Fall Registration is here and as you plan your schedule for next year, you might be trying to decide if a NUvention startup course or class on technical entrepreneurship is right for you. Professor Verinder Syal is here to help by clearing up five common misconceptions about entrepreneurship below. Be sure to also read Professor Werwath’s proposal for the natural fit between entrepreneurship and engineering and learn about a former NUvention group that found success in a national competition.
1. Entrepreneurship is a win-all, lose-all gamble on a completely new product.
The standard perception of an entrepreneur is a person who has an epiphany, starts a business, hocks all his savings (and perhaps those of his family and friends), rolls the dice, and hits a grand slam or strikes out.
In reality, nothing could be further from the truth.
Entrepreneurship is a process. It can be learned. And practice makes perfect. In his classic book Innovation and Entrepreneurship, Peter Drucker defines entrepreneurship as follows: “It is the act that endows resources with a new capacity to create wealth.” In other words, entrepreneurship is NOT a science or an art but uses innovations as the key means to create value.
Drucker adds that entrepreneurs are a small minority of businessmen because most businesses do not add any new value. Think about it: Hamburgers had been sold for a few millennia (give or take) but it was Ray Kroch, the entrepreneur, who brought new value to McDonald’s by standardizing the product, production, and service. He endowed the same resources—meat, potatoes, and bread—with considerable wealth-generating capacity.
Walmart revolutionized retail by developing what we now call “supply chain.” Amazon destroyed bookshops; Apple is making the music industry obsolete (and perhaps the movie industry distribution business as well). Skype has demolished long distance telephone monopolies, while Grameen brought microfinance and economic growth to the poor in Bangladesh. Each company took an already well-established market and simply made it better. Which leads to our next point.
2. Ideas must come from a sudden spark of inspiration.
No, you don’t have to howl at the moon or wait for a bolt of lightning to strike you with a grand idea. You do not have to be kissed by the muse or mutated by the right genetic code. But if the muse down not speak to us, where do the ideas come from?
Peter Drucker developed seven sources.
- The Unexpected
- Process Need
- Industry/Market Structure
- New Knowledge
The number one source is “the unexpected” which can mean both unexpected successes and failures. Drucker provides many example in his book. A more recent one: could anyone have imagined that an idea developed to rate girls by a fellow who had a hard time getting a date would result in Facebook? Demographics come in at number five and new knowledge comes in last at number seven, mainly because it takes so long to convert new ideas into feasible businesses. The most prolific creative force known to mankind has been Leonardo da Vinci and several of his ideas took centuries to come to fruition.
When evaluating your new idea, turn to Rachel Bridge’s suggestions In her book My Big Idea. She suggests that a good idea should:
- solve a problem
- be practical and easily scalable
- have a market/customer of a big enough size
- have a reasonable price and offer a competitive opportunity cost
- create an immediate relationship with the customer
Entrepreneurs may not need to be struck by sudden inspiration but they do need to observe the world around them: solve problems, create new value, and have the courage of strong convictions. Entrepreneurs combine passion with common sense. They look outward and serve the customer. They use a business model based on common sense to solve problems and work with people who share the same values. Look around you. Problems exist everywhere. The next time you see a problem, don’t get upset; rather, think of a solution. Now you are on your way to becoming an entrepreneur.
3. Most successful entrepreneurs open tech companies in Silicon Valley.
A common misconception is that entrepreneurship is limited to technology companies like those based in Silicon Valley, but this is a mistake. Silicon Valley has glamour and can appear to be the land of dreams, but the odds of making it there are similar to winning the lottery.In other words, miniscule. It makes for good theater, but is more akin to tulip manias than sustainable value creation. A recent article from Trends magazine states that “. . . the number of startups (today) valued at $1 billion exceeds the number during the height of the dot-com bubble in the late 1990s . . . . Of the private U.S. companies that were valued at $1 billion or more back in 1999 and 2000, only a few are still in existence. Most have lost much of their value while many have disappeared.”
Taking a step back from the buzz and excitement around Silicon Valley allows one to see just how many other entrepreneurial opportunities exist in the world. To help my students understand the breadth of possibilities, I have them read Rachel Bridges’ My Big Idea, which highlights 30 small entrepreneurial ventures across almost every industry in the UK. To dispel the Silicon Valley myth, my friend and entrepreneur Robert Jordan researched over 45 entrepreneurs from technology and no-technology companies in the Midwest who had created $41 billion of value. Based on their stories he wrote How They Did It, a book I highly recommend.
I don’t want to minimize the great benefits created by Silicon Valley companies—they have generated enormous value and in many cases changed the way we live—but I do want to emphasize the fact that there are many ways to create value in virtually every industry and in every country. By all means, create a technology company if that is your passion, but using technology as a driver may open up even more opportunities.
4. Entrepreneurs and innovative companies destroy existing companies while only creating a few new jobs.
In a recent Wall Street Journal article, Andy Kessler passionately explains how entrepreneurs, following Schumpeter’s dictum of creative destruction and create many new jobs even as they destroy existing businesses. “Apple employs just 47,000 people, and Google under 25,000. Like Staples, they have destroyed many old jobs . . . But by lowering the cost of doing business they’ve enabled innumerable entrepreneurs to start new businesses and employ hundreds of thousands, even millions, of workers world-wide—all while capital gets redeployed more effectively.”
5. Entrepreneurs must be able to do everything themselves.
In just about every venture you pursue, you will have a team. You do not need to do and learn everything yourself. Instead, consider a strengths-based leadership approach and develop the skills more necessary to your position. Here are five tips that will help you:
- Passion. You will need a lot of it to overcome your fears, doubts, neigh Sayers, and the inevitable setbacks.
- Perseverance. You have to get through it, adapt, go around concrete structures, all while lifting those around you.
- Emotional Quotient (EQ). Dealing with people is the key to success, be it working and motivating your team, connecting with potential customers, or raising capital. Most people approach others with a transactional attitude (What’s in it for me?); focus on developing relationships instead (How can I help you?). Good karma will come along for the ride.
- Seeing and Seizing Opportunity. This is a mindset wherein problems are converted to opportunities, setbacks to new possibilities, and dreams to realities.
- Discipline. You will need to be very disciplined personally and you will need to run the organization in a disciplined manner. You must have goals and execution, which is what leads to success. Lofty pronouncements will not get you very far.
When I ask my students about the skills necessary to become an entrepreneur, they come up with some very thoughtful answers: passion, networking, humility, self-awareness, leadership, team player, confidence, selling skills, optimism. In the end, integrity is the cornerstone of a successful business and a successful life; there is no compromising your integrity. Make sure you choose partners who believe the same.
Verinder Syal is an entrepreneur having started Filterfresh of Chicago and Syal Consult. He also teaches highly regarded classes on Entrepreneurship, and Leadership at Northwestern and guest lectures at Loyola Universities in the Chicagoland area. He has run both large companies and small ones at Quaker Oats, Stella Foods, Rymer Seafood.
For some shareholders, it’s raining dollars and cents. U.S. publicly-owned companies are buying back shares and issuing dividends at a frenzied pace.
That sounds pretty good, right? Well, probably. After all, in doing so, companies are returning capital to owners. And the markets seem to like it; the activity has helped drive stocks to new highs.
But, on the other hand, it might also mean that companies can’t figure out anything better to do with their money. And that could signal that they’re not thinking about acquisitions or investments in R&D.
Participants at PriSim classes in the Northwestern MEM program wrestle with a similar decision. As they manage the capital structure of their simulated companies, they must decide to pay or not to pay dividends, whether or not to buy back stock, or whether to make further investments in their business.
And believe it or not, even more cash is building up at U.S. companies:
1) Much of the current investment seems to be replacement spending, not new investing.
2) While stock repurchasing has increased, it’s partly offset by new stock-options paid as compensation.
3) Cash is still being stockpiled in the international operations of U.S. companies rather than brought back to the U.S. where it would be taxed.
For more information check out this WSJ article that looks specifically at Apple and Chase.
As always, we welcome your ideas and comments.
PriSim Business War Games Inc. runs and designs customized business simulations that teach decision-makers about business, strategy, finance, and leadership.
The Strategic Frameworks and Beyond Google for Competitive Intel takes place May 16 6-9pm at DePaul O’Hare. Find a short description of the event below. More information is available on the PDMA website. Read more about NU successes in national competitions and within the MEMPC as well.
“Often in business, asking questions in the right way brings clarity to the answers and renewed purpose to an organization. Frameworks do just that — provide analytical structures from which businesses can gain perspective on where they fit within their own business environment and reveal exploitable competitive advantages. The trick is to know the most insightful frameworks, when to apply them, and how to fill them with the right data to bring clarity to your business strategy.
“In this presentation, Sean Campbell, national speaker, teacher and successful consultant, will not only share with you the most useful frameworks for today’s businesses, but he’ll show you the secrets of how to reach into the web beyond Google to collect the data you’ll need to fill your framework with relevant data. Don’t miss this foundational topic and fabulous speaker.”
Tomorrow, Friday, May 10, will mark the first weekly call and official start of the 2013 Accenture Wi-Fi Analytics Case Competition. Students from the MEM department and the Master in Science of Analytics program as well as anyone enrolled in IEMS 490 Managerial Analytics had the opportunity to register a 2-3 member team for the competition. Finalists will be chosen to present their cases to a board of Accenture executives and partner affiliates supporting the competition and have a chance to win tablet computers and a $1000 prize.
Accenture chose the topic of challenge because of the importance and usage of Wi-Fi in the United States. According to an Accenture report:
Statistics and trends point to the growing importance of Wi-Fi. In the United States, for example, Wi-Fi connections account for more than 37 percent of digital traffic over mobile phones, and about 90 percent of Internet access from tablet computers is done via Wi-Fi, not through a 3G or 4G network. . . . With the rise of digitization, Wi-Fi network operators and owners have amassed terabytes of information about their user base and their behaviors.
The enormous store of Wi-Fi data is the perfect ground for experimenting with Big Data. The groups will have the opportunity to analyze data sets and examine trends in ways never before possible with traditional market methods. While exploring the many unique new uses of Big Data they hope to discover real world possibilities for new business opportunities.
Each team will submit a problem statement halfway through the competition and a final deliverable on May 24. The final teams will be chosen to present a Powerpoint presentation with a strict 12 slide limit to a board of Accenture executives and Accenture partner participants for final evaluation. The winner and their project will be announced in a press release with Northwestern at the end of the competition, so keep an eye out at the end of May. Pictures from the information session can be seen below. If you missed out on the event, make sure to attend an upcoming event hosted by inNUvention, a group that runs a startup competition on campus in the Fall. Best of luck to all our MEM participants!
Just a few months ago the Master of Engineering Management Program Consortium(MEMPC) hosted its first ever alumni event in Palo Alto, California. Now it is working on bringing engineering managers from all the Consortium schools all over the country together, on the east coast in Boston and New York, and right here in Chicago. Read below to learn more about the new MEMPC alumni community taking shape in the city.
On April 2, 2013, three Northwestern MEM alumni, Director Mark Werwath, and Associate Director Sue Fox met via teleconference to discuss plans for the Chicago regional MEM Program Alumni Council (MEM-PAC). The meeting came after months of initial outreach and contact as Sue Fox solicited interest in forming a stronger MEM alumni community in Chicago. Less than a month later, the Chicago regional planning committee now includes graduates from Duke, and Dartmouth with plans to expand to Stanford, Cornell, and USC soon.
While the Chicago MEM-PAC will have a chance to meet and greet at an informal mixer this summer, all four groups, including the Palo Alto community, Boston, and NY will host simultaneous events around the country in the fall. The Chicago team already has big visions for the young organization. “We want to build a community and have new opportunities to interact in professional, social, and educational settings,” Sandra Waters, a 2007 NUMEM graduate and head organizer for the group, explains.
Ms. Waters currently works as a consultant in the non-profit healthcare sector. She and her husband moved to Evanston specifically for the MEM program. ”I love education and Northwestern is a great environment for learning,” she adds. They eventually purchased a house in the area because of the proximity to Northwestern and the incredible learning environment it creates. Although the ultimate goals of the Chicago MEM PAC are still forming, Ms. Waters sees ongoing education and professional development as central pillars in an active MEM community.
“Everyone has responded positively to the proposal of integrating alumni into a regional community,” Ms. Waters states. As the demand for engineering managers continue to increase, so does the need for great MEM education. Each MEM school brings a variety of skills to the table to help each other learn and grow. ALL MEMPC alumni are invited to attend the event this summer. Be sure to join the MEMPC LinkedIn group today to keep track of updates and to start making new connections today!
How does a Kellogg Graduate with no background in engineering become an advisory board member for the MEM program? Although his father attended NU and graduated with a degree in engineering, Jay Goldstein turned more to the marketing and development side of the picture as an entrepreneur with an eye for great ideas. Have you heard of Redbox? He played a role in developing the enterprise. Learn more below.
By Jay Goldstein
As a non-quant, non-engineer type I am amused to find myself on the MEM board. My father is a Northwestern University engineering graduate and I like to say he tried to make an engineer out of me because I was introduced to so many basic sciences growing up. I was also introduced to what entrepreneurialism is all about as he and his NU partner went on to form a business after they graduated which, among other things, created the residential garage door opener industry.
Personally, I leaned more toward the sales and marketing development sides of things rather than the technical but most of my entrepreneurial success has come from working alongside creative engineers. For example I was working with an engineer who had this idea for a DVD vending kiosk that I thought had a lot of possibility. I became their first business development person and opened up many of the first proof of concept chain-store trials, then went about raising venture capital and other early-stage activities. This company would go on to produce over 35,000 Redbox kiosks, which you may have seen around.
As I’ve worked with engineers throughout my career I’ve come to understand the different skill sets necessary in a successful team. Most recently at the IT software development firm that was engineering driven and until I arrived, without business processes or sales and marketing functions and they could not achieve their market potential. Once those business aspects were put in place the growth really accelerated, to about 400% in two years, and is forecasting another 500% growth over the next few years.
Being a serial entrepreneur I love transformational growth and development—developing people, markets, products and services, and the businesses themselves. Today it is interesting that universities are the new incubators (at least according to Donna Fenn’s book Upstarts). At McCormick I have guest lectured in leadership and entrepreneurship classes, acted as a project judge at the freshman and senior levels, and even had a design project for my own company completed by a senior team which came up with an amazing, creative, and even patentable design. As an MEM advisory board member I hope to bring my creativity and divergent thinking to team and help shape students so they can learn to work with non-engineering types before they leave the classroom.
“Engineering (management) is well positioned to make an original contribution to entrepreneurship as engineers and entrepreneurs both are seen as ‘creators.’ Engineering can contribute a systems perspective to understanding the entrepreneurial phenomenon and can offer a well-developed formal and mathematical apparatus to further the understanding of complex non-linear and dynamic processes in the creation of new ventures.”
The paper concludes the following:
“Technological inventions are generally accepted as one of the major drivers for entrepreneurship. And many well-known entrepreneurs, Edison, Siemens, Gates, or Jobs, just to name a few, are engineers. It therefore does not surprise that a quick review in IEEExplore reveals that entrepreneurship is a topic embedded in many engineering disciplines. We have shown in the paper that engineers and entrepreneurs alike can be conceived as creators from which an original engineering contribution to entrepreneurship theory can be motivated.”
As the student was digesting all that I told her, beginning to understand that an MEM degree leverages and builds upon her engineering training and mathematical discipline while also teaching leadership and management essentials that fit nicely with entrepreneurship, she started to realize that the world was a very big place. All she desired could barely fit within one lifetime, which is the magic of being a budding young engineer with all of life’s possibilities before you.
She is off to a fantastic start, with myriad, lucrative options immediately ahead. I assured her that her future has time for successes, failures, and u-turns because her foundation is solid and her training is impeccable. She can literally go as far as her will and energy desires. If she is truly an entrepreneur, sooner or later it will emerge. Entrepreneurship is not only an event in one’s life, but a continuing and unfolding process of innovation and discovery. It is a frame of mind that captures all the opportunities of invention and creation that the engineering mind can muster. This is at the essence of entrepreneurship. I wish her all the best.
By Mark Werwath, Director MEM Department Northwestern University
March 14 marked the most recent in a series of case studies presented by the American Society for Quality (ASQ), Buckman Associates, and Northwestern University. Nestle Purina Pet Products is the most recent example in a series called “Next Generation Quality Leadership,” which focuses on companies with a role model system of leadership development. The series is a great resource for Northwestern University MEM students hoping to improve company and personal leadership practices, and students also play an imperative role by attending video taped presentations and asking questions during the following Q&A sessions.
Next Generation Quality Leadership
Jim Buckman first came up with the idea for a case studies series as a missing resource provided by the Joseph M. Juran Center for Research in Supply Chain, Operations, and Quality, which he helped start at the University of Minnesota. Mr. Buckman, now retired from the university, approached his friend Robert Galvin, former CEO of Motorola and a strong supporter of his wife’s alma mater Northwestern University (including a recent $6 million donation to the music school for a recital hall to be named after his widow Mary Galvin) with his idea for the series and soon a partnership formed between Buckman Associates, Northwestern University, and the American Society for Quality.
From the start, Mr. Buckman took a different approach to the series than most case studies to day. Hoping to present information in a more engaging and effective format, the research is presented in a variety of formats including video, instructor guides, and an in-depth written analysis. The Mayo Clinic in Rochester, Minnesota served as the first example in 2011 because of their incredible approach to health care that could help revamp a currently failing system in the United States. The process beings with interviews and questions during in-person meetings on site for each company. Several months later, company representatives travel to Evanston, specifically the ITW room of Ford familiar to all MEM students, to present material about their leadership session, followed by a Q&A sessions with MEM students providing the necessary expert audience.
The MEM Impact:
MEM students offer a good choice as participants for a variety of reasons. One focus of the case studies is to place an emphasis on systems thinking, which Mr. Buckman believes is a signature aspect of the MEM program and sorely needed–and often missing–from executive education generally in both business and engineering. Students in the MEM program are dedicated to quality in their management skills. They already have work experience, training in technology and science, and a broad range of skills to draw from, so they know what questions to ask and what they would like to see in a case study.
During the most recent Nestle Purina Pet Products presentation, Vice President of Quality Systems Ken Dean and Vice President of Manufacturing in America Bill Cooper discussed the way Purina overcame stagnant years in the 90s to emerge an industry leader with continually growing success with 18 consecutive years of sales growth and five consecutive years of increased market shares in all Purina categories. Mr. Dean and Mr. Cooper focused on Purina’s incredible feedback practices with their customers and internally in the company as well as the “zero” mentality, meaning aiming for “zero workplace accidents,” “zero waste,” and zero tolerance for aiming for anything less than perfect. Student questions focused on attaining a more thorough understanding of the survey methodology and how to balance important business practices such as efficiency and innovation that often conflict with one another.
Quality Studies and Exceptional Results
For Mr. Buckman as well as members of the ASQ, the series has been a rewarding and exciting prospect. “This has been a lof of fun and a really rich experience for us working with Northwestern,” Mr. Buckman stated. The ASQ is able to reach an audience of over 100,000 all over the world and so far the series has been wildly successful among subscribers. The Mayo Clinic report:
- has had nearly 5000 visits and downloads to date
- is the #1 most downloaded case study in 2012 (with nearly five times more downloads than #2)
- was featured in Quality Progress magazine and was the 13th most visited and 10th most downloaded article
Why has the study been so popular? According to user feedback:
“This is a great article about a great institution. What impressed me most about the article was the description of how their system evolved and clearly was not ‘copied.’ . . . While there are many key points in the article, I believe the point about overcoming a mindset explains why many organizations fail in their attempts at quality.” —Ron Behren
“Fantastic article! I am sharing this with as many people as I can because this really hits the nail on the head. This is what our healthcare system needs more of, and The Mayo Clinic is doing it like a business. Rock on Mayo!” —Dave Wildner
“This article is inspiring in more ways than one. When the driving forces of a company buy into a belief and support activities to proceed and succeed, that is when something concrete and substantial can manifest. I intend to use this case study to raise awareness. Thank you for another fine and extremely relevant article!” —Anisha Verma
If you ask Mr. Buckman, he believes the depth of the case studies is what set them apart. Unlike a simple report or technical evaluation, the studies are multifaceted and engaging. The ASQ also provides an instructor’s guide for implementing strategies explored in the reports along with video clips from various executives within the organizations, and in general are presented in an engaging tone that adds a human view in contrast to a purely managerial view. The cases studies also offer an intellectual aspect necessary in an academic setting, which will be more relevant down the road when a book about the case studies is produced.
“We try to select cases that are a real impact on the world,” Mr. Buckman explains. He believes a real renaissance in manufacturing will require strong engineering leadership and a focus on developing both a technical and leadership background will be essential to in a variety of industries in the future, from banking, to insurance to real estate. The MEM program aims to develop students capable of solving the worlds problems and the case studies offer one more step toward achieving that goal.
You can find the studies online on the ASQ Knowledge Center and see the video online here. Learn more about why engineering managers are growing in demand and how NUMEM is preparing them for the future.
Sitting at your desk and leading a virtual team via Skype might sound easy, but as anyone who’s actually done it knows, it’s really not. At all. And it requires a very different style of leadership and management.
PriSim just conducted a 4-week online business competition between virtual teams from Master of Engineering Management programs at 5 leading U.S. universities (click here to read all about it). The teams never met live, but ran their team completely online, planning their strategies and tactics via webcasts, Skype, and by phone. However, our initial survey of the students in the competition indicates they thought their virtual teams were only about 70% as effective as physical teams.
Live meetings of geographically distributed teams can be expensive, difficult to schedule and set up, and disruptive to the lives of overstretched staff. However, using today’s high-tech tools, virtual teams can be run very successfully, as shown in a study by Dr. Lynda Gratton of the London Business School of 55 virtual teams with over 1,500 team members at companies such as BP, Nokia, and advertising company Ogilvy and Mather (see link).
Erin Meyer, director of INSEAD’s Managing Global Virtual Teams program for executives, describes four keys to success with virtual teams:
- Take a leadership style that provides clear direction and goals and removes any vagueness in how processes will be conducted.
- Define how decisions will be made so that cross-cultural differences don’t create logjams in decision-making.
- Reliability is the currency of “trust” in a virtual team. Specific results produced reliably within a well defined process will establish trust when face-to-face meetings are few.
- Communicate as if you’re actually alive, not just a voice on Skype. Move around while you speak instead of just sitting like a statue.
What are your experiences with virtual meetings? Do you still prefer meeting face-to-face? We invite you to share you comments and own experiences.
PriSim Business War Games Inc. runs and designs customized business simulations that teach decision-makers about business, strategy, finance, and leadership.
Today, we regretfully share that MEM founder Professor Albert Rubenstein passed away this past week on April 13. The McCormick School of Engineering and Applied sciences has provided a memorial article about Professor Rubenstein’s life and contributions to Northwestern University and the MEM program and Professor Werwath has written his own reflection below.
I was deeply saddened to hear of Al Rubenstein’s passing this weekend. I can say that Al was truly a visionary leader in the field of engineering management and Northwestern was privileged to have him on faculty. To say that Al had a profound influence on my life would be an understatement. Al got me started in my engineering management career. Al’s passion was always on taking an organizational theorist’s view of research and development. He was quite focused on innovation and capturing and leveraging the innovative capacity of the organization.
For an “operations” guy like me, someone trained to work with automation and manufacturing, Al gave me permission to feel comfortable with R&D and gave me an insight that allowed me to spend the bulk of my career in the middle of an R&D organization. This was rare for someone like me, who might have been considered an industrial engineer, to find himself pursuing R&D projects for more than two decades in a variety of industries. I believe Al made it possible for me to fulfill that dream.
Al was also one of the original members of the board of governors for the IEEE engineering management society (now called the Technology Management council). His efforts in those early days with the EMS were legendary. Years later, Al’s recommendation got me a seat on the IEEE EMS board of governors in 2004 where I served for three years.
Perhaps it was Al’s legacy that helped draw me back to Northwestern. He motivated me to complete my PhD in Organization Development in 2001 and I would eventually fulfill the very role that Al originated, as Director of the MEM program starting in 2012. I can only hope to have this kind of influence on someone else’s life. My job now is to maintain the high standards that he established for MEM back in 1977. Al will always remembered.
We welcome you to share your own stories and memories as we honor Al’s life, teaching, and leadership.