Dr. Saras Saraswathy is the Isidore Horween Research Associate Professor at the University of Virginia’s Darden School. She is a specialist in strategy, entrepreneurship and ethics, and has taught in the US, Denmark, India, Croatia and South Africa. In 2007, Saras was named one of the top 18 entrepreneurship professors by ‘Fortune Small Business’ magazine. Her book Effectuation: Elements of Entrepreneurial Expertise was nominated for the 2009 Terry Book Award by the Academy of Management. Effectuation is a framework for understanding the creation and growth of new organisations and markets.
Saras received her PhD in information systems from Carnegie Mellon University under the supervision of Herbert Simon, 1978 Nobel Laureate in Economics. She was previously at the University of Washington and University of Maryland, and has been part of the founding team in five entrepreneurial ventures.
Saras will be conducting a workshop on entrepreneurial expertise this week at TiE Bangalore. She joins us in this exclusive interview on entrepreneurship behaviours, trends, research and education.
YS: How much of entrepreneurship is inborn and how much can be taught or imbibed externally?
SS: I believe entrepreneurship can be taught and learned just as science can be. But it does not mean that we can produce Bill Gates in the classroom just as science teachers cannot produce Einstein in the classroom.
As my friend and successful entrepreneur Jack Roseman would say – ‘teaching entrepreneurship is like teaching music. We cannot give you a voice, but no matter what kind of voice you bring to the classroom, we can teach you to sing better.’
In my opinion, entrepreneurship is even easier than music because there are so many different kinds of entrepreneurship. So I believe everyone can learn to become entrepreneurial and of course we can teach a lot about how to build different kinds of ventures.
YS: Is there an ideal age for being an entrepreneur or can the startup bug strike you at any time?
SS: I have collected stories of successful entrepreneurs from all over the world, over the past two hundred years, from every walk of life, every stage and circumstance and industry and background. Of course, different people at different stages of life and different types of life circumstances will face different kinds of constraints.
And my research shows that what entrepreneurs get good at is to work with whatever particular constraints they face. So the same person at 20 or 40 or 60 may start different kinds of ventures — and should. But there is no reason to believe that there is an ideal age for stating ventures.
YS: What, according to you, are the key drivers of entrepreneurship today?
SS: The serious thoughtful answer to that question is – the failure of most other forms of political philosophy other than capitalism. And the simple economic fact that value has to be created before it can be distributed, saved or invested.
But I find that another set of drivers come from “reactions” to this fact – from governments that are trying to “incentivise” startups, business schools teaching “cool” courses to students they treat as customers rather than students, and media hype that offers entrepreneurship as a panacea for everything from career stress to world peace.
I hope to add a third more useful driver – the insight that entrepreneurship is a “method” analogous to the scientific method yet very different from it in content and potential outcomes.
YS: How can big companies harness the energy and insights of startups? And vice versa?
SS: Why should they? They should do what they are good at — budgets, procedures, strategic plans, soothing the stock markets and hiring smart MBAs for obscene amounts of money! Kidding aside, I think neither entrepreneurs nor large corporations invest in as many creative, productive and profitable partnerships with each other as they could. Both sides are too busy trying to “be” the other or at least pass themselves off as the other instead of seriously considering ways to partner and leverage each others’ strengths and weaknesses. When talking to top management in large companies or to startup entrepreneurs, my message is the same — think effectual partnerships.
YS: Which emerging economies are at the cutting edge of entrepreneurship, and how so?
SS: I think India is awesome – not only in technology (a la Infosys or Mango), but in mundane businesses like Just Books and ID (Idly Dosa batter) and particularly in social entrepreneurship (Husk Power and Aravind Eye). I think Brazil is doing interesting things. So is Indonesia and South Africa. Organisations like Startup Chile and Endeavour are making amazing strides in emerging economies as well.
YS: What can ‘non-entrepreneurs’ and rest of society learn from the successes and failures of entrepreneurs?
SS: I don’t believe in non-entrepreneurs — it is like saying non-scientists. Everyone can learn what is scientific and even how to be scientific without choosing to become scientists. I believe that about entrepreneurship. But we do not educate everyone in entrepreneurship the way we educate everyone in science. Hence confusions like the question of “non-entrepreneurs.”
I think everyone should be taught entrepreneurship. And successes/failures are neither the only nor even the most useful sources of learning about entrepreneurship, just as inventions are not the only sources of scientific knowledge. There is a “method” to entrepreneurship analogous to the scientific method and that is what we should be teaching everyone, whether they choose to become entrepreneurs or not.
YS: How can the spirit of creativity and inquiry be kept alive for years to come?
SS: This seems more like a question for philosophers and sages than a question about entrepreneurship! I think the answer from entrepreneurship is “action” – continue to act creatively and act curiously and skeptically — that is the only way to keep the creative and inquiring neurons in the brain alive and kicking.
YS: How should people and companies find that optimum balance between productivity and innovation?
SS: Is there an optimum balance? I am more of a proponent of satisficing. Aim for enough productivity to keep the bills paid and enough innovation to develop the next source of productive income. I am not a big proponent of “innovate or die.” I know companies that are productive and endure for decades, being profitable year after year for all their stakeholders making pretty mundane things like car mats or dental floss or papad.
YS: What changes are you seeing in the roles of investors and angels in the entrepreneurial boom?
SS: Data show that most investors have a lower hit rate than the startup population as a whole. I think investors could do more if they were better listeners, not to money but to the entrepreneurial method. At the moment, however, money talks and it talks too loudly. Consider the fact that most Inc 500 companies don’t take any outside money. Even more surprisingly, most companies that go public are not VC backed.
YS: How is your work on effectuation being received by academics and industry and what are some new theoretical and practical fronts emerging in this field?
SS: Very well – better than I could have anticipated. The community is beginning to fill out amazing details at both the micro and macro ends of this research. For example, we are beginning to understand the fundamental actionable unit on which novices can practice effectuation and learn the lessons of expert entrepreneurs – they ASK; be it asking for advice or resources or getting other people to ask to be part of their venture, and so on.
We are also beginning to develop a much deeper understanding of equity relationships not only between investors and entrepreneurs but between entrepreneurs and all their stakeholders (employees, suppliers, local community, corporate partners) and also understand equity beyond financial terms – including emotional/psychic and socio-cultural ownership. At the macro end, we are beginning to develop ideas around the entrepreneurial method as I mentioned earlier and around entrepreneurship education for all and not only potential entrepreneurs.
YS: What is your parting advice to the startups and innovators in our audience?
SS: I haven’t met them yet and hope never to part from them! But here is a sound byte summary of what I have been learning over the years. The future is not out there to be “found” – your job is to make it with whatever you have at hand – hopefully multiple futures for many different kinds of people and life experiences. The entrepreneurial method is a method for making new worlds just as the scientific method is a method of understanding existing ones.