Talk on Entrepreneurship at XIMB

“He that will not apply new remedies must expect new evils, for time is the greatest innovator.” With that quote from Francis Bacon (1595) I introduced the topic of “Innovation and Entrepreneurship” at the XIMB’s (Xavier Institute of Management, Bhubaneswar) conference on “Innovation and Entrepreneurship.” I was asked to give the concluding keynote talk on 13th Jan.

You might say that I am not fully qualified to talk about entrepreneurship, not having been one. At the very least you could say that I not a successful entrepreneur although I do hope the entrepreneurial venture that I am associated with (dealing with education) will be successful. For now, I am like the driver who drove around the famous surgeon so many times on his lecture circuit, that ultimately the driver was able to deliver the lecture. Having spent some time working with successful entrepreneurs, I have some second hand understanding of what goes in the making of a successful entrepreneur.

Time, as Bacon observed, innovates. Change is a fundamental feature of our universe. Without change, the universe would be sterile. That insight was arrived at around 2,500 years ago by Gautama, the Buddha. The environment changes and to the extent that we are individually powerless to hold things constant, change is ‘exogenous,’ a word much loved by economists. We also know one basic fact about the exogenous change, that it induces monotonic increase in complexity. Systems become more complex with the passage of time. The Big Bang produced a simple universe which became increasingly complex.

Moving from that big picture to the much more accessible small picture of our present rapidly changing and complex economy, the entrepreneur is generally seen as an agent who identifies change, and appropriately responds to it by exploiting change. That is my understanding of what the textbooks say about entrepreneurs. I see it as a human response to the exogenous change imposed by the fundamental nature of our world, a world where change is rapid in the direction of increasing complexity. Entrepreneurs, one can say, are organisms which are successful in adapting to change. And I believe that the mechanism for this adaptation is “innovation.”

I pondered the issue of innovation for a bit to prepare for the talk. It occurred to me that innovations which reduce the complexity of the world around us are the successful innovations. Actually, that is not quite accurate. The complexity of the world is a given. That is not reducible. What is possible is to create a better interface behind which you can hide all the complexity of the underlying world. So the innovation is in creating a front-end which helps people better manage a world which is becoming very hard to deal with without appropriate tools.

Examples? Computing hardware become faster and more complex. A series of innovations took place that helped people manage the evolving hardware: more sophisticated languages, from assembly level languages to high level languages. Another example: airplanes evolved to be extremely complex. The innovation was the use of computers to fly them.

So it seems that the most successful innovations are those that shield people from the increasing complexity of the world they live and work in. That was the insight that I tried to convey to the group which was mostly composed of MBA students.

My message was that if you want to be an entrepreneur, try figuring out an innovation which helps people manage complexity.

I don’t know if I got that message across. Perhaps the message was wrong or perhaps the delivery was wrong, or both. In any event, I did make the standard exhortations to them to think differently. There was a compelling reason (to me at least) for doing so. Earlier in the conference, I was asked to be on the panel of judges for a business plan contest.

There were five plans presented and four of them involved advertising as a major part of the revenue source. Sure, Google is immensely successful with their ad based model. So are the Yahoos and other biggies. But yet another advertising revenue based model is as exciting as last week’s warmed over pizza. Listening to the business plans was a tad bit disappointing. Where’s the substance, I kept wondering. Give people stuff that they will actually pay for and you have added some value to the world. If all you can do is to say that advertising revenues will support your model, you need to think again since Google has pretty much cornered that market. If you want to take on Google, don’t expect to win. As some guru pointed out, Google is the environment, not the competition.

After that gratuitous bit of advice, I moved back to the topic: entrepreneurship. My colleague of over three years is a very successful entrepreneur, Rajesh Jain. I have also observed closely another immensely successful entrepreneur, Vinod Khosla. Another very successful entrepreneur I have had the pleasure of knowing is Gordon Dryden, my friend in New Zealand. Having learnt something from them, I decided that I was theoretically qualified to tell people “How to Be an Entrepreneur”:

The Five Step Program
* Identify the problem
* Become an expert
* Work Hard
* Work Hard
* Work Hard

Identifying a problem is the first step. Care should be taken to distinguish between problems and symptoms. You are better off addressing the problem rather than futzing around with the symptoms. You have to be an expert for that. You become an expert by learning, some of which comes from experience, and which in turn comes from trying out different things and learning from the inevitable failures. Failing fast and failing frequently is a good thing if you learn from them. But to my mind the most important thing of all is to THINK DIFFERENT.

How does one think differently? At the very least it requires a big vocabulary. Not the GRE word list, of course, but concepts. You need to understand the world from a wide variety of perspectives. And that requires at the very least reading widely outside your domain of expertise. For people who have a technology and business background, I would suggest history, anthropology, economics, science, literature, etc. This will help you understand and appreciate the connections that link everything around you and you will be able to figure out how to build stuff that will be useful and thus people will pay to get the stuff and you will be a successful entrepreneur.

Oh yes, the bit about working hard. Without the hard work, you’d have to be very lucky to be successful. And I believe that luck does not fully explain the most successful ones. Unfortunately, the capacity to work hard is, I think, built sometime in one’s formative years. So in a sense, your basic nature determines if you can be an entrepreneur.

What I have described above is not exactly verbatim but faithful in spirit. I ended my talk with that favorite quote from the architect Daniel Burnham (1864-1912) who said:

Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty. Think big.

[Related posts: “RISC at XIMB,” “Konark and Beyond” and “Innovation and Entrepreneurship at XIMB.”]

Author: Atanu Dey

Economist. View all posts by Atanu Dey