News: UC Berkeley is growing the Engineering Leadership Program (ELPP). For the first time after 4 years we have opened a fall section. The program is now full, however we are maintaining a waiting list. We welcome this year’s new firms: Box, Juniper, Cloudera, GE, Ericsson, Altera, Kaiser Permanente, VW, Mentor Graphics, Synopsys, and Pivitol. Participants from new firms will join the program with engineering leaders from Google, Yahoo!, Samsung, VMware, Lam Research, SanDisk, NetApp, Qualcomm, Cisco and Applied Materials.
Posted by Ikhlaq Sidhu, April 22nd, 2014
You may already be aware that the Berkeley Method of Entrepreneurship (BMofE, see link on our CET website – https://cet.berkeley.edu/curriculum/) is a unique teaching model for developing the entrepreneurial mindset, in addition to teaching tactics and providing infrastructure for the new venture process. One of the big questions in the field of start-up education has always been whether entrepreneurs are simply “born” or whether entrepreneurial skills can be acquired. Our most recent findings give us reason to believe that these critical skills and behaviors can indeed be taught and learned.
We see support for this in the confluence of two major themes:
1) our own co-authored Comfort Zone research showing that entrepreneurs and innovators are comfortable (and continue to be increasingly so) with ambiguity and with experiences outside their comfort zone
2) empirical research studies on motivating success by Carol Dweck, a distinguished Stanford psychology professor. Her findings show that mental growth, learning, and resilience are linked to a specific mindset (growth mindset), which allows students to be comfortable working outside their comfort zones and accepting of new challenges.
Thanks to Rebecca Loeffler, Visiting Scholar with UC Berkeley’s CET and on loan from Germany’s prestigious Ludwig-Maximilians-Universität München (LMU), we are now bringing together concepts from social psychology (part of Rebecca’s academic focus) with our previous work training entrepreneurs.
So, let’s connect the dots. Prof. Carol Dweck’s work on mindsets is exciting for education, with most of the study being conducted originally in K-12 settings. What she discovered is that children typically develop one of two mindsets: a “fixed mindset” or a “growth mindset”. The fixed mindset characterizes students who believe that ability is a fixed trait. Often children become constrained in their learning by allegedly permanent “labels” such as being smart or not smart. People with a fixed mindset try very hard to hold their label of being smart by avoiding challenges or situations that might have others question their badge of credibility. They are mostly afraid to lose the label of “being smart” which they have already attained.
In contrast, individuals with the growth mindset believe that ability is the product of effort and can therefore be learned or trained. They believe that they can overcome challenges and develop new mental capabilities. Those who have a “growth mindset” are not afraid of being wrong. Instead they find reward in the experience of overcoming challenges. They continue to take on challenges outside of their comfort zones and they continue to grow.
As mentioned earlier, the amazing part is that this growth mindset can be learned. It comes down to reward mechanisms. For those who are rewarded by themselves or others for “being” smart or successful, it generally leads to less self-driven challenge, less growth, and a downfall in measured results. But for those who are rewarded for the process of “overcoming challenges or trying new strategies or for even effort” the result is a positive reinforcement for taking on harder tasks and a continued increase in capabilities and results (i.e. to get in to the growth mindset on your own, “don’t tell yourself your are brilliant, instead, be proud of the challenges that you have been able to overcome”)
In our most recent Comfort Zone research work, originally developed by Prof. Paris de l’Etraz at the IE Business School, we observed that among the segments of entrepreneurs/innovators, managers, and engineers, it is the entrepreneur segment that is the most tolerant of ambiguity and the most comfortable to take on challenges outside of his/her own comfort zone. Moreover, it turns out that people in each segment would like to increase their comfort with ambiguity believing that they would actually be happier professionally and personally, however, only entrepreneurs/innovators actually continue to grow in this manner. Every other segment regresses slightly after their high school years, while entrepreneurs and innovators markedly increase their comfort with ambiguity.
There are several major results (or at least hypothesis) that could be concluded from this:
- A growth mindset allows a person to be comfortable with ambiguity and therefore creates the seminal condition from which entrepreneurship and innovation skills and mindset can be formed.
- Developing a growth mindset is essential to become a successful entrepreneur. Successful entrepreneurs are likely to reflect a growth mindset.
- A growth mindset can be fostered through certain kinds of feedback and rewards.
- Since reward structure has a direct effect on mindset, it’s likely that corporate environment or social environment plays a significant role in creating and incentivizing entrepreneurs and innovators.
- Ultimately, we can teach people in ways that will bring out their intrinsic innovation and entrepreneurial potential.
I’m on my way back from Shanghai after being invited to work with a group of Chinese executives on their product innovation and intrapreneurship strategies, using aspects of my newly developed model for professional/executive education. It’s really an exciting model, that I used with Coca-Cola on their beverage strategy in China, with Tencent, a leading retailer with hundreds of stores, GM, World Health products, and other multi-nationals seeking global innovation.
Photo: Coca-Cola and World Health Products executive discussing strategy options for China in Shanghai with simultaneous translation. December 16, 2013.
While many institutions and programs I’ve worked with excel at providing executive education programs with a clear impact, these are more the exception than the rule. For many, I’d say that the time has come for a change. Historically, executive education has focused on succession planning. The formula was that you take experienced, trusted managers and then have them spend some time being polished by academic experts. And that has become a big business: Business Schools today make about 40% of their revenue from Executive Education. That model needs to be refreshed, if it is to effectively solve the problem of innovating in a global environment.
First, most Executive Programs have mixed reviews in terms of quality. It turns out that half of professors actually score below 3.5/5. In other words not all program professors are “best in class”.
Second, case method and other generic materials are often not relevant. They provide very few targeted insights for the executives. Picking useful cases requires significant industry experience-based judgment and they must be supplemented with additional insights. Many of these programs simply do not have ways to address the actual context, strategy, and threats that their firm’s executives are facing.
Third, and this is a pretty important one, these programs are not accountable. There is no mechanism to follow up to see what came from the experience. Sometimes the courses can be “interesting” or “fun”, but in the next week, its business as usual.
And my best reason to believe that it’s time for a change is that most of these programs are focused on research results of the past. Firms live in the present and plan for the future. In fact, the pace of innovation has been accelerating significantly in the last 100 years and its not slowing down. The current issue for most firms, as pointed out by banking innovator Carlos Beldarrain, is that, the minimum pace of innovation to simply survive, is also accelerating. The time is right to find a model that works even better.
Here is the challenge I offer to those interested in evolving what is generally today’s state of the art for executive education:
- We need to actually focus on the goals of the firms. This means that successful programs will build in the time and methods for the faculty to actually know the company and its people at a deeper level.
- There has to be a mix of academic and industry experts. For year’s at Berkeley, we have been bringing Silicon Valley know how into our teaching program though entrepreneurs, investors, innovators, and executives. Choosing the right faculty is also critical because they need to have the breadth of how to teach executives as well as a relevancy on current industry issues.
- The firm’s executive champions have to be directly involved. I’ve always been known as an innovator. But with experience I’ve learned, no matter how capable you are at innovation, you can’t innovate within an organization without “permission” from the organization to actually create the innovation. For this reason, its critical that the executive sponsors participate to “offer the permission” for the participants to innovate, and to let them know that its safe to do so. By the way, “some people” are going to innovate anyway, as Steve Jobs said, you can’t stop them and you can’t ignore them either.
- It’s really about the project, not the lecture or the case. Yes, there are essential materials to cover, but the project has to be a real problem of the firm. Barriers such as confidentiality or NDAs cannot be excuses to work on fake projects.
- Projects need to be holistic. A company’s project cannot be only about design or only about strategy or only about branding. No, you need complete alignment on the project, because the result has to be financial success and impact or maybe learning and failure. Isolated skill development is not an executive level challenge.
- And finally, we need to have accountability of the result. What happened after one quarter, one year, or longer. You can’t teach it if you have not lived it in some way, and you also are not qualified to offer your certification if your institution does not have skin in the game, just like your students.
For institutions and programs who can evolve and incorporate these aspects, I respectfully suggest that it will result in a big step forward for both education and innovation.
If you want to understand how to build a culture and organization for truly “high performance teams”, then take a close look at “Netflix Culture: Freedom & Responsibility” developed at Neflix by Patty McCord and posted by CEO Reed Hastings on Slideshare. Facebook’s Sheryl Sandberg has called it “the most important document ever to come out of the Valley.”
Of course high performance teams are flat (non-hierarchical) and they typically value innovators, conflict (required to seek out the best of ideas), and clear, direct communication. Other concepts for high performance teams are:
- Results-oriented. Hard work is actually irrelevant, only the results matter. The firm won’t measure anyone’s time in the office or even vacation days. In fact, there is not even an expense policy. The guidance is to simply use common sense to do what is right for the organization.
- Low Process/High Flexibility. High performers thrive on freedom. However, as firms grow, they use processes to combat the complexity from scaling. This has a tendency to cripple innovation and drive out high performers. The proposal made in this slide set is to grow by hiring only truly high performing people and to avoid adding process and new rules. This leaves the organization flexible so that it can adapt to the inevitable changes yet to come.
- Context-focused not delegation-focused. There is some highly relevant advice for managers as well. As we know, high performers thrive on freedom, so consider this concept from Antoine De Saint-Exupery, “If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead teach them to yearn for the vast and endless sea.” According to McCord, “The best managers figure out great outcomes by setting the appropriate context, rather than trying to control people.” Don’t set top-down decisions, don’t use management approvals, and don’t defer to committees. And planning and process should never be valued over result. “When one of your people does something dumb, don’t blame them. Instead: Ask yourself what context you failed to set.” And, “when you are tempted to control, ask yourself what context you could set instead.”
The document explains the behaviors that a high performance culture expects. According to its author, high performance culture is not for everyone. And for that matter, it’s not for every organization.
Questions to consider:
- How would you know whether a “high performance culture” is right for your organization’s mission?
- Could this be established in pockets of the organization or does it need to be driven top-down and implemented everywhere?
- What are the drawbacks or downsides to high performance team culture?
Posted by Ikhlaq Sidhu
You can find additional information in article posted by First Round Ventures highlighting Patty McCord’s role in defining the Netflix Culture: http://firstround.com/article/The-woman-behind-the-Netflix-Culture-doc#ixzz2YrMlvtfi.
Innovation and Entrepreneurial Policy – Asia Perspective
Last month, I hosted our Global Engineering Leadership (GEL) module in Hong Kong, which offered a fascinating perspective on innovation and entrepreneurial policies across Asia, in particular East Asia’s main economies of Korea, Japan and China. One of Asia’s main business differences relates to the intertwining of family- owned and state-owned business. And as most people know, cultural aspects such as the concept of “saving face” and “making decisions as a group” are fundamental characteristics. Having said this, Korea, Japan and China have very different and uniquely designed industrial policies.
South Korea Perspective:
This is an amazing success story. The county rebuilt from almost zero after the Korean War, which ended in 1953. Under the leadership of Park Chung-hee (1961-1979) the Korean economy experienced immense growth, mainly from family-controlled small and medium enterprises, known as chaebols. Park encouraged their success with favorable tax incentives and put in place an economic policy that has been carried forward for 40+ years. Many of these small Korean enterprises grew to become today’s global multinationals including Samsung, LG, Hyundai, and POSCO. As explained by Professor Wonjoon Kim of KAIST (Korean Advanced Institute of Science and Technology), the government’s long-term policy has been a key driver of economic success.
Government regulations literally forced markets to focus externally. Korea’s current leader, and the country’s first female president, Park Guen-hye (Park Chung-hee’s daughter) appears interested in continuing this focus. She began her term in February 2013 and has been quite open about plans for promoting technology and entrepreneurship. She has proposed using tax incentives, alternative methods for raising technology capital and has held fact-finding meetings with US entrepreneurs such Bill Gates (Microsoft Founder), Larry Page of Google and most recently Mark Zuckerberg of Facebook.
Meanwhile, the owner-driven Korean growth strategy has been a combination of fast-follower for product design and innovation and leader in process, materials, and manufacturing. Mass import of global talent has also played a key role.
What’s next for Korea? According to Professor Kim, heavy investments in capital emerging intensive businesses such as biotech.
Japan rebuilt its industry after WWII with market-friendly policies and twenty-five years ago, was where Korea is now. More recently, Japan has suffered from a lack of sustained leadership with an adverse impact on its economic growth agenda. Today, there is a lot of optimism around proposed economic policies of current Japanese Prime Minister Shinzo Abe. His LDP recently increased their power base, winning additional seats. “Polls showed Sunday’s win was largely over the economic policy dubbed “Abenomics” that Mr. Abe has engineered since taking power last December and due to a surge of optimism among voters for a recovery of Japan’s economy, which has struggled for two decades and has lost competitiveness against rivals such as China.”.
Economic policies may not be enough in Japan, as it faces a maturing population, the effects of zero population growth and very little immigration. There is a literally shortage of a young, risk-taking workforce. While the current government policy supports entrepreneurship as a way forward, anecdotes of government incubators are not reassuring. It seems executives, close to retirement with no past entrepreneurial experience, often run them. So their primary objective is to simply not let anything “blow-up” before the retirement.
According to serial entrepreneur and GEL instructor, Jeff Char, Japan is also a potential economic time bomb that would make Greece seem insignificant. He states that “in 2012, Japan’s debt service was 23% of GDP, with interest rates at 1%, and Japan’s gross public debt is projected to hit 230% of GDP by 2014. If [yields] rise from 1% to just 2-3%, Japan’s debt service will literally explode. And likely, a vicious cycle of higher yields, bigger fiscal deficits, and inflation will occur.” Modest interest rate increases could simply break the country’s financial model.
What’s next for Japan? There have been a number of high profile entrepreneurial successes, such as the Line messaging mobile application, globally popular with 180M users, and developed in response the telecom outages from the last Tsunami. However, available investment dollars for new ventures continue to be low, risk aversion is high, immigration policy is unfavorable, and a number of social barriers still exist. Japan could apparently benefit from policy intervention. “Abenomics” and sustained leadership may provide the needed boost.
China policy, in contrast is very much driven by a need to serve its 1.3B people and the number two global economy. The scale of the country and the solutions are incredible. Over 5M people in China graduate college every year, which is as many people as there are in Chicago or Hong Kong proper. The Chinese government feels the pressure of serving its growing population. China must create 5M jobs every year just to support newly graduated students every year. The consequence of not creating at least 5M jobs annually is a very unhappy population. This is why the target growth rate needs to be 8%.
The second main driver of economic development policy is the large population in the west of China that has not yet benefitted from China’s industrialization. Accordingly, the party based government is currently organized into two main subgroups: one for the growth needs of eastern China and the other for the industrialization of western China. As explained by Prof Jian Gao of Tsinghua, China’s economics tell two stories. On one hand, China’s GDP is over $7T which is approx ½ of the US economy (i.e. wealth creation and very large scale), and on the other hand a per capita GDP of only $6,000 (i.e. large numbers of people without sufficient means).
Due to growth needs, pains, and challenges, China policy is fueling entrepreneurship at a massive scale and with intense competition. According to James Tan, GEL speaker and Managing Partner of QuestVC, Beijing’s Zhongguancun area next to Tsinghua, is the home of 4,000 start- ups. Throughout China, there are 10 LinkedIn competitors and large numbers of Groupon comparables. Creating jobs is the number one goal from the government’s perspective.
What’s next for China? Policy considerations in China are different from Korea and Japan. Since there is a large young population, immigration is not a bottleneck issue. Degrees of openness to culture infusion are as yet hard to measure. The good news is that there is very large domestic market and it will be an increasing focus of China policy.
From an innovation policy perspective, there are some fairly common levers that can be used to guide the system, whether direct or indirect. These levers include access to capital, skills development, tax credits/incentives, economic policy, immigration policy, enterprise governance controls, and even the effects of democracy on policy. It is interesting to see how in each of the Asia cases, the policies have been selected to match the specific needs of each local situation.