When we think about entrepreneurs, we usually think about young technologists in co-working spaces coming up with the next big smartphone app. Yet some of the smartest innovators aren’t working with code or looking for a lucrative exit. They are working to find sustainable solutions to some of the world’s toughest problems.
At the recent Falak Unreasonable Summit, I met three social entrepreneurs doing just that. One is unlocking the wealth that many of the world’s poor have tied up in livestock. Another is bringing light to some of the world’s most remote places. A third is helping transform refugees into entrepreneurs in war-torn Kurdistan.
What all three have in common is that, rather than merely providing assistance, they are helping some of the world’s most needy communities to leverage assets they already have. We often forget that even the world’s poorest people are not necessarily helpless. They have skills, energy and nonconventional assets that can be unlocked to create a better life.
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When Enron was formed in 1985 through the merger of two natural gas pipeline companies, it became the second largest gas marketer in the America. Over the next decade the firm grew to be a dominant force in the industry and built a sophisticated trading operation that could compete with the biggest New York banks.
It soon became clear that trading could be incredibly profitable. Unlike marketing physical gas, you didn’t have to invest in expensive physical assets. In the years that followed, Enron’s financial wizardry made it a Wall Street darling until, of course, it was all revealed as smoke and mirrors. A scandal erupted and Enron went bust.
Today, once again physical assets are going out of vogue. Pundits preach that instead of building things in the real world, business should “harness the power of networks.” and create platforms based on “digital, intellectual, and relationship assets.” The truth is that this is just a new version of the Enron pixie dust of 20 years ago. Real businesses have real assets.
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It seems like every day we see or hear about a breakthrough new discovery that will change everything. Some, like perovskites in solar cells and CRISPR are improvements on existing technologies. Others, like quantum computing and graphene promise to open up new horizons encompassing many applications.
Nevertheless, we are still waiting for a true market impact. Quantum computing and graphene have been around for decades and still haven’t hit on their “killer app.” Perovskite solar cells and CRISPR are newer, but haven’t really impacted their industries yet. And those are just the most prominent examples.
The problem isn’t necessarily with the discoveries themselves, many of which are truly pathbreaking, but that there’s a fundamental difference between discovering an important new phenomenon in the lab and creating value in the marketplace. To bridge that gap we need to create a new ecosystem for bringing science to market.
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As a manager, I always felt incredible pressure to innovate. Yet it was hard to know how to go about it. There were plenty of books about high flying companies, but those same organizations seemed to sputter out almost as soon as the ink was dry. I wanted to know how to innovate consistently, not just fly high and then flame out.
That’s what started me on the journey that led to my book, Mapping Innovation. Over the last decade, I’ve talked to hundreds of executives, entrepreneurs and scientists looking for what they had in common. What I found surprised me and has changed the way I look at innovation ever since.
The organizations I studied were all very different. Some were hard-charging, others fairly conservative. Some were centralized, others decentralized. Some innovators were charismatic, but others were soft-spoken and introspective. Yet the one thing they all had in common was their willingness to explore and that, it seems, is what makes all the difference.
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Early digital computers weren’t very useful. Sure, they were far more powerful than the punch card tabulating machines that they replaced, but they were devilishly hard to program. Instructions needed to be written in assembly code, which was time consuming and difficult.
That began to change when John Backus developed FORTRAN in the early 1950s, which replaced assembly language into command statements that compiled the lower level code into something that roughly resembled English. Later languages built on that basic logic, compiling commands of low level code into something simpler still.
Today, there’s a similar movement underway to transform code into visual interfaces by companies like Quick Base, Mendix and Zudy. Much like the shift from assembly code to FORTRAN, the underlying code is still there, but it can be represented more simply. These low-code/no-code platforms are beginning to disrupt how software powers enterprises.
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“Culture isn’t just one aspect of the game,” Lou Gerstner wrote in the memoir of his historic turnaround at IBM, Who Says Elephants Can’t Dance? “It is the game. What does the culture reward and punish – individual achievement or team play, risk taking or consensus building?” Culture is, in many ways, is how an enterprise honors its mission.
Yet all too often, culture becomes an excuse for uniformity. Managers hire people like themselves and encourage their people to see things the same way, which can hinder a team’s ability to take on new ideas. On the other hand, studies have shown that diversity can create discord that can make it hard to get things done.
Clearly, we need to balance diversity with cohesion, but that not as easy as it would seem. It takes more than just putting people of diverse backgrounds and perspectives together and seeing what happens, you need a strategy to help them to work together. So while building a diverse team is a worthy goal, we need to put some thought into how to make it work.
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Go to any conference these days and innovation is almost sure to come up. When it does, you can be just as sure you will see something Steve Jobs said, something Elon Musk did (or plans to do) and some doomsday scenario about how robots will make us all obsolete (if they haven’t already).
There are good reasons for this. Our world is changing faster than ever and companies don’t last nearly as long as they used to. In some cases, entire industries are swept away by the rising tide of new technology. We’re not only creating machines that think, but editing genes and manipulating materials on the molecular level.
These are exciting, but confusing times. Unfortunately, that leaves a lot of room for hucksters selling gimmicks and every conference has its share of them as well. They tend to be long on buzzwords and short on any real experience or track record of accomplishment. Nevertheless, they can be incredibly convincing. Here are four ideas you should be looking to avoid:
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Ideas fuel business. They drive how we respond to customer problems and leverage market opportunities. The right idea can make a business work and, over time, our successes become ingrained in our mental models. The opposite is also true. If we begin with the wrong mental model, important problems become impossible to solve.
Consider the labor participation rate for prime working adults, which despite the recovery is still three points below where it was in the 1990s. Some believe that people aren’t working because they lack incentives. But the evidence shows that the problem is more rooted in the opioid crisis and high incarceration rates.
Clearly, if you believe that a lack of incentives is the root of the problem, you’d want to adopt “tough love” policies like making cuts to the safety net. However, once you understand that incarceration rates and opioids are to blame, you can begin to make an impact. It’s the same in business. The right mental model can push you forward, the wrong one will end badly.
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The recent scandal involving Facebook and Cambridge Analytical was different than most other breeches, because it wasn’t a breech at all. Cambridge Analytica simply walked through the front door, took the data it wanted and then moved it back to its own servers to be used for a completely different purpose than was intended.
We derive enormous benefits from having our data shared. As Sheryl Sandberg pointed out, without data, Facebook would have to be a paid service. The same goes for Google and every other ad supported business on the web. Yet there is a dark side of technology and data sharing is its greatest vulnerability.
Data sharing goes far beyond social media. We want doctors to share our data so that we can get medical treatment. Banks needs information about us so that they can extend credit. Law enforcement needs access to data to keep us safe. Yet each one of these activities exposes us. It’s not just Facebook, the Internet is broken, but new technologies may be able to fix it
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One of the most interesting things I discuss in my book Mapping Innovation is what I call the new era of innovation, which will create profoundly new technologies, classes of data and business models. It is likely to be the most important shift we’ve seen in at least 50 years and perhaps in a century.
To understand the size of the shift, imagine yourself as the CEO of a Dow component company in 1918. The impacts of the major technological forces that will shape the 20th century are not yet clear, but their capacity for disruption will be so great that your company has only roughly 50% chance of surviving the next decade.
The nascent forces at work today may be just as profound and it’s critically important to begin to explore and understand them because they will shape business models for decades to come. Much like a century ago, it will not be enough to simply wait to see their impact and adapt. If you want to win the future, you have to prepare to shape it — or someone else will.
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