Bureaucracy gets a bad rap. Just the word conjures images of interminable meetings, endless lists of rules and annoying paperwork. But bureaucracy — or at least some aspects of it — may deserve a second look.

Khonika Gope, a graduate student in Stanford University’s Department of Management Science & Engineering who is studying with STVP, is researching how work environments and institutional contexts impact entrepreneurial outcomes. In a recent field experiment, working with Management Science and Engineering professor Chuck Eesley, she used entrepreneurship bootcamps as a testing ground to explore how bureaucratic work environments — defined by their use of rules and strict hierarchies of authority — impact the quality of the resulting business ideas. The study was designed to explore not only whether bureaucracies help or harm entrepreneurs, but also which specific aspects of bureaucracy are beneficial or troublesome.

As part of her experiment, she offered multiple versions of a daylong bootcamp program, each tweaked to highlight different components of bureaucracy. One was heavily rule-based, another involved lots of hierarchy, and yet another incorporated aspects of both the rule and hierarchy conditions. She also offered a neutral version of the bootcamp as a control. At the end of the program all participants were asked to generate business ideas. An independent group of evaluators then vetted the ideas on the basis of practicality (the ability to implement the idea using existing technology) and novelty (how unique the idea was in relation to existing solutions) to create a combined quality score.

When Gope crunched the numbers, she found that participants in the three bureaucratic conditions (rules, hierarchy, and rules and hierarchy together) generated fewer ideas than participants in the non-bureaucratic control condition. That wasn’t an unexpected outcome given that rules are often portrayed as antithetical to creativity. But according to the evaluators, the hierarchy condition actually generated the business ideas of highest quality. It wasn’t what Gope expected. “I thought that the people in the bureaucratic groups were not at all going to come up with interesting ideas, that the ideas were going to be very boring, but that is not the case,” she says.

In comments edited and condensed below, Gope discusses the possible applications of this surprising finding, and future research directions that may shed more light on the upsides of bureaucracy.

Why did you get interested in studying bureaucracies and how bureaucracies affect entrepreneurship?

I come from Bangladesh, a country that is very bureaucratic. Characteristics of a bureaucratic organization include things like a complex multi-level administrative hierarchy, departmental specialization and a standard set of formal rules or operating procedures. In Bangladesh, you see all of these in any government organization. No decision can be made without the approval of higher order actors, and even getting your birth certificate or passport takes forever. Take the example of the passport: You have to apply online and get your application printed. It needs to be attested and notarized by certain government officers. Then you go to the passport office physically, submit the notarized application and get your photo taken. After a few days, a police officer will come to your home and verify all the information you provided. The police will then submit a report. To receive your passport, you again go to the passport office. The applicant only sees a glimpse of the formal rules. Behind the scene, an even more complex combination of hierarchy, departmentalization and standard operating procedures is running.

I thought that the lack of entrepreneurial activities in Bangladesh and other developing countries was due to the presence of this bureaucratic mindset. After I came to the United States, and particularly to Silicon Valley, I thought that everything would be very entrepreneurial and smooth, which is not the case. Here, if you want to get something done, you also have to go through bureaucratic processes. I was surprised to see examples of bureaucracies in a lot of places – from the DMV office to banks and insurance companies. I became very interested in how that impacts our entrepreneurial spirit. Does bureaucracy impact the way we identify entrepreneurial opportunities? Does it impact the way we mobilize resources for entrepreneurial ventures? Or does it impact the way I interact with others?

What does the existing research suggest about the relationship between bureaucracy and entrepreneurship?

There’s some work out there showing that if a person has worked in a bureaucratic firm, the person is less likely to be an entrepreneur.

But the problem is: Suppose I’m someone who wants to start my own company. To gather experience, I might avoid working for large companies, and I would be more likely to work for an entrepreneurial firm, right?

The outcome that you’re seeing — that people who work for entrepreneurial firms are more likely to be entrepreneurs, and people who have worked for a bureaucratic firm are less likely to be entrepreneurs — is it because of the environment? Or is it because my personality led me to choose that environment in the first place? I wanted to think about how we can untangle that.

Based on this study, when might bureaucratic contexts help, and when might they hurt?

There are two things to consider when generating business ideas. One is, how many ideas can I come up with and what is the average quality of my ideas? The other is, what is the quality of my best idea?

Suppose you are in a market where you have to come up with one idea every few years. In that case the quality of your best idea has to be really good. I would say that’s when a hierarchical bureaucracy is better — when you have to come up with only one idea, and it has to be really good. Let’s take the example of the mining industry that has been employing old techniques for a long time. The reason is: There’s a lot of risk in designing and building a mine with new technology as opposed to tried and tested technology. So, mining companies tend to be more conservative. There, new ideas are not incorporated frequently. Things might change with a new breakthrough technology only every few years.

On the other hand, if you are in a market where you have to come up with new products on a regular basis — when you have to come up with a lot of ideas — I would say the traditional entrepreneurial environment is better. For example, to be relevant and competitive, most high tech and internet companies need to come up with new ideas all the time.

What are some opportunities and challenges for entrepreneurs in Bangladesh, specifically?

The number one difficulty is the mindset: People want a safe career, like being an engineer or a doctor. Second, there are fewer resources. If you’re not in an entrepreneurial community, it’s very difficult to start your own company, because you don’t have the financial resources and you don’t have people to recruit. The third challenge is political instability: If you want to do anything, you have to bribe the political parties; it’s an open secret. And fourth, the whole process of starting a company is very complicated and convoluted.

But there are some really great opportunities as well. In Bangladesh and in most developing countries, you will get a huge market. In Bangladesh, somebody recently started an Uber for bikes, and it has become a huge success because the need is there and the market is really big. So, the upside is that if you’re the first mover, you can tap into a very large market, which is a very good thing.

What are your other projects besides this?

Another research project that I am currently working on is designing a field experiment in accelerator settings.

There’s research showing that accelerators help entrepreneurial outcomes. For example, accelerator startups get more funding and more customers. That we already know. But we don’t know what components of an accelerator make the entrepreneurs successful. For example, in an accelerator, there is the educational and training component. Then, there is structure and working under deadlines. There is access to a wide variety of networks, like venture capitalists and peer entrepreneurs.

Is it the network that actually helps? Or is it the financial resources that I get? Or is it the videos that I watch and the classes I attend, or is it discussing the idea with my peers that’s actually helping? If we give entrepreneurs access to flash teams so that they do not have to go through an elaborate process of hiring, can it impact their venture outcome? We don’t know yet.

I would like to explore that. If an accelerator helps an entrepreneur to be successful, which components of the accelerator help, and which components are redundant? My dissertation advisor Chuck Eesley and I are hoping to do a field experiment with some accelerators in Thailand, tweaking some of these components to see which are helpful.

The second project that I’m working on is also related to accelerators. We know that if you have attended an MBA program, you are likely to be more successful as a manager. For an entrepreneur, the equivalent of an MBA degree is joining an accelerator program. If you have joined an accelerator program, your success as an entrepreneur increases.

However, not all people who join an accelerator program become entrepreneurs. A portion of them go into the wage labor market and work for others rather than starting their own company. So, we want to explore: Does an entrepreneurial education in an accelerator program or bootcamp help us in the labor market? And if it does, what component actually helps? And how does it help? Does it help us become a better manager? Does it help us solve a wider variety of problems?

I would like to study that: How does this entrepreneurial capital, as opposed to managerial capital, help us in the wage labor market?

If you have a smartphone loaded with apps, you’ve probably observed that those apps can have wildly contrasting pricing schemes. Some products are free but stuffed with ads, while others charge a flat fee. Still others offer in-app purchases and upgrades. How would an entrepreneur building out an app decide which of these approaches to pursue?

That’s the sort of question that Ron Tidhar, a graduate student in Stanford’s Department of Management Science & Engineering who is studying with STVP, is trying to answer in his research. “My interest is very much on how executives choose these business models and then develop them in a new market,” he says. In particular, he’s interested in revenue models—the money-making component of a company’s business model. Working with advisor Kathleen Eisenhardt, Stanford W. Ascherman M.D. Professor in the Department of Management Science and Engineering, he’s written papers seeking to understand when and why different ways of making money succeed or fail.

In comments edited and condensed below, Tidhar explains the pros and cons of different approaches to revenue. In the process, he touches on what Spotify got right, and compares two seemingly similar online clothing retailers that turn out to have radically different revenue models.

Why did you decide to focus on revenue models in your research?

Revenue models are a new source of uncertainty for businesses. There’s greater flexibility nowadays, especially with digital products, in terms of which revenue model to choose. It’s so much cheaper to set up, sell and distribute software. And firms are able to delay that revenue decision while they’re subsidized by VC funding and say, “We’ll worry about how we make money down the line.” That ends up causing a lot of trouble for many firms.

We realized that there wasn’t a good answer in the literature to the question of which revenue model to choose when. That made it an interesting stream to go down.

You’ve done a couple of internships at Spotify. How did that shape your research?

One of the things that people often talked about with Spotify was how their freemium revenue model was a source of their advantage and a reason why they could potentially be competitive with Pandora or Apple Music. I was intrigued by the why—why is that the case? Why did they choose that model when their rivals did not?

In our study, we actually identified two different kinds of freemium models, which is a new insight in the literature. We call them the bundled freemium model and the fragmented freemium model. Essentially, the difference is how many upsells the firm offers to its customers.

In a bundled model, there’s one or maybe two premium upsells. For example, Spotify has a free version and then a premium version, which includes offline music-playing and increased functionality. There’s just that one upsell. Imagine a Spotify where you had to pay separately for offline use, for playing specific songs, for receiving recommendations, and so on. Because those features are interrelated, it doesn’t make sense to break them up and sell them separately. It makes more sense to bundle them together.

We see the fragmented model quite often in gaming, things like Candy Crush. There’s a single free version with many different kinds of upsells: an extra life, extra points or other consumable purchases. A fragmented model works well when you have modular and consumable upsells.

One contribution of this research is to separate the freemium models and say, “There’s more nuance here in how these might be structured.”

What are some perils of the freemium approach?

A classic issue with the freemium model is cannibalization. If you make the free version too good, then not enough of your users will be willing to pay in order to get the upgrade.

Then there’s the complementary problem of offering too little on the free product. People aren’t able to experience the value or don’t understand what the product is good for, so they’re not likely to pay to upgrade to the premium version. Figuring out that boundary is a really tricky problem that I think many executives often get wrong.

What types of companies can get away with a subscription model?

Companies have to have really clear quality signals, so the customer knows that what they’re paying for is valuable, and valuable in a recurring way.

For example, Netflix is able to demonstrate continuing value because it’s always releasing new content, refreshing its catalog, and learning the preferences of its customers.

The customer is induced to pay the first time because of those quality signals, and is then willing to stay on because they know there’s going to be new content and better recommendations every month.

And what have you observed about the ad-based model?

We realized that the advertising model is part of a broader revenue model which we call the third-party model. That’s one in which there is a third party that’s willing to pay. In many cases that is an advertiser, but not always.

The third-party model works well when the focal firm gets some kind of insight about its users that might be difficult for a third party to get otherwise.

Putting aside recent controversies, I think Google and Facebook demonstrate the vast monetary value that this model drives when built on the right product. The crux of this model is the combination of unique insights into their users (Internet search queries and social networks, respectively, which both reveal user preferences) in order to better target online advertising. I don’t think anyone quite anticipated just how profitable this business model would be.

Interesting counterexamples are Twitter and Snapchat. While they both command very large user bases, they don’t generate the same insights about their users as Facebook and Google. This is because Twitter is based on very short 280-character public messages often broadcast to loose connections, and Snapchat is based on disappearing photos and videos that—though funny—are often trivial or meaningless. (Both contrast with Facebook’s close friend networks and timelines of personal life events.) This can help explain why Twitter and Snapchat have struggled with their revenues when compared to Facebook and Google.

There’s an interesting change in consumer psyche recently around how we should be viewing this ad-based model. That’s because the consumer is actually paying for the service—they’re just not paying for it with money, they’re paying for it with access to their data. There’s been some interesting research about whether we should consider data as labor, suggesting consumers should be paid for work they’re doing generating data.

What are you working on now?

It’s a follow-up study from this question about revenue models—it’s in the preliminary stages at the moment. We realized that different firms, even in the same industry, can have very similar offerings to their customers, but because some part of their business model might be different, they end up looking like really different businesses altogether.

A great example is in the online retail space. Stitch Fix, an online retailer based in San Francisco, sells clothing by having users fill out a survey about their clothing preferences. Then they send that customer five items of clothing in the mail based on their sign-up survey answers. The customer will keep and buy whatever items they want and send back, at no cost to them, whatever items they don’t want.

Rent the Runway is also an online retailer, but they’re focused on renting clothes online. A user can scroll the website, pick a designer dress, rent it at a fraction of the retail price, wear it for a special occasion, and then send it back to Rent the Runway.

Both of these businesses are essentially trying to deliver clothes to online customers. Neither of them focused on physical store locations. But because Rent the Runway has chosen a rental model, it means that 100 percent of the clothes that they send out will come back to them. Whereas Stitch Fix is trying to sell clothing; they’d like to have the majority of the five items that they send out actually be bought by the customer and not returned to them.

So the businesses they’ve developed turn out to be strikingly different. Rent the Runway has become the biggest dry cleaner in North America because they have to get really good at receiving clothes, cleaning them and then sending them back out again for the next renter. Stitch Fix has ended up being a master at retail data. They have gotten really good at predicting what clothes a customer will want to wear. Stitch Fix has hired from Netflix and elite data firms, whereas Rent the Runway has become a logistics business.

The small, seemingly innocuous decision of how they want to make money from their products—their revenue model—has led to different businesses later on. The question for this study, through a multiple-case approach, is: What does that early revenue model decision mean for what the business looks like later? And how can executives actually figure out what they have to get good at, given their early business model decision?

Is there an ideal time in the life of a startup to make a final decision about the business model?

I think the key thing is to treat business model development as an experimental process. It’s very unlikely that an entrepreneur can precisely predict what the fully formed business will look like. Therefore, ensuring that entrepreneurs update their beliefs about what will work and what won’t as they go is a key part of the process.

Counterintuitively, some research from our group shows that entrepreneurs shouldn’t settle on a business model too quickly. The rationale is that optimizing (or over-optimizing) too soon leaves an early-stage business susceptible to market changes. It becomes more challenging to roll back decisions or adapt the business model to new conditions.

Who would dominate the drone industry? It was an open question back in 2012, as two fierce rivals battled for market share: Berkeley, California–based 3D Robotics (3DR), and Dà-Jiāng Innovation Science and Technology Co. (DJI), of Shenzhen, China.

Culturally and organizationally, the two ventures couldn’t have been more different. 3DR was flat and relied on the bottom-up ingenuity of a large open-source community of drone enthusiasts. DJI, meanwhile, was hierarchical and dominated by the vision of its founder, Frank Wang.

Those different organizing strategies grabbed PhD candidate Robert Bremner’s attention as he worked with his advisor Kathleen Eisenhardt, Stanford W. Ascherman M.D. Professor in Stanford’s Department of Management Science & Engineering. He began to examine how organizational design and experimentation can help or hinder ventures. “Depending on how you structure your company, that can play a big role in its success,” he says. In the face-off between 3DR and DJI, he had an ideal case study.

Bremner’s analysis, drawn from interviews he conducted, news articles and other public records, revealed that, although DJI proved to be the ultimate victor in the drone industry, each company’s approach had strengths and weaknesses. Both flat and hierarchical structures can succeed, Bremner found. It just depends on what kind of problem you’re trying to solve.

For instance, 3DR’s bottom-up approach is useful for finding a path forward when it isn’t clear what is blocking your company’s or product’s success. “An example in the drone industry is the drone architecture,” Bremner explains. “DJI was focused on helicopters, but safety was a huge issue that wasn’t fully recognized at the time.”

For 3DR, the answer to the drone architecture problem arrived serendipitously as members of the open-source community started using quadrotors instead of helicopters or planes. The quadrotor design had existed since the early 1900s, but 3DR implemented it in a way that was more affordable than ever before. That kickstarted the company’s growth, and the quadrotor spread through the industry like wildfire.

Sometimes, though, it’s obvious what problems need to be solved for a new technology to take off in the market. “The challenge might be finding the right solution or just implementing it,” Bremner explains. In cases like these, hierarchy wins.

In the drone industry, the obvious but unsolved problem was figuring out who wanted and needed drones. The quadrotor made drones more accessible, but it was obvious to industry insiders that the technology was still missing a “killer app.” In solving that problem, Bremner noticed that DJI’s approach excelled. “Hierarchy is good because it enables organizations to quickly and systematically test different alternatives,” Bremner says.

DJI experimented with ideas including public safety, utilities inspection, and agriculture, attending trade shows and working closely with experts in each field. Ultimately, the team settled on marketing drones to filmmakers and video producers. “What we saw was, at that point—when the bottleneck to growth in the industry was clear but there was still a lot of uncertainty as to how to solve it—DJI’s approach worked really well,” Bremner explains.

DJI’s hierarchical structure helped the company in other ways as well. “An issue that the team at 3DR ran into was the challenge of building a complex hardware product, like a drone, when you have a distributed team of part-time engineers working for you,” Bremner explains. “They were all brilliant—3DR had a ton of engineering talent—but when employees have free reign over what to do and how to do it, it becomes a struggle to rally them to work through really complex issues.”

Inspired by events in the drone case study, Bremner has turned his attention to experimentation in the video game industry. “One thing that was common in the drone industry, and certainly elsewhere, was rushing to get a prototype on the market to see if it would stick,” Bremner explains. “For DJI, this really worked. But sometimes it really backfired.”

Traditionally, video game developers have relied solely on internal user testing to determine whether a new game was ready for prime time. In the last decade, however, many companies have turned to a new development model called early access, in which they launch an unfinished game to test it on the market. The model is similar to the lean startup method, which emphasizes “being as lean as possible, saving resources and just getting your product out there in the market,” Bremner explains.

For developers with limited budgets, early access is an appealing option. “It’s easier to launch the game, get market feedback … and then improve it or move on to something else from there,” Bremner says. “The question is, what are the risks for taking this type of approach?”

To answer that question, Bremner has begun a quantitative study, which looks at how many people purchase and play each game each day, as well as how long they spend playing. “There is a pretty clear pattern where, over time, games launched in early access start to engage a higher proportion of users than regular games,” he explained.

The catch is, for certain types of developers, these improvements don’t translate into sales. Small independent developers, Bremner’s observed, might take a reputational hit by releasing early versions of not-quite-ready games. “Gamers might simply stay away because of the negative impression formed by a few early players,” he says.

Though the research is still in progress, Bremner says it suggests one reason why entrepreneurs should be cautious when applying concepts from the lean startup method. “I think it’s easy to get carried away in the hype of something like lean startup or early access, so that we forget that there might be situations where the process might not work as intended,” Bremner explains. And there may well be other scenarios where different methodologies are better suited to startup success: “I’ve made it my mission to figure out what those edge cases are,” he says.

With the race to roll out autonomous vehicles thick with industry giants in the tech and traditional car-making sectors, why are Silicon Valley’s top venture capital firms even investing in upstart entrepreneurs looking to get in the game?

Bottom line: The market is huge – both in terms of the types of products and services that will be needed in the age of robocars, and more importantly, the opportunity to solve serious problems like traffic collisions, congestion and pollution. Achieving full autonomy has broad implications for land use, car ownership and industrial-scale transport such as cargo shipping.

Sure, the way ahead may seem daunting for the aspiring entrepreneur. Waymo, the company born out of Google’s self-driving car project, has now logged about three million miles on city streets. Meanwhile, Apple has reportedly filed for patents on technology related to driverless-car systems. Rideshare companies and auto manufacturers alike are also inching forward, rolling out features that make their vehicles incrementally more autonomous.

And yet, take just three of many Silicon Valley startups in the autonomous-vehicle space: Together, they have raised a total of $400 million in capital to date. Zoox, which is developing a self-driving car from the ground up, has raised $290 million thus far. Drive.ai, which is building integrated hardware and software retrofit kits that businesses can install on their fleets to make them fully autonomous, has raised over $60 million in funding. Mapbox, which has a division devoted to developing a mapping system for autonomous vehicles, has also raised $60 million.

“It’s a question of when and how, not if,” said Steve Jurvetson, a principal partner at venture capital firm DFJ. “Rest assured that all vehicles will be autonomous eventually.”

Jurvetson is widely known and acclaimed for investing in companies that are at the forefront of technology and are poised to transform major industries. He made early bets on Tesla and SpaceX.

“The entrepreneurs at the helms of the kinds of companies I look for are pursuing a greater mission than profit arbitrage,” Jurvetson told Forbes in 2016. “The companies we invest in are doing things that extend beyond the moment and will have long-term implications for how we live, work and play.”

A Driving Focus

In terms of optics, the emphasis on transforming society may give smaller startups an edge in the autonomous-vehicle space over the titans of Motor City and Silicon Valley. For all the resources that Apple, Google and Detroit’s “big three” have at their disposal, they are first defined by their legacies – namely, high-end devices, Internet search and ads, and gas-guzzling cars. Startups, at their very core, can embody their promises of change from the get go.

“We started Drive.ai because we believe there’s a real opportunity to make our roads, our families, and our communities safer,” the company’s founders professed publicly this summer. “We also believe that self-driving vehicles will be the efficiency engine of the transportation network.”

Saving lives and making us more efficient – those words aren’t exactly in the mission statements of industry incumbents. But they are precisely what autonomous-vehicle entrepreneurs hammer home when they talk about their company.

“The fact is, 40,000 Americans are dying every year in car accidents. More than a million are getting injured, and globally, you have over a million people dying,” Jesse Levinson, co-founder and chief technology officer at Zoox, said recently at Stanford. “When that’s your starting point, there’s a lot of ways to improve the technology.”

In that same talk, for the Entrepreneurial Thought Leaders series, Levinson and fellow co-founder Tim Kentley-Klay described how the fleet of self-driving taxis they are developing will address the extreme inefficiencies of conventional car ownership: from the familiar fact that individually owned autos spend more than 90 percent of the time parked, to the current reality that people spend tens of thousands of dollars on vehicles that will be technologically in the dust in just a few years.

Find a Niche

For Drive.ai, its founders didn’t set out to launch a startup. As students in the Stanford Artificial Intelligence Lab, they were working on “deep learning” – a form of AI that allows a machine to develop an increasingly sophisticated understanding based on examples it is given. They saw how a dynamic decision-making system based on deep learning could fare better than task-specific algorithms in the infinite and unpredictable conditions that human drivers face everyday.

Once they started testing how well their system could perceive different conditions, the engineers began to think they had a better technology solution than those being developed in the industry. The validation of peers in the field, who were “blown away” when the students shared their results, also gave them the confidence to put their Ph.D. studies on hold and start a company, according to Drive.ai Co-Founder Brody Huval.

From a business perspective, they decided to build self-driving vehicle systems – the “brains,” as they like to say – specifically for businesses. Companies represent a larger revenue stream than the consumer market, and importantly, they tend to operate fleets within a fixed area. Such “geo-fencing” allows for a quicker deployment than the more widespread rollouts planned by other autonomous-vehicle makers.

“We felt that this new approach to making self-driving car brains would actually lead to a solution that’s more scalable, safer, and ultimately could be deployed a little bit quicker,” said Drive.ai Co-Founder and CEO Sameep Tandon. “Those two dimensions are also very important to us as we think about what the world will look like in an autonomous-vehicle-driven society.”

Meanwhile, the founders of Zoox are focused on “autonomy as a service,” targeting people in crowded cities who would rather not deal with the hassles and costs of car ownership. In order to not tip off competitors, they have shared few specifics about the all-electric vehicle they’re developing. Also, they are pursuing a “full-stack” strategy, partly to minimize risks and dependencies associated with the use of components and technology made by others.

“We want it to be safe. We want it to be clean. We want people to be able to jog and not be getting tailpipe emissions,” Kentley-Klay explained when he and Levinson spoke at Stanford in May. “And we want it to be accessible for the whole community, low cost, and we want it to be a wonderful product experience.”

For the team at Drive.ai, it also comes back to impact: “It takes about the same amount of time to build something like Facebook for cats as it does to build an autonomous-vehicle company,” Huval said. “They both take pretty much all of your working hours. But if you’re able to focus on something that you think will be a high-impact area, something that’s large and transformative for society, you’re going have a lot more motivation and be able to stick to it through tough times.”

Expanding Ecosystem and Opportunities

As technology futurist Sudha Jamthe says for her Stanford Continuing Studies course The Business of Self-Driving Cars, “We are witnessing a historic moment in car manufacturing and the birth of new business models.” But as attractive as a wide-open market may seem, aspiring entrepreneurs must also understand the industry standards and regulations already in place to ensure they know the landscape and build products that comply.

For instance, carmakers refer to vehicle autonomy along a spectrum of five levels, as defined by the National Highway Traffic Safety Administration. They were first developed by the Society of Automotive Engineers and, in short, are as follows:

As for the regulatory environment, the U.S. Department of Transportation in September 2016 adopted the Federal Automated Vehicles Policy, a set of guidelines in 15 areas of vehicle performance that driverless carmakers can voluntarily follow. Unlike the Federal Motor Vehicle Safety Standards – which regulate the design, construction, performance and durability for all cars in the country – the automated vehicle policy isn’t mandatory.

“It’s meant to be a nimble and flexible framework as the technology develops,” said Bert Kaufman, head of corporate and regulatory affairs for Zoox. “There’s a ton of opportunity to innovate, and I think the policy is the government’s way of allowing that to happen.”

Different companies are following their own timelines for the launch of their version of fully autonomous vehicles. Estimates seem to be clustered between 2018 and 2020, when Zoox aims to have its cars on the streets. At the Andreessen Horowitz 2016 Summit, partner Frank Chen stated that Uber hopes to have its entire fleet be driverless by 2030. The Institute of Electrical and Electronics Engineers (IEEE) predicts that, by 2040, three out of every four cars on the road will be driverless.

The vast array of business opportunities for different products and services orbiting autonomous vehicles reflects the rapid expansion of the ecosystem. Autonomous-vehicle makers are desperate for cheaper lidar technology – the laser-radar detection system that sits atop many of today’s self-driving cars like a turret. Opportunities are also emerging in software, data tagging and in many downstream areas currently encompassed by today’s automotive sector.

Just last week, Drive.ai announced that it will soon begin piloting self-driving cars in the San Francisco Bay Area through a partnership with the rideshare startup Lyft. The collaboration underscores how startups can create opportunities for each other as they experiment and explore. “One of the advantages we think we have is our speed, both in technology and business development, ” said Drive.ai Co-Founder Tao Wang.

Jamthe says revenue from self-driving cars is estimated to be $42 billion globally by 2021. And given driverless technology’s potential to upend everything from personal mobility to commercial cargo, DFJ’s Steve Jurvetson says the autonomous-vehicle market will actually engulf the traditional transportation sector.

“Every vehicle will be autonomous, eventually, and there are distinct opportunities in personal mobility – cars and drones – as well as cargo on land, sea and air,” Jurvetson explains. “It will transform urban design. And on the labor-market side, consider for a moment that 20 percent of all jobs globally are driving a vehicle. Of those who have an income-paying job, 20 percent of them are drivers.”

The implications, and so the opportunities, seem then to be endless.

Amazon’s $13.7 billion purchase of the Whole Foods Market chain, which is now a done deal, has grocery shoppers salivating at the thought of never having to walk into a supermarket again.

Likewise, entrepreneurs and artisans behind the upscale products that fill Whole Foods’ shelves see the upside of Amazon leveraging its constant growth and ubiquitous brand to bring their goods to a wider audience online at a price that no longer reeks of “whole paycheck.”

But for the rest of us left trying to read the fair-trade tea leaves, Amazon’s latest move is a little confusing. Why Whole Foods? Why now? And why did Amazon CEO Jeff Bezos decide to buy the Washington Post four years ago?

For these questions, we turn to Stanford Professor Kathleen Eisenhardt, a leading scholar on strategy and organization in technology companies and high-velocity industries. While she is on faculty in the university’s engineering school, Eisenhardt says Amazon’s business dealings remind her of experiments in genetic modification.

Organizations can simultaneously be thought of, and act as, monolithic entities and smaller components or genes acting in concert, according to Eisenhardt, who holds the S.W. Ascherman M.D. professorship in Stanford’s Department of Management Science and Engineering. By understanding that there are specific, gene-like areas that can be “mutated,” leaders can think more nimbly about how to innovate and scale without unwinding the helix of an entire organization.

In other words, the 470-store chain that proudly promotes its many non-GMO products now finds itself owned by none other than a Genetically-Modified Organization. The good professor elaborates below …

Stanford eCorner: You say that Amazon’s top business priority is growth, not profit. And the price cuts Amazon has made across Whole Foods products signal that. Why does a strategy focused on growth, rather than profit, make sense here?

Kathleen Eisenhardt: Growth over profit has been the Amazon strategy from day one. More accurately, the Amazon strategy is to sell to customers whatever they want at the best possible price, and however they want to buy it. Practically speaking, this ends up favoring growth over profit. It’s also why Amazon was originally named “Amazon” – for the river – and not something limiting like “Books Now.”

The best and most reliable way to grow a company is to leverage existing resources into new markets. Resource leverage works particularly well for Amazon because low profitability in new markets is not the deterrent that it is for most other firms. Amazon simply enters the markets in which customers want to buy products.

So growth over profit doesn’t make more or less sense in the context of Amazon. Rather, it is what Amazon does!

eCorner: Speculation from industry watchers has ranged from the acquisition being Amazon’s play to beat Walmart in the fresh-foods sector, to it being a move to increase its warehousing capacity to serve existing and new customers. How do you see it?

Eisenhardt: The acquisition is a quick way to build a physical presence, rather than starting from scratch. And from what I know, the goal is, again, serving customers regardless of what they want to buy. So it’s not about beating Walmart, although that might happen. Vertical integration is not key, either. Instead, they are offering what customers want to buy and how they want to buy it!

There’s a lesson here for entrepreneurs whose goal is growth: Don’t waste time worrying about competitors and markets. Focus on knowing and understanding your audience’s needs fully, and evolving with your customers to make your products and services absolutely essential.

eCorner: You describe an interesting way to make sense of Amazon’s moves – by seeing the various components of its business model as genes, and how new initiatives are essentially Amazon “mutating” a given gene so as to produce a different outcome. Could you explain this a little more?

Eisenhardt: Amazon has product, channel, country, customer, and fulfillment “genes” – genes for every core aspect of its business. It is constantly mutating single genes, like at the start when the company started with books and then added music, video and other products – mutating the “product” gene.

But every so often, Amazon mutates many (but not all) genes, like the introduction of marketplaces and web services. They then go back to make lots of small single-gene changes. The strategy is very organic and very smart from an evolutionary biology lens: many small changes and occasionally big ones.

The Whole Foods acquisition is remarkable only in that Amazon seems to be using it to speed its evolutionary progress. But it’s not different from what the company has consistently done before – a major gene change in channel, but same customers, geography and even products as those covered by its existing Amazon Fresh service.

Metaphorically speaking, entrepreneurs may want to look at their venture at microscopic level and unpack its DNA. Adjusting the focus and seeing their organization in more detail can reveal opportunities for change and, ideally, growth.

If Amazon has “genes” for product, channel, customer, and country, what genes does your organization have? Which genes can you tweak for growth, or which are you stuck with? How will you continue to grow? Consider taking a page from Amazon’s evolutionary playbook.

A few months after her failed bid for California governor in 2010, veteran Silicon Valley CEO Meg Whitman found herself on the couch, completely deflated. The team she built for her campaign, the crowds who cheered her on, the 5 million California votes — not to mention the personal fortune she invested — all for naught.

There she was, the graduate of Princeton University and Harvard Business School who went on to head eBay during its most explosive decade of growth, from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue in the late 1990s and early 2000s. Now, just her and Ellen DeGeneres on the TV in the family room of her home.

Her husband said this would not do and urged her to figure out what’s next. It didn’t take long.

Later that day, another tech-industry leader, Marc Andreessen, called to ask Whitman to serve on the board of directors for Hewlett-Packard. Less than a year later, the board invited her to be the company’s next president and CEO.

Once word of that got out, though, Whitman’s return to industry hit some turbulence. At the time, she was widely criticized in the press as being unfit to head a company as big as HP. On the day of her appointment, members of HP’s board apologized for once again subjecting her to intense public scrutiny.

But her time in the cutthroat arena of politics prepared her well. “It was a remarkable experience. And frankly, it made me a better CEO,” she said during a recent talk at Stanford as part of the Entrepreneurial Thought Leaders series. “I have a much tougher skin than I did before I ran for governor.”

At HP, she stabilized a company that saw the departure of two CEOs in just two years and headed the restructuring of a legacy high-tech giant into two Fortune 100 companies.

She did that by following several tactics that leaders should hone, regardless of context. In turning around the storied HP, Whitman first returned to the company’s foundational values and existing strengths. She also let actions speak louder than words:

During her talk, Whitman described how government and business require different leadership approaches and skills. And yet, her immersion in politics endowed her with more than just thicker skin when she returned to industry. Engagement with social and economic issues led to a deeper understanding of how business and commerce shape global affairs.

As Whitman describes below, leadership in innovation is still very much up for grabs. It will depend on which country can identify the industries with the most potential, and then realign its economy and education system so that it can foster, keep and sustain innovation in those sectors going forward.

Why are the best ideas often the ones that don’t seem to make sense? Bestselling author Adam Grant, one of the most influential management thinkers in America, recently came to Stanford to give a talk that was chock-full of counterintuitive tips for anyone seeking to be a better business leader — citing scholarly research and case studies from his 2016 book “Originals: How Non-Conformists Move the World.”

1. Bosses Have It Backwards

The saying “don’t bring me problems, bring me solutions” means no one asks the toughest questions. Instead of a culture of advocacy, Grant says managers should foster an environment of inquiry in order to spur innovation.

2. Imagine How to Kill Your Company

Thinking of competitive threats could reveal big business opportunities. Call a meeting and invite everyone to share ideas for how to kill the company. Grant says vulnerabilities may be the seeds of growth.

3. Beat Haters to the Punch

Lead with your flaws and turn skeptics into problem solvers. An entrepreneur begins his pitch to investors by giving three reasons why they shouldn’t give him their money, and then walks away with $3.2 million in funding. Here’s why.

4. Hire for Culture Fit or Culture Add?

It depends on whether you’re a small startup or a big business. The shared values that fuel a venture in the beginning can slow growth once it goes public and requires more diversity of thought, Grant explains.

5. Let Your Mind Drift Before the Meeting

Studies show that bosses might be in a better headspace to evaluate an employee’s idea if they take a few minutes beforehand to think about something completely different. Grant describes how a quick brainstorm can wash away the negativity that often clouds a manager’s judgment.

Watch Grant’s entire talk at the Entrepreneurial Thought Leaders Seminar.

Businesses and entire industries are coping with major uncertainty due to President Donald Trump: from carmakers that fear his next tweet, to health insurers who can’t set coverage rates because of the ongoing fight to repeal the Affordable Care Act.

Rohan Bhobe is the CEO and co-founder of a technology startup that earned its chops by fixing key parts of the HealthCare.gov website after its clunky launch in the fall of 2013. So you’d think he and his fellow co-founders at Nava – a public benefit corporation – would be downright nauseated from following every twist and turn of the healthcare debate.

How could any business move forward if its biggest customer decided it should dismantle the program that gave the business its start in the first place?

Well, the young entrepreneurs at Nava aren’t asking that question, and in fact, are more certain than ever about their work, which is building modern web platforms for government agencies that deliver services to the public. For HealthCare.gov, Nava moved critical systems to the cloud, dramatically streamlined the online-application process, and “hot swapped” the original identity-management system that had caused most of the initial site outages – saving “tens of millions of dollars” in taxpayer costs, according to Bhobe.

In the process, this agile group of go-getters from Silicon Valley gradually found their stride in the stodgy District of Columbia. “We got better at shipping modern product in the context of a government environment,” Bhobe explained, “and as government also became more familiar with our techniques, we were able to work together faster.”

He and his team developed a cadence of learning and a growing confidence that their skills might be better applied in Washington than the West Coast. And the prospect of improving how government serves people aligned strongly with the entrepreneurs’ personal values.

Now, with Trump in office and Republican majorities in both houses of Congress, the effort to dismantle the Affordable Care Act drags on as the party in power struggles to come to a consensus on provisions for a replacement plan.

So again, why aren’t Nava’s founders freaking out?

Simply put, their confidence stems from a complete faith in their team’s unique skills and strengths in engineering the delivery of government services, as well as a clear understanding of who their customers really are: the American people. Neither of those facts bend for a new Commander in Chief or anyone else.

It’s an important lesson for every entrepreneur: Your special talents, and a high-fidelity image of the people you’re serving, should be the steel guardrails for your venture.

“We work with government as our partners to serve, ultimately, the American people,” Bhobe said. “It was great to see our commitment extend beyond any particular authority figure in government; and it sharpened our focus onto people and their needs, and working on their behalf.”

Not that Nava’s founders didn’t voice how they personally felt. In a blog post published a month after the election, Nava’s founders strongly rejected many of Trump’s actions and statements during the 2016 presidential campaign. As a public benefit corporation, Nava wears its values on its sleeve.

“We believe that when our democracy commits to a public service, it should deliver in a way that is equitable and effective,” Nava Co-Founder Sha Hwang stated on Medium. “Our work is a tireless pursuit towards this goal. We believe that the software powering these services can be radically reimagined to improve the quality of people’s lives.”

But now that those in power are trying to figure out how to get out of that commitment, Bhobe says Nava is responding to the uncertainty by increasingly turning to other types of organizations to get a clearer picture and work together toward the outcome they’d like to see. These include healthcare foundations, political institutions, and experts in everything from data ethics to design.

“We’re all in a wait-and-see mode about what the priorities are going to be,” Bhobe said. “The uncertainty is not a positive thing.”

Indeed, recent entrepreneurship research has shown that one way startups respond to market uncertainty is by forming strategic alliances. Specifically in the healthcare space, studies at Stanford University have found that medical-device startups formed ties with different types of stakeholders to hedge unpredictability in both product development and the commercialization process.

In a 2015 study by Stanford entrepreneurship professors Riitta Katila and Kathleen Eisenhardt, along with lead author Emily Cox Pahnke at the University of Washington, they found that network ties with certain partners were especially beneficial when medical-device development was highly ambiguous.

“These startups got different benefits from different partners,” said Katila, a professor in Stanford’s Department of Management Science & Engineering. “Government gave them credibility. Ties to private investors, strategic and managerial advice. Ties to corporations, manufacturing and marketing resources.”

In a subsequent paper by Katila, who studies technology strategy and innovation, she and her co-authors found that med-tech startups handle uncertainties in the environment by forming relationships with doctors and bringing them in as collaborators. “Uncertainty” in this context was around possible changes in FDA standards and whether a drug or device would be approved.

Katila recalled an interview with an orthopedic surgeon, where he explained why a medical-device startup had reached out to him. According to Katila, the doctor described how vagueness in the regulatory landscape meant a trial designed according to standards in place at the time might yield irrelevant results and waste much money, time and effort.

“Even if you do a design like that right now that the FDA approves, when you go back to [the] panel in three to five years, the reviewers are likely to have changed their minds to reflect more current standards of care,” the doctor told the paper’s authors. “If the company had gone without clinical input, they would have been up a creek.”

At Nava, reaching out to other stakeholders predated Trump’s election, according to Bhobe. The company’s goal was never to be the sole builder of all technology for the government, he said. But at a time of great uncertainty, strategic alliances seem to be more important than ever – whatever form they may take.

“We’ve come to realize that success in this environment, independent of any kind of political party, is going to be a messy ecosystem of groups, pushing long term in fits and starts,” Bhobe explained. “It’s not as clean, but I think that’s OK.”

Growing up in India, Saad Bhamla, like many children, routinely played with a traditional spinning whirligig — a simple toy that consists of a disc that rotates rapidly when twine threaded through the center is pulled apart by both hands. Three decades later, that fond memory sparked the idea for a 20-cent paper centrifuge that isolates blood-borne diseases like malaria and HIV.

How did Bhamla and the Manu Prakash bioengineering lab at Stanford University unearth a breakthrough medical innovation for the developing world from a children’s toy?

The epiphany for the so-called “paperfuge” did not come overnight. Bhamla and Prakash, a 2016 MacArthur Fellow known for building low-cost tools for health workers in the field, had brainstormed for weeks.

The requirements were stark. What would it take to design a centrifuge for under a dollar, that had the centrifugal force to separate blood into different components, and required no electricity?

Prakash had seen first-hand how medical inventions are implemented, or not, in the developing world. Visiting a clinic in Uganda, Prakash saw dormant centrifuges that cost hospitals $1,000 to $5,000. The clinic had no electricity and the centrifuge became a doorstop.

Prakash and Bhamla began by viewing the challenge as a physics exercise with clear and rigid parameters from which they could explore. Could they look at the everyday from a different perspective: the eyeglasses you wear or a beloved toy from childhood.

“What is the most efficient way to convert human energy into rotational energy,” Bhamla asked himself. “I actually just started on the back of an envelope.” He soon began looking up gears, examining egg beaters and salad spinners.

There’s a wonderment and optimism in the way Saad talks through his process. He looks to the pen in his hand and the flow of ink due to gravity. He questions and explains in equal parts — a tightrope walk that leans towards “what if,” then back towards the world of established physics.

A visiting scholar who performed as a circus artist in a former life made Bhamla think of trying a yo-yo. High-speed imaging revealed that it spins at about 3,000 RPMs when unfurled, which is about the same as smaller microfuges commonly found in labs. The problem was the learning curve: Bhamla was new to yo-yos, and it took too long to get the hang of it.

“That experience was valuable,” Bhamla said. “If I cannot learn it within a week, how am I going to train a 50-year-old health worker who has 200 patients standing outside with mothers and crying babies?”

They went through a drawer full of toys, scoured Amazon for ideas, and yet, nothing.

“You know when you’re tired and desperate, and you’re having one of those nights when you’re frustrated?” Bhamla explained. “You’re willing to explore anything and everything.” Then, the childhood memory of that whirligig popped into Bhamla’s head. He turned to his girlfriend and asked for a button and some string from her sewing kit and quickly fashioned a makeshift toy.

Back in the Prakash Lab, a high-speed camera showed the button whirligig could reach 15,000 rpms. “I couldn’t believe my eyes,” he recalled.

After two weeks of prototyping, he mounted a capillary of blood on a paper-disc whirligig and was able to centrifuge blood into layers. With proof-of-concept in hand, Bhamla and Prakash proceeded to scientifically explain how a whirligig actually works.

Saad Bhamla (Photo courtesy of Stanford University)

Bhamla recruited three undergraduate engineering students from MIT and Stanford to build a mathematical model. The team created a computer simulation to capture design variables like disc size, string elasticity and pulling force. They also borrowed equations from the physics of supercoiling DNA strands to understand how hand-forces move from the coiling strings to power the spinning disc.

Once the engineers validated their models against real-world prototype performance, they were able to create a version with rotational speeds of up to 125,000 rpm, a magnitude significantly higher than their first prototypes.

And unlike the case of the yo-yo, this so-called “paperfuge” could easily be mastered — and even built with everyday materials — by a villager in Africa.

From Bhamla’s perspective, better to put a simple device in the hands of a field worker who, without any knowledge of physics or education beyond grade school, sees centrifugal force come from what is essentially child’s play — and then thinks, “Hey, this is just twine, paper and wood. I can make one of these! What else can this be used for?”

Bhamla and Prakash’s paperfuge is a powerful example of how extreme constraints and intense curiosity can create innovation from the everyday. Today, community-health collaborators in Madagascar are working with the Prakash Lab to test the paperfuge in the field.

Seeing it in use, the new waves of curiosity it stirs and the potential for future innovations it may inspire, fulfill Bhamla more than anything else.

“That’s empowerment, when a person forgets that they’re not an engineer, but they can see problems and everything around them starts to look like a potential solution,” Bhamla said. “If you can tap into someone’s curiosity, I think you can change somebody’s life.”


Additional information:

Saad Bhamla is a postdoctoral fellow at Stanford University, where he earned a Ph.D. in chemical engineering in 2015. As part of his doctoral studies, he built a device to examine the non-Neutonian flow of liquids (think of the colorful swirls on the surface of a soap bubble). Learning about entrepreneurship through the Accel Innovation Scholars program at the Stanford Technology Ventures Program, Bhamla patented the device and sold it to two companies for contact lens design research. Learn More

The Prakash Lab is “a curiosity driven” research group working in the field of engineering and physical biology. One of the lab’s specialties is in an area pioneered by Manu Prakash known as “frugal science,” where he and his team design science-education and diagnostic tools for extremely resource constrained settings, especially in the field of global health. Learn More

At a time when the pay and perks of the tech sector can seem much more tempting than the physical and emotional demands of active military service, a course created at Stanford University is giving the next generation of innovators at campuses across the United States a way to serve their country as it fights to keep up with terrorists and hackers who adopt and implement new technologies.

The course, Hacking for Defense, debuted at Stanford in spring 2016 as a way to teach students the “lean startup” approach, a method popular among Silicon Valley entrepreneurs for quickly discovering user needs and developing a product. Instead of building apps for a smartphone, students in these classes build prototypes for mission-critical innovations such as wearable sensors for Navy divers or next-generation bomb detectors.

Navy divers sometimes work at depths of up to 200 feet for two to four hours, so sensors that can measure core body temperature and other biometrics on a single battery charge would be a game-changer. And thus far, robots and drones used by the Army to detect improvised explosive devices and enemies lying in wait have been hampered by environmental factors such as terrain, as well as their own size and weight.

Seeing the original Stanford course as a prototype, the teaching team captured the class’s activities and progress throughout the quarter and shared everything online — including all the lesson plans — for any university interested in replicating the experience at their campus.

“Our goal was to scale these classes across the country, giving students the opportunity to perform a national service by solving real defense and diplomacy problems using lean methods,” said Steve Blank, adjunct professor in Stanford’s Department of Management Science & Engineering. “Our government will benefit from the fresh ideas and perspectives of students who are eager to tackle society’s most daunting challenges.”

Now, Georgetown University, the University of Pittsburgh, James Madison University and Boise State University and the University of California, San Diego, have all debuted Hacking for Defense (H4D) on their campuses. In total, the class will be offered at 23 universities around the country in the next year.

Blank, a retired eight-time serial entrepreneur and a creator of the lean-startup movement, conceived of the H4D course after five years of teaching a popular tech-startup class at Stanford and designing a training program for the National Science Foundation that shows government-funded scientists how to take their breakthroughs out of the lab and into the market.

But Blank is quick to point out that the goal of H4D is not to have students build products for the military to be shipped off to the front lines. Nor does he wish to turn students into entrepreneurs that run off and launch their own startup once the class wraps up.

“As educators, our job is to teach students a way of thinking,” said Blank, who led a teaching team that included faculty from Stanford’s School of Engineering and Center for International Security and Cooperation (CISAC). “So, if students launch a startup, but we haven’t actually taught them anything, we’re in the wrong business.”

The class consists of students forming teams and picking from a list of “challenges” identified by personnel at the Department of Defense or within the intelligence community. These challenges become the team projects that will determine the bulk of their grade, with students using the “Lean LaunchPad” approach developed by Blank.

The main principles of the approach are:

From there, continued feedback intake drives product improvement and, if necessary, any changes in the direction of the business — otherwise known as a “pivot.”

At Georgetown, one of the student projects is to build a tool for identifying possible terrorists in a crowd through the use of augmented reality. At the University of Pittsburgh, students are tackling vulnerabilities within the emerging field known as the “Internet of Things.”

Sam Gussman was a member of the Stanford class that started it all. Then a senior majoring in engineering, Gussman met with U.S. military officers, studied the mental duress soldiers face during combat, and then worked on software that distinguishes insurgents from civilians in video feeds from drones.

“There’s no company or startup that works on problems as interesting as those that the government wrestles with,” Gussman told Bloomberg Technology last November. “Plus with the government, my input can directly help save lives.”

Also on the original teaching team were retired Army Special Forces Col. Joe Felter, a senior research scholar at CISAC, and Tom Byers, a professor of management science and engineering and faculty co-director of the Stanford Technology Ventures Program (STVP). Retired Army Col. Pete Newell and Jackie Space, both visiting research fellows from the National Defense University, also helped teach the course.

In the fall, students can take a different H4D course that Blank and Felter teach with Stanford political science Professor Jeremy Weinstein, called Hacking for Diplomacy, where students work on challenges identified by the U.S. State Department. Former Secretary of State John Kerry spoke to students in the class during a visit to Stanford last fall.

Similar to Hacking for Defense, the course focused on diplomacy drew problems from relevant government offices and agencies — including the Bureaus of Conflict and Stabilization Operations, of Counterterrorism and Countering Violent Extremism, and of Population, Refugees, and Migration. At the end of the quarter, the student teams presented their “MVPs,” one of which was an artificial-intelligence chatbot that would allow refugees to connect with charity workers over Facebook Messenger.

“So much of what we’re doing is at the intersection of policy and technology,” Deputy Secretary of State Tony Blinken said in December to the Los Angeles Times. “At the same time, many of us don’t have the background and expertise when it comes to tech.”

This ability to apply the lean approach to product development in different fields has also spawned the course Hacking for Energy, which will be offered in the spring to graduate students at Columbia University, New York University and the City University of New York. Nicknamed “H4E,” the class illustrates how the common principles and components across all the Hacking for courses can serve as a template that might be summed up as “H4X” — where X stands for whatever sector needs accelerated innovation.

And as more universities adopt and iterate on the H4X framework, the vision of the teaching team comes one step closer to reality: to show students around the country how to think like entrepreneurs and act like civil servants.

“I was so pleased to be involved in the Hacking for Defense debut,” said Byers, who holds the Entrepreneurship Professor endowed chair in Stanford’s engineering school. “STVP’s mission is to delight Stanford students with new and innovative courses, as well as help in ways to spread and scale those course designs to faculty around the nation and world.”


Students at Stanford interested in registering for Hacking for Defense in Spring Quarter 2017 can learn more by attending brown-bag lunches and information sessions to be held on campus over the next two months. For exact dates, please visit the course website.

Cities around the world with emerging tech hubs are asking what’s in Silicon Valley’s so-called “secret sauce,” and how they can emulate the famed region’s success.

In order to demystify that secret, Stanford Assistant Professor Chuck Eesley and Daniel Armanios, an assistant professor at Carnegie Mellon University, sometimes visit places far away from Silicon Valley – where entrepreneurial ecosystems are still in their infancy.

They research environmental influences that lead to high-tech ventures, and that are therefore critical for aspiring entrepreneurs. For a recently published study, the two spent time in Beijing’s bustling Haidian district – home to some of China’s most prominent universities and technology companies.

What the district doesn’t have, however, is a critical mass of startup investors like the venture-capital community in Silicon Valley.

Eesley: In my travels in emerging economies, I noticed that there weren’t very many private, early-stage investors. A lot of the resources were still controlled by the government, due to under-developed institutions for antitrust regulations, IP protection and the like. Early-stage entrepreneurs were really struggling to raise funding.

In China, the government’s budget and domestic loans account for over half of the total annual domestic investment, and state-owned banks administer three out of four domestic loans. Overall, about 46 percent of domestic financing in China is controlled by the public sector, whereas private-equity funding represents just 5 percent of that total.

Armanios: The prevailing view is that to access these public resources you need to know someone in the government. What we find is that even without political connections, you can still make yourself competitive for such financing by working through a locally reputable organization like a science park, incubator or accelerator.

China’s science parks were developed to bridge the gap between private-sector entrepreneurs and the public resources they need. As part of their admission process, science parks also assess the potential of the various entrepreneurs who come through the door – in other words, reducing perceived investment risks while at the same time increasing access to startup money.

The researchers found that, in particular, entrepreneurs with business experience gained elsewhere, but with no local ties, benefited from a science park’s ability to lend credibility. The other group in the study that gained the most from science parks were highly educated locals who had strong technical skills but needed additional business training and mentoring.

China’s first science parks were established in the late 1980s, when the government began to embrace entrepreneurship as a profession and play catch-up with other advanced industrialized nations. They typically provide various services in a shared space and essentially serve as business incubators for technology ventures that spin out of nearby research institutions.

This intermediary role is essential for China’s emerging entrepreneurial ecosystem: The state is “ill-equipped” to pick entrepreneurs with the most potential and connect them with the capacity-building training and capital they need.

Armanios: How entrepreneurs acquire public financing depends on their prior experiences, capabilities and network connections. Returning entrepreneurs, or those entrepreneurs who spent time abroad and are now coming back to their home country, have tremendous amounts of technical experience and global business know-how.

However, they’re trying to get financing from local government officials who don’t have business expertise, so the officials have trouble credibly assessing those kinds of skills. What “returnees” do is apply for admission into science parks because those parks are reputable local institutions that are known for credibly-vetting such skills.

“Local elites” on the other hand, who are entrepreneurs educated at prestigious institutions in China – such as Tsinghua University, Peking University, or institutions under the Chinese Academy of Sciences – have tremendous amounts of technical experience but do not have much business experience. They enter science parks to help build up those skills, like business-model development, management training, as well as to learn about marketing and advertising.

The experience in China mirrors those of other countries that are striving to incubate entrepreneurial ecosystems of their own. For instance, Start-Up Chile is a key institutional intermediary linking government funds to support about 1,000 Chilean ventures. And more recently, the Malaysian Global Innovation & Creativity Centre has been launched to support and foster strong communities where entrepreneurs are able to easily connect and share their ideas and solutions with each other.

Eesley: As a scholar of entrepreneurship, I’d love to see the field do more research on how we can help these entrepreneurs who aren’t well-connected and who may not typically have the resources to enable them to be successful in entrepreneurship. What are the most time- and cost-efficient ways to help train them or to help provide resources or services to enable them to create successful ventures?

Armanios: By looking at how science parks in their day-to-day activities actually help support existing government programs – and how that subsequently helps entrepreneurs acquire resources from these programs – really fascinated me. In leveraging intermediaries like science parks, entrepreneurs can improve their access to resources from existing public-policy programs, rather than having to wait or lobby for the creation of new programs.

In the end, understanding what mechanisms must be in place to support entrepreneurs in emerging economies will help governments, institutions and entire nations bring more innovation into the world.

Armanios: Even in the United States, those early-stage ventures that are trying to commercialize basic science also need government financing.


This study, “How entrepreneurs leverage institutional intermediaries in emerging economies to acquire public resources,” was published in the Strategic Management Journal. In addition to Armanios and Eesley, their co-authors include Jizhen Li, an associate professor in Tsinghua University’s Department of Innovation, Entrepreneurship and Strategy, and Kathleen Eisenhardt, a professor of management science and engineering at Stanford and faculty co-director at STVP.

Five years ago, Stanford History of Science Professor Londa Schiebinger was in Madrid and interviewed by some Spanish newspaper reporters. When she returned home, she put the articles through Google Translate and was shocked to see that she was repeatedly referred to as “he.”

Oops — of all the people for this to happen to. Schiebinger has spent the last three decades exploring the intersection of gender and science, and her current work on Gendered Innovations in Science Health & Medicine, Engineering, and Environment at Stanford University focuses on how to harness the creative power of “gender analysis” for discovery and innovation.

Google’s algorithmic fail became fodder for a case study on gender biases in machine learning, with Schiebinger inviting two experts in natural-language processing to a workshop at Harvard University. After listening for about 20 minutes, the one from Google said, “We can fix that!”

“Fixing it is great, but constantly retrofitting for women is not the best road forward,” Schiebinger states in her Gendered Innovations case study. “To avoid such problems in the future, it is crucial that computer scientists design with an awareness of gender from the very beginning.”

Such an issue may amount to no more than a minor bug for a business as big as Google. But a failure to consider diverse users in the design of a product at smaller firms like startups could seriously limit their financial future by overlooking or alienating potential markets and user needs — or even harming the business’s brand reputation.

Take Snapchat. In August, the image-messaging app introduced a filter that puts extremely slanted eyes, rounded cheeks and buckteeth on a face. In a blog post by Katie Zhu, a member of the product and engineering team at the publishing platform Medium, she said Snapchat called the filter “anime-inspired.”

“Anime characters are known for their angled faces, spiky and colorful hair, large eyes and vivid facial expressions,” Zhu wrote in her post “I’m deleting Snapchat, and you should too.” “This is quite literally yellowface, a derogatory and offensive caricature of Asians.”

“Fixing it is great, but constantly retrofitting for women is not the best road forward.”

Stanford Professor Londa Schiebinger

This wasn’t the only instance in which Snapchat has sparked criticism within industry and from individual users over filters that superimpose racially stereotypical traits onto photos of faces. Four months prior, Wired wrote about how Snapchat released a “Bob Marley filter” on April 20, the day marijuana lovers celebrate their shrub of choice. The headline said it all: “Welp! Snapchat’s 420 Filter Celebrates Bob Marley with Blackface.”

The Venice-based startup issued a statement after the article appeared, explaining that the filter was created “in partnership with the Bob Marley Estate” to give fans a way to show their appreciation of the reggae legend. Snapchat has also spurred comments in mainstream press outlets such as Business Insider, and on sites like Medium and Quora, for a lack of transparency regarding its total number of employees and how many of them are women or minorities.

Yes, Snapchat’s popularity seems to be growing by the day. But it’s uncertain how much the firm can expand its user base beyond those over 25 and into the more lucrative demographic groups that advertisers desire. Moreover, systemic issues around diversity that get ignored early on just might grow into deal-breakers that make a hot, young startup less attractive to potential suitors in the years ahead.

That seems to be playing out at Twitter. On Oct. 27, the San Francisco public radio station KQED reported the startup’s plans to lay off 300 people, and how it may be tied to the company’s unresponsiveness to harassment by “trolls.” For KQED’s California Report, journalist Queena Kim quoted a Bloomberg analyst who described how Twitter’s user growth and advertising dollars are both flattening out, and how that may be a result of all the negative content.

Kim then spoke to a BuzzFeed reporter who said both Disney and Salesforce may have walked away as potential buyers in part because of Twitter’s seeming indifference toward offensive comments. Kim went on to explain how women and minorities who work at Twitter had brought the issue to the attention of senior management as far back as 2008, and how that leadership remains largely white and male.

The report ended with a comment by Kellie McElhaney, an adjunct faculty member at the Haas School of Business at the University of California, Berkeley: “This is an example of how lack of diversity is bad for business.”

(Since that report, Twitter announced several new measures aimed at curbing hate speech — although a New York Times article questions if features such as the ability to hide or report offensive posts will have any lasting impact.)

Data on Diversity … or Lack Thereof

While concerns about the underrepresentation of women and minorities in tech isn’t new, the heightened awareness of the problem can be traced back to October 2013, when Tracy Chou, a young female engineer at Pinterest, blogged about the absence of data on gender diversity in the industry.

Other luminaries of the valley, such as Eric Reis and Vivek Wadhwa, had already pointed out that the local tech community mostly consisted of white men. But Chou did something clever: Alongside her blog post on Medium, she set up an online repository and encouraged tech workers throughout the valley to count the number of female engineers at their companies and share them.

“Systemic issues around diversity that get ignored early on just might grow into deal-breakers that make a hot, young startup less attractive to potential suitors in the years ahead.”

She started by posting Pinterest’s stats: 11 female engineers out of 89 total at the time. Soon after, dozens of other tech firms contributed theirs, including Dropbox, Reddit and Mozilla. A few months later, Google publicly reported its figures on ethnic and gender diversity, and then Apple, Facebook, Twitter and other tech giants followed suit.

“Once all that data was out there, this thing which had been an open secret in Silicon Valley for a long time became known to the rest of the world as well,” Chou said on the Stanford Innovation Lab podcast. “It became a really big topic of conversation when people realized that these companies [that] are producing technology and products that everyone is using were so not representative in their workforces of the people that they were trying to serve.”

Recently, the U.S. Equal Employment Opportunity Commission published a report on diversity in high-tech that summarized data on the race and sex of all employees at the top 75 tech firms in the valley (as ranked by the San Jose Mercury News in 2015). The data was pulled from government-mandated diversity reports, called “EEO-1” filings.

Of the nearly 210,000 employees across 230 work sites throughout the valley belonging to the top-ranked companies, here’s what the commission found: Seven out of 10 employees were men, while the percentages of black and Hispanic workers were 3 and 6 percent, respectively.

diversity_in_tech_table
(Courtesy of U.S.Equal Employment Opportunity Commission)

“What is striking in this table is the degree of sex and race segregation,” the report states. “Women comprise just 30 percent of total employment and Asian Americans and Whites comprise 88 percent of all employment.”

Study after study has found that more diversity is better for business. Just to cite one report from 2015, the business-consulting giant McKinsey & Co. examined proprietary data sets for 366 public companies and found that more diverse workforces performed better financially.

Specifically, companies in the top quartile for racial and ethnic diversity were 35 percent more likely to have financial returns above their respective national industry medians. Meanwhile, firms in the top quartile for gender diversity were 15 percent more likely to top their industry medians in returns.

“Given the higher returns that diversity is expected to bring,” the report concludes, “we believe it is better to invest now, since winners will pull further ahead and laggards will fall further behind.”

Earlier Interventions Needed

The glitch in Google Translate that converted references to Londa Schiebinger to “he” was based on the fact that phrases such as “he said” are more commonly found online than “she said.” Schiebinger’s case study on this fits into a category she calls “bias in big data,” and she has since discovered newer examples of unintentional bias in algorithms.

She notes, for instance, that Amazon’s same-day delivery service was unavailable for zip codes in predominantly black neighborhoods at one point. She also notes the now well-known example of Google’s photo app, which applies automatic labels to pictures in digital photo albums. Early versions of the app inadvertently identified African-Americans as gorillas. Google apologized, saying it was unintentional.

Specifically in the area of product design, Schiebinger discovered examples of likely gender bias in software at Pinterest and Apple:

Tracy Chou now works on increasing diversity at tech companies through an organization called Project Include, which she co-founded with other influential women in the industry. They describe the project as “an open community working toward providing meaningful diversity and inclusion solutions.” Beyond tactics like anonymizing job-applicant resumés, Chou says Project Include offers comprehensive recommendations and is taking steps to put them into practice.

One is called Startup Include, where companies that participate commit to metrics that they will share with Project Include after three and six months to measure progress. Much like the tech industry itself, the project takes an open source and data-driven approach, with the goal of aggregating metrics across a cohort of firms and developing benchmarks.

“It’s much easier to change the course early on and set the right culture, than trying to steer a really massive ship later.”

Tracy Chou, Project Include

“We’re focused specifically on tech startups, where we think there’s just so much opportunity to get things right from the beginning,” said Chou, who earned degrees in electrical engineering and computer science from Stanford. “It’s much easier to change the course early on and set the right culture, than trying to steer a really massive ship later.”

Among the startups working with Project Include are Asana, Clef, Managed by Q, Patreon, Periscope Data, PreK12Plaza, Puppet, Truss and Upserve. But just as success doesn’t happen overnight in the startup world, Chou says the effort to increase diversity in tech will require conviction and patience commensurate with the problem at hand.

“There isn’t a quick fix for diversity and inclusion,” she says. “It has to be prioritized on an ongoing basis and it takes a lot of hard work. But it’s worth the effort.”

Today, the cool factor of entrepreneurship has spread around the world as technology startups have grown from fledgling ventures into global forces that can redefine our times. The founders of Facebook, Google, Tesla and Uber are practically celebrities.

For better or worse, all this entrepreneur worship has given rise to the “wantrapreneur,” someone who seeks to launch a startup just for the money and acclaim. Never mind that they don’t have a great product idea — or more importantly, the business skills to spend capital wisely or responsibly lead a team of hardworking early employees.

So, if there were a step-by-step process that any aspiring entrepreneur could follow, would that be a good or bad thing? In the tech sector, some say such a formula is being taught: the lean-startup methodology, an approach to entrepreneurship that consists of clearly defined steps for discovering customers and developing a product or service.

Over the past five years, the lean movement has spread beyond the traditional tech sector to being taught within the government to publicly funded scientists so they can better translate their research into commercial innovations. At the National Science Foundation and the National Institutes of Health, this entrepreneurship-training program is called I-Corps (Innovation Corps).

Now the Lean LaunchPad is being used to address national-security and foreign-policy concerns. After a successful pilot class at Stanford University last spring, the course “Hacking for Defense” will be taught to college students around the country as a way to develop solutions to critical national security problems for the national-defense and intelligence communities. And this fall, another lean-startup course at Stanford debuts, called “Hacking for Diplomacy,” where students will work on challenges faced by the U.S. State Department.

From tech startups to government-funded research and now national defense and international diplomacy – are there no limits to the lean approach? Devotees say its widespread adoption and track record of success are proof that it works. Others say the methodology doesn’t make sense for certain sectors. So, who’s right?

A ‘lean’ history lesson

In 2005, retired Silicon Valley entrepreneur Steve Blank came out with The Four Steps to the Epiphany, which first stated that startups are not smaller versions of large companies, but nascent ventures in search of a business model. Four years later, a Swiss business theorist, Alexander Osterwalder, introduced the world to a new tool to help startups design their business model, called the “business model canvas.”

By then, Blank had become an educator, teaching entrepreneurship at Stanford. He combined Osterwalder’s business-model canvas with the customer-development process he defined in Four Steps and began teaching what he called the “Lean LaunchPad” methodology in 2011.

Today, countless students and entrepreneurs who have come across his books, including the 2012 bestseller The Startup Owner’s Manual, credit their success to Blank’s insights. The movement was also advanced by the 2011 book The Lean Startup, by Eric Ries, and continues to grow as the federal government now teaches the lean-startup methodology to scientists at its national labs using the curriculum Blank developed.

An eight-time serial entrepreneur, Blank is the first to admit there is no rule book in Silicon Valley. What his Lean LaunchPad approach does is help entrepreneurs avoid some of the most egregious failures, which he explains are often caused by hubris.

“It’s all the attributes of a world-class founder — passion, resilience, velocity, urgency — that make most of them fail because they end up confusing a faith-based enterprise with a fact-based enterprise,” Blank said. “You need faith to start, against all odds. But what you rapidly need to do is replace the faith with facts.”

The cornerstones of the lean methodology include:

From there, continued feedback intake drives product improvement and, if necessary, any changes in the direction of the business — otherwise known as a “pivot.”

Government goes lean

The approach worked for Jason Oberg, who, in 2013, was working on a Ph.D. in computer science at UC San Diego. Along with a post-doc at UC Santa Barbara and professors from both campuses, Oberg was researching a basic technology that would help computer-chip makers find vulnerabilities that could result in data leaks and other security issues.

That year, they received a research grant from the National Science Foundation and went through NSF’s I-Corps training program. They followed Blank’s core mandate to “get out of the building” and talk to at least 10 people per week — potential customers and other stakeholders. For Oberg’s team, this meant venturing off campus and chatting up chip makers, chip buyers, potential partners and more. By the end of the 10-week I-Corps program, Oberg realized that his team could indeed build software that finds chip vulnerabilities, and that customers would pay good money for it.

Oberg is now CEO of San Diego-based Tortuga Logic, a startup founded by the members of his I-Corps team. They now have nine employees, secured phase two of the NSF grant and are bringing in both early investment money and revenue from clients.

“If we had not gone through I-Corps, it would not have pushed us over the edge to build a product and become entrepreneurs,” Oberg said. “I probably would’ve ended up working at one of the big software companies.”

The NSF offered the first I-Corps training in 2011 and has since grown into a huge success: Over 800 teams from 192 universities in 44 states have completed the NSF training, according to Tom Kalil, deputy director for technology and innovation in the White House Office of Science and Technology Policy. Each I-Corps team includes a university faculty member who is a research scientist and acts as the principal investigator (PI), a graduate student (entrepreneurial lead) working in the PI’s lab, and a mentor from their local area with domain expertise.

More than 320 companies have been created by those I-Corps alumni, Kalil said. “It’s taught scientists and engineers about this similarity between the scientific method and the entrepreneurial process,” Kalil said. “So I see this playing a really important role in providing some entrepreneurial as well as experiential learning that provides a clear and logical framework.”

Limits to lean?

However, some feel that would-be entrepreneurs are becoming overly concerned with following the formula, while losing sight of more practical business matters. Mike Pozmantier, a technology-transfer expert who managed the U.S. Department of Homeland Security’s Transition to Practice program, says he has seen a number of dabblers over the years adhere to the process in lieu of actually solving the issues they encounter.

From his time in government, Pozmantier is well aware of its enormous efforts to understand and adopt the mindset of the private sector. And he acknowledges that I-Corps does a good job of pushing researchers to get out and speak to people — and of teaching one of the few well-defined methodologies for putting people on an entrepreneurial path.

“Process is clearly helpful, but I’ve seen too many people rely on it to the detriment of actually doing what they need to do,” Pozmantier said. “There is a place for lean, but entrepreneurs should look at it as a tool in their toolbox — and not as the toolbox.”

Perhaps the biggest critique skeptics voice about the lean-startup approach is that it threatens to change the entire trajectory of entrepreneurship. No longer is it about developing a profoundly novel and complex technology over several years, remaining focused on a specific idea for a product that can actually live up to a cliché mission statement about “changing lives” or “making the world better.”

Instead, critics say the lean approach is increasingly skewing entrepreneurship toward the creation of products and services that lend themselves to rapid market releases, iterations and exits. Why embark on the daunting journey of developing some heavy technology that could take years and many millions of dollars just to prototype, when you could design the next Pokemon Go? The smartphone and app ecosystems have already been built, and thumbs are literally twitching for that next digital distraction.

“When the technology is deep and new, you do not start with those advantages,” said Mike Lyons, a longtime lecturer on entrepreneurship at Stanford and veteran of the Silicon Valley tech scene. “The companies that drive GDP in the valley, including Facebook and Google, were not built that way.”

One field that seems to defy the lean methodology is med-tech. Setting aside biometric-tracking devices, wellness apps and the like, much more time and capital are needed to build a product or service that will diagnose or treat a medical condition, says Gordon Saul, executive director of the Stanford Byers Center for Biodesign.

He acknowledges the value of the customer-development process’s mandate to walk out of the lab and talk to as many people as possible — especially when it comes to academic research, which Saul says can be “very inward looking.” But in the case of, say, a Class 3 medical device — a category that includes the highest-risk products such as surgical implants — the wide array of stakeholders, regulatory issues and immense development costs don’t fit into rapid iteration and pivot cycles.

“Developing medical technology is enormously expensive,” said Saul, adding that costs to get a Class 3 medical device to market can soar as high as $80 million. He notes that a significant proportion of those costs are spent clearing regulatory hurdles, some of which arise early in the development cycle, such as the documentation of design controls and decisions.

“Many of these very specific regulatory hurdles don’t exist in other industries, especially consumer products where the lean methodology got its start,” Saul continued. “Similarly, with medical devices, there’s not just one end user to target. Patients, doctors, healthcare facilities and insurance companies all have a say in whether a new technology will be adopted.”

The result is that it’s just not that simple to build, test and iterate a minimally viable product in the med-tech field, Saul says.

In fact, the center teaches its own proven, repeatable process for health-technology innovation – a step-by-step approach for identifying and evaluating important unmet healthcare needs, inventing new technologies to address the most compelling ones, and then helping innovators prepare to bring those technologies into patient care.

Since 2001, the center’s trainees have founded 41 health-tech companies from projects originated within the program, and treated over half-a-million patients with technologies invented at Stanford Biodesign. The innovations range from a neonatal resuscitation device to solutions for arrhythmia, enlarged prostate and post-menopausal challenges in women.

“We do adapt some of the lean methodology’s focus on outward discussions and disciplined gathering of input to help drive decisions, but in a more typical framework that we would see in medical-technology development,” Saul said.

A flexible framework

Adaptation has also been key in teaching the lean approach to publicly funded researchers working in the life sciences. Tom Kalil at the White House Office of Science and Technology Policy said the National Institutes of Health have successfully tailored the NSF’s I-Corps program in order to train teams that receive NIH grants to develop therapeutics, diagnostics and medical devices. But it wasn’t a simple copy-paste.

“The FDA is involved. Medicare is involved,” explained Kalil, who also serves as Senior Advisor for Science, Technology and Innovation for the National Economic Council. “In fact, it’s going to be different depending on — within the life sciences — whether you are talking about a diagnostic, a medical device, a drug, a vaccine or a health IT solution.”

Blank blogged about prototyping I-Corps for life-science innovators. The 10-week class was held in 2014 at the University of California, San Francisco, and in his post, Blank includes video of a physician who described how valuable the customer-development process was for his team’s medical-device startup.

But again, Blank says the Lean LaunchPad does not guarantee a successful startup. He points to outliers like Steve Jobs and Elon Musk, whose achievements resulted more from their unique talents than any formal education. What made the lean methodology stand out, Blank explains, is that it wasn’t a better version of something else — but a radical shift in thinking described as never before.

“It’s not the methodology, it’s a methodology,” Blank said, “and like most things, hopefully something better and more efficient will come out of it.”

Today, technology entrepreneurship and the arts are often characterized as clashing forces in society. As tech startups proliferate in a city, we hear the familiar cry that gentrification will sterilize the creative and artistic soul of the community – and that rising housing costs will put artists out on the street.

But both disciplines play a crucial role in shaping our world, so wouldn’t it be better to start from a place of empathy, rather than rivalry? Artists and entrepreneurs have so much in common: Each discipline requires creativity and vision to bring an idea to life, and whether you’re a musician or a technologist, without passion you’ve got nothing. Even the underlying strategies and satisfaction felt from a dream realized are similar.

Take Meow Wolf, a Santa Fe-based art collective and production company. It started as a group of artists with a desire to create a space to host music shows, make art, and be expressive in their community. As their installations started gaining traction, the artists began looking for a way to support the collective financially, which was the beginning of their journey into the world of scalability and entrepreneurship.

Photo - Giant spider sculpture
Spider sculpture ‘TaranTula’ by Christina Sporrong at the Meow Wolf Art Complex in Santa Fe, New Mexico.

“As artists, we emerged as entrepreneurs largely because we were looking for alternatives to the traditional art world model,” said Sean Di Ianni, co-founder and chief operating officer at Meow Wolf. “What fueled our ability to make opportunities for ourselves was both a sense of strength in numbers and also a real enjoyment of the unpredictability of working collaboratively.”

Furthermore, Di Ianni’s experience as an artist helped prepare him for the world of uncertainty that startup founders often face: “As an artist I always seem to be solving strange or unexpected problems to push my work forward. I think the work I’ve done in building a business is an extension of that process of propelling myself into unknown creative territory.”

More similar than not

In one of his blog posts, entrepreneurship educator Steve Blank begins by presenting two kinds of artists: composers and performers, where the former are the ones who create and latter are those who execute that creative vision. “Founders fit the definition of a composer: they see something no one else does. And to help them create it from nothing, they surround themselves with world-class performers,” Blank writes.

“This concept of creating something that few others see – and the reality distortion field necessary to recruit the team to build it – is at the heart of what startup founders do,” he continues. “It is a very different skill than science, engineering, or management.”

Blank’s colleague, Stanford Professor Tom Byers, concurs. The holder of the Entrepreneurship Professorship endowed chair in the university’s engineering school, Byers has taught students the art and science of technology venture formation for over 20 years – drawing from his faith in higher education and experience in the startup world before coming to academia.

When he first graduated, however, Byers was a guitarist for several touring blues bands. He performed in over 100 gigs, all in his 20s, and yet can still easily see the similarities between being a musician and an entrepreneur. “To me, they bring the same sort of joy. When performing, I felt in flow, I felt joy, I felt like I was having impact,” Byers said. “Putting together a band and making a living – the feeling that I was doing something I was born to do, that’s the same feeling I got when I decided to pursue entrepreneurship and academia.”

Beyond these feelings of individual joy and passion, Byers explains that the two biggest components of innovation – creativity and teamwork – are the foundation of both music and entrepreneurship.

“Innovation in both music and technology entrepreneurship is rooted in creativity and teamwork. Finding the harmony between creativity and teamwork, and developing a culture and a mindset that cultivates both of those things, is essential,” said Byers, a faculty director at the Stanford Technology Ventures Program (STVP). “If you have one and not the other, you have no impact. That’s absolutely the case, whether you’re performing with a band or creating a company as a startup team.”

Arts and tech in higher education

Stanford is a familiar theater in this supposed war for relevance, with much ink spilled in the debate over whether the emphasis on a liberal-arts education has been overshadowed by Silicon Valley’s need for technical innovators. The university has launched numerous interdisciplinary initiatives in recent years that have brought arts and humanities departments closer to engineering, but even at the level of individual faculty members, the spirit of mutual respect is obvious.

Rich Cox, a lecturer at Stanford in the engineering school and Graduate School of Business, takes the intersection of art and science to heart in his own venture, a management-design firm he founded.

“We think there is something magical about the intersection of the research and theory from academics, the embodied learning from the arts, and the practical application from business,” Cox said. “Academics organize knowledge into usable frameworks, the arts thrive in giving elegant answers to ambiguous questions, and business grounds theory and expression giving concrete results.”

Art is innovation

Indeed, unique disciplines can literally go hand in hand. In his book The Innovators, Walter Isaacson explains how no less than Leonardo DaVinci, Albert Einstein and many other geniuses engaged deeply with both the arts and sciences at the peak of their inventiveness – themselves citing this interplay as the reason for their success as innovators.

“When Einstein was stymied while working out General Relativity, he would pull out his violin and play Mozart until he could reconnect to what he called the harmony of the spheres,” Isaacson writes.

Perhaps the best example of arts and startup communities coming together is the emergence of incubators outside the high-tech sector. Alice Loy, co-founder of Creative Startups, founded the company in 2007 because she realized the potential for innovation in the often-overlooked creative population.

“For a long time, there’s been this falsehood perpetuated that artists struggle with business,” Loy said. “What I would argue is that artists bring a unique perspective and creativity that allows them to see market opportunities before others see them, and then go after these opportunities in a unique and defensible way.”

Beyond their innate entrepreneurial abilities, “creatives” also have ideas and perspectives that Loy believes benefit society in the long run. She mentions data showing that entrepreneurs make social change happen. This begs the question: Who are the chosen entrepreneurs who get to shape the future? What kind of world do you want to see?

Loy adds that given how creative expression such as art, music and film are the foundation of the communities we all love to live in, we should invest in artistic entrepreneurs to build more of the world that we want to live in.

Back in Santa Fe, Meow Wolf seems to be a positive example of what happens when these types of entrepreneurs do get a chance to shape the world. “People of all ages and many walks of life have reacted with overwhelming positivity to what we’ve done with our first permanent installation,” Di Ianni said. “This is in part because people crave raw, unique, expressive experiences just as much as artists crave a place to be expressive.”

Entrepreneurship may be seen as a key to improving society and economies in America and much of the developed world. But how much faith do other cultures put in it, especially those with vastly different beliefs about gender, authority and openness to change?

There was perhaps no better place to understand how the rest of the world feels about it than at the 2016 Global Entrepreneurship Summit held last month at Stanford University.

On stage with President Barack Obama, three young entrepreneurs shared their stories about founding ventures in countries as distant from Silicon Valley – in miles and mindset – as one could imagine. They included the founders of an Egyptian event-promotion app and platform, a startup in Rwanda that turns waste into renewable energy, and a social startup in Peru that empowers under-educated women by teaching them coding and other professional skills.

Jean Bosco Nzeyimana, founder and CEO of the Rwandan startup, described one of the biggest differences in mindset between investors in the valley and those in his home country: a respect for elders and a dismissiveness of younger people, especially in regards to tackling societal issues such as waste management and energy creation.

“In my culture, it is believed that those great initiatives are started by old people,” Nzeyimana told Obama. “So I tried to disrupt that status quo and created this company. But of course, during this period, no one was even trusting me.”

That was just one of many challenges that entrepreneurs at the summit said they faced back home. And yet, the more than 700 entrepreneurs who flew in from across the globe illustrated how much optimism exists worldwide.

Recent research initiatives support growing enthusiasm around entrepreneurship internationally. For instance, a 2010 report published by the Kauffman Foundation showed that new startups are responsible for all net job creation. And more recently, the 2015-16 Global Entrepreneurial Monitor report, which tracks characteristics, rates and societal attitudes around entrepreneurship, found that the positive perceptions around entrepreneurial careers and opportunities were highest in “factor-driven economies” – defined by the World Economic Forum as economies dominated by businesses with a heavy reliance on (unskilled) labor and natural resources.

In other words, economies with the highest potential for growth recognize the importance of entrepreneurship towards their future development and are eager to capitalize on the opportunities.

With the rise of entrepreneurship-education programs, literary resources and other learning opportunities, gaining access to entrepreneurship training has never been easier. This access to information is incredibly important to the propagation of entrepreneurial ecosystems globally. But being successful as a global entrepreneur means going beyond blanket best practices, learning how to adopt ideas to the specific ecosystem at hand, and developing an entrepreneurial mindset that will serve as an asset in different contexts.

Regional differences at play

In addition, leaders in the field believe that thinking globally is becoming increasingly important for all entrepreneurs. “Remember that entrepreneurship is a way of life, and being globally minded is no longer a choice if you want to be a successful entrepreneur,” said Rebeca Hwang, a Stanford graduate and lecturer who has worked as an entrepreneur on multiple continents.

Noting that entrepreneurs around the world share many personality traits – including a high level of technical or entrepreneurial talent and a hunger to create something amazing – Huang says she sees different entrepreneurial norms and behaviors at play in each region.

In general, Europe has available capital and reliable institutions – though a certain sense of complacency and aversion to risk can exist in areas where a non-entrepreneurial career is believed to provide more stability and security. And yet, there is a growing interest in Europe for entrepreneurship, according to Lena Ramfelt, who teaches entrepreneurship, marketing and innovation at Stanford and the Stockholm School of Economics.

“In many large cities in Europe, you can almost describe the growing interest as a movement, where you might have to explain why you are not an entrepreneur rather than the other way around,” said Ramfelt, adding that excitement has spread beyond the high-tech sector into areas such as social entrepreneurship and ventures focusing on creative markets.

In contrast, Latin America has high potential for fast growth with plenty of young and hungry talent. But the region also faces some institutional challenges, like a lack of venture capital, according to Felipe Jara Schnettler, director of entrepreneurship at the integrated higher-education system INACAP, which is based in Chile.

“The missing link in the region, in spite of growing interest in entrepreneurship, is private funding,” Schnettler said. “Although there are people and families with big amounts of capital, there is still little interest in becoming part of a venture capital or angel network. This is mainly due to risk aversion, which may be driven by limited number of success stories so far.”

Meanwhile, Asia and South East Asia are booming with entrepreneurship and have tremendous market opportunities. But Hwang explains that the horizontal culture of entrepreneurs can clash with the traditionally hierarchical status quo in many countries there.

During a panel on entrepreneurship in China at the Global Entrepreneurship Summit, the founder of a venture-capital firm also commented on how the mix of opportunities and challenges make China’s entrepreneurial landscape quite complex and dynamic.

“Every day we see new companies, we see new opportunities,” remarked Northern Light Venture Capital Founder Feng Deng. “We also see a lot of challenges in terms of not only in the technology side, but a lot of times it’s the whole environment, for example the government regulations.”

As for the Middle East and Africa, political instability and conflicts continue to haunt what are otherwise emerging markets with great potential. The stigma of failure also hinders many potential entrepreneurs, according to Tim Weiss, an academic researcher who studies entrepreneurship in Kenya.

“In Kenya, failure is more sticky to the person,” Weiss said. “The repercussions an individual faces for failing make it much riskier to fail than in an environment where failures are understood as an integral part of becoming an entrepreneur. As a result, many entrepreneurs don’t pursue their boldest ideas, even if they have the potential to be the most rewarding.”

Given the unique cultural, political and business climates in different regions of the world, experts say global entrepreneurs must learn how to navigate varying conditions and diverse entrepreneurial ecosystems. And due to these diverse conditions, entrepreneurial practices that work in one region or ecosystem may not translate directly to another, meaning that global entrepreneurs must learn to be flexible when it comes to applying ideas that have worked in the past.

An “open” question?

This dynamic can trickle all the way down to the offices where work is getting done. Stanford Professor Pamela Hinds, who co-directs the Center for Work, Technology and Organization in the School of Engineering, studies the effect of different cultures on innovation.

In her research, Hinds has found that certain practices that lead to greater innovation within U.S. organizations can actually hinder innovation in other countries. In a study on the effect of open and unfinished space on innovation, Hinds and her team found that employees at U.S.-based companies thrived in open environments, but the open and unfinished “startup garage environment” was quite problematic in India.

“The unfinished nature of the space,” Hinds said, “translated into not feeling very polished. And in India, it was inconceivable to bring customers into this space because it didn’t convey the kind of professionalism that was expected of the organization.”

In other words, the cultural differences around unfinished and open space negatively affected the workers’ ability to innovate, even though that same kind of space had been proven to increase innovation in another cultural context.

In the study, rather than calling the open and unfinished space a failure, the team in India took what they learned from this experiment and adapted the space to suit their own culture and needs. The result, in the end, was an increase in innovation for this company as well.

In describing why the team in India eventually found success, Hinds said it was crucial to have someone in the innovation center in India who understood both cultures and was therefore able to advocate for the needs of the team in India.

This research is yet further proof that applying blanket best practices to an organization rarely leads to success. Rather than copying an approach that’s been proven in one country or one environment, Hinds’ work suggests that the most effective entrepreneurs take ideas from other successful companies and adapt them to their own ventures.

Having taught entrepreneurship on multiple continents, Hinds has seen equal entrepreneurial potential in students across the board. It’s when students leave their idyllic academic environments and start working in the “real world” and confront the cultural norms of each region that potential fades into conformity.

At heart, however, Hinds said, “the innovation potential in people in different places is pretty much the same.”

Business classes are not a prerequisite for entrepreneurship, and yes, some of the most storied startup founders were college dropouts. But many others say they benefited from academic courses and experiential learning opportunities that focused on the fundamentals of entrepreneurship.

Joshua Reeves, the soft-spoken CEO of a payroll and benefits startup called Gusto, began one talk on entrepreneurship by saying he attended the Entrepreneurial Thought Leaders Seminar at Stanford University 14 quarters in a row while majoring in electrical engineering.

Kevin Systrom and Mike Krieger, the founders of Instagram, met as students in an entrepreneurship work/study program that combines classes, mentoring and other immersive experiences. They and other entrepreneurs who went through the nine-month Mayfield Fellows Program, also at Stanford, say it was the most insightful experience they had as students.

Other alumni of the program include startup founders like Kit Rodgers of Cryptography Research, Avid Larizadeh of Bottica and Google Ventures, David Merrill of Sifteo and Bobby Lee of BTCC. Each one of them possesses innate talents and drive, that along with insights they gained as students, propelled them to entrepreneurial success.

Elon Musk may embody the notion of a naturally gifted entrepreneur, but the aforementioned founders are proof that the necessary skills and mindset can be learned. The thought-leaders seminar and fellowship program are both offered through the entrepreneurship center in Stanford’s Department of Management Science & Engineering.

The late Peter Drucker, one of the leading management thinkers of the 20th century, said it best: “The entrepreneurial mystique? It’s not magic, it’s not mysterious, and it has nothing to do with the genes. It’s a discipline. And, like any discipline, it can be learned.”

Yes, some will argue that entrepreneurship is still more art than science, at times requiring improvisation in the face of unique and uncertain situations. But there are obvious characteristics that successful entrepreneurs tend to share. Among them are:

Emergence of entrepreneurship education

Donald Kuratko, a professor of entrepreneurship at Indiana University, Bloomington, traces the history of the academic field back to 1971, when the University of Southern California first launched a concentration in entrepreneurship for MBA students. By the early 1980s, more than 300 universities offered courses in entrepreneurship and small business, and over the next decade, that number grew to 1,050 schools, Kuratko states in his article, “The Emergence of Entrepreneurship Education: Development, Trends, and Challenges.”

When it was published in 2005, entrepreneurship education had exploded to more than 2,200 courses at over 1,600 schools around the country. Kuratko also counted more than 100 established and funded entrepreneurship centers at the time, noting emerging trends in “experiential learning” such as class projects, startup competitions and field trips exposing students to industry.

“Today, the words used to describe the new innovation regime of the 21st century are: dream, create, explore, invent, pioneer, and imagine!” Kuratko wrote. “Entrepreneurship educators must have the same innovative drive that is expected from entrepreneurship students.”

However, Kuratko notes — as do others — that more progressive universities are offering entrepreneurship courses across a wide range of schools and departments. In particular, “it is critical to expand entrepreneurship education to engineering and science departments where most of these technologies originate,” entrepreneurship professors Tom Byers (Stanford) and Andrew Nelson (University of Oregon) state in the Chicago Handbook of University Technology Transfer and Academic Entrepreneurship.

Byers and Nelson, along with Richard Dorf, an engineering professor at the University of California, Davis, wrote the textbook Technology Ventures: From Idea to Enterprise. And in it, they explain why they focus on the tech sector, and on educating science and engineering students as well as those studying business:

“The technology sector represents a significant portion of the economy of every industrialized nation. In the United States, more than one-third of the gross national product and about half of private-sector spending on capital goods are related to technology. It is clear that national and global economic growth depends on the health and contributions of technology businesses.”

At the university that spawned Silicon Valley, Stanford’s engineering school offers courses, fellowships and other learning opportunities to help students develop the knowledge, skills and behaviors to be entrepreneurial in life. And through Stanford’s involvement with the National Center for Engineering Pathways to Innovation – known simply as the Epicenter – students and faculty far beyond the valley have brought entrepreneurship and innovation to their campuses and curriculum.

Funded by a $10 million grant from the National Science Foundation, the Epicenter led initiatives that turned thousands of college students and faculty around the country into inspired advocates for bringing a focus on entrepreneurship and innovation to engineering education — touching about 300 U.S. institutions over the past five years.

The Epicenter’s leaders recently sat down and discussed how far entrepreneurship education has come in the last 20 years, and what the future holds for integrating more of it into engineering curriculum.

Creating innovators, not experts

In one instance, an entire engineering college is devoted to graduating innovators by tearing down the academic silos that have historically kept students narrowly focused on their major. Olin College of Engineering, in Needham, Mass., does this in recognition that the next Steve Jobs won’t be an expert in just one discipline — and that the late CEO of Apple didn’t even major in engineering.

At a recent Entrepreneurial Thought Leaders talk at Stanford, the president of Olin College described how the traditional model of higher learning separates the disciplines and forces like-minded students to stick together. When instead, Richard Miller said, what aspiring innovators need is to be exposed to a diversity of perspectives.

Citing research out of Stanford, Miller explained that innovation happens where three objectives overlap: feasibility, viability and desirability. But at a typical university, most of the students who focus on feasibility (can it be done?) are in the engineering school, while the students concerned with viability (is it financially possible?) are working on MBAs. Meanwhile, the students who care most about desirability (people’s emotions) are usually found in the humanities and social sciences.

“If we’re going to create innovators, we need to do a better job of integrating these in the same head, so that one person can see the whole picture,” said Miller, a leader in the movement to revolutionize and reshape engineering education. “The big message for engineering schools: No amount of doubling down on math and science courses is going to improve the output of innovators.”

The point is that the most important traits in entrepreneurship aren’t necessarily inherited or the result of total luck. While charisma and happenstance certainly play a role, prominent educators agree that people can learn to be entrepreneurs.

Fortunately, there is no shortage of programs, organizations and universities that want to prepare the next generation of innovators – and the need for them has never been greater.

The concept of social entrepreneurship is becoming increasingly popular. People talk about great entrepreneurs like Jessica Jackley, co-founder of the microfunding company Kiva, and Blake Myscokie, who founded TOMS, which donates a pair of shoes to the needy for every pair of shoes sold. But let’s be honest: What if we want to contribute to social causes but are not ready to become the next “great social entrepreneur,” because we also have other things we care about? I have a friend who is really passionate about improving clean water supplies in developing countries, especially Africa. However, he has a job he loves, along with his hiking trips and friends – the fact that he cares does not mean he is ready to abandon his current life to move to Africa and dedicate it to the cause of clean water.

There are a wide range of entrepreneurs today, from Hollywood celebrities championing social causes to those toiling in obscurity on technological advancements. Is there any middle ground for average folks like us, who care deeply but don’t have the bandwidth to devote 100 percent to an immense social mission?

Student organizations are the most common occupants of this middle ground. Since high school and throughout my years at Stanford, I was part of an association called the Southeast Asia Leadership Network (SEALNet). Every year, SEALNet organizes community services trips for U.S. colleges students to Southeast Asian countries. Each trip is tasked with a social mission in a specific developing region, such as mentoring orphans in Vietnam, supporting underprivileged immigrants in the Philippines or improving hygienic measures in Indonesia. The SEALNet leadership board is almost 100 percent students, who spend on average 10 to 20 hours per week recruiting and preparing for SEALNet summer trips, and putting on regular bonding activities to strengthen SEALNet’s fast-expanding global community.

Five years ago, when I was a freshman at Stanford, I thought about bringing parts of the wonderful entrepreneurship education that I, fortunately, have had the opportunity to receive, to my home country, Vietnam. In Spring Quarter, with much-cherished support from Tom Kosnik, a management science and engineering lecturer at the Stanford Technology Ventures Program, Viet Youth Entrepreneurs (VYE) was born out of his course Global Entrepreneurial Marketing. Missioned to promote the entrepreneurship ecosystem in Vietnam, VYE organizes startup-education bootcamps, startup-internship programs, hackathons, business plan-pitching competitions, tech workshops, panel discussions, startup job fairs, and we most recently published a book on entrepreneurship. Now among the most prominent startup-community builders in Vietnam, the organization has thrived in the past five years 100 percent from the contributions of volunteers, most of whom work part time for VYE while carrying on their other jobs and ventures.

Many people ask me why we do not focus on building VYE to become the next big global social venture, powered by a full-time, well-structured team. I do not think everything needs to grow to be the next big thing (and I know this is a particularly strange statement in Silicon Valley, where the ultimate goal of the average startup founder is to make his/her venture the next big unicorn). VYE’s impacts on Vietnam’s youth and on its startup community have been proven. We put on new programs and events all year round, and are continuously modifying our approaches to better fit with the country’s fast-changing startup environment. Different from a traditional startup, where growth and cash flow are often the main focus, VYE is more of a community – a house hosting individuals who wish to spend time on supporting young Vietnam-based startups.

The community factor is key to part-time social ventures like VYE. A strong sense of community is the only way to motivate a group of part-time volunteers to commit to the organization’s overall mission. People voluntarily decide to offer their time because they believe in the mission; they then voluntarily continue to stick with the organization and deepen their commitment because they enjoy the friends they work with and the new friends they will meet through the work. Thus, shaping the right culture and facilitating optimal bonding between the officials have always been the focus of VYE’s leadership team.

Community is also one of the key perks for joining so-called part-time social ventures. Many VYE volunteers have found new ideas, inspiration, trusted friends, co-founders, and even girlfriends/boyfriends through plugging into our network. Apart from the core founding team, all VYE volunteers are assigned on a per-project basis, and thus are not meant to stay after the project ends. The more dedicated ones find time to come back and hold more permanent roles with the organization; some do not take on official responsibilities but keep coming back to support when they can. This model is ultimately laissez-faire – our organization is basically a group of everyday people who wish to contribute but can’t commit full time to VYE, who are nonetheless bound by the sense of community and culture that we have built.

I do not believe we have to wait until we have attained sufficient time, resources and determination to start thinking about “social good” startups. If we can find a channel to contribute as much as we can, when we can, society will benefit hugely from the additional 10 percent time contribution from millions of people – those with good intentions but who are not yet ready to become the next Muhammad Yunus due to other commitments. VYE is one community model for part-time entrepreneurs, and I am sure there are many other viable models out there. You just have to go look until you find one that fits your life.

In the era of the entrepreneur, clever ideas can seem like a dime a dozen. But it’s the committed willingness to act on an idea that turns an epiphany into something much more than an ephemeral intention. To illustrate this, we present insights from the Entrepreneurial Thought Leaders (ETL) Seminar, featuring recent speakers sharing different but equally poignant perspectives on the value and mechanics of taking action.

One of the most notable hotbeds for technological leaps is Alphabet, and in particular, X, its well-known “moonshot factory.” From balloon-enabled Internet to self-driving cars, the division has earned a reputation for conceiving some of the most audacious ideas for improving our lives through technology and seeing them through – at least to the prototype phase.

Astro Teller, “captain of moonshots” at X, spoke a little of the lab’s secret sauce at his ETL talk, saying that its success starts with a culture that sounds contrary to its mission: While crazy ideas are encouraged and celebrated, they are immediately scrutinized for flaws in feasibility. Calling himself a “culture engineer,” Teller emphasizes the importance of fostering workplace norms that encourage the sharing of big ideas, and of creating a space where people feel safe knowing no limits will be imposed on the imagination. Teller notes that adults often feel they have lost their sense of creativity and miss out because of it. The rate-limiting step to innovation, as he sees it, is that we don’t put all our ideas out on the table because of our self-defeating doubts.

Now, once you’ve gotten all those great ideas out in the open and have identified the one with the most potential, it’s time to execute. And while there are many ways to move forward, there’s a tried-and-true formula that works for most teams – whether they are in large corporations or small startups. It’s called product management, and below, entrepreneur Minnie Ingersoll describes its three phases from her time at Google, where she led efforts to create Google Fiber, deploy a citywide WiFi network and improve Google AdWords – all non-trivial tasks for sure. Now the co-founder and chief operating officer of the online used-car marketplace Shift, Ingersoll describes the three phases as 1) defining the vision, 2) deciding what product to build, and 3) execution.

The first phase involves getting to know who you’re building for and what problem you’re solving. After all, what good is a solution if you haven’t taken the time to put yourself in the shoes of the user? The latter two phases are setting up a product roadmap and, perhaps most importantly, holding yourself and your team accountable to the product milestones you established. This is where relentless execution on the vision you crafted in the first step of the process separates the ideas that come to fruition from those that don’t.

But imagine a circumstance where, after much debate and deliberation, your team decides to move forward with an idea you vehemently disagree with. What then? After all, we’re proud of our ideas and often find it difficult to set them aside. According to Bob Sutton, organizational-behavior expert and professor in Stanford’s Department of Management Science & Engineering, that’s precisely when we should forego ego and give 100 percent. Citing the wisdom of late Intel co-founder Andy Grove, Sutton says that by fully committing to the project you initially resisted, you’ll know that, if it fails, the flaw was in the idea itself and not in the execution.

To have a good idea without the ability or drive to bring it to life is like having a dinner table without sturdy legs: It’s nothing more than an illusion of having something valuable. This is not to diminish the value of a good idea, which is half the battle in and of itself. But to discover an opportunity worth pursuing and follow through with committed and thoughtful execution, bolstered by strong team alignment, is the very essence of entrepreneurship.

It’s wonderful that design thinking is now applied to so many different problems: designing better experiences for hospital patients, designing and implementing better client experiences at social-service agencies, starting new companies, teaching leadership, inventing new radio shows, changing organizational structures, and developing new products and services for people at the bottom of economic pyramid – to name just a few. Design thinking focuses on uncovering human needs, and doing so by not just relying on what people say, but by watching what they do as well. It entails developing a point of view about what needs to address, generating quick and rough solutions, prototyping like crazy and testing ideas with the users, customers, patients, employees or whomever the solutions are intended to help – and doing it all very quickly and not being overly attached to ideas.

There is, however, a part of the story that seems to be slipping away – especially in the business press and in business schools, as well as in areas such as education and healthcare where design thinking is being used. Many executives, students and journalists don’t seem to realize that engineers and engineering schools were among the main driving forces behind the start of this movement. David Kelley, the main founder of the innovation firm IDEO and the Stanford d.school, has been teaching mechanical engineering at the university for over 35 years; and Bernie Roth, our academic director at the d.school has been teaching mechanical engineering at Stanford since 1962 (he is a pioneer in the field of robotics).

And consider two of the most revered design thinkers and teachers I know: Diego Rodriguez at IDEO and Perry Klebahn at the d.school (officially, the Hasso Plattner Institute of Design at Stanford). When I first met Diego, some 20 years years ago, he had just graduated from Stanford, where he earned a degree in mechanical engineering and was working at IDEO. Diego did get increasingly interested in business, got a Harvard MBA, and now – back at IDEO for years as a partner – has become one of the most imaginative business thinkers I know (check out his blog and tweets). Yet, when I talk to Diego, listen to his ideas, and watch his masterful teaching and coaching, I can always see how the magnificent engineering designer inside him remains the strongest guiding force. His relentless advice to do things like get out and talk to and watch some real human beings, to develop a sharp point of view, to brainstorm, to “prototype until your puke,” and to view ideas as easy to get, important to throw away, and ultimately best to be judged by users and the market (rather than experts) all go back to his product-design roots. This really struck me when, a few years back, Diego was designing a new organizational structure for a client that, many years before, he had designed a product for when working as a young IDEO designer. He remarked to me, “The end product is a lot different, but the process I am using is remarkably similar.”

I see the same thing in how Perry approaches problems. Perry has always been a product guy, as he invented the modern snowshoe as a Stanford product-design student and then went on to grow a company that sold and spread the product called Atlas, then was COO of Patagonia, and most recently was CEO of Timbuk2. Perry has also taught numerous product-design classes at Stanford over the past 25 years, and in the last decade, taught over a dozen classes for students and executives at the Stanford d.school. In fact, Perry has taught more d.school classes than any other faculty member since the d.school was founded in 2004 (even though he was CEO of Timbuk2 for five of those years, he kept teaching).

Over the years, I have watched Perry move beyond and expand his engineering-design skills to an ever broader set of problems, like helping software executives gain empathy for what millennials want and rethinking the strategy of a Fortune 500 company. Lately, Perry’s students in his d.school classes – which he teaches with others including Kathryn Segovia, Jeremy Utley and me – tackle problems ranging from finding ways for the San Francisco Opera to attract younger customers to improving the experience of buying a bra for women who have had mastectomies.

Yet Perry’s engineering roots are always evident. I remember watching Perry use his product-engineering background to guide a class exercise aimed at improving employee selection, recruitment and socialization practices for our d.school fellows program. He pressed the students to look for unmet needs, to identify the problem they were trying to solve, to brainstorm ideas for prototypes quickly, and then to test the emerging ideas with users – even though those ideas were unfinished and crude approximations of organizational practices. This process, although modified by Perry and many others to fit problems of all kinds, is simply a variation of the design process that Perry used as a Stanford engineering school student years ago to invent the modern snowshoe – and then to grow the company and customer base required to make the product succeed.

Yes, I am a tenured professor in the Stanford School of Engineering, but I am not an engineer. The core of what we do at the d.school, and of much of what they do so well at IDEO, is rooted most strongly in product-design engineering – especially the flavor taught at the engineering school. That is why, frankly, I feel better when I work with “real” engineering product designers like Diego and Perry in the d.school classes I help to teach – even though I recognize that there are master design thinkers from all kinds of backgrounds, including lawyers, journalists, computer scientists and psychologists. The aforementioned Kathryn Segovia has a Ph.D. in communication (she did her thesis on the psychology of avatars), and Jeremy Utley is a Stanford MBA and former management consultant). Both have developed into two of the most skilled design-thinking practitioners, teachers and coaches I know.

Like many people at the d.school, I get in regular arguments about what design thinking is, how it ought to be applied, and the times when it isn’t right to use it. It’s healthy for all of us to question what we do and how to do it better. But one thing we all share at Stanford, whether our students and faculty realize it or not (and some don’t, as the history is fading a bit), is that the brand of design thinking that we teach is a mindset and set of methods that was developed and refined at Stanford’s engineering school for decades – especially by product designers – before design thinking was ever a hot topic in business, entrepreneurship, education, healthcare and so many other places.

For most of us, the reorganization of Google into a network of separate subsidiaries under the holding company Alphabet had zero effect on our lives. In the wake of Larry Page’s announcement in August 2015, we searched the web, mapped our routes, checked our Gmail, and it all felt exactly the same.

That’s because those core products remained within the original blockbuster business, now known to investors as Google, Inc. But over the long run, the restructuring could unleash the full ambition and creativity of the Silicon Valley company — influencing our lives dramatically in the way that it has with search, and could with self-driving cars and the rest.

That’s Kathleen Eisenhardt’s take on it. She is the S.W. Ascherman M.D. Professor in Management Science and Engineering at Stanford University, and a leading scholar on strategy and organization — especially in technology-based companies and high-velocity industries.

Beyond that, Eisenhardt was the Ph.D. advisor for Shona Brown, the former senior vice president of business operations at Google. Together, they wrote the highly acclaimed business book Competing on the Edge: Strategy as Structured Chaos.

In advance of next month’s annual stockholders meeting at the Googleplex, the first in the age of Alphabet, and Page’s promise of increased transparency into finances and operations, Eisenhardt explains how tech companies (and even terrorists) have turned to an agile and modular structure — and what needs to happen to fuel outsized innovation beyond just another corporate re-org.

Stanford eCorner: Alphabet CEO Larry Page says this will allow for cleaner operations, while industry observers say it will soothe shareholder concerns about Google’s increasingly “wild investments.” What do you find most interesting about the restructuring?

Kathleen Eisenhardt: The most interesting aspect of the Google restructuring is that it took so long to do it. Google has an amazing search business — no doubt about it. Many people even call it Google’s “ATM” because it generates so much cash. But at the same time, Google has had a rough time developing successful new businesses. Many (or even all) of Google’s winning innovations and businesses outside of search per se — like YouTube, Google Earth, Nest and so on — came from acquisitions. Even DoubleClick that was pivotal to the search business was an acquisition.

So, like other companies with enormously successful core businesses (like Intel and Microsoft), Google’s management has found replicating its search success difficult to do organically — that is, from inside Google itself and without the boost of acquisitions. In my mind, reorganizing was long overdue.

eCorner: In Competing on the Edge, you and Shona Brown aimed to help organizations find the balance between too much and too little structure. How did this restructuring size up with the concepts from that book?

Eisenhardt: Shona and I wrote about too much and too little organizational structure – and several processes, one of which we called “patching.” Patching simply means frequently reorganizing companies into focused business units that match changing markets. The term patching comes from quilting: the size of the cloth “patches” on a quilt.

A major insight of patching is the critical importance of business size — organizing into a few large businesses favors efficiency and fits in stable markets. In contrast, organizing into lots of small businesses favors agility and goes with changing markets. This size tradeoff is another instance of balance between too much and too little structure. In the case of Google, it’s likely that its management stayed too long in an organization that favored efficiency when agility was the better choice.

Another point of patching is the importance of having businesses that are about the same size. This reduces politics — a huge benefit. But, it will be challenging for Google to achieve the same size across its business, and so keep the search business from suffocating the others. At the same time, Larry Page is right: The new organization will make for a cleaner organization. The “sunshine” of this new organization should be immensely helpful in the C-suite for clarifying the actual performance of different businesses, and assessing whether the right managers are in place.

eCorner: Do you think the separation of Google into subsidiaries — web-based businesses, medicine, investing and assorted technologies (Nest, X, Sidewalk Labs) — will increase the pace of innovation and bring more breakthroughs into the world?

Eisenhardt: Yes, I absolutely think that the separation will turbo-charge innovation. Of course, this somewhat depends on the investment level. But generally speaking, if implemented well, the new organization lets Google’s leaders install top-notch management teams for each business and gives those teams the freedom to run their businesses. The key will be to push decision-making (both tactical and strategic) down to the business level — to those managers in the best position, with the most relevant skills and information — to make quick and informed choices. They are the ones, after all, with the pulse of the market.

There’s another subtler point, too — that is, one of the toughest challenges is to manage businesses that are operating at different speeds, like simultaneously managing some that are moving at Internet time and others that are running at a slower pace for now (like autonomous vehicles). It is difficult to manage to the beat of different market metronomes. So the new structure should help Google managers to stay in rhythm with their markets.

eCorner: You’ve also recently looked at the virtues of simplicity. And if anything, “Google” was the essence of simplicity in corporate identity. Doesn’t the corporation lose something in this restructuring that adds complexity (at least internally)?

Eisenhardt: Google’s identity may have been simple, but its structure was not. The new business-unit organization should be a lot simpler for people inside and outside of the corporation. In fact, this restructuring is an old story.

A classic book in business history is Strategy and Structure, by Alfred Chandler. He studied several corporations from the beginning of the 20th century, including and notably DuPont. DuPont was primarily an explosives manufacturer that emerged from World War I with huge stockpile of cash. DuPont executives used that cash to diversify into a slew of new businesses, but they stayed in the same monolithic structure that had brought success during the War. By the early 1920s, DuPont was losing money in almost every business except explosives. The flood of red ink finally led DuPont’s senior executives to reorganize the corporation into small business units focused on particular products. DuPont and other corporations that followed this same path went on to become the backbone of U.S. industry. They diversified, stagnated and then reorganized, just as Google has done.

Today, companies like Johnson & Johnson, General Electric and 3M have prospered for decades using this same business-unit structure. Even terrorist groups like ISIS successfully use it, unfortunately. In fact, one of Silicon Valley’s most iconic firms, Hewlett-Packard, remained at the top of the tech world for over 30 years. By contrast, Apple and Google are still a long way from this kind of staying power. A major reason for H-P’s success was its very modular business-unit structure. Regrettably, H-P faltered when its corporate executives added complexity and slipped out of this structure.

So yes, Google’s switch to their new structure is an old story and an overdue one. The new “simpler” Google will be a better Google.

If you’re going to lead the lab that launches moonshots like self-driving cars and balloon-powered Internet, you need to be incredibly ambitious and intelligent. But that will only get you so far. It turns out you also need courage and confidence in the people around you.

Those sentiments came up again and again when the director of Alphabet’s moonshot factory, X, spoke at Stanford on April 20 as part of the DFJ Entrepreneurial Thought Leaders Seminar series. The geniuses inside the secretive lab at the Googleplex in Mountain View are encouraged to identify every possible reason why an incredibly ambitious idea won’t fly, as soon as it’s been thought — and certainly before costly brainpower and other resources are committed.

The teams celebrated most fondly at X aren’t the ones that complete their projects, according to Astro Teller, director at X. He says the teams that kill their moonshots before they even see the light of day are the true rockstars. This is how the Silicon Valley mantra “fail fast” is lived, and not just given lip service.

“This is the difference,” said Teller, who earned his bachelor’s and master’s degrees from Stanford University’s computer science department before getting his Ph.D. studying artificial intelligence at Carnegie Mellon University. “Creating the feeling that failing fast would actually get you what you want, instead of getting you the opposite of what you want.”

Teller gave a similar TED talk in February titled “The unexpected benefit of celebrating failure.” But his discussion at Stanford allowed him to go deeper and engage the audience with an insightful question-and-answer session at the end.

More than any of the moonshots that his factory is known for, Teller said he is most excited about “systematizing innovation.” He does this by creating a work environment where employees are encouraged to be audacious, and by giving them the freedom to work on ideas that inspire them and that they want to own — whether they fail or succeed.

In addition to the self-driving car and Google Glass, other well-known innovations out of X include Project Loon, which is providing Internet access through stratospheric balloons, and Project Wing, a fleet of next-generation drones intended to deliver goods ranging from consumer products to emergency medicine. And yet, X also drops ideas by the dozens every year. Some projects that X has famously pulled the plug on include a space elevator, a jet pack and vertical farming.

Those projects were not fruitless, though. Teams within X taking them on meant there was some potential for a breakthrough, because those working on the projects wouldn’t be there in the first place if they didn’t possess both intelligence and integrity. That’s where the confidence in others comes into play.

“I’m not pro-failure. I’m pro-learning,” Teller said. “We mean find incredibly efficient ways to learn.” Calling himself a “culture engineer,” Teller also explained that good ideas can come from anywhere, and that the positivity that results from such optimism must be protected in order to fuel real creativity, audacity and honesty without fear of reproach.

At one point in his talk, Teller described how the audaciousness of an idea for generating electricity once shared in Alphabet’s moonshot factory far outweighed its impracticality in his mind. He then sums up the decision-making process at X for whether or not to put resources behind a project, using the terms “false positives” and “false negatives.”

In this context, a false positive is when an idea is thought to be worth the time and effort, but ends up not going anywhere despite all the trouble. A false negative, Teller explained, is when an idea is considered unworthy of resources and passed up, when in reality it could’ve been a major breakthrough. He said a false positive is much more costly than a false negative for X — or for any innovation factory.

Toward the end, Teller addressed a question from the audience about how other organizations could possibly create a culture that incentivizes bold failures if they don’t have Alphabet’s deep pockets. To that, Teller pointed to all the research showing that salary increases do not lead to long-term worker satisfaction.

“What people want is recognition,” Teller said. “You don’t need cash and you don’t need (job) promotions to do what I’m describing.”

With entrepreneurs all vying to come up with the “next big thing,” it’s easy to see why everyone is putting work first — and the rest of life second. There are, however, some positives that can result from being obsessed, along with the better-known negatives we seek to avoid. So, while it’s important to keep tabs on when our obsession might turn into something destructive, it’s also worth noting that such behavior can play an incredibly empowering role in entrepreneurship.

Take the tale of Blue Bottle Coffee, founded just six years ago in the San Francisco Bay Area, with a mission to deliver coffee in a way that paid special attention to the roasting process. James Freeman, Blue Bottle’s founder and a recent guest at the DFJ Entrepreneurial Thought Leaders (ETL) Seminar, explained how his foray into business paralleled the artistic process of a musician. All too often, we’re told about the “greats” in any field: Mozart in music, Einstein in science and, nowadays, perhaps Elon Musk in engineering. But Freeman notes in the video clip below that, all too often, striving for that level of perfection is both unrealistic and paralyzing.

Freeman makes a good point when he describes his passion for perfecting the process, not the outcome: It’s worth being obsessed with the ritual and practice of an art, as opposed to being driven to achieve a particular end result. This nuanced form of obsession is rare — and remarkable when we find it in a person. A healthy obsession with the product or service is just what entrepreneurs need to cut out all other distractions and get an idea off the ground.

Prominent venture capitalist and author Michael Mortiz echoed this very concept in his conversation with Lisa Sugar, founder and president of Popsugar, who he says embodies this sort of obsession. With a company motto that once read “Insanely Addicted,” the pop-culture website for women highlights what pragmatic obsession and undying focus can empower an entrepreneur to accomplish. It certainly made a believer out of Moritz.

Besides obsessing over a product, entrepreneurs constantly think about the health of the company they founded – at least the good ones do. This internally focused obsession is evident in a 128-slide presentation published by HubSpot Co-Founder Dharmesh Shah, famously known as the Culture Code. In a recent ETL talk by Shah, he emphasizes the importance of talking about something like culture incessantly because it’s the only way to ensure that it continues to evolve and improve over time. Like any good product or idea will show, being obsessed with iteration and growth is the only path to staying relevant.

This sort of focus is indicative of a personal conviction and dedication to the journey that entrepreneurship represents. But the downside of obsession is equally real, and the initial phases of a startup can easily eat up a founder’s every waking hour. You’re busy building your business and your team, iterating on your product and raising capital all at once. For Derek Belch, co-founder and CEO of Striver Labs, his goal was to generate revenue and make his startup profitable.

Strivr Labs uses virtual reality to train athletes, and in order to capitalize on all the current buzz around VR, Belch said he spent an entire summer on the road — away from his pregnant wife — to sign up professional and college sports teams around the country. Fortunately, he returned just in time for the birth, explaining in this segment of his ETL talk that opportunities sometimes present themselves to a fledgling startup … and you simply have to “sprint.”

Putting our personal lives on hold in order to grow a project or idea into something that will outlive us may be worth throwing work-life balance off in the interim. Just realize obsession for what it is, and how it could benefit your endeavors as long as you know how to harness it. And hopefully, those closest to you will understand when you aren’t getting back to them.

Stanford Engineering Professor Bernard Roth, a founding faculty member of the university’s renowned design institute, told audience members attending one of his recent talks at Stanford University how to “stop wishing, start doing and take command of your life.”

That’s the subtitle of Roth’s new book, The Achievement Habit, and he summed it up in terms verging on blasphemous to the science-loving attendees of the April 13 talk. He disputed the wrinkled, green Jedi’s famous line in Star Wars: The Empire Strikes Back: “Do. Or do not. There is no try.”

To that, Roth stated flatly, “Yoda was wrong.”

Risking the wrath of sci-fi fans everywhere, Roth explained that there is indeed a “try” and a “do.” “There’s really nothing wrong with trying to do something, and there’s certainly nothing wrong with doing it,” he said. “The problem is when you think they’re the same thing.”

That assertion is at the heart of Roth’s teaching over the past 40 years, at Stanford and in workshops around the world. Initially offered as classes in creativity, Roth’s teaching has grown to encompass all that goes into “design thinking,” which is rooted in engineering’s focus on building solutions to problems and involves human-centered need finding, prototyping and iterating.

More commonly known on campus as “Bernie,” Roth is a Jedi in his own right. He is the Rodney H. Adams Professor of Engineering at Stanford and is a longtime veteran of the university’s design scene, first joining the faculty in 1962. He has a worldwide reputation as a researcher in kinematics and robotics, and his most recent activities have moved him more strongly into experiences that enhance peoples’ creative potential through the educational process.

Roth currently serves as the academic director of the d.school, known formally as the Hasso Plattner Institute of Design at Stanford. It has become a hub for innovators throughout campus, where students and faculty in engineering, medicine, business, law, education and the humanities converge “to take on the world’s messy problems together.”

At his talk for the Entrepreneurial Thought Leaders Seminar (MS&E 472), Roth acknowledged that his current thinking seems to run contrary to the ethos of design thinking, which focuses on the problems of others, not the ones doing the thinking. But let’s face it, we all have problems — and Roth was intent on proving that the tools for unlocking solutions that he has developed would work for everyone in the audience.

In keeping with his emphasis on “doing,” rather than simply talking, Roth showed attendees how to reframe problems in a way that increases what he called the “solution space.” He told audience members to:

  1. Think of a problem in your life.
  2. Ask yourself what solving that problem would do for you.
  3. Turn the solution into the question you need to answer.

For instance, one person told Roth that he is slow to get out of bed in the morning. And when Roth asked him what getting out of bed would do for him, the man said it would allow him to get more work done during the day.

“So the question is how to get more work done. It has nothing to do with getting out of bed,” Roth replied. “I can figure out a way to stay in bed and get more work done, as an example.”

In his book, he calls this “moving to a higher level,” and he applies it to profound problems that everyone faces. He starts with the question “How might I find a spouse?” and then turns it into a declarative sentence that sounds more like a challenge: “Find a spouse.”

He then asks, “What question is ‘Find a spouse’ the answer to?” This unlocks a long list of possibilities, including:

“Each of these questions, regarded as a problem, has many possible solutions,” Roth writes in The Achievement Habit. “Finding a spouse is just one solution to each of these. In actuality, it may not be a very good solution to any of these problems.”

However, Roth also cautions that doing isn’t always a virtue, and in his book, specifically calls out Silicon Valley’s obsession with change. In this high-speed, hyper-competitive business environment, companies are always doing something new out of fear that they will stagnate and fold without constant innovation.

The problem, Roth writes, is when we let that notion rule our personal lives.

“Often the things we strive for only represent more of something we already have: money, fame, appreciation, love,” he explains. “It’s an endless chase; as the saying goes, you can’t get enough from more.”

In the startup world, there may be no such thing as becoming too successful. But for those few ventures that end up growing into a consumer business that reaches massive scale, well, it can get complicated.

In the early days of Airbnb, when its founders were happy to just get out-of-towners into their San Francisco loft in order to make rent, they probably didn’t think they would need to worry about how the entire city felt about their business.

But because of how wildly successful Airbnb is today, they do now. The company raised over $8 million to defeat a measure on last November’s ballot that would have imposed tighter restrictions on short-term rentals in San Francisco. The debate over the measure reached from city hall to the radio airwaves and overshadowed even the mayor’s race.

Opponents included Airbnb and the many hosts who list their properties on the site, while those for the measure were San Francisco residents claiming that the constant stream of Airbnb guests was eroding a sense of community. And that sums up the disruptor’s long-term dilemma: When a startup grows to a point where it is in the public eye, the number of people who feel they have a stake in the venture grows.

In short, it becomes their business, too.

Chuck Eesley, an assistant professor of management science and engineering at Stanford, has studied how different stakeholders protest corporate behavior — from religious groups that file civil lawsuits, to environmental activists who hold rowdy public protests to attract news vans and bad press for the business.

“Innovators and entrepreneurs need to recognize that along with technological disruption, often comes social disruption,” said Eesley, who researches entrepreneurship at the Stanford Technology Ventures Program. “These companies need to be aware of what kinds of regulatory battles might be in their future as a result of their innovation.”

“These companies need to be aware of what kinds of regulatory battles might be in their future as a result of their innovation.”

Chuck Eesley

Eesley’s study, published online in the Strategic Management Journal, looked at more than 1,300 actions brought against firms by social activists over the span of 30 years to pressure more environmentally responsible corporate behavior. The journal article, “Through the Mud or in the Boardroom: Examining Activist Types and their Strategies in Targeting Firms for Social Change,” was co-authored by Katy DeCelles, an associate professor at the University of Toronto’s Rotman School of Management, and Michael Lenox, a business professor at the University of Virginia and academic director of the Batten Institute for Entrepreneurship and Innovation.

Unrest in the valley

While their study focused on protests over environmental concerns, some of the findings bear upon some of the most high-profile social challenges currently facing Silicon Valley — tech titans and upstarts alike.

Specifically, Eesley and his fellow researchers found that different types of stakeholders tend to employ different protest strategies: “Internal” stakeholders such as activist investors often worked within the system to affect change, like calling for shareholder proxy votes or filing a civil lawsuit. Meanwhile, “external” stakeholders such as social-movement organizations (SMOs) like Greenpeace were more likely to adopt openly confrontational tactics meant to shame firms in the eyes of the press and public.

In the tech sector, one such SMO is Silicon Valley Rising, a new labor movement comprising hundreds of janitors, cooks, maintenance workers, receptionists and security guards, all demanding better pay and conditions from the highly successful tech companies that employ them.

As for the analog for internal stakeholders identified in Eesley’s study, an excellent example would be Tracy Chou, a female engineer at Pinterest who sparked a national dialog about the glaring lack of women technologists in the valley via her 2013 blog post about gender imbalance.

Maybe it’s because she was an “insider,” or the fact that she could speak in a way that relates to her fellow programmers. But one thing’s for sure: Chou’s initial commentary has bent the ear of the entire industry — from the CEO and co-founder of Pinterest vowing to lead the way in diversifying its ranks, to the heads of Apple, Intel and other tech giants now publicly reporting their diversity numbers (or lack thereof).

Initially, Chou says public accountability wasn’t part of her plan. But she did want the issue to be discussed industry-wide, and without the blogosphere, she would not have been able to share her thoughts so broadly. “I wasn’t that intentional about it to start, but I think it’s important that these discussions be happening, and the way to provoke them is by being public about the message and the stories,” Chou said.

“I think it’s important that these discussions be happening, and the way to provoke them is by being public about the message and the stories.”

Tracy Chou

“I think I have a lot more credibility coming from the inside and being someone who has all the ‘right’ credentials,” she added.

As it turns out, Chou has ties to both the Stanford Technology Ventures Program and to Eesley in particular. While at Stanford, Chou belonged to STVP’s 2009 cohort of the Mayfield Fellows Program; and as a research assistant for Eesley, Chou helped analyze large databases for his comprehensive study on the economic impact of entrepreneurship and innovation at Stanford.

“She had this interest in using data and analyzing data in order to shed light on companies,” Eesley said of Chou. “Now, as an employee in one of these companies, she realized that there was variation across the firms, and that perhaps we should start collecting data and tracking it over time.”

Going forward, the measure of a startup’s success may depend not just on how disruptive it is initially, but how responsive it is as the business grows and stirs up the pot of public sentiment.

It’s easy to see why much of America sees Silicon Valley as out of touch, even as we tap and swipe our devices with renewed vigor each time an entrepreneur churns out a new app. Exhibit A: Tech workers in San Francisco make news when they develop an algorithm that does exactly what the startup founders in the HBO comedy series Silicon Valley are pitching to investors.

As you might guess, veterans in the valley have a more nuanced view. Some liken seemingly frivolous apps to baby steps by young entrepreneurs, who could very well go on to launch more important and influential technological innovations as they mature. Others are trying to show the next wave of founders a different path.

The one that longtime entrepreneur and investor Mike Lyons wants them to take is more of an uphill climb. He currently chairs a cybersecurity company doing “converged infrastructure virtualization,” based on technology developed through a tech-transfer partnership with Pacific Northwest National Laboratory (PNNL).

In 2002, he founded SafeView, Inc., which originally licensed the millimeter-wave technology now used around the world in airport security screening systems. The technology was developed with government money at PNNL, and SafeView invented the imaging system for screening individuals.

So, while Lyons is passionate about entrepreneurship, he doesn’t get too excited about the next messaging or mobile-game app. “A lot of that stuff is just polishing the apple,” says Lyons, also a director of an Internet-of-Things company in the valley.

He wants to see technology taking on bigger, more complex challenges. And that’s why, since 1988, Lyons has taught the course Technology Venture Formation in Stanford’s Department of Management Science & Engineering (MS&E). Along with two other experienced entrepreneurial instructors, the class brings together graduate students — mostly from the engineering school and graduate business school — to work in teams on a technology that has “a critical innovative advantage that will provide sustainable differentiation.”

Among the more than 200 companies that the teaching team estimates alumni of the course have launched are a startup focused on crop science that champions economic and environmental sustainability, a company that provides open software-defined networking solutions, and Skybox Imaging, the micro-satellite maker acquired by Google for $500 million. Serious businesses.

“I don’t mind apps and things like that,” says Lyons, a consulting associate professor in the MS&E department. “I just think people should understand the difference between building companies that leverage a previously built, trillion-dollar infrastructure, and ones that are building technically significant products from the ground up, or that leverage such infrastructures in disruptive ways, like Uber.” Think wireless infrastructure, chip fabs, open-source and operating systems.

In regards to the lean-startup approach, which advocates for the development of a “minimum viable product” (MVP) and iterative product releases based on customer feedback and data, Lyons says it is a method that makes sense for technologically “light” projects. But he adds that the notion that a handful of engineers can build an MVP over a few weekends does not apply across all startups.

“If it’s one of these deep technology products, that’s just nonsense. That’s just not going to happen,” Lyons says. “The MVP could take two years to build.”

And those are exactly the kind of innovations he and the rest of the teaching team see in the version of Technology Venture Formation offered in Stanford’s Department of Civil and Environmental Engineering. Students from that class have launched ventures like PlanGrid, a construction app that digitizes blueprints and allows all team members to collaborate on a project via an intuitive interface.

Another startup, Mango Materials, aims to transform waste into affordable eco-friendly materials that are competitive with oil-based plastics through a microbial process involving the biogas methane.

Mango Materials CEO Molly Morse, who took an earlier version of the civil and environmental engineering course while working toward her Ph.D., says her company is currently getting paid for its products. But to have a meaningful impact in the world of plastics, Morse explains that her operations need to be at the “million-pound-plus scale.”

“When we started Mango Materials, we wanted to change the way people think about methane and the fate of plastics in the environment in a big way,” the biocomposites engineer says. “Impactful entrepreneurship to us, is not just creating a new business, it is critically thinking through how our technology can touch people’s lives and the planet.”

Other projects in the course have addressed housing and energy infrastructure in developing countries, while some teams have proposed ambitious infrastructure projects like sewage-treatment processes that would generate electricity to power a community.

“It’s fantastic because you’re not consuming – you’re net neutral on the grid. You don’t have to buy power to run the sewage-treatment plant,” Lyons said. “Students who really want to make an impact are turning towards this kind of entrepreneurship.”

I was raised to view hierarchy as a bad thing. My late father, an entrepreneur, often ranted about the idiocy he battled in the corporate and government bureaucracies that made life difficult for his little company. He loved the Peter Principle because, to him, it explained why so many organizations were packed with people who had risen to their level of incompetence. Perhaps because of my upbringing, I have always been drawn to arguments — such as management guru Gary Hamel makes — that “bureaucracy must die” and that top-down control is “toxic.”

Given my ingrained biases, I was taken aback by my own answer during an interview with McKinsey partner Rik Kirkland. He was interviewing me about Scaling Up Excellence, the book that Huggy Rao and I came out with in 2014. Rik closed the interview by asking what I learned from our scaling research that surprised me most. I immediately said something like, “I have always despised hierarchies in my heart, but this research taught me that they are good and necessary — of course some are good and others are bad, but spreading and sustaining excellence depends on having an effective pecking order.” As I told Rik once the filming stopped (it was a video interview that appeared on the McKinsey Quarterly site), I was surprised to hear my own answer to his question about surprises!

Huggy and I reached this conclusion for two main reasons. I still feel a bit ambivalent about it, but the evidence is overwhelming:

  1. Hierarchy is inevitable. As our Stanford colleagues Deb Gruenfeld and Lara Tiedens show in a detailed review of research on hierarchy, although the forms it takes vary wildly, it is impossible to find groups or organizations where all members have roughly equal status and power. Whether researchers study people, dogs, or baboons, hierarchies are evident after just minutes of observation. And when strangers meet for the first time, a hierarchy of leaders and followers begins to emerge immediately. This rapid development of pecking orders is seen, for example, in groups of college students who meet in psychology experiments and when strangers start chatting on the street corner — leaders, followers and other signs of status differences nearly always emerge (along with more subtle roles such as “joker,” “hero” and even “scapegoat”).

Gruenfeld and Tiedens conclude: “When scholars attempt to find an organization that is not characterized by hierarchy, they cannot.”

Organizations that are celebrated for their lack of hierarchy may downplay and reduce status differences, but they always have some people with greater formal and informal power than others — and associated pecking orders. And eliminating titles such as “manager” or “supervisor” doesn’t make the hierarchy disappear. For example, there has been a lot of talk lately about Zappos’ ongoing reorganization into something they call a “holacracy.” Some headlines suggest that the company is getting rid of bosses — that isn’t quite right. While more power is being pushed down the hierarchy, it persists under the new structure. More responsibility is being placed as people are moved into “circles” (which sound much like self-managing teams). Yet even though they have stopped using the word “manager” for many roles, there are still people who perform what sounds like middle-management roles to me: They are responsible for staffing teams and dealing with employee performance issues. And, while Zappos is getting rid of a lot of titles, note that Tony Hsieh is still called the CEO.

Hsieh may delegate and empower people more than many CEOs. But Wired’s cute claim that he is “the boss that isn’t” strikes me as somewhat misleading. As I discussed with Jena McGregor when she interviewed me for the Washington Post article she wrote on the change, Hsieh is using his power and position at the top of the pecking order to institute the new structure (which seems like a good idea, at least based on what I learned about it). In fact, this kind of claim that an organization is non-hierarchical because the top dog wields his or her power to push greater responsibility and accountability down to lower levels is also seen in hype about other companies including IDEO and W.L. Gore. Yes, when people are given decision-making power and have the requisite confidence and skills, leaders do not need to monitor or coach them as closely – but there is still a hierarchy and certain people have more decision authority than others.

In short, if you can find a group of people (or dogs or baboons) without a hierarchy, I want to hear about it. Yes, power and status differences are sometimes reduced, but hierarchy is a fact of organizational life.

  1. Organizations and people need hierarchy. While there is no doubt that some hierarchies are better designed than others, an interesting test is what happens when there is little or no consensus about who has more – and less — power. Gruenfeld and Tiedens describe a series of studies showing that when such agreement is absent (so the nature of the formal or informal pecking order is not clear), members become less committed to their groups, less productive and effective, dysfunctional competition for status emerge, and coordination and cooperation suffer.

Another interesting test is what happens when layers of management are removed in a company. Certainly, some organizations have too many layers, but some quite famous founders have discovered that they need intermediate layers — even though they long for the good old days when it was just them and a small team. Google Co-Founder and CEO Larry Page is exhibit one. As we wrote in Scaling Up Excellence:

‘Page has been described as “obsessed with making Google work like a smaller company.” In 2001, when Google grew to about 400 people, Page decided that middle managers were creating complexity and friction — symptoms of John Greathouse’s “Big Dumb Company Disease.” So he got rid of all of them. More than 100 engineers reported to a single overwhelmed executive. Frustration and confusion was rampant. Without those middle managers, it was nearly impossible for people to do their work and for executives to grasp and influence what was happening in the company. Page learned the hard way that a hierarchy can be too flat and that middle managers are often a necessary complexity.’

The upshot is that, as you scale an organization, getting rid of the hierarchy — or even assuming that a flatter one is better — is the wrong goal. Your job is to build the best hierarchy you can.

An earlier version of this article appeared on LinkedIn. Bob Sutton is on Twitter @work_matters.

Nowadays, it seems every budding startup claims its new app, product or service will change the way you live. But before passively accepting hyperbole as the new norm, let’s instead ask the question: What does real impact looks like?

It’s fine if friends want to post “Best. Ever.” with a phone pic of the burger they just ordered down the street, or rave about some new fashion accessory by typing, “How did I ever live without this?” But we all know what it means to truly make a difference in people’s lives, don’t we?

Venture capitalist Mike Maples, Jr. certainly wasn’t exaggerating when he ended his presentation at the DFJ Entrepreneurial Thought Leaders Seminar by daring students at Stanford to “only do things that you think have a chance to be legendary.”

His VC firm Floodgate invested early in Twitter, TaskRabbit and Lyft, all of which have had a deep and ongoing impact on society. And for Maples, they don’t conjure up images of cute birds, bunnies and bright pink moustaches, either. Rather, he regards them as “thunder lizards,” startups so disruptive that they don’t just redefine markets, they demolish them like Godzilla.

Step outside Silicon Valley, and the definition of “impact” can take on new dimensions. Even just beyond the San Francisco Bay Area bubble, community leaders want tech innovation to address more basic social ills born of poverty and inequity. In the town of Stockton, Calif., city councilman and mayoral candidate Michael Tubbs challenges the tech industry to turn its attention to problems such as racism and illiteracy.

The best coders in the world may never develop apps for those issues. But as someone who came from the town once known as the biggest American city in history to declare bankruptcy – and then went on to earn undergraduate and graduate degrees from Stanford on full-ride scholarships – Tubbs draws from both perspectives when he calls for today’s innovators to focus on real-world impact.

That mission is at the center of the world’s greatest institutions, from the United Nations to universities such as Stanford. While Hollywood and humanities majors around the country continue to portray Stanford as being singularly focused on churning out the next Google or Instagram, there’s no denying that the university seeks to solve society’s most intractable problems.

Last month, Stanford announced that it will launch the largest fully endowed scholarship in the world in order “to prepare a new generation of global leaders with the skills to address the increasingly complex challenges facing the world.” With a total endowment of $750 million, the graduate-level scholarship will begin accepting applications in the summer of 2017 from students everywhere who have the passion and potential to solve global challenges affecting the environment, health, education and human rights.

“We will bring together outstanding, courageous scholars to benefit from Stanford’s innovative educational environment, who then go on to lead governments, businesses, nonprofits and other complex organizations and develop creative solutions to effect positive change,” University President John Hennessy said at the time of the announcement.

Also speaking recently at the Entrepreneurial Thought Leaders Seminar, Hennessy reflected on his 16 years leading the university and his achievements in industry as a computer-science pioneer. Perhaps most notably, he said entrepreneurship isn’t just about starting a business. It’s about transforming an idea into something real that can have wide impact:

Hennessy steps down as Stanford’s president this summer, at which point he will serve as the inaugural director of the new scholarship. In honor of his leadership at Stanford, and the generosity of alumnus and Nike Co-Founder Philip Knight, it has been named the Knight-Hennessy Scholars Program.

Illustration - pencil, compass and ruler

If you ask, experienced entrepreneurs will make it very clear how difficult their job is, and how slim your chances are of launching the next Uber or Facebook. And yet, around the world, the allure of entrepreneurship grows stronger by the day. It coincides with the mantra that innovation is the answer to all of life’s shortcomings.

So, especially in innovation hubs like Silicon Valley, everyone wants to “do a startup” just to do it. And we’re doing it at a time when books, classes and other resources have all but demystified the art of entrepreneurship and turned it into a step-by-step process. Couple that with readily available startup money from a crowded field of venture capitalists competing to back that next game-changer, and you can go from zero to launch in no time.

The challenge is knowing if what you’re building is exactly what customers want before you’ve blown all that capital on hiring top talent and building the actual product. Traditionally, that was called “market research.” Then in 2008, with the introduction of the “lean startup” approach by Eric Ries, entrepreneurs turned to business-hypothesis-driven experimentation and iterative product releases based on customer needs.

At around the same time, Alberto Savoia, a two-time entrepreneur and early employee of Google, began urging entrepreneurs to “pretotype” before they prototype. Savoia was the search giant’s first engineering director and most recently held the title “Innovation Agitator” at Google before leaving in 2012 to focus on spreading his idea to help you ensure that “you are building the right it before you build it right.”

The premise of Savoia’s approach is that most new ideas fail in the marketplace not because they are poorly built or executed, but because they were the wrong idea to pursue in the first place. In his 2011 book Pretotype It — a 75-page manual that begins with the disclaimer that it is itself a pretotype — Savoia states that 90 percent of mobile apps don’t make any money, and 80 percent of startups lose money for the investors.

To show that even the most proven innovators are likely to fail, he includes slides in his standard presentation that are riddled with the logos of killed initiatives at Google and Microsoft.

Image - Google Graveyard board
The Google Graveyard
Image - Microsoft Morgue board
The Microsoft Morgue (Images courtesy of Pinterest)

“We assume too much, plan too much, hope too much … and test too little,” Savoia says. His approach offers multiple techniques for pretotyping something to determine whether you’re building the “right it.” All are ways to test a product or service with minimal build-out, use of resources or emotional attachment.

For instance, at Stanford, where Savoia is an educator-in-residence, students came up with a potential business idea called “Second-day Sushi.” Would cash-strapped college students buy day-old sushi from a campus eatery if labels said so and offered a 50 percent discount? Would enough of them be persuaded by the catchphrase “Nothin’ fishy about it!” to make Second-day Sushi an idea worth fleshing out further?

Many of Savoia’s pretotyping techniques reflect his clever approach to experimentation and his focus on “time to data”: How quickly can you get real-world data to support or invalidate your idea. For the students, he proposes printing out some simple stickers that say “Second-day Sushi, 1/2 Off” and placing them on half the sushi containers sold at the eatery. Then, he would stand back and count how many students bought sushi that day, and how many of them chose the discounted containers.

From his time at Google, Savoia prefers decisions be backed by numbers. So, he specifies that at least 20 percent of students would have to buy Second-day Sushi to consider it a successful experiment.

Savoia is quick to add that the eatery’s permission might be needed to conduct such a pretotype. But even without it, he says students could be stopped before they bring containers labeled Second-day Sushi to the cash register, told that it was just an experiment, and that they are actually holding fresh fish. And in return for unknowingly participating in this market test, you offer to pay for their lunch.

“Students get a free sushi box and you get real data,” Savoia says, “not just some fuzzy opinion that provides no metric for success.”

This experiment embodies an approach to many of Savoia’s pretotyping techniques, which is, “test before you invest.” And while Savoia acknowledges some overlap between the meaning of pretotype and prototype, he does draw an important distinction:

“A key difference between pretotypes and prototypes is that the cost and timeframe for pretotyping is at the lowest end of the spectrum that is usually covered by prototyping,” he explains in his book. “It’s acceptable for a prototype to take months or years of development and cost millions of dollars. In contrast, it’s definitely not acceptable for a pretotype to take that long or cost that much.”

He adds, “One of my standard challenges is the ‘24/24.’ Can you get me real-world data in 24 hours or less for $24 or less?”


Alberto Savoia is an educator in residence at the Stanford Technology Ventures Program (STVP).

I require my students at Stanford to write a failure résumé. That is, to craft a résumé that summarizes all their biggest screw-ups — personal, professional, and academic. For every failure, each student must describe what he or she learned from that experience. Just imagine the looks of surprise this assignment inspires in students who are so used to showcasing their successes. However, after they finish their résumé, they realize that viewing experiences through the lens of failure forced them to come to terms with their mistakes and to view them as a great source of data about what works and what does not.*

On the most basic level, all learning comes from failure. Think of a baby learning to walk. He or she starts out crawling and falling before finally mastering the skill that as an adult we take for granted. As a child gets older, each new feat, from catching a baseball to doing algebra, is learned the same way, by experimenting until you are finally successful. We don’t expect a child to do everything perfectly the first time, nor should we expect adults who take on complex tasks to get it all right the first time.

So, how do you prepare yourself for inevitable failures? People who spend their time on creative endeavors know that failure is a natural part of the creative process and are ready when it happens. Jeff Hawkins, founder of Palm, Handspring, and Numenta, gets worried when things go too smoothly, knowing that failure must be lurking around the corner. When he was running Handspring, everything was going swimmingly for the release of the original “Visor”, a new personal digital assistant. But Jeff kept warning his team that something would happen. And it did. Within the first few days of the release of their first product they shipped about 100,000 units. This was remarkable. But the entire billing and shipping system broke down. Some customers didn’t receive the products they paid for, and others received three or four times as many units as they ordered. This was a disaster, especially for a new business that was trying to build its reputation. So what did they do? The entire team, including Jeff, buckled down and called each and every customer. They asked each person what he or she had ordered, if they had received it, and whether they had been billed correctly. If anything wasn’t perfect, the company corrected it on the spot. The key point is that Jeff knew something would go wrong. He wasn’t sure what it would be, but was prepared to deal with anything that came their way. His experience has taught him that failure is inevitable, and that the key to success is not dodging every bullet but being able to recover quickly.

Jeff Hawkins, in 2009, sharing this story at the DFJ Entrepreneurial Thought Leaders Seminar.
Most individual’s paths are riddled with small and enormous failures. The key is being able to see these experiences as a chance to evaluate valuable data, and to move on. For most successful people, the bottom is lined with rubber as opposed to concrete. When they hit bottom, they sink in for a bit and then bounce back, tapping into the energy of the impact to propel them into another opportunity. A great example is David Neeleman, the founder of JetBlue. David initially started an airline called Morris Air, which grew and prospered, and he sold it to Southwest Airlines for $130 million. He then became an employee of Southwest. After only five months David was fired. He was miserable working for them and, as he says, he was driving them crazy. As part of his contract he had a five-year non-compete agreement that prevented him from starting another airline. That seemed like a lifetime to wait. But after taking time to recover from this blow, David decided to spend that time planning for his next airline venture. He thought through all the details of the company, including the corporate values, the complete customer experience, the type of people they would hire, as well as the details of how they would train and compensate their employees. David says that getting fired and having to wait to start another airline was the best thing that ever happened to him. When the non-compete period was over, he was ready to hit the ground running. He was able to turn what seemed like a terrible situation into a period of extreme productivity and creativity.

David Neeleman, in 2003, shares this story at the DFJ Entrepreneurial Thought Leaders Seminar.
Tackling new challenges in all domains requires a willingness to take risks, and a high chance of failure. However, risk taking is not binary. Each of us is comfortable taking some types of risks and find other types quite uncomfortable. You might not even see the risks that are comfortable for you to take, discounting their riskiness, but are likely to amplify the risk of things that make you more anxious. For example, you might love flying down a ski slope at lightning speed or jumping out of airplanes, and don’t view these activities as risky. If so, you’re blind to the fact that you’re taking on significant physical risk. Others, like me, who are not physical risk takers, would rather sip hot chocolate in the ski lodge or buckle themselves tightly into their airplane seats than strap on a pair of ski boots or a parachute. Alternatively, you might feel perfectly comfortable with social risks, such as giving a speech to a large crowd. This don’t seem risky at all to me. But others, who might be perfectly happy jumping out of a plane, would never give a toast at a party.

By my accounts, there are six primary types of risk: physical, social, emotional, financial, intellectual, and ethical. For example, I know that I’m comfortable taking social risks but not physical risks. In short, I will readily start a conversation with a stranger, but please don’t ask me to bungee jump off a bridge. I will also happily take intellectual risks that stretch my analytical abilities, but I’m not a big financial risk taker. On a trip to Las Vegas I would bring only a small amount of cash, to make sure I didn’t lose too much.

I ask my students to map their own risk profile. With only a little bit of reflection, each person knows which types of risks he or she is willing to take. They realize pretty quickly that risk taking isn’t uniform. It’s interesting to note that most entrepreneurs don’t see themselves as big risk takers. After analyzing the landscape, building a great team, and putting together a detailed plan, they feel as though they have squeezed as much risk out of the venture as they can. In fact, they spend most of their efforts working to reduce the risks for their business.

If you do take a risk and happen to fail, remember that failure is a natural part of the learning process. And, most important, if you aren’t failing sometimes, then you probably aren’t taking enough risks.


* I include my own abbreviated failure resume in, What I Wish I Knew When I Was 20, published by HarperCollins.

This article originally appeared in the Stanford Report.

Photo - Downtown San Jose skyline
Downtown San Jose, Calif. (Credit: Wikimedia Commons)

From humble beginnings known for its fruit orchards, Silicon Valley has transformed into the heartland of entrepreneurship and innovation in the United States. Each year hundreds of budding entrepreneurs from all over the world descend on Silicon Valley in search of the secret sauce. What makes this environment ripe for creativity and innovation? Can the environment be replicated in another country?

Headshot of Chuck Eesley

Charles Eesley, an assistant professor in the Department of Management Science and Engineering and at the Stanford Technology Ventures Program, has been studying the implications of institutional change for entrepreneurship in the United States, China and Japan. This week, a study by Eesley and collaborators Delin Yang, a professor at Tsinghua University, and Jian Bai “Jamber” Li, a doctoral student at Stanford, was published in Organization Science that analyzes the successes and failures of one of China’s primary efforts to encourage innovation.

The work looks specifically at Project 985, an educational reform program funded and implemented by the government of the People’s Republic of China and launched in 1998. It sought to foster a belief in the importance of innovation among students of 39 partner universities, with Tsinghua University and Peking University each receiving a current value of nearly $276 million. This funding provided new classes and programs on innovation and commercialization, recruitment of accomplished researchers from overseas institutions and corporations to teaching positions, construction of new facilities and acquisition of new equipment needed for advanced research.

Following is a Q&A with Eesley about his research:

What did your research reveal about innovation funding and outcomes in China?

Government funding provided additional resources both in classrooms and in the lab, and students graduating from the Project 985 universities were significantly more likely to create innovative, high-tech firms. However, when they commercialize their technologies in a startup, they find that innovating in a manner advocated by Project 985 negatively impacts firm financial performance.

How does Project 985 negatively impact firm performance?

It turns out that political networking results in better firm performance in the Chinese context. This is a counterintuitive result. From a U.S. perspective, you would expect the additional funding for research and development would lead to more innovative products that would result in better firm performance. The other institutions in the U.S. that are implemented to support startups, such as intellectual property and antitrust laws, are lacking in their enforcement in China. Also, state-owned enterprises are often favored and it often becomes difficult for a startup to compete against a state-owned enterprise no matter how innovative the product.

We found that those students influenced by Project 985 reform were less likely to engage in political networking and more likely to spend time and invest in research and development activities. They thought that the great technology that they developed was enough to succeed and they were actually spending time on activities not linked to better firm performance.

Photo - Shanghai skyline at night
Shanghai skyline at night. (Credit: Wikimedia Commons)

How would you compare entrepreneurship in China to Japan and the United States?

A big part of my research is that environment shapes the type of entrepreneurship for a specific region. China, the U.S. and Japan all have very different cultural and institutional environments. The forms of entrepreneurship that you see are a reflection of the policies at each place.

Each of these markets is at a different stage of their development. In the Chinese market over the past decade, they have been going through a boom in manufacturing that the U.S. and Japan went through a couple of decades ago. The U.S. economy has moved more fully into services and the type of entrepreneurship that you see is focused on e-commerce, health care, financial services – and less about agriculture and manufacturing. The Japanese economy is also advanced. With their aging economy, low-end manufacturing is becoming more commoditized and moving into robotics and high-end manufacturing.

Some of the market struggles that we are seeing in the Chinese economy are a reflection of transitions taking place. The services industry is one of the fastest growing in China and manufacturing is slowing down.

The million-dollar question: Is there a formula for boosting innovation and entrepreneurship that can be replicated?

It is complicated and there are a lot of factors. There are institutional policies and culture, both of which take time. What we learn from this study is that sometimes changing just one policy in isolation is not effective and we need other complementary policies to be enforced as well.

For instance, Taiwan mimics U.S. policies. However there is something about the education system in the U.S. that allows students to be creative and think outside the box and do something different. To purely compete on efficiency and low cost is very difficult over time and you don’t gain the higher profit margin from offering a differentiated product or service.

You have to consider both the policies, and their correct implementation, and the cultural environment. Educational institutions have an important role to play as well both in technical education as well as in entrepreneurship education and informing policymakers. In the end, it’s a bit of copy and adapt depending on the local environment.

These days, organizations across the board claim to be focused on innovation. But when you look at how well different types of entities responsible for bringing new products and services into the world actually do so, some are better than others.

The most obvious type of organization that helps launch new products is a venture capital firm, which funds entrepreneurs and often works with them to bring their concepts to market. Another is corporate venture capitalists, who typically work within a larger corporate structure and seek to acquire innovative startups that can be folded into the parent company. A third entity is government, which supports innovation by issuing grants for groundbreaking research and for early-stage development of entrepreneurial ventures.

Among those three flavors of funding partners, traditional venture capitalists (VCs) fueled the most innovation, according to a recent study by entrepreneurship researchers from the Stanford Technology Ventures Program (STVP), the entrepreneurship center in the university’s Department of Management Science & Engineering (MS&E).

Their study, “Who Takes You to the Dance? How Partners’ Institutional Logics Influence Innovation in Young Firms,” is published in the journal Administrative Science Quarterly. The study’s co-authors include STVP-affiliated faculty Riitta Katila and Kathleen Eisenhardt, both professors in MS&E. The lead author is Emily Cox Pahnke, an assistant professor of management at the University of Washington, and a graduate of STVP’s Ph.D. program.

“We attribute these differences to VCs having a closer advisor relationship with the venture,” said Pahnke, whose dissertation provided the data for this study. She added that traditional venture capitalists are driven by better-paced and more motivating milestones than either corporate VCs or government agencies.

The authors studied almost 200 ventures in the United States, over a 22-year period, that make minimally invasive surgical devices, counting which ones received the highest number of patents and FDA approvals. The ones that worked with VC firms performed the best, primarily because their professional norms and practices made them more nimble and nurturing funding partners than corporate VCs or government agencies.

Regardless of the type of funding partner — venture capitalists, corporate VCs or government agencies — all proved to be good at selecting innovative ventures and having valuable technical and commercial resources on hand. The problem, the researchers concluded, was that the latter two were less involved during the relationship.

Traditional VCs, especially those in boutique firms, are deeply engaged with the entrepreneurs they fund, serve as advisors and sit on the boards of their startups, the co-authors explained.

Corporate VCs, on the other hand, turned out to be less effective partners because the complex division of labor within corporations, and broader strategic goals, seem to hinder progress and slow the decision-making process.

Meanwhile, the entity with perhaps the most altruistic reasons for seeing society advance through scientific and technological innovations proved to be the least effective funding partner. The effort on the part of government agencies to be fair and treat all private ventures equally resulted in particularly passive relationships, cookie-cutter approaches and “one size fits all” resources, according to the study.

In the field of surgical devices, the primary government agency that funds firms is the National Institutes of Health (NIH), which issues grants to support both technical breakthroughs that advance science, and commercial innovations that can improve public health. However, despite the NIH’s immense technical and informational resources, they remain largely out of reach because of the agency’s hands-off approach.

“So, then the question becomes whether it should be the government’s role to support startup innovation,” said Katila, whose research is at the intersection of technology strategy and organizational learning.

Given how important innovation is for society, she admits that she and her co-authors were disappointed to see government not outperform the other types of funding partners. But on a positive note, Katila said that their findings can show the public sector how to be better backers of innovation by identifying what works best in the private industry.

The government is beginning to catch on: The U.S. Patent and Trademark Office recently opened a regional office in Silicon Valley to save entrepreneurs on the West Coast a trip to Washington, D.C. And over the last few years, several government agencies — including the NIH — have trained their scientists and researchers in the “lean startup” methodology that has fueled much of the current tech boom.

“Government and Silicon Valley have much to learn from one another to boost innovation,” Katila said.

New Entrepreneurship Course Focuses on National Security Challenges

Terrorists rapidly leveraging today’s technology are threatening the safety of our country. So some of Stanford’s top entrepreneurship educators are turning their students’ eyes from the tech industry to national security.

This spring, Stanford’s School of Engineering will offer the course Hacking for Defense: Solving National Security Issues with the Lean Launchpad. Its teaching team will be led by renowned entrepreneurship educators Tom Byers and Steve Blank – creator of the “Lean LaunchPad” methodology. They will be joined by faculty who ran some of the military’s most agile organizations and scholars who have served at some of the highest levels in the military.

In addition, former U.S. Secretary of Defense William Perry, an emeritus professor in Stanford’s Department of Management Science & Engineering (MS&E), will be the course advisor.

The goal of the course (MS&E 297) is to connect the Silicon Valley innovation culture and mindset to the Department of Defense and intelligence community.

Graduate students across the university can apply in teams to take the course and are encouraged to attend one of the brown-bag lunches and information sessions being held this month to learn more.

In a recent blog post, Blank points to ISIS, al- Qaeda, North Korea, Crimea and Ukraine as potential foes that threaten to disrupt America’s national security by harnessing the power of social networks, encryption, GPS, low-cost drones and 3-D printers. And whether they know it or not, these adversaries are using the lean startup methodology, which Blank developed. It emphasizes rapid development and deployment of products – without fear of failure or blowback.

“Terrorists today live on the ‘net and they are all early adopters,” writes Blank, who also teaches the course The Lean LaunchPad: Getting Your Lean Startup Off the Ground (ENGR 245).

“They don’t need an office in Silicon Valley to figure out what’s out there,” he continues. “They can crowd-source designs, find components through eBay, fund through PayPal, train using virtual worlds and refine tactics, techniques and procedures using massive on-line gaming. All while we’re still writing a Request for a Proposal from within the US Government procurement and acquisition channels.”

Blank’s co-instructor, retired Army Special Forces Colonel Joe Felter, hopes students at Stanford will step up and lend their entrepreneurial minds and talents to the cause. Felter, a senior research scholar at Stanford’s Center for International Security and Cooperation (CISAC) and research fellow at the Hoover Institution, understands the challenges and opportunities that tomorrow’s technologists face should they decide to focus on the national-security space.

After earning a Ph.D. in political science at Stanford in 2005, Felter helped stand up and lead the Combating Terrorism Center at the U.S. military academy West Point, and later led the International Security and Assistance Force, Counterinsurgency Advisory and Assistance Team in Afghanistan – reporting directly to Gen. Stanley McChrystal and Gen. David Petraeus.

His experiences on the battlefield include serving as platoon leader in the Army’s 75th Ranger Regiment and as a Special Forces team leader and company commander in Southeast Asia. He earned his bachelor’s degree at West Point and his master’s degree at the Harvard Kennedy School, where his academic adviser was none other than Ash Carter, now the U.S. Secretary of Defense.

“The problems are too important not to bring our best people to the table,” Felter said. “We’re going to expose them to the types of challenges that our national security organizations are grappling with.”

The course is presented by STVP, the Stanford Technology Ventures Program, the entrepreneurship education center in the School of Engineering. STVP Director Tom Byers, a professor in management science and engineering, said the partnership with CISAC to offer this new course is truly exciting.

“We want our entrepreneurially minded students to understand that our country needs them just as much as the high-tech industry,” said Byers, who holds the Entrepreneurship Professor endowed chair in the engineering school. “What better way to teach them that they can have a real impact on society than by showing them they can be innovators in the name of national security?”

Students accepted into the course will work in teams on pressing problems facing the Department of Defense, intelligence community and other government agencies. They range from wearable sensors for Navy divers who work in extreme conditions to an app that would aid humanitarian assistance and disaster relief where agencies from the local to international levels need to share information immediately. The teaching team says innovative solutions to these and other problems will help make America safer.

Photo - Marine in full gear in Afghanistan
(Credit: Cpl. Kowshon Ye/defenseimagery.mil)

The goal of the course, however, is not to have Stanford students build these products and have them shipped off to the front lines. Nor does the teaching team intend to turn students into entrepreneurs that run off and launch their own startup once the class wraps up. Their mission is to instill an entrepreneurial mindset, and perhaps, a sense of patriotism.

“As an educator, my job is to teach students a way of thinking,” Blank said. “So, if students launch a startup, but I haven’t actually taught them anything, I’m in the wrong business and so is Stanford.”

That said, Blank also notes that Stanford has supported national security by supplying technological expertise in the past. In his series “Secret History,” Blank describes the rise of what he calls “Microwave Valley,” chronicling the decade of 1946 to 1956 as the university became the hub of military and industry contracting in the Bay Area.

While those years aren’t discussed much these days, Blank said Hacking for Defense is a return to the university and its engineering school contributing to national defense – except with “a more mature” understanding about the role of students and society.

If successful, Blank plans to share the course and its materials with universities around the country in hopes of creating something akin to a “tech ROTC” for the 21st century. That’s not much of a stretch considering Blank’s success with bringing the lean startup methodology to other sectors of the government.

So far, 750 teams of scientists have taken a version of Blank’s Lean LaunchPad course, called I-Corps, which is taught at 53 universities around the country. And over the last few years, other federal agencies like the National Institutes of Health, the Department of Energy and the Department of Health and Human Services have started adopting the course to accelerate innovation.

“We’re seeing terrorism in every city, and in every country,” said Blank, a consulting associate professor in MS&E. “Students ought to be engaged in thinking about this, not just thinking about how to graduate. And there’s already a segment of students who do.”

This article is republished courtesy of INSEAD Knowledge. Copyright 2016.

Photo - Girl on cell phone
In the contest for competitive advantage, startups should use a very different playbook from their larger rivals.

If the Fortune 500 had a motto, it could be “go big or go home”. Large companies excel at bold, expensive moves intended to intimidate the competition. After all, they have enough resources to follow through on their aggressive threats. Startups, however, don’t have the luxury of belligerence. With their limited resources, attracting the attention of more powerful rivals too early in the game can be fatal. However, their smallness can also be a distinct advantage, allowing them to make market inroads right under the noses of the giants.

These differences can be exacerbated by the market context. In the newer, less certain markets that many startups enter, a company’s ability to discover untapped opportunities tends to matter more than the size of its assets. Therefore, it stands to reason that entrepreneurial firms need an entirely different strategic mindset from the big boys in order to successfully compete.

As this issue sits at the intersection of competition and innovation, which happens to be my area of concentration, I took part in researching it for the paper “All the Right Moves: How Entrepreneurial Firms Compete Effectively” (co-written by Riitta Katila of Stanford University and Eric L. Chen of Onyx Pharmaceuticals), published in Strategic Entrepreneurship Journal. Our findings indicate that startups can potentially gain competitive advantage even in crowded markets if they keep in mind that their greatest weapon is the element of surprise.

The permutations of competition

For this experiment, we used the INSEAD-developed Markstrat software, widely known for its accuracy in replicating real-world competitive business environments. Player groups form virtual companies and vie with one another in simulated marketing and R&D activities (everything from market research to allocating advertising budgets). The system periodically “grades” the simulated firms’ performance, giving them a share price as well as sales, market share, and customer satisfaction data.

During the years 1999-2006, we assigned a total of 160 teams of MBA students from a major U.S. university to compete in either mature or untested market simulations. In addition, we made two out of every five teams “startups” by granting them fewer financial resources and less market power than the other three. In this way, we were able to observe and learn from the different permutations that unfold when firms of various sizes compete within both new and established markets.

Established markets

The mature-market Markstrat simulation has well-established customer segments and product features. A new entrant must work hard to outperform the incumbents, but the potential rewards are huge.

The virtual startups that succeeded in the mature-market environment developed a strategy that worked around the large players but ultimately surprised them. In general, they engaged in more exploitative R&D moves, or process-based R&D—introducing low-cost products—and exploratory market moves, i.e. entering new market segments. Essentially, they stayed below the radar while probing for weak spots in their more powerful competitors. In post-game interviews, these teams spoke of “shifting strategy according to our competitors’ moves,” and using cheap products as a “Trojan horse” preparing the way for full-scale market siege. Their success in established markets was based on their ability to seize upon incumbents’ complacency and tactical errors.

The large firms were able to prevail by doing the opposite: constantly innovating within established market segments, introducing new products and refining current ones so as to increase their existing advantage and, over time, cement their supremacy.

New markets

MBA teams competing in the new-market simulation had to contend with uncertainty and instability that only increased as the game went on. It was unclear who the competitors would be, how consumers would behave, and whether the market would even be profitable at all (of course, it ultimately was).

Here, the high-performing startup teams were the ones that quickly got a feel for the uncharted terrain through rapid-fire exploratory R&D and market moves—releasing a spate of new products aimed at diverse market segments. This strategy enabled them to scout for opportunities while remaining light-footed enough not to be toppled when the ground shifted beneath them.

A fully exploratory strategy allows startups to exploit their natural agility. Unlike in the mature market, where the winning competitive strategy for startups was heavily reactive, in the new market startups had no choice but to lead. I suspect this is because the pervasive uncertainty of new markets levels the playing field, thus erasing the invisibility advantage entrepreneurial firms enjoy elsewhere. Getting in and out of markets ahead of the established players is the best way for smaller firms to avoid being muscled out of the running.

As the students put it, entrepreneurial firms needed to “be nimble and quick…willing to leap from segment to segment.” By contrast, one startup team that chose a “slow and steady” approach finished last place in their industry.

Large firms are sometimes at a disadvantage in new markets because they are forced to employ both exploratory and exploitative moves simultaneously. In other words, they must innovate like startups without putting existing strongholds at risk. One team illustrated this approach by saying, “Milk current products, but be prepared to have new ones at hand to catch the next wave and gain new advantage.”

Quality vs. quantity

On the whole, our findings suggest that startups can achieve success with fewer competitive moves than their large rivals, but those moves need to be expertly timed. In established markets, entrepreneurial firms can enter late, keep their head down, and strike hard once they spot an exploitable weakness. In less mature markets, they can leverage their agility to structure new markets before large firms have the chance to enter. It appears that when it comes to gaining competitive advantage, entrepreneurial firms play by a different set of rules.

If there’s one thing we know for sure, it’s that entrepreneurship is an uncertain and risky journey where surprising discoveries often lead to breakthrough progress. So, how do we set ourselves up to be open to these “aha” moments and learn from them?

In our daily lives, we tend to have certain expectations about what will happen in any given situation. But it’s when actual results don’t line up with those expectations that we should learn to really pay attention. Let’s take Intuit as an example. In the video below, Scott Cook, co-founder of the accounting software maker, describes how he ignored one bit of customer feedback year after year because it didn’t make sense to him … until it finally did. And once he accepted the unexpected data, it opened the door to a whole new market.

Welcoming cognitive dissonance isn’t trivial. As we’ve now seen, for entrepreneurs, puzzling findings can lead to lucrative opportunities. And this can also hold true for the venture capitalist who invests in them. Here in Silicon Valley, where perhaps the world’s highest concentration of VCs hear pitches from an equally high number of potential founders throughout the year, it’s easy to see how startup investors eventually adopt a “seen it all before” swagger.

But it’s the ones who resist thinking that way, and remain open to letting their beliefs be challenged, that increase their chances of discovering the next big thing. Rebecca Lynn, co-founder and general partner at Canvas Venture Fund, emphasizes the importance of paying particularly close attention when something doesn’t make sense. She explains that her ability to hone in during these moments has opened her up to some of the most interesting ideas she’s ever come across.

Even opportunities for self-development come by way of opening up ourselves to contrarian views. As Mike Rothenberg of Rothenberg Ventures discusses in the video below, growing as an entrepreneur hinges on relentlessly inviting feedback from others. And beyond listening intently when we experience cognitive dissonance, Rothenberg says we should express our gratitude for the new learning.

The truth is, expectations, beliefs and worldviews are uniquely personal and, as a result, are bound to vary from one person to the next. But as entrepreneurs and growing individuals, moments of utter surprise that challenge our deeply held beliefs should be reframed as valuable opportunities to pause, listen and learn. Insights about how to grow our careers, our businesses and, most importantly, ourselves come disguised as experiences that cause cognitive dissonance. The key is to embrace the anomalies, not ignore them.

Too many of us use the terms “going to school” and “getting an education” interchangeably when, in fact, a formal education is just one part of it. The experience of classical schooling is multi-faceted and encompasses a mix of acquiring academic knowledge and softer, more abstract skills. Though fundamental knowledge serves as the foundation for any innovation, being an entrepreneur takes much more than just book smarts alone.

Once, in the midst of his own academic pursuits, Albert Einstein beautifully captured all that an education is: “Education is what remains after one has forgotten what one has learned in school.” That’s not to say school isn’t important — it is. But perhaps the biggest takeaways are retaining the thirst for knowledge beyond graduation, and building upon the life skills that helped get us there. While impressive, graduating from a prestigious college with a slew of classes aced and a degree in hand doesn’t necessarily say anything about a person’s ability to succeed professionally. In the video below, Stewart Butterfield, co-founder and CEO of Slack, dispels the notion that an elite education guarantees excellence.

So what else should we look for in an education? The true test should be that we are able to demonstrate our learning and showcase the skills we acquire. And perhaps grades alone can’t adequately capture this. Then what can? In the following clip, Sal Khan describes a new model for education from his book The One World Schoolhouse. The founder and executive director of the free learning platform Khan Academy highlights that walking out of school with a portfolio of work, projects and accomplishments says more about one’s ability — both as a student and as a member of the workforce — than grades and a degree do alone.

This is already the case at Stanford and campuses across the country, where experiential education is being emphasized just as heavily as traditional learning approaches. There is obvious value in both, but differing opinions abound on the importance of domain-specific expertise versus the development of someone who can just jump in and learn along the way. The debate is particularly fascinating when you pose that question to scholars and practitioners sitting right next to each other – as we see here:


A formal education remains incredibly important for a variety of reasons: It offers a venue for exposure to a wide breadth of topics and offers us the opportunity to make connections across disciplines. For entrepreneurs, school not only provides subject-matter knowledge, but also the frameworks necessary to remain a lifelong learner. Academic institutions are incredible places where curious minds gather to learn for the sake of learning. Ultimately, however, let’s not forget that classes, schooling and degrees are just part of the education equation.

Welcome to the future of healthcare, when startups in the field are in the market for the same technologists as Facebook and Pinterest, machine learning aids in drug discovery, and Big Brother will need more of a bedside manner.

Members of the Stanford community joined health-tech entrepreneurs for a panel discussion titled “Precision Health: The Future of Healthcare” during a daylong series of events held on campus recently to explore and celebrate how technology and innovation will shape the future of our world.

“Anything is possible, at least if you can write an app for it,” said Dr. Lloyd Minor, dean of the Stanford School of Medicine. He pointed to MyHeart Counts, an app that the school launched last spring that allows users to contribute to a study of human heart health, while learning about the health of their own ticker.

Image - App on iPhone screen

(Image courtesy of Stanford Medicine)

Minor also mentioned the ongoing collaboration between the school, Google and Duke University to conduct longitudinal studies aimed at understanding the molecular markers that are key to health and the changes in those biomarkers that may lead to disease.

“Too much of healthcare is about sick care,” said Minor, echoing others on the panel.

Dr. Cameron Sepah, medical director at Omada Health, talked about how his startup sits directly at the intersection of science, technology and design. A trained physician on faculty at UCSF Medical School, Sepah described how Omada combines access to health coaches, the power of social media, metrics tracking and engaging software design to promote sustained behavioral change.

Every week, tens of millions of Americans cannot get into a doctor’s office. And yet, more of us are dying today from preventable diseases – such as Type 2 diabetes and obesity – than from infectious diseases. Together, those two trends present the challenge and the opportunity, Sepah said.

In terms of profitability, Sepah explained that Omada makes no money unless its patients show positive health results. Fellow panelist Abraham Heifets, CEO of drug-development research firm Atomwise, said the same holds true at his startup: If its predictive models – fueled by the latest advancements in artificial intelligence and machine learning – don’t lead to drug discovery by the scientists and pharmaceuticals it serves, Atomwise doesn’t see a cent.

As a doctoral candidate at the University of Toronto, Heifets created one of the largest public databases of patented chemical structures, as well as a protein analysis tool used by researchers in 70 countries. Prior to that, he worked at IBM’s T.J. Watson Research Center.

The extensive experience in academia and industry allowed Heifets to see all the latest advancements in context: “Machine learning has been in use for a long time,” he said. “It used to be called statistics.”

Photo - Panelists speaking.

Panelists at the precision-health discussion at Stanford. (Credit: Matt Beardsley)

The panel was thoughtfully moderated by Robert Chess, a lecturer at the Graduate School of Business who has started and grown businesses across multiple science-based industries – including biotech, clean-tech and information technology. Questions from Stanford Ph.D. students deeply interested in innovating healthcare also fueled the lunchtime discussion.

When asked what will lead to the greatest advancements, the panelists all seemed to agree that the apps and services will just get more precise as the passive collection of biometrics via users’ devices gets better – and as the providers caring for them learn how to better analyze and act on the increasingly large amounts of data about us that get collected everyday.

“Precision Health: The Future of Healthcare” was one of five lunch panels organized by the Stanford Technology Ventures Program for STVP Future Fest, held on Oct. 7, 2015, and supported by the venture capital firm DFJ. Other panel discussions focused on the futures of robotics, biology, energy and arts organizations.

In a place as forward thinking and technology driven as Silicon Valley, what someone said just five years ago can seem ancient. New technologies continue to emerge at an ever-faster rate and our expectations are challenged time and again. To appreciate just how far we’ve come, let’s step back in time and see whether or not what we thought of the future came to pass.

In 2003, Jen-Hsun Huang, the co-founder of visual-computing pioneer NVIDIA, described virtual-reality goggles as if he were holding an Oculus Rift headset in his hands. If anyone would know what would lie ahead in this space, it would’ve been Huang. But when he mentions “extremely lightweight displays that you put on as goggles with head tracking,” it sounds impressively similar to the cardboard ones Google just debuted that use your smartphone’s accelerometer to track head movement.

Much of what we envisioned about the future is already manifesting in the world around us, and the evolution is quite apparent. In fact, the rate at which technology has been able to disrupt and force traditional businesses to evolve and stay relevant is nothing short of unprecedented.

Nearly 20 years ago, Silicon Valley luminary Vinod Khosla predicted that phone companies would have the rug pulled out from under them within a decade, once long-distance calling became free. He recalled this in a 2008 talk as part of the DFJ Entrepreneurial Thought Leaders Seminar series. And yet, beyond free long-distance calling, we’re now at a point where even using the word “Skype” as a verb has become passé.

Khosla was uncanny in predicting how disruptive technology would be. But he also pointed out something else that’s now understood as fact: entrepreneurship shapes our future. The key is in recognizing the opportunities in existing markets and established processes that are ripe for disruption. That’s where innovative change can be brought about.

Steve Ballmer, former CEO of Microsoft, describes a landscape where technology companies of all sizes emerge and fade away with time. In a world where the industry will become increasingly dynamic, our computing devices will become smarter and smarter. This excites Ballmer greatly, as captured in the video below:

The beauty of our time is that technology continues to shape our world at a faster pace than ever before. But the question remains: What else will the future bring about to exceed our expectations?

One way to find out what makes a good entrepreneur is to, well, ask a successful entrepreneur. And if that person has done well in your chosen field, then it’s highly likely what she says will be relevant to you.

But if you want a more basic understanding, in terms of the right mindset and skills needed to succeed, it might make more sense to ask people who observe and invest in entrepreneurs on a regular basis. Through repetition and experience, these people can see patterns emerge in the traits of those who excel and those who don’t.

When you ask these experts, as we do every week in the DFJ Entrepreneurial Thought Leaders (ETL) speaker series, they don’t call an entrepreneur good or bad based solely on their net worth. Rather, they talk about the individual’s work ethic, enthusiasm and intelligence.

Pattern recognition is one sign of intelligence. But beyond the ability to see when something occurs again and again, the flip side of pattern recognition is noticing where things aren’t happening. The business-strategy term “blue ocean” refers to just that: a wide-open market that no one else has yet noticed, and so abounds with opportunities.

And in his recent ETL talk, venture capitalist Mike Rothenberg — whose seed-stage fund identifies, invests in and cultivates tech entrepreneurs — has just two words for those with serious startup aspirations: Start swimming.

As the longtime host of this seminar series, Stanford Professor of the Practice Tina Seelig has spoken to hundreds of entrepreneurs over the years and learned what traits the best ones have in common. She shares these lessons in her new book, Insight Out: How to Get Ideas Out of Your Head and Into the World, and in the classes she teaches in Stanford’s Department of Management Science and Engineering.

She also spoke about it at ETL last fall, presenting a model that lays out the knowledge, attitudes and skills that are crucial for any would-be entrepreneur. In a framework she now calls the “Invention Cycle,” Seelig says the journey from imagination to implementation begins with engagement — noticing opportunities in your everyday environment.

As co-founder and partner of one of the most prominent venture capital firms in Silicon Valley, Ben Horowitz, also knows a thing or two about what makes a good entrepreneur. He, too, wrote a book that sums up his insights, The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers. As the title implies, it aims to be a no-nonsense guide for entrepreneurs, explaining brutal truths and dispelling common myths.

It all starts with being able to build a great product, Horowitz said when he spoke at ETL last fall. If you can’t build something that consumers want, Horowitz explained, you’re not going to be able to build a great company. The co-founder of Andreessen Horowitz spent a lot of his talk describing how many of the non-technical skills that entrepreneurs need — people skills, management skills — are not intuitive. But they are absolutely essential to succeed and scale up.

The concept of “entrepreneurship education” still has its skeptics, perhaps because what immediately comes to mind are iconic entrepreneurs like Elon Musk or Oprah Winfrey. How could anyone possibly teach an individual to be remotely as influential or visionary as either of those two?

Educators, however, know that “entrepreneurship” is an umbrella term that embodies many teachable skills — such as creativity, design thinking, leadership and the basics of business and management.

Although entrepreneurship may not be as exact a science as, say, bioengineering, the associated knowledge, skills and mindsets can be taught. Just like a child can be nurtured over time to be a great writer or athlete, a person can learn to be entrepreneurial if given the right guidance and opportunities to internalize important lessons through hands-on, experiential exercises that gradually develop the required tools.

One of the latest entrepreneurship educators to demystify her field is our own Tina Seelig, executive director of the Stanford Technology Ventures Program, the entrepreneurship center in the university’s engineering school. In her new book, Insight Out: How to Get Ideas Out of Your Head and Into the World, Seelig presents a series of steps that anyone can follow to do exactly what the title states.

The “Invention Cycle” Seelig describes in her book is based on 16 years of teaching as well as hundreds of interviews with entrepreneurs and innovators, including those she hosts as part of the DFJ Entrepreneurial Thought Leaders Seminar series.

Time and again, Seelig says the path these entrepreneurs took followed the steps of her Invention Cycle: imagination, creativity, innovation and entrepreneurship. And she recently took to the seminar stage herself to explain how those concepts constitute the cycle, beginning with imagination.

After imagination, the next two steps in the cycle are creativity and innovation. Creativity, as Seelig defines it, is applying imagination to address a challenge or opportunity. Innovation, then, is applying creativity to generate unique solutions. That is, creative ideas are new to you, and innovative ideas are new to the world.

These two concepts are illustrated perfectly in the story shared by entrepreneur Alon Cohen, who, along with his wife, Adi Tatarko, founded the home design and remodeling website Houzz. After several frustrating rounds of trying to remodel their own home — failing at first by going with a friend’s referral, and then later taking the inefficient route of leafing through piles of books and magazines — they decided to build a website that showcases and aggregates the work of architects for the countless others in their situation.

And because it was one of the only websites of its kind at the time, word spread quickly and Houzz started offering content for homeowners in Chicago, New York and other major markets across the country. The site also grew rapidly in scope, attracting interior designers, landscapers and other professionals.

Clearly, Houzz wasn’t just a creation. It was an innovation.

The last step in the Invention Cycle, entrepreneurship, isn’t so much about starting a company, as it is about influencing others to support your innovation in order to magnify its impact and truly get your idea out “into the world.” Hence, Seelig explains, entrepreneurship requires encouraging and empowering others — whether that means they join your team, fund your work, use your products or even just spread the word.

“Great founders are amazing at getting support. They are amazing at getting support from people who can really help them,” says Mike Rothenberg, founder and CEO of Rothenberg Ventures. “That is what entrepreneurship is, is getting support outside of what you can currently control.”

Rothenberg Ventures identifies, invests in, and cultivates technology value and talent at scale, having provided early funding for such startups as Planet Labs, SpaceX and ZenPayroll. Rothenberg himself founded and bootstrapped three companies. So not only can he recognize the traits of a good entrepreneur, he is one, harnessing all the parts of the Invention Cycle — imagination, creativity, innovation and entrepreneurship.

Think back to when you were in high school. How did you do your hair? How did you dress? People generally develop a sense of personal fashion over the ensuing years into adulthood, after a few flings with different styles — and hopefully, some honest feedback from friends and family.

But Susan Koger, co-founder of the independent online retailer of women’s fashion known as ModCloth, says it’s perfectly “OK to look back and cringe.” She wasn’t talking about day-glow tops and friendship bracelets, though. She was speaking at the Entrepreneurial Thought Leaders (ETL) Seminar series, sharing advice on pursuing one’s passion, with students on the cusp of launching their own careers.

Her point: Your first attempt at anything new will likely be crude, and so you should give yourself the permission to just do it. If you stick with it and get better, yes, you will probably look back years later and wince. But next to no one crushes it the first time, anyway.

True, the stakes may seem higher if you’re an entrepreneur debuting your first rev to the world. But Koger, ModCloth’s chief creative officer, insists that getting started is better than waiting till it’s perfect.

Admitting to ourselves that we are bound to err is humbling. But in the business world, where showing confidence and competence are the norm, having humility may be what gives the entrepreneur an edge.

William Marshall, co-founder and CEO of startup satellite maker PlanetLabs, also had some wise words for those interested in entrepreneurship at another recent ETL talk. Actually, he cautioned students at Stanford — all deeply immersed in the Silicon Valley vibe — against “defaulting” to a startup the next time they have an idea that seems to have business potential.

Another non-intuitive bit of advice Marshall shared was to not get an M.B.A. Reflecting on his own career, the former NASA scientist said some of the best physicists he’s known didn’t study physics. “The same is true in business: The best business people didn’t study business,” Marshall says.

But his final bit of advice, in the video below, was to have humility. Rather than promise everyone that you’re going to create a great product, build it first and then show people how amazing it is. Marshall says they will be much more appreciative if you take that approach.

In that clip, Marshall briefly mentions hiring people smarter than you among his tips for future founders. Heidi Roizen, however, shares that same advice, but in much blunter terms. “My goal truly is to be the dumbest person in the room,” Roizen said at her ETL talk last year, titled “Adventures in Entrepreneurship.”

Roizen has spent her life immersed in the Silicon Valley ecosystem, as an entrepreneur, corporate executive, venture capitalist, educator and board member for companies public and private. She is currently is the operations partner at the venture capital firm DFJ and lectures on entrepreneurship in Stanford’s Department of Management Science & Engineering.

In short, she knows what she’s talking about.

Even for those who aim to think “outside the box,” rules and constraints aren’t always bad. They focus our thinking and remind us to be deliberate with our execution by keeping our goal in mind. So in order to thrive in a landscape characterized by unmade decisions, it’s critical to be thoughtful about what rules we create and how they might guide our choices down the road.

At her recent DFJ Entrepreneurial Thought Leaders Seminar talk, Stanford Management Science & Engineering Professor Kathleen Eisenhardt drew on the principles from her new book, Simple Rules, on how heuristics are crafted. In the video below, we see how rule formation guides a multinational company through an uncertain future in a responsible manner:

Not only do rules inform intelligent choices about the way we do business, they also provide us with constraints, which, as David Heinemeier Hansson said in his 2010 ETL talk, “are your friends.” In an overwhelmingly competitive landscape, boundaries bring us face to face with a hard truth: Sometimes, you just can’t outdo your competition. But you can think differently than your rivals and, ultimately, succeed by recognizing and operating within your own zone of expertise.

Amazon Founder and CEO Jeff Bezos once said: “One of the only ways to get out of a tight box is to invent your way out.” Teams and organizations that leverage their own operational limits to think more creatively about how they do business often reap the rewards of differentiation. This sort of creative exercise doesn’t just prompt us to think about how to do things faster, cheaper or better ‐ it makes us question our assumptions and sometimes reinvent ourselves entirely.

Hansson — creator of the popular Ruby on Rails web-development framework and founder of the collaboration program Basecamp (formerly 37signals) — talks us through just how this looks in practice:

Perhaps the most important part of developing constructive constraints in business is to first think about our own work ethic. Why do we make the choices we do? Are our own actions aptly guided by a simple set of rules? What personal limits to place on ourselves? Hemant Shah, CEO of Risk Management Solutions, underscores the seriousness of recognizing this as a means to then realizing when we should seek help from others.

Rules and limitations can seem like irritating constraints on what we can and cannot do. But think for a moment just how powerful they could be if harnessed in the right way: a simple set of guiding covenants that empower us to make informed choices, ask for help when necessary, and ultimately allow us to save our time and energy for the more important matters in our lives.

An entrepreneur, as the quintessential self-starter, naturally looks inward for inspiration when the road gets rockier and the hurdles higher. But no matter how awesome you are, people can’t always be walking nuclear reactors that generate a constant supply of motivation in a contained, self-sustaining way.

And you don’t necessarily need to max out the memory of your tablet with a bunch of the latest books by big-name motivational speakers. You need only look around you to replenish your emotional reserves when the entrepreneurial journey begins to wear you down.

Perhaps the most obvious source of motivation outside yourself are the people around you. Imagine you’re the head of a fast-growing startup, confident you’re about to receive a $50 million infusion from several large investors. Then, all of a sudden, you get a call that they’re backing out. Visions of laying off all your loyal and hardworking employees – who laid everything on the line up to this point — cause you to break out in a cold sweat.

This is precisely what happened at the biotech startup Invitae at a critical point in their pre-IPO days. But the shared determination of everyone on the team, from the founders to the bankers representing them on the phone, pulled them through, Invitae President and Chief Operating Officer Sean George says in this video clip:

Motivation can also be found in the mission of your venture — that is, if it’s lofty enough. Again, the path of entrepreneurship is riddled with adversity, and day after day, people will want to dismiss your idea and say you can’t do it. Sooner or later, you’ll wake up one day and ask yourself whether it even makes sense to keep going.

For Ron Gutman, founder and CEO of HealthTap, his startup’s mission is “to help people live healthier, longer and happier lives” through on-demand patient treatment services made possible through an app that connects paying members with a network of over 67,000 doctors. A mission as important as that, Gutman says with a smile, “never gets old.”

A less obvious, but very valuable source of inspiration is the challenge itself — but not so much in the sense of someone simply rising to the occasion. As personal-brand expert Tristan Walker described when he came to speak at Stanford last year, an obstacle is simultaneously “a blessing.”

The founder and CEO of Walker and Company Brands learned this after speaking with filmmaker Tyler Perry, and he shared the advice with Stanford Professor of the Practice Tina Seelig at the DFJ Entrepreneurial Thought Leaders Seminar series: that every challenge an entrepreneur faces yields a lesson on how to deal with it next time.

In that sense, the lesson is simply a gift, Walker goes on to explain in this final clip. And once you understand that challenges are just gifts in disguise, you’ll always be able to find motivation in the face of adversity.

For the second year in a row, Stanford Engineering Ph.D. students in the Accel Innovation Scholars (AIS) program welcomed a special guest who once filled their shoes. University President John Hennessy, who holds a Ph.D. in computer science, taught for many years and served as dean of the School of Engineering, came to the cohort’s class in late February to share his experience and wisdom.

John Hennessy, Accel Innovation Scholars
University President John Hennessy

The 12 doctoral candidates accepted into the AIS program learn the skills and possibilities of technology commercialization, opportunity evaluation and entrepreneurial leadership. And as someone who succeeded as an entrepreneur in industry, as well as a scientist and scholar, Stanford’s 10th president embodied the many possibilities for the participants in the AIS program.

“I wish I had had a program like this during my Ph.D.!” exclaimed Hennessy, who earned his doctorate from State University of New York at Stony Brook. “Doing a Ph.D. teaches you to be a problem-solver and how to work in a field that is not established.”

Making the leap from a Ph.D. to a startup, Hennessy said he “had to learn things the hard way, by making mistakes and learning from them.” In 1984, Hennessy co-founded MIPS Computer Systems, now MIPS Technologies, and then Atheros in 1998. He sits on the boards of Atheros Communications, Cisco Systems, Google and the Daniel Pearl Foundation.

When one AIS scholar asked Hennessy what was “the most innovative, disruptive thing” that he has done as president of Stanford, he said that he has concentrated most of his attention on trying to build a focus on interdisciplinary work to facilitate collaboration around large problems that wouldn’t be solved by one group of scholars — “to make the whole greater than the sum of the parts.”

He also shared his vision for Stanford: “We try to play from our own songbook. You can’t be in Silicon Valley and fail to be influenced by it — and most of that influence is for the good. Our goal is to increase our impact on the world through education and research. We are a relatively small institution and try to look for first-mover advantage in various fields. We don’t try to do everything. Our goal is to be in the top five in all our programs.”

Asked how he makes hard decisions, Hennessy first distinguished how university decisions differ from those of startups and then explained his decision-making process in his present role.

“Universities are semi-permanent structures here for the long term,” Hennessy said. “We have to project the impact of any big decision 100 years into the future.”

He added that university leaders have to think about everything — entitlements, impact on future generations and other dynamics. “We try to make sure that everyone with a stake in the decision has the opportunity to give an opinion,” he explained. “We then weigh the opinions and the impact of the decision on the various constituencies and into the future.”

Lastly, scholars asked about Stanford’s place in Silicon Valley. “Technology comes in waves of innovation,” Hennessy said. “A new insight, a new application creates an entire industry and many new companies. That’s what happened with the World Wide Web and social media. Innovation is cyclical. The key is to keep the innovation cycle going.”

“I really enjoy working with students and sharing fundamental ideas with them. It’s as simple as that,” says Professor Kathleen Eisenhardt, one of the most cited scholars in the domain of strategy and organization studies in the last quarter century. “I don’t think about my students as the ‘next generation of influencers’ or ‘captains of industry’ — although they are likely to become just that.”

Rather, Eisenhardt explains, “I see them as young adults — and I get satisfaction out of watching them maturing, blossoming and succeeding in whatever becomes their passion and path.”

Case in point: Adam Khorakiwala, a public policy major in Stanford’s class of 2015, says he plans to take what he’s learned in Eisenhardt’s course on organizational theory and management and eventually apply it toward international development efforts in his home nations of India and the Philippines.

Selamile Dlamini, a native of Swaziland, also expects to apply the insights about effective leadership from Eisenhardt’s course toward a career in the public sector to address pressing issues in Africa. However, Dlamini is testing them already at Stanford, where she heads the International Undergraduate Community.

“I think about how to be more of an effective and impactful leader and how to design subgroups and how to communicate with people effectively,” said Dlamini, a management science and engineering major, also in Stanford’s class of 2015. “It’s something that you really use in real time.”

Now, Eisenhardt is taking her insights beyond Stanford and sharing them with anyone seeking common-sense solutions to complicated lives. Simple Rules: How to Thrive in a Complex World, which comes out April 21, distills decades of research on how individuals and organizations succeed in high-velocity and complex markets into an incredibly accessible 288 pages for the average reader.

simple-rules-full

The applications of simple rules, which she writes about with co-author Donald Sull of MIT, range from coping with insomnia and scaling ventures like Airbnb to gardening, playing poker and setting Federal Reserve interest rates.

“I wanted to write the kind of book that I particularly enjoy reading,” Eisenhardt says. “I love books about fundamental ideas like those by, for example, Malcolm Gladwell and Michael Pollan.”

Her previous book, Competing on the Edge: Strategy as Structured Chaos, focuses on businesses in the volatile and highly competitive markets that characterize technology-based industries. Along with her co-author then, MS&E Ph.D. and former Google senior vice president Shona Brown, they concluded that entrepreneurs and other executives must cast aside standard survival strategies and instead constantly reinvent themselves.

This insight gets to the heart of Eisenhardt’s scholarly focus. Working in research and consulting with executives in firms ranging from telecommunications and software, to Internet and biotech, agribusiness and solar power, she emphasizes novel theories of complexity and the realities of power that move beyond traditional approaches that assume equilibrium and favor planning.

Formative Years and Honors

Eisenhardt recalls that she first wanted to become a professor when she was a sophomore in college, studying engineering. She was drawn to the idea of a career that would let her explore novel ideas and be her own boss. Her research focus came later, while working in the software industry right after college.

“I realized that the technical problems that I faced were ‘easy,’ but the organizational issues were not,” remembers Eisenhardt, who then went on to earn a Ph.D. in organizational behavior at the Stanford’s Graduate School of Business. Even before she finished her doctoral dissertation in 1982, she had launched her faculty career and began teaching across campus at the School of Engineering.

And that’s where she’s been ever since, teaching thousands of undergraduates and master’s students over the years, authoring more than 100 papers and book chapters, penning three books and advising about two dozen Ph.D. students who have gone on to become industry leaders and faculty members at some of the most prestigious universities in the world.

Kathleen Eisenhardt
Kathleen Eisenhardt

Most recently, the Academy of Management’s Technology and Innovation Management division named Eisenhardt its 2014 Distinguished Scholar at the academy’s annual meeting last August. Colleagues in attendance described Eisenhardt as a pioneer in building theories from case-studies research, and credited her with developing a “world-famous” method of comparative case studies that “uniquely has performance as the dependent variable.”

This adds to previous awards that include four honorary degrees, the Global Award for Entrepreneurship Research, and selection as a fellow of the World Economic Forum, Strategic Management Society and Clinton Global Initiative.

Knowledge Organizations Need

Eisenhardt readily acknowledges that definitive research results can be elusive in her chosen field. But even if the insights take time to develop, her contributions to better understanding the importance of heuristics and other cognitive approaches, along with the strategies of entrepreneurs, have been significant.

And other findings about effective competitive strategies — such as following market bottlenecks instead of leveraging in-house capabilities – have been “personal revelations,” Eisenhardt notes.

“My work often translates well into popular articles such as for Harvard Business Review” and Sloan Management Review,” she observes. “I also find that my work appeals particularly to senior corporate executives, who tend to think in broad and fundamental ways, which is a superb fit for my approach to academic research.”

And besides holding the Stanford W. Ascherman M.D. Professorship and serving as Chair of the Ph.D. program in MS&E, Eisenhardt is also a co-director of the Stanford Technology Ventures Program, the entrepreneurship center in the School of Engineering.

“Kathy is a model modern scholar. She is very focused on doing great research that is rigorous, relevant and offers new twists,” says fellow MS&E Professor Bob Sutton, also a prolific author in organizational theory. “This is why Stanford students love her classes, and why so many senior executives have used her ideas to make better decisions and to build great companies.”

Taking time to reflect and understand what matters most to us, both professionally and personally, provides us with a strong framework for making decisions. In addition, staying clear on what matters to us often leads to a greater sense of fulfillment in life altogether. Whether implicitly or explicitly, some of our most recent speakers in the DFJ Entrepreneurial Thought Leaders Seminar series discuss how introspection keeps their efforts in line with their values.

Joshua Reeves, CEO and co-founder of ZenPayroll, raises the familiar point that professional success does not equal personal happiness, and hence, how crucial it is to choose our path carefully. In other words, take the time to understand what gives you a genuine sense of purpose and, yes, “mission.”

In college, Reeves says the academic quarter system provided built-in breaks from work to reflect on where studies were leading you. But even after launching into a career, he insists that we can structure our lives in a way that allows for periodic reflection and soul searching. That’s how Reeves realized his passion for developing technology that empowers others to do what they love.

Be it during a stroll through a neighborhood park or while commuting to work, taking the time to ask ourselves questions about why we do what we do can get us back in touch with what we consider meaningful and what our real priorities are.

Again, it comes down to choice, according to longtime venture capitalist Kathryn Gould. We can spend our time responding to the many opportunities that come to us, or we can choose to actively seek out the opportunities that truly excite us. For Gould, one of the first women venture capitalists in Silicon Valley, the choice was clearly the latter.

However, it is also important to distinguish between what we desire most deeply and when we can compromise. For John Collison, co-founder of the online payment system Stripe, it was always about creating a way for commerce to be seamless across different countries and currencies. Everything else, such as app features and design elements, become bendable means to a steadfast end.

This is especially relevant in entrepreneurship, where success depends largely on constant iteration based on customer feedback. But as Collison explains, understanding when to heed others and make adjustments, and knowing when not to budge, only comes after much self-reflection.

There are a few principles in life that keep us on track: a strong sense of what matters, our personal values and our vision. Adopting a ritual that allows for routine reflection keeps us asking the right questions of ourselves and, ultimately, allows us to lead a more fulfilling life. So think for a moment – are your actions in line with what matters to you?

Rare beasts, “thunderlizards” are companies that exit the startup phase at greater than $500 million — at least in the vernacular of venture capitalists. Each year, 4,000 to 5,000 companies are funded at the seed stage. Only 15 to 20 become true thunderlizards.

“Startups is a business of exceptionalism,” stated Ann Miura-Ko, co-founder of venture capital firm Floodgate and instructor of the STVP “Spark” titled “Giving Rise to Thunderlizards: What legendary companies look like before they make it big.”

Miura-Ko, a lecturer in Stanford’s Department of Management Science & Engineering, invited Instagram Co-Founder Mike Krieger to the extracurricular, pop-up class in late January to discuss the thunderlizard that he let loose with fellow co-founder Kevin Systrom.

Instagram Co-Founder Mike Krieger (right) and Tommy Lee, parnter at Rothenberg Ventures. (Instagram photo by Eli Shell/STVP)
Instagram Co-Founder Mike Krieger (right) and Tommy Lee, parnter at Rothenberg Ventures. (Instagram photo by Eli Shell/STVP)

“When I was seventeen, I wanted to be a crime-beat journalist,” said Krieger. That passion led him to create Instagram — an app, as stated on Instagram’s website — to “capture and share the world’s moments.”

After graduating from Stanford with a degree in symbolic systems, Krieger was working on his Crime Scene SF app when he connected with Systrom, a fellow alumnus, who was working on his own app, Burbn. The two weren’t sure they could work together, but they decided to give it a try. After a few days, they decided they made a compatible team.

Burbn was the precursor to Instagram, but the technology was “a bit janky,” said Krieger. “People were uploading videos and photos nonetheless.” This and the fact that one user — Chantel — “was completely obsessed with Burbn” proved viability. The next step was to seek investors.

Recognizing that Krieger and Systrom were doing something the digital world hadn’t seen before, investors became interested, especially because the app was mobile and local.

But right when Krieger, a native of São Paulo, Brazil, received his visa to stay in the United States and quit his job to work on Burbn full time, Systrom announced that he didn’t think Burbn would set the world on fire. “We knew what we wanted to be, we just had a lot of doubt about how to get there.”

They crystalized their vision. “We wanted a fast, beautiful and fun way for people to share their lives with friends and family. And we knew we wanted to keep it simple.” With that idea in mind, they developed a product that would allow users to snap a photo with a mobile phone, then choose a filter to transform the image into a memory to keep around forever.

Today, Krieger and Systrom enjoy Instagram’s position inside Facebook, and continue to focus on product and staying competitive.

As clashes between political parties, socioeconomic classes and ethnic factions dominate current events, it’s clear that we could all use a lesson in empathy. Taking the time to put oneself in the shoes of another and experience the problems they encounter everyday reveals unique opportunities to use our own energy and talents to help others and better connect with them.

In our personal lives, it seems intuitive that exercising empathy allows us to better bond with friends, family and acquaintances. It is, in fact, not so different in our professional lives: Approaching negotiations with the goal of helping the other person get what he or she wants, you both will be better off, according to Stanford lecturer Heidi Roizen, a recent speaker at the Entrepreneurial Thought Leaders (ETL) Seminar Series.

“The art of negotiation is finding the maximal intersection of mutual need,” said Roizen, operating partner at the venture capital firm DFJ, quoting her favorite lesson from her days as a student at the Stanford Graduate School of Business.

Often, the opportunities to practice empathy in a meaningful way exist outside of our own networks and communities. In those instances, that may mean venturing way beyond our comfort zone to truly know the pains others feel.

In her ETL talk last month, Code for America Founder Jennifer Pahlka shared the example of how her program’s fellows enrolled in California’s food-stamps program to find out why so many recipients failed to renew their claim and kept falling off the rolls.

By interacting with the time-intensive and non-intuitive online enrollment system themselves, the coders experienced the full frustration of those actually signed up for the “CalFresh” program. It inspired them to simplify the online process, and build an elegant smartphone app for the many recipients without access to broadband.

But most importantly, the coders kept low-income families from going hungry, and in the process they gained a healthy dose of personal fulfillment.

Sometimes, an entrepreneur’s challenge is recognizing what problem to address. In a world so rich in opportunities, the choice isn’t always quite as clear as we’d like.

But consider this for a moment: Might we be asking the wrong question altogether? Perhaps it’s not a matter of recognizing what problem we’re best suited to work on, but rather, just taking the plunge to help out, experience the journey and see if anything in it speaks to us.

In his ETL talk, Shah Selbe reflects on his own volunteering experiences, underscoring the profound effect they had on what he does now as a bona fide “National Geographic Explorer.” By taking the time to volunteer for what he considers worthy causes, Shah said he gained a deeper understanding of the challenges out in the world, while gaining credibility for working on problems for completely altruistic reasons.

Having empathy is, of course, critical for entrepreneurs seeking to understand and solve people’s pain points. But on a more human level, it helps form meaningful relationships with those in our network — and possibly, compels us to volunteer our time and talents in order to serve those beyond who could really use our help.

STVP’s new fellowship for master’s students in Stanford’s School of Engineering kicked off with wise words from Mike Maples, Jr., co-founder of the venture capital firm Floodgate. The Silicon Valley veteran was the featured speaker at the first class session for the DFJ Entrepreneurial Leaders Fellowship, a new nine-month program that combines courses, professional development and experiential opportunities for students interested in leading entrepreneurial ventures during their careers.

Mike Maples

With a career in high-tech spanning more than two decades, Maples talked about how much luck can play into a startup’s success. In general, people often look at life and success through the lens of taking out risk. But when you are super early and risky, it’s more important to think about “what can go right,” Maples says.

This can involve focusing on cutting-edge technology that is timed well, and it can involve surrounding the company with the right people. Or it can involve articulating and exploiting potential “free moves,” according to Maples (more on that below). “But above all, it is a mindset of increasing the odds of luck finding you and knowing how to take advantage of it.”

In no certain order, here were a few other takeaways from his Jan. 26 talk:

Of course, the industry veteran tempers his inspirational advice with reality, stressing that exceptionalism in entrepreneurship is truly rare: Only 10 companies out of the 10,000 to 20,000 started each year create 97 percent of the value in the tech-business.

According to Maples, “Many entrepreneurs and VCs never truly internalize the importance of this and fall into the trap of ‘doing a startup’ rather than locking in on the opportunities that have a chance to create exponential outcomes.”

The course Engineering 145 at Stanford University examines the fundamentals of technology entrepreneurship as practiced in Silicon Valley and similar regions of innovation around the world. Often called “E145,” the course is open to all undergraduates at Stanford, of any major, and admits from 40 to 60 students per class. The course is offered three times in the autumn and winter quarters for Stanford students, and when the academic year ends, E145 is taught again as a Stanford Summer Session class that students from universities around the world take for credit.

E145 is taught by different instructors each quarter, so the course focus and activities vary. In the fall, it is taught by Stanford Engineering Prof. Tom Byers, who stresses the inclusiveness of the course and the comfortable-but-intense workload. He says what makes E145 unique among the many entrepreneurship-related courses at Stanford is that it carefully examines the entire journey of a tech venture. (See his full syllabus.)

“It fits completely with our job as educators to take students and transform them into leaders,” said Byers, faculty co-director of the Stanford Technology Ventures Program (STVP), the entrepreneurship center in the universityʼs School of Engineering.

Housed in the school’s Department of Management Science & Engineering, STVP is a lab for creating and delivering courses, performing research and developing tools and programs to accelerate entrepreneurship education at Stanford, across the country and around the world.

E145 certainly opened Wade Morgan’s eyes to a new realm of possibilities. Having grown up in what he described as a low-income environment on the East Coast, Morgan said the thought of a career in high tech used to be as remote as Silicon Valley was geographically to his home state of New Jersey.

However, Morgan actively seeks out new challenges and opportunities for growth. He applied and got into Stanford, joined the men’s basketball team as a walk on, and after completing all that’s required for his political science major, started taking courses such as E145 to learn more about Silicon Valley’s vibrant innovation ecosystem.

Morgan said that studying the entire journey of tech entrepreneurship in E145 has put the much-hyped startup success stories in the press in perspective — and even made them seem attainable.

“I was empowered to know that I don’t have to be the person who is coding away to still lead a company. I can lead it with my vision and with my passion,” said Morgan, who has accepted a sales-and-marketing position at LinkedIn that starts after he graduates this spring.

In Winter Quarter, E145 is taught by Chuck Eesley, an assistant professor in management science and engineering whose learn-by-doing approach has prepared his students well. In class, they identify a real-world entrepreneurial opportunity, recruit and assemble a team of classmates, gather resources, develop a business plan and execute on their idea.

“The way the class is structured really facilitates organic learning both in the team and from speakers,” said entrepreneur Trent Hazy, who took Eesley’s E145 course in 2011. “The classroom setting was really helpful for me because I knew I could try and fail and learn and push my limits in a safe environment.”

Hazy now occupies a suite in an industrial building in San Francisco’s chic south-of-Market area, where he serves as CEO of MindSumo, a recruiting-based startup he co-founded in 2012 that uses real-world challenges to match college students to relevant companies.

“Especially now, I’m three years into a business, and I’m thinking about scaling,” Hazy said, “and had we not done the case studies and done the deep learning in those areas in E145, I would be totally clueless right now.”

Erin Parker, another Stanford alum taught by Eesley, took his class to heart: She treated her team’s project, not simply as an assignment, but as an actual business that she would work on full time after graduating in order to be self-sufficient.

While the business she worked on in E145 was completely different from the one she now runs, Parker said the biggest takeaways from the class proved to be essential for her tech venture today — a health-and-fitness company whose first product is a strength-training app called Spitfire Athlete.

Spitfire Athlete

Spitfire currently has more than 50,000 registered users, and Apple has featured it on its App Store’s Health and Fitness page for months. Parker, a national-level Olympic weightlifter, said the lasting effect of E145 is that she never forgets the importance of talking to customers regularly, prototyping a product before shipping it and testing out assumptions.

“It’s really the skill set of learning how to discover opportunities, and then take those opportunities and form them so that they’re this great product or service that people really need,” said Parker, who also taught herself to code while earning her degree in economics at Stanford.

In keeping with STVP’s efforts to accelerate entrepreneurship education around the world, E145 is also taught to learners globally as a Stanford Online course by Eesley. And each summer, the course is taught by management science and engineering lecturers Tom Kosnik and Rebeca Hwang.

Occasionally, they see a Stanford student or two in their class. But mostly, they teach to a room full of international students, who also form teams and work on tech-venture projects based on entrepreneurial opportunities they see back home.

Kosnik and Hwang are well suited to teach E145 with an international slant. During the academic year, Kosnik teaches the popular, longstanding course “Global Entrepreneurial Marketing.” And Hwang — with her unique Korean-and-Argentine background — was a co-founder of YouNoodle, which grows global entrepreneurs through a network of startup competitions.

“The process of startup creation has a lot of parallels with the way you plan your own career and life journey,” said Hwang, now a lecturer in management science and engineering at Stanford. “A lot of the concepts and tools that we teach throughout the class can be applied to planning your career — and that’s pretty much universally applicable to any major, to any career orientation, to any country.”

If you’re leading an entrepreneurial venture, the new year can be an ideal time for redefining and rejuvenating. In a startup’s early days, founders can code all night, talk to customers all day, while keeping a small and devoted team on track the rest of the time. But once a business grows and becomes more complex, those sleep-deprived entrepreneurs will have to let go of some of those responsibilities to focus full time on leading the company and charting its path forward.

In other words, it becomes a matter of redefining the leadership role. For the final DFJ Entrepreneurial Thought Leaders talk of 2014, Ben Horowitz, of the Silicon Valley-based venture capital firm Andreessen Horowitz, pointed to Google Co-Founder Larry Page as a poignant example of someone who simply cannot take on everyday technical tasks anymore.

“He cannot work on production products. It’s a full-time job – even for somebody who can do as many things as Larry,” said Horowitz, author of The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers. “If Larry can’t do it, you can’t, either. I guarantee you.”

A new year can also be a great time to start seeing things with fresh eyes. As she discovered while researching for her book Rookie Smarts: Why Learning Beats Knowing in the New Game of Work, leadership educator and author Liz Wiseman found that experience had the ironic effect of limiting people’s ability to see things clearly – because they often made assumptions based on previous experiences instead of being open to new data points, perspectives and possibilities.

The solution, Wiseman says, is to maintain a “rookie” mindset. But what if you’re a grizzled veteran in your field who has seen and done it all before? Here, Wiseman shares how a surfer-turned-CEO, French filmmaker and accomplished scholar all found ways to return to their rookie roots and reinvigorate themselves.

Once rejuvenated, however, it’s also important to maintain perspective. A new year and a new outlook may inspire you to begin the next chapter in your venture. The challenge of building on success, whether it’s refining a product or reinventing a business altogether, is one that few in the tech sector have pulled off at scale:

In the clip above, Lewis Cirne, founder and CEO of New Relic, shows cautious optimism that his software-analytics company will be able to pull it off. And yet, entrepreneurs have always been known to fixate on that next big thing. So, if the only alternative is complacency, is there really any other choice?

It can be tempting around the holidays to tune out all the consumerism. But entrepreneurs would do well to heed customer sentiment. Whether the product being built is a free app or fresh apparel, the bottom line is that, if consumers don’t want it, you’re out of business.

Usually, a successful venture begins with identifying an unseen opportunity or a widely shared pain point that no one else has addressed yet. But once you figure out your solution to that problem, or your unique product, building it out before seeing what potential customers think of your idea would be folly.

The financial loss from a flop is the most obvious risk. But nowadays, with the average consumer wielding the megaphone of the Internet, if a company gets it wrong, that individual can — and will — let the business and the rest of the world know about it in an instant.

Especially in retail, brands no longer have the one-way advantage of dictating tastes to customers. As Tina Wells of Buzz Marketing Group says in this video clip, today, consumers dictate their desires to brands:

At the same time, it’s wise to look closely at cases where others got it wrong – because they can guide you toward success. This was how Method Products, the maker of hip and healthy household cleaners, managed to compete against established giants in the industry: by studying their missteps.

Given Method’s niche of making only non-toxic cleaning products, the company asking customers to bring their empty containers to the store for refills would be in line with its Earth-friendly stance. But Method Co-Founder and “Chief Greenskeeper” Adam Lowry saw how others failed with that approach, and in fact, inconvenienced customers more.

“You can create the most beautiful, the most sustainable product in the world,” Lowry explains. “But if nobody wants to buy it, if you don’t get a lot of people to buy it, then I would argue that it’s actually not innovative.”

And by the way, if you can’t build a great product, how can you expect to build a great company. That had a lot to do with the tremendous bust that followed the dot-com boom of the 1990s, according to Silicon Valley luminary Ben Horowitz. Investors turned to “professional CEOs” who knew nothing about building a product that customers would want and relied on these leaders to rapidly grow a company — except that it would fold just as fast because no revenue came in.

Again, it all comes back to the consumer — empowered by the digital age, and as ever, holding the power of the purse strings. So take heed:

November is National Entrepreneurship Month in the United States. But if you have an entrepreneurial mindset, opportunities present themselves every day – whether for a new business, or even just learning something new.

The first step is noticing these opportunities. And while it may seem obvious that this requires paying attention to what’s going on around you, it is worth noting because we can all be blinded at times by our own beliefs. Inexperienced entrepreneurs can be especially prone to thinking that a personal epiphany is an opportunity, and unfortunately, pursue it without first verifying whether what they perceive is the reality.

Stanford Engineering Professor of the Practice Tina Seelig, a thought leader in the area of creativity and innovation, presented a new model that maps out the process for how ideas are brought to life and what is required at each stage. Called the “Inventure Cycle,” Seelig explains here how one must observe their surroundings before envisioning an opportunity:

Opportunities can also be found in places that others overlook or simply don’t care about. This doesn’t mean pursuing things that aren’t important, though. If you can bring passion and optimism to the table, you really can make an impact and even address one of the world’s great problems.

Take home heating and cooling. In the United States, the amount of energy needed to keep every house comfy and cozy is greater than the total amount of electricity generated by all the solar or nuclear plants in the nation. The letters H-V-A-C don’t signal sexiness, but clearly, attention is needed here.

That’s where Matt Rogers, co-founder and vice president of engineering of the smart-thermostat maker Nest, saw an entrepreneurial opportunity. And before that, when he was a new employee at Apple in 2005, he enthusiastically took on what was then considered just a side project: prototyping the iPhone.

Sticking with it at Apple showed how “intrapreneurial” he could be, and this video clip shows how well that experience prepared him to be an entrepreneur in the next chapter of his career. “I think I’ve built my entire career – actually, probably my entire life’s work – on things that no one cares about,” Rogers says. “And I’ve actually done really well doing it.”

Even for the entrepreneur who has already launched a startup, day-to-day activities can lead to new opportunities if you’re observant and take action. That was certainly the case for the founders of the ticketing service Eventbrite.

When they spoke last month at the DFJ Entrepreneurial Thought Leaders Seminar Series, the wife-and-husband team Julia and Kevin Hartz recounted how their business goal evolved. Initially set on taking down market leader Ticketmaster, they soon realized the opportunity lying just beneath the tip of the iceberg: all the everyday events that need ticketing.

“It’s everything you do in your everyday life where you gain access … cooking classes, yoga seminars, obstacle races,” Julia Hartz says in the clip below. “Capturing this opportunity that wasn’t from the get-go very attractive is why Eventbrite is here today, and why we’re seeing the growth that we’re seeing.”

Here’s the idea: Moober — Uber for cows. Trailers would drive around and pick up cattle from family farms, bring them to the slaughterhouse and solve the problem of bottlenecks at the facility.

It was clever, addressed a real problem and had the hip name to boot. And yet, when Stanford graduate student Christine Su shared the idea with the instructor of the course Engineering 245 — Steve Blank, the renowned father of the “Lean LaunchPad” approach — he predicted it wouldn’t work. Then he told Su to see for herself by going out and talking to actual ranchers.

It didn’t take long: The first farmer Su spoke with spent two years lovingly raising and fattening her cows and would not think of cramming them into a trailer with other baffled bovine. It would stress them out and cause the release of hormones and lactic acid that would, ironically, degrade the quality of the meat.

Fortunately, that was only one of many ideas Su pitched, and her team eventually worked on a project that has since developed into a truly unique startup: a mobile app that allows farmers to manage their fields and monitor grazing.

“One of the most invigorating things about Steve’s class is getting proven that you’re wrong,” said Su, who expects to earn a joint master’s degree in business and land use and agriculture at the end of the 2014-15 school year. “As Steve says, every time you’re proven wrong, you’ve just saved your family, your friends and your investors tens of thousands of dollars.”

As any entrepreneur or investor in the tech-startup scene now knows, the Lean LaunchPad methodology boils down to several key components:

From there, continued feedback intake drives product improvement and, if necessary, any changes in the direction of the business — nowadays known as a “pivot.”

Experiential Learning

The methodology is a reversal of the traditional approach to entrepreneurship, which historically meant developing a business plan behind a desk, pitching it to investors, forming a team, building the product and then selling as hard as possible. Blank’s method reduces the high, upfront costs that would normally come with developing and perfecting a product before debuting it to the world.

“The goal isn’t to be an incubator,” said Blank, adding that those kind of resources abound at Stanford. “Take this class if you actually want to change your life as an entrepreneur — because we’re going to teach you a basic set of skills about how to be incredibly efficient with your time and money.”

The course, titled “The Lean LaunchPad: Getting Your Lean Startup Off the Ground,” is offered in Winter Quarter with limited enrollment. Graduate students must apply in teams, typically comprising three to five members, and present the business ideas that will serve as their class project, as well as be interviewed by the course’s instructors.

The course (ENGR 245) is one of many presented by the Stanford Technology Ventures Program (STVP), the entrepreneurship center in the universityʼs School of Engineering. Housed in the school’s Department of Management Science & Engineering, STVP is a lab for creating and delivering courses, performing research and developing tools and programs to accelerate entrepreneurship education.

Headshot of Jeff Epstein

Teaching ENGR 245 with Blank is Jeff Epstein, an operating partner at Bessemer Venture Partners and former CFO of Oracle. “What we do in the course is give you a very rich environment of resources,” said Epstein, citing the online lectures, in-class discussions, and mentors and advisors who also make themselves available to students. “Altogether, it gives you a very hands-on laboratory experience that’s as close as you can get to building a real company in a classroom setting.”

A defining aspect of ENGR 245 is its emphasis on getting lots of feedback from actual people: Over the course’s 10 weeks, teams are required to talk to a minimum of 10 individuals per week in person or by phone. For both the business school students and those from engineering who typically make up a team in the class, the constant stream of feedback is both grueling and rewarding.

“If you think about it, most entrepreneurs probably haven’t spoken with 100 customers and partners and suppliers,” Epstein said. “It’s a big investment in time, and there’s a huge payoff by doing it because what you learn each week as you develop your own idea of what your product is and what your company is, you learn more and more about what people want.”

That was definitely the case for Su and her teammate Jennifer Tsau. A digital native, acknowledged “foodie” and advocate for sustainable farming, Su and her team set out to do something in information management for farmers. They would take turns going to farmers’ markets, driving out to Tulare and Fresno, and even cold-calling trade associations for fruit growers, dairy farmers and cattle ranchers.

Over and over again, they got feedback affirming the need for an information-management solution, which led them to develop software that is now at the heart of their startup, Summer Technologies. Their app, currently in private beta mode, allows ranchers to create and save fields by tracing boundaries with their finger on a tablet or smart-phone screen. Farmers can also take geo-tagged photos, record grass heights and save notes before and after grazing.

“Years to come, no matter whether you become an entrepreneur or not, I think in every level of business or technology, user-centric design and empathy are really important,” Su said. “I’m getting a degree in agriculture, and I think I learned the most about agriculture in this course.”

For another entrepreneur who took ENGR 245, his startup also stems from food. As a child back in Berlin, Michael Heinrich spent a lot of time in his grandmother’s organic garden, picking and enjoying ripe raspberries, succulent apples and other fresh fruit. Contrast that with the highly processed snacks that surrounded him when he came to the United States as an adult to work in corporate offices and attend Stanford as a graduate student in management science and engineering.

So when he walked into the Lean LaunchPad course in winter 2014, he set out to build a startup that would produce and supply healthy snacks in the type of settings that he and his teammates found themselves in most – college campuses. But they quickly discovered, by getting out and talking to 10 to 15 people each week, that sales based on a typical university’s pace of purchasing would not sustain a business very well.

They also realized that focusing on college campuses would limit their market. So they pivoted and turned from higher education to targeting high-tech companies. Those epiphanies and many others have paid off, and now, Heinrich’s startup is on the road to sustainable success: “Oh My Green!” (omg!) counts Apple, IDEO and Levi Strauss & Co. among its biggest clients.

“The course has completely changed my trajectory as an entrepreneur,” said Heinrich, whose business is now growing from within the StartX accelerator program. “Steve and the teaching team are just fabulous. They offer a bit of tough love sometimes. But they really invest all of their time because they fundamentally believe and value the students – and they want to see them succeed.”

National Recognition

So powerful and proven is the Lean LaunchPad approach that it has been adopted by the National Science Foundation and the National Institutes of Health as a training program called Innovation Corps (I-Corps). According to Blank, government officials in Washington, D.C., see the emphasis on testing a hypothesis and gathering data as a “scientific formula” for innovation that NSF and NIH scientists can apply toward bringing more basic research into the market.

Photo - Steve Blank with students

In May, Blank was honored by the NSF at a special ceremony in Washington, where he was given the agency’s Outstanding Leadership Award. Currently, the NSF has put 400 teams of principal investigators through the I-Corps class, and the NIH says it will fuel the commercialization of all life-science research going forward, in the field known as “translational medicine,” Blank said.

“One of the reasons I began teaching this class is, for the decades I spent as an entrepreneur in Silicon Valley, there was no theory about entrepreneurship,” said Blank, who worked on eight startups before joining Stanford as a consulting associate professor. “Here at Stanford, we developed the first experiential, hands-on class that matches the latest theories and techniques that we know about how to build a startup — and that’s what Engineering 245 is all about.”

To learn more about the course, click here. Information sessions will be held on Nov. 14 and 19, both from 6 to 8 p.m. Anyone with questions may contact Stephanie Zhan at smzhan@stanford.edu.

This post was originally published on Inc.

Peter Thiel, Scott Cook, and Elon Musk have all spoken out about why b-school grads hurt rather than help innovation. But is it really true?

If you want to be an innovator or an entrepreneur, should you go to business school? At first glance, maybe not: Peter Thiel once said “never ever hire an MBA; they will ruin your company.” Meanwhile, Scott Cook, founder and leader of Intuit, recently told me, “When MBAs come to us we have to fundamentally retrain them — nothing they learned will help them succeed at innovation.” Perhaps a stronger indictment comes from Elon Musk, founder of Tesla, SpaceX, Solar City and PayPal, who said, “As much as possible, avoid hiring MBAs. MBA programs don’t teach people how to create companies … our position is that we hire someone in spite of an MBA, not because of one.”

While we generally recognize that management training has value, why do leaders of innovative companies offer such harsh criticisms?

I would argue that the fault doesn’t lie in the person but in the purpose of management itself. Business schools teach management principles that were developed in the later industrial revolution to solve the large-company management problem — not the innovation problem. As the industrial revolution transformed the economic landscape, replacing small workshops with large companies, the “new giants” created demand for management to make the trains run on time. Business schools followed close behind, with tools to train managers on how to coordinate and control these growing industry titans. However, while these more familiar management practices work well for relatively familiar problems, such as how to optimize activities and coordinate execution, increasing evidence suggests these techniques work poorly for managing the comparative uncertainty of bringing a new idea to market. In other words, business schools have focused on how to capture value from customers, not how to create value.

Another way to think about it would be examine the traditional S-curve that describes the life of a product or company (see Figure 1):

Graph

(Figure 1)

Early in the life of a company, during the startup phase, uncertainty is high and the entrepreneur is forced to wear a dozen hats to create value. Core tasks include search and discovery in an effort to create a customer. But once that uncertainty begins to resolve, the core tasks shift to execution and optimization in order to capture value. The founders are often kicked out of the company during this shift, and MBAs take the reigns to scale up the company.

When we talk about conditions of high uncertainty, we need what we might call an innovation school, rather than a business school, approach. An innovation school deals with the emerging science of managing uncertainty. Figure 2 shows the differences between these two schools of thought:

Chart

(Figure 2)

To provide an example of how these schools differentiate, consider the following:, In business school (B-school), when you study marketing, you typically learn the importance of building and protecting your brand or doing quantitative analysis to identify customer segments and get customer feedback. In an innovation school (I-school), however, you should initially ignore your brand and obtain all customer feedback through direct interaction, whether by experience, observation or interviews. What’s more, rather than emphasize building brands by satisfying a broad range of customers through perfected products, I-school emphasizes the need to test low-fidelity prototypes with small groups of customers, embracing errors as opportunities to learn.

Further illustrating this point, in B-school, when you learn finance, you’re taught about marginal cost logic: the importance of leveraging prior fixed-cost investments with new initiatives. But this approach biases you toward incremental innovation efforts. In I-school, you learn how to look for opportunities to build something disruptive, something that hasn’t been built before, to deliver a unique solution. In a world of uncertainty, leveraging investments can often be a bad practice because it may lead to building a workaround solution instead of one that nails the job to be done.

I’m not saying that one approach is good and the other is bad. Both are good. The key to success is to recognize when to apply a more familiar B-school approach and when to apply I-school thinking — a decision that rests primarily on the degree of uncertainty. In other words, when uncertainty is high, apply an I-school approach. When the uncertainty has been resolved, use a B-school approach. Fortunately business schools are starting to adopt these ideas, but we are in the midst of a transition. The real question is, how do you manage uncertainty? Are you applying the right process?

Short-term, extracurricular “pop-up classes” on a variety of topics related to entrepreneurship and innovation are now being offered to anyone in the Stanford community.

Called “Sparks,” the classes will be taught by experts from the local entrepreneurial community. Each Spark will consist of three evening sessions, one night a week for three weeks. Students, staff and faculty are encouraged to sign up here.

Sparks are presented by the Stanford Technology Ventures Program (STVP), the entrepreneurship center in the universityʼs School of Engineering. Long known for helping develop and deliver entrepreneurship-related courses within the schoolʼs Department of Management Science & Engineering, STVP developed Sparks to offer individuals a way to develop the knowledge, skills and attitudes needed to think entrepreneurially.

“We believe that no matter what field you are pursuing, these skills benefit everyone in bringing their ideas to life,” said STVP Executive Director Tina Seelig.

Three Sparks will be offered during Autumn Quarter:

All Sparks classes are free and will run from 7 to 9 p.m. Preference will be given to current Stanford students, but all members of the Stanford community are encouraged to register.

For updates on Sparks classes planned for the winter and spring quarters, subscribe to STVPʼs quarterly newsletter or follow the program on Facebook.

The DFJ Entrepreneurial Leaders Fellowship is an exciting new offering at Stanford that will provide 12 outstanding masters-level engineering students with an immersive set of experiences designed to prepare them to lead entrepreneurial ventures.

“Photo Using living cases with Silicon Valley entrepreneurs and investors, workshops and field trips, the selected students will learn the attitudes and actions needed to bring bold ideas to fruition. The Stanford Technology Ventures Program (STVP), which is the entrepreneurship center at Stanford School of Engineering, runs the program, with generous support from venture capital firm Draper Fisher Jurvetson (DFJ).

“Stanford attracts the best young minds in the world and then equips them to make positive contributions as entrepreneurial leaders. We at DFJ have been fortunate to work with many of those entrepreneurs to help them bring their ventures to life,” said Heidi Roizen, operating partner at DFJ.

Roizen, who has two Stanford degrees, is already a valuable contributor to Stanford. She has been a lecturer in the Department of Management Science & Engineering for the past six years, where she teaches a course titled “The Spirit of Entrepreneurship.” Roizen says, “We see the DFJ Entrepreneurial Leaders Fellowship as an opportunity to provide a deeper entrepreneurial educational experience for masters students before they leave campus.”

Stanford engineering students working on a master’s degree are invited to attend one of two information sessions at STVP. The first session will be on Wednesday, Oct. 15, from 5:30 to 6:30 p.m. The second will be on Thursday, Oct. 23, from Noon to 1 p.m.

The DFJ Entrepreneurial Leaders Fellowship (DFJ Fellowship) will run through the winter, spring and summer quarters. In winter, students accepted into the program will attend “The Spirit of Entrepreneurship” (MS&E 178), as well as the DFJ Entrepreneurial Thought Leaders lecture series. In addition, they will meet each Monday night for a dinner seminar featuring special guests from the Silicon Valley ecosystem. 

Also during winter, the students will begin developing their own professional goals, with support from the teaching team, and will be matched with corporate or venture capital mentors. They will also be coached as they find stimulating summer internships that will allow them to use the leadership skills they are developing. 

Spring quarter, students will continue to attend the weekly Entrepreneurial Thought Leaders lectures. In addition, pairs of students will lead evening seminars, working with the teaching team and choosing the topic to be explored.

At the end of spring quarter, the students will present their plan for achieving their professional goals. Then in summer, students will work at a startup company of their choice, enhanced with educational and social programming with all of the DFJ Fellows.

Students who go through the Entrepreneurial Leaders program will be encouraged to help their successors the following year. This pay-it-forward model has been a huge component of the Mayfield Fellows Program (MFP), which served as a model in developing the DFJ Fellowship. MFP is a work/study experience, also run by STVP, that has been immensely successful over the past two decades in helping selected undergraduates at Stanford realize their goals as entrepreneurial leaders.

“This new program is designed around the specific needs of School of Engineering masters students, providing them with a collection of experiences that will prepare them to lead entrepreneurial ventures,” said Tina Seelig, STVP’s executive director and a professor of the practice at the school. “Knowing that masters students are at Stanford for only a year or two, the program quickly exposes them to entrepreneurial thought leaders and connects them with internship and job opportunities in technology ventures.”

The DFJ Fellowship also borrows elements of STVP’s Accel Innovation Scholars program, a yearlong experience for Ph.D. students who are interested in exploring entrepreneurial opportunities in their research. Anaïs Saint-Jude, who helped develop the AIS program in her role as manager of student engagement at STVP, says, “We’re excited to collaborate with DFJ to round out STVP’s fellowship programs, where we now offer high-touch entrepreneurship education programming for undergraduates, masters and Ph.D. students.”

The DFJ Fellowship teaching team will work closely with the students throughout their three-quarter experience, from the articulation of their entrepreneurial aspirations at the outset to the hosting of informal gatherings and workshops at the end to discuss the group’s experiences.

To apply, visit the DFJ Entrepreneurial Leaders Fellowship page.

On a mild day in mid-July, four advocates for entrepreneurship from England’s University of Warwick volunteered to be the first to present their team project, illustrating their deep passion for realizing what they were calling the “Warwick Enterprise Pathway.”

The visitors were taking part in a two-week experience, called the Faculty Fellows Program, in which the Stanford Technology Ventures Program (STVP) hosts representatives from universities across the globe to come and refine entrepreneurship initiatives for their home campuses, while also soaking up all that is Silicon Valley.

The Faculty Fellows Program includes opportunities for visiting teams to get feedback from entrepreneurship educators at Stanford affiliated with STVP. And the minute Team Warwick finished its presentation, Trevor Loy, who co-teaches the course “Entrepreneurial Management & Finance,” pointed out that the term “enterprise” is synonymous with “large business” in Silicon Valley — so, not exactly entrepreneurial.

Because “enterprise” is the correct word in England, Warwick’s team stuck with it. But the verbal quibble was proof that STVP’s instructors were there to listen closely to every word and identify opportunities for all of the teams to hone their projects. This type of feedback was a big reason that the team — representing the Warwick Enterprise Partnership — came to Stanford.

Like the other teams from Chile, Finland, Lithuania, Sweden and Uruguay, Warwick’s arrived with four members: Nigel Sykes, a teaching fellow in the Enterprise and Innovation Group at Warwick’s business school; Kevin Marks, head of the university’s technology-commercialization office; Rachel Davis, from Warwick’s Student Careers and Skills office; and Laura Downey York, a research project manager at the university.

As they described it, the overall goals of the “pathway” they envisioned were to ensure that all students be introduced to the concept of entrepreneurship and be able to articulate either how they are entrepreneurial or how they can develop their entrepreneurial skills. Another goal was to enable all members of Warwick’s community to access what they need and when they need it, regardless of where they are in their entrepreneurial journey.

A final goal was to ensure that the entrepreneurial activity at Warwick is visible and interactive — physically and online — in order to inspire others and engage external stakeholders and partners. To that end, longtime STVP faculty member Tom Kosnik, a consulting professor in Stanford’s Department of Management Science & Engineering, encouraged the team to see if it could secure any financial support from Jaguar Land Rover, which is helping fund the creation of a center for automotive innovation at Warwick.

But what really got Kosnik’s attention wasn’t the team’s witty project title — “Warwick Enterprise (Un)Ltd.” — but the three words that appeared below it: “Energy Commitment Altruism.”

‘Why are you here?’

Sitting outside on a third-floor terrace the day after opening presentations, the British team members were eager to hear Kosnik’s thoughts on their presentation. Throughout, Sykes insisted that Warwick’s students should be at the center of their “enterprise” plan. And because of his 30-plus years of teaching at Stanford and Harvard before that, Kosnik was considered the best coach for teams with an emphasis on academics.

At one point during the afternoon session, Kosnik asked each team member to answer a very basic question: “Why are you here?” They took turns, going around the table, beginning with York. Like others on her team, she had direct experience as an entrepreneur, having launched an online platform with her husband that provides teaching and learning materials for students studying government and politics in the U.K.

“I’m here because I think it’s really important to bring research and our academic colleagues into the enterprise discussion,” York said. “I think that enterprising ability and enterprising behavior and skills in our students is the future of student development and research development at our university.”

“I really want all students to understand and be able to articulate how they are enterprising,” said Davis, who heads student development in Warwick’s Student Careers and Skills office. “We should all have the opportunity to engage in that, particularly our students.”

In the days ahead, the Faculty Fellow teams took time to tour the Stanford campus and meet with students involved in STVP offerings such as the Mayfield Fellows Program and Accel Innovation Scholars program. The teams also learned more about Stanford’s approach to entrepreneurship education through a presentation by Prof. Tom Byers, STVP’s faculty co-director, while exercising their creative instincts in workshops led by STVP Executive Director Tina Seelig and Stanford lecturers Anne Fletcher and Aleta Hayes.

Photo of men putting sticky notes on a whiteboard.

Warwick’s Nigel Sykes at a creativity workshop at Stanford.

One of the activities the teams liked most, it turns out, was the day spent visiting startups and accelerators near Stanford and in San Francisco. They dropped by StartX, an accelerator next to campus for Stanford-affiliated entrepreneurs, and then drove up to the San Francisco offices of NovoEd, an innovator in the world of massive open online courses (MOOCs) that began at the university.

‘Where do we want to get to?’

The field trip allowed the teams to see the broader entrepreneurial ecosystem beyond Stanford, which then helped them as they iterated on their projects during dedicated time slots throughout the two weeks when teams could work independently. “To me, that has been the most useful thing,” said Richard Groves, an enterprise-research development officer in Davis’ office who joined Warwick’s team the second week, “to have that breathing space to actually ask, ‘Where are we, where do we want to get to, and what needs to happen in the next six months?’”

On July 25, they outlined just that. It was the last day of the Faculty Fellows visit, and this time, Warwick’s evangelists for enterprise went second — after the team from Uruguay. As Sykes put it, the order of events upon returning to Warwick would start with raising awareness and winning support across the university — through recruitment into the Warwick Enterprise Partnership and engagement with student groups — followed by establishing a common language and surveying the landscape of resources and ideas.

Prior to final presentations, STVP’s Global Programs Manager Rebecca Edwards, who developed and organized the Faculty Fellows experience, asked each of the teams what would be the first email they would send, or the first meeting they would have, when they returned home. The question was an exercise in thinking tactically about next steps.

For the Warwick Enterprise Partnership, it would be to begin preparing for an “enterprise festival” planned for the first month of the new school year. The event would span several days and kickstart the effort in celebratory fashion, in hopes of encouraging students and the rest of the Warwick community to get involved.

“We know this is going to take a long time to change the culture of an institution,” Groves said. “But we want to make a big noise in the next half year and get as many students and staff involved as soon as we can.”

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Interested in becoming a Faculty Fellow? Learn more and watch a short video on how much previous participants enjoyed the experience.

You might think that companies that receive the most feedback from customers with clever ideas would be in the best position to break new ground. However, new research shows that the more distant an idea is from a business or organization’s expertise, the more likely it is to be disregarded. And perhaps more discouraging, as more suggestions come in, organizations narrow their attention even further and filter out distant ideas.

Henning Piezunka

These are the main findings of a new study published in the Academy of Management Journal, titled “Distant Search, Narrow Attention: How Crowding Alters Organizations’ Filtering of Suggestions in Crowdsourcing.” Leading the research was Henning Piezunka, a Ph.D. candidate in Stanford’s Department of Management Science & Engineering, and Linus Dahlander, an associate professor at the European School of Management and Technology.

Their findings were based on an expansive and sophisticated, four-year analysis of more than 105,000 crowdsourced suggestions sent in to 922 organizations by members of the public. The innovation scholars got their data from a user-feedback company that works with over 20,000 organizations across the commercial, nonprofit and government sectors.

They ended up studying a much smaller set of entities because they wanted ones that they could cross-reference on CrunchBase and ZoomInfo. And so, most of the organizations in their study ended up being young, entrepreneurial companies, according to Piezunka, a Ph.D. researcher in management science and engineering at the Stanford Technology Ventures Program – the entrepreneurship center in the university’s engineering school.

“Today, we have the ability to search very broadly and get a wide range of suggestions,” he said. “But then, what we pay attention to is very narrow.”

The researchers found that, generally, 15 percent of the crowdsourced suggestions in their sample were given consideration. But then they drilled down and analyzed each suggestion’s content and several other aspects of the feedback that helped determine how familiar or unfamiliar it was: whether the organization heard from the external contributor before, whether it has heard from that “type” of contributor before – in most cases, type referred to profession – and whether suggestions were similar to others in characteristics such as word count and choice.

That last area of assessment was part of a more sophisticated text-analysis technique that won Piezunka a Sloan Foundation grant in computational social science.

The researchers referred to the process of disregarding certain ideas as “narrowing,” and to the degree of an idea’s unfamiliarity as its “distance.” They also equate the soliciting of suggestions by organizations as a “search.”

“Look at it as a public brainstorming,” said Piezunka, now an assistant professor at the graduate business school INSEAD in France. “This is how organizations innovate today. You no longer have the lonely inventor-genius who comes up with all the great ideas, and so you actually have to reach out and engage crowds of people.”

For proprietary reasons, the researchers did not name the businesses or organizations in their study. But as an example, they pointed to BP’s open call for suggestions on oil spill-cleanup ideas after the Deepwater Horizon disaster. The 120,000 that came in represented one of the largest pools of external suggestions ever documented and included some ideas that were quite foreign for a petroleum company – such as using genetically modified bacteria to breakdown the spilled oil.

Instead, some of the most widely known measures that BP took were ones that were closely aligned to the type of work it already does: using mechanical equipment to sift out residual oil from sand, or hiring contractors to skim oil off the water’s surface. And while ascertaining the sincerity of BP’s wide call for suggestions was irrelevant to Piezunka’s study, he seemed certain that the crowdsourcing campaigns of the organizations he examined were not just marketing gimmicks.

“There’s nothing cynical about it,” Piezunka said. “My impression was that these organizations really felt like they wanted to broaden themselves and get new ideas. But then they actually get trapped.”

That a deluge of ideas reduces the chances of any single suggestion getting noticed by an organization may seem like an obvious fact: We can only pay attention to so much. But Piezunka said the takeaway for businesses is to, first, be aware that you need the capability to look through all the suggestions for the rare gems, before embarking on a broad idea search.

Second, if an organization doubts it will have the capacity to comb through all the suggestions, Piezunka said it could decide at the outset to limit its campaign by, for instance, only brainstorming with select individuals.

“Sometimes, there’s a tendency to rush into these new models of innovation. But these processes require careful management,” he said. “In these crowdsourcing models, there can be an enormous gap between the potential and what organizations actually get out of it.”