The Path from Executive Education to Corporate Innovation

dilbert-cartoon_1Posted by Ikhlaq Sidhu, December 23rd, 2013

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.

Simultaneous Translation of Coca-Cola Exec in China

Photo: Coca-Cola and World Health Products executive discussing strategy options for China in Shanghai with simultaneous translation. December 16, 2013.

The Issue:

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.

The Solution:

Here is the challenge I offer to those interested in evolving what is generally today’s state of the art for executive education:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

Will Korea’s Entrepreneurial Engine Continue to Deliver?

http://wp.me/pR02r-nN
Korea's President Park meets with Facebook's Mark Zuckerberg

Korea’s President Park meets with Facebook’s Mark Zuckerberg

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.[1]

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 Perspective:

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.”[2].

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 Perspective:

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.

Ikhlaq Sidhu


[1] ” Growth Not Missile Threat Tops Park’s South Korea Agenda,” Bloomberg Markets Magazine, 20 May 2013.

[2] “Vote Empowers Abe to Pursue Vision for Japan,” Japan News, The Wall Street Journal, 21 July, 2013.