say "I got into Harvard but went to State. With the money I saved, I can come work for you for free" (a variant of this is, "pay me what you think I earned at the end of the internship"). If you wanted to work with Amy Smith, you could apply for her summer design summit and not worry about missing out on summer job income. If you wanted to do climate change research in Antartica... well, you get my drift. Your job is to be remarkably different, and just heading off to an Ivy won't make that so. I think it may actually make you less remarkable.

When you graduate, if you decide to go to grad school, you may be a much more competitive position. If you do it right at State, you will have good grades, strong references, and you will provide diversity for the grad school as it puts together its class. Plus, you won't be in debt when you start.

If you decide not to go to grad school, and join the labor force, think about where you want to end up. Going to Boston or going to Seattle may have different answers in terms of plugging into the network, knowing who the best employers are, etc. The way to win this game is not to have Harvard on your resume, it is to get the job before it gets posted. Because you met your new boss at a talk she gave to your class, or at a 10k run, and then got an internship with her company. And, to my earlier point about cost, coming out of school with major debt results in poor career choices. Picking prestige over passion. Golden handcuffs. Soul death. And, even if you have your eyes set on the corner office, this may not be your ticket.

Best of all, if you decide to start a company after you graduate, you will have that option. Not many people with high student loan balances can even consider it. Often for a decade they are out of the start up game, and then it may be too late. I think most prospective entrepreneurs would be much better off at a State school, and then attending events around the country. It should take less time to get your school work done, you will invest less money in a degree you are unlikely to use much anyway, you can build your network, you can get in a few days skiing or surfing, and you get access to smart people and credibility. Think of college as your business incubator.

As for the claimed network effect (or should that be affect?), I don't think that the education market has adjusted its prices for the effect of Web 2.0. MIT is now open source. Most well known thinkers have many podcasts, articles and books on-line. And it's global. If I want to watch a lecture that happened at LSE last week, I can do it whenever I want. For the motivated student, this vastly reduces the potential cost of getting exposed to leading thinkers. As for the Ivy network, sure it is still valuable. But those walls are getting breached just as surely as the one in Berlin, and Facebook and Ning are the hammers. And you should be able to create a network of smart friends at any school (the converse is also true, by the way). Just start a facebook group called "I got into Harvard but went to State" and start hanging out. I guess it is just a matter of what value you place on saving $120,000 over four years.

Don't get me wrong. You should be proud of getting into one of these selective schools. Now show how smart you are by playing your cards to get the best education for YOU. That may mean its time to leave the high status college casino with your current winnings. And then, to paraphrase Mark Twain, using your resources to make sure your schooling decisions "don't interfere with your education." Going local, and looking for your best afforable option, could be a great way to hack your way through college.

NOTE: This advice is aimed at undergraduates. For graduate school, some of the same arguments apply, but the network hiring effects for the grad schools, particulary in law, business and medicine are significant. Weakening, but significant. So if you don't get into the GSSE program, go to Harvard Business School, or Stanford Law, since it probably won't hold you back too much in the long run.