7 Habits of Highly Effective Entrepreneurs: Habit 1 - "Be Creative"

Entrepreneurship is hard. It is possible only for those who stick to the path and never give up. The question that follows is what gives the successful entrepreneurs the tenacity required for success? Is it that because they are seduced by those potential billions of dollars that they may get in future? Or is it something much deeper and fundamental to their identity? While researching an answer to these questions, I read hundreds of blogs and watched equal number of videos. For some blogs and videos, I read a list of entrepreneur attributes and for others I saw a pattern in entrepreneurial behaviour but could not find a succinct way to articulate my research. Much to my surprise, I found an eloquent articulation in some Sanskrit texts. Based on my research and some experience, I have identified 7 principles that an aspiring entrepreneur needs to absorb until they become habits. For some entrepreneurs these habits could be natural and for others, these habits can be inculcated. In my blog, I will discuss the 7 Habits of Highly Effective Entrepreneurs.

For brevity, I will discuss only one habit in each blog post.

Habit 1: Be Creative

To be a successful entrepreneur, one should have an unlimited amount of Creativity Quotient (CQ). Steve Jobs, the best example of creativity that all can relate to, said in his 2005 Stanford Commencement address:

(Modified from www.desktopaper.com)

I have read and heard the above sentence repeated through videos, blogs etc. However, I could never put this in a scientific framework [sorry but my PhD training (or conditioning?) that compels me to formulate everything into a set of principles :-)]. In mathematical terms, I was searching for a framework that will increase one's "CQ". Herewith, I will share with you two of my findings that helped me to understand creativity and provide a conceptual framework that one can adopt to augment one's creativity:

Recently, I read a publication from Saras Sarasvathy from Darden Business School, University of Virginia, (Please click here for the original publication) in which she gave a very interesting explanation on the various types of creativity. Based on her research, she has categorized creativity into three types - managerial, strategic and entrepreneurial. Please see below a figure from her publication:

(Sarasvathy Saras, Darden Business School, University of Virginia. Please click here for the original publication)

Usually in our education or jobs, we are encouraged for managerial or strategic creativity. Managerial creativity involves using a set number of means (e.g. M1 to M5) to meet the company goal. Strategic creativity builds on it to use more number of means (e.g. M1 to Mn) to reach the goal. The goal can be for individual performance, delivering a new product, increasing sales or profit margin etc. In any case, the goal is pre-defined. One has to use existing internal and external resources to meet the goal faster, cheaper and/or better. 

In contrast, entrepreneurial creativity is totally different. It is about connecting the dots (or means) to come up with something brand new. For example, all of the Apple products the Mac, iMac, iPod, iPhone and iPad -  all of these were about connecting the dots or inventions/technology available at the time and imagining the next-generation product. It was believing that these dots could be connected and not allowing our critical/analytical reasoning to jeopardize our creative thought.

However, all of us cannot be Steve Jobs! (and we should never forget that!) While Sarasvathy's publication above explained to me what is entrepreneurial creativity, I still did not have a conceptual framework on how could one increase the CQ. I was researching whether creativity could be made into a scientific process i.e. it has to repeatable and accessible to everyone. Finally, I found an answer in the following interesting creativity model from Prof. Tina Seelig at Department of Management Science and Engineering at Stanford University. While all of her videos are awesome, if you are very busy then I would highly recommend the readers to watch at least this, this and this. 

To summarize, what I call it as the Seelig Creativity Model: 

(Reproduced with permission from Tina Seelig. 
Image from her book: inGenius - A Crash Course in Creativity)

Seelig says creativity is the "innovation engine". According to her model, at the inside of this engine is us with our attitude, knowledge and imagination and on the outside are our resources, culture and habitat. These six components are integrated like a Möbius strip and all components are interdependent. The beauty of this model is - one can start anywhere and yet unleash one's creativity to the fullest. (please check her videos to know more about her creativity model). Based on this model, one can identify what are the current external and internal resources (i.e. what is) and put a conscious effort in change them to suit the goal (i.e. what ought to be). For instance, one could identify one's knowledge about entrepreneurship and improve it by educating oneself through various online resources. Once the knowledge is improved, it will trigger our imagination and affect how we see opportunities (thus changing our attitude). We will then seek out the required habitat or network to realize the business idea. Associating with entrepreneurial network will further affect our culture. Similarly, one could start at any point in the model and realize how all the above dimensions are interdependent. The more you iterate and apply this model, the more creative you will be!

Finally, habit of creativity is not only useful for entrepreneurs but for everyone! So just to tickle your imagination, what can you do with 500 post-its???

Submit your comments/videos/pictures!

Revisiting the Trifecta of Market Leadership

Product design, customer intimacy and operational excellence are the trifecta of a successful marketing strategy. A model based on these three "value-disciplines" was proposed by Michael Treacy and Fred Wiersema in their book "The Discipline of Market Leaders". In this blog, I will discuss a few musings on the topic:

To begin with, let's understand the Treacy-Wiersema Model:

Product Excellence: It is a relentless pursuit to innovate and design next generation products and services. Such companies build a culture of innovation and entrepreneurship. They are excellent talent scouts, teamwork and portfolio management. They invest heavily in R&D, are product-centric by definition and excel in creating an unprecedented "product experience". A few examples of market leaders in product design are Apple, Nike and Ferrari.

Operational Excellence: It is optimization of business processes and supply chain to deliver products faster, cheaper and better. They build a culture of cost saving. They are excellent in harmonizing workflows and automation to reduce costs. They invest heavily on creating error free "engines" of profitability. A few examples of market leaders in operational excellence are Southwest Airlines, Ikea and McDonalds.

Customer Intimacy: It involves developing a deep, long-lasting relationship with the customers to offer them the products and services that best matches their needs. They build a culture of developing personal connection with the customer. Thus, they are excellent in aligning the whole company to think 'customer first'. They invest heavily in market research, big data analysis, SEO and digital/social media marketing (in recent times). They are customer-centric by definition and excel in creating an unprecedented "customer experience". A few examples of market leaders in customer intimacy are Amazon, Facebook and Linkedin.

From the attributes that define each value discipline, we can see that to excel in all three value disciplines is rare for any company. The reason for this rarity is the company culture, structure, human resources, processes, facilities and revenue models that are optimized for a value discipline are incompatible to excel in other value discipline.  For instance, a company that is optimized its resources for operational excellence would have limited range of products and production pipelines that will make innovation difficult (please check my blog on corporate entrepreneurship here, wherein I discuss more about balancing innovation and performance). Hence, the company has to make a strategic decision to channel their resources into one of the value disciplines.

The power of the Treacy-Wiersema model is that the value disciplines sets the criteria for competition in the industry. The model states that for any company to be competitive, a minimum threshold of competence is required in all the three value disciplines. However, to be a market leader, it has to excel in just one of the value disciplines. Hence, choosing the value discipline is a strategic decision for every company. However, in my opinion, the choice of value discipline to gain the market leadership will depend upon the nature of industry. For instance, the core of e-commerce industry is to deliver the right products faster, cheaper and better to the customers. Thus, the e-commerce should be aware of the customer needs (hence customer intimacy). In contrast, the heart of biotechnology industry is R&D and they need to develop innovative solutions to cure disease (hence product excellence). Likewise, the minimum fair value for aviation industry is cheap and punctual flights (hence operational excellence). Thus, the type of industry pre-defines the value discipline determinant for market leadership.

Next, I set out to research if we can find any instances wherein a company has been successful in excelling in all three value disciplines and emerge as market leader. Interestingly, I found a couple of examples:

Walkman: This product may not be so well-known in the younger generation. Hence, the history of the Walkman is very interesting to read. Please click here to read more. Briefly, in the 1970s, the concept of portable music player was non-existent. The personal tape players were expensive and heavy. Hence, the customer need was to make the music players portable and affordable. In 1979, under the leadership of Akio Morita, Sony released the Walkman. It was a disruptive innovation at that time. Thus, an example of product excellence. Next, the challenge was to make it affordable to the masses. Sony worked on the operations and manufacturing to bring down the costs. It enjoyed ~50% market share in the music player industry, a huge success. Thus, Walkman became an example that excels in all three value disciplines.

After the Walkman, we witnessed the discmans and MP3 players. While these were innovative products but none enjoyed the success of the Walkman. The only product that rivaled the Walkman is the iPod.

iPod: From a product innovation perspective, iPod (a portable MP3 player) was 3 years late as compared to the MPman - the first portable MP3 player. However, downloading MP3s was time-consuming and the internet bandwith was not fast enough. And unlike the cassettes for a Walkman, one could not purchase the MP3s in retail stores. It was only in 2001, when all the components to download MP3s were in place and then came the iPod. Steve Jobs knew that until the relevant supporting technology is not available, portable MP3s will not be the next Walkman. Thus, launched at the right time, iPod became an icon of product excellence. Next, iPod + iTunes store gave a hassle-free access to millions of songs for 99 cents apiece - an example of customer intimacy. But what about operational excellence? Shouldn't the products deliver by excellent operations be cheaper? (iPod was sold at $399, remember?). But that was exactly Tim Cook's role when Steve Jobs was still leading apple. Tim, COO then, is an expert in operations. Apple redefined operational leadership and took it to the next level (Click here to read how iPod broke all Sony's records and here and also here to read about Apple's operational excellence).

In summary, the Treacy-Wiersema Model is still valid because it is rare to excel in all the three value disciplines. But for those who do, they create history. The people who are crazy enough to think they can change the world, are the ones who do.

Entrepreneurship after PhD

PhD is a passport to academic elite. But is this really true? Not really. To substantiate my claim, I will share with you the following figure from a publication in Nature Biotechnology:

(Source: Schillebeeckx et al., (2013). The missing piece to changing the university culture. Nature Biotech. 31(10): 938-940; Reproduced with permission from Nature Biotechnology)

As you can see, in last 30 years, only 1/8th of the PhDs in science and engineering ended up in faculty positions. What happened to the remaining ~90% PhDs? Probably they took one of the career paths discussed in the PhD Career Guide. 

In this blog, I will focus on pursuing an entrepreneurial career after a PhD. I will build a case by highlighting a few similarities between PhD and new venture creation.

1. Commitment: It takes ~5 years to finish a PhD. In some cases, it could take even longer! It is a lonely road that is full of hard work and frustration interspersed with moments of joy when experiments are working (which is rare :-)). To be able to effectively handle the frustration, one has to be committed to get a PhD. For those who lack this commitment, it is not uncommon to see them drop out of their PhD program. 

Starting a company is also a road less traveled. With >90% failure rate of startups, one has to be fully committed to the company. Unlike a well-cushioned job in a big company, starting one's own company will be full of frustration. Many things could go wrong e.g. co-founder leaving, no seed capital that will require bootstrapping etc., all of which will test the entrepreneurs perseverance. Depending on the product of one's startup, it could take anywhere from 1 to 5 or even more years before their startup becomes profitable.

2. Research: The core of PhD is research. The following figure depicts the recursive loop of doctoral research:

The above process is very similar to the development of a Minimum Viable Product (MVP). In the following infographic, Eric Ries (the author of "The Lean Startup") explains process of continuous innovation while developing an MVP:

Thus, we can see that the recursive hypothesis testing during PhD is very similar to the development of an MVP.

3. Handling Failure: During PhD, failure is an integral component of hypothesis testing. It is very rare that an experiment has worked in the first instance. But, based on each data point or more precisely building on failures, a PhD student keeps trying different hypotheses, various experimental conditions, discussing with mentors and fellow students and searching literature - one way or the other, the student makes the experiments work.

In startups, developing an MVP is fraught with failures. Until an MVP is ready, the founders have to keep trying. And, after customer validation, the MVP has to be improved further. Besides, there is >90% chance that the startup will fail. But, the entrepreneur keeps going - trying one hypothesis after another or in some cases starting one startup after another!

4. Pitching to investors: An integral component to PhD training is presenting at conferences, lab meetings and journal clubs. The presentations can range from discussing a journal paper over lunch or presenting a poster or giving longer presentations to a diverse audience. Besides, our friends and family are always curious to know why we are so busy!

Similarly, integral to entrepreneurship is pitching to the investors, who are not subject matter experts. Hence, jargon should be avoided and the business has to be explained in an interesting way. Alike PhD, when we venture into a startup, our friends and family are always curious about what is keeping us busy and where are all the savings gone! :-)

Thus, presenting our research as well as pitching to investors both require that the topic should be explained in a way to grab attention of the audience.

5. Handling rejection: PhD prepares us to handle rejection. For example, it is seldom that a submitted manuscript will be accepted immediately. In many cases, it is rejected or accepted with comments. The usual first response to the rejection is pain - why was it rejected? Given the effort that we put into writing the manuscript, we always find a reason to disagree with the reviewer's comments. Nevertheless, we have to respond to their decision. Either we can write a rebuttal or resubmit it to another journal or perform additional experiments that were recommended by the reviewers. Thus, one way or the other, we find a way to deal with rejection.

While starting a new enterprise, one will be rejected in many different ways. For instance, the customers may not immediately accept the product or in other cases the potential investors will reject the proposal. But, without loosing enthusiasm, one has to be determined and keep going.

6. Constant worrying: If a graduate student is not working at nights and weekends, then one is at least thinking about it! No matter how much one tries to take a "break", usually it does not last long. For many, these "breaks" turn to be eureka moments that help in making major progress in research. It is not unusual to have a "brilliant idea" while watching movies, in the middle of the night or while partying! I have seen some graduate students maintain an "idea book" to ensure that they do not miss any ideas.

Unlike working for an established company, where all infrastructure and processes are in place and the focus is only to "perform and deliver", nothing is in place in a startup. The product, website, brand, logo, strategy, sales, marketing, finance, human resources, legal etc. everything has to be put in place by the founders. This requires a constant engagement of the founders.

Thus, without being seduced by the potential title of "Doctor" or with the potential of making billions after exiting from the startup, both graduate students and entrepreneurs are constantly thinking about their research/startups.

7. Low income: Let the truth be told. The graduate student stipend is barely enough to make ends meet! In developed countries, it is still decent enough to afford a reasonable standard of life for a single person. In contrast, in countries like India, it is barely enough to buy a laptop on loan installments! (car is definitely not an option for graduate students in India). Nevertheless, we learn to manage with available funds and be happy!

The founder of a startup has to bootstrap (mostly without salary) until there is the first investment. Even after the first investment, the salary will not be equal to what one could get in an established company. Yet, the entrepreneur voluntarily accepts the economic hardship to "build" the company.

Given these similarities, in my opinion, PhD training provides the necessary foundation, soft skills and mind set that can make one an entrepreneur.