Innovators need self-belief and agility, but there is also a wealth of resources that can help educate them about the challenges and solutions ahead, as these entrepreneurship experts explain.
Uday Phadke and Shailendra Vyakarnam are co-authors of Camels, Tigers and Unicorns: Rethinking Science and Technology-enabled Innovation (see my book review). Uday graduated from Trinity College and University of Sussex, and was CEO of Cartezia. Shailendra is Director of the Bettany Centre for Entrepreneurship at Cranfield University.
The 300-page book draws on innovation data gathered over the period 1995-2015 from 300 science and technology-enabled firms. The findings reveal that there are three chasms startups must cross: from concept to prototype (Chasm I), from prototype to functional offering with a commercially sustainable business model (Chasm II), and significant scaling up from early customers to large market (Chasm III).
The authors join us in this interview on the role of academia in teaching and researching entrepreneurship, frameworks of innovation, and their upcoming work in social entrepreneurship.
YourStory: What is your current area of research in innovation and entrepreneurship?
Uday Phadke and Shailendra Vyakarnam: Between the two authors, there is a stream of research spanning the next few years, mainly looking at innovation and business models. The first is about the idea of autonomous and induced innovation, where employees come up with ideas for innovation and are either encouraged or discouraged to move forward with their projects. This has been defined as "intrapreneurship" in the past and the definition is too clumsy to use in this day and age, so it is better to talk about autonomy and how to achieve that in organisations.
Induced innovation, on the other hand, is more about top-down innovation – also referred to as corporate entrepreneurship or venturing. The boss has an idea for diversification and is committed to it - but perhaps the staff is not yet ready for it.
The other research area is growth of businesses or rather how they scale. This involves us looking at business models and how they need to evolve when faced with dynamic markets. The impact on businesses and on social innovation is of greater interest these days than simply making a return on venture capital injections.
Another strand is to research the commercialisation journey and look in more detail at the key vectors (or management levers) that can affect the pace and trajectory of this journey. These include market spaces, where the work challenges some of the conventional wisdom from Porter's understanding of the five forces that shape a competitive environment; contingent technology deployment, which departs from the work of Clayton Christensen on the innovators' dilemma; and we are re-examining the dynamics of leadership in more entrepreneurial environments.
YS: How big a role does academia play in entrepreneurship?
UP & SV: It plays a huge role. Without academic disciplines like physics, mathematics and other subject areas, we would not have the base knowledge from which innovation can emerge. If the question is - do we need to have academic learning to open the next coffee shop - then perhaps not. But your readers are more likely to be those who have had an education and so the answer is - yes, academics plays a critical role.
Even with the infinite number of apps that are created these days, unless entrepreneurs know someone who can code—which is most likely to have been learnt in formal training—it is not possible to get going in entrepreneurship.
YS: Can entrepreneurship really be formally taught?
UP & SV: Yes, absolutely, because "entrepreneurship" is a process and any process can be taught. But the question is whether it can help to create new ventures and whether people can learn the skills and acquire the knowledge they need to start and grow businesses. It is similar to how music is taught or dance or medicine - so we can offer courses in entrepreneurship.
It is then up to the individual to decide whether they want to be a musician, a dancer, a doctor, or an entrepreneur. There is simply no magic. The key is for the institution to create curricula for entrepreneurship rather than about entrepreneurship. This is about pushing students towards action, giving them practice at creating new ventures, offering them mentorship, skills, confidence and the ability to tell a good idea from a bad one.
This is what we have been doing for some 30 years now and so we would not be doing it if there was no impact!
YS: How was your book received? What were some of the unusual responses and reactions?
UP & SV: The response has been remarkable in many ways. The highest accolade has come from some of the most senior people who have recognised the value of our findings and the new vocabulary we are creating while at the same time building on the work of our predecessors in innovation.
One note of positive energy is of course that the book is selling! But for us, the real win comes when a reader has commented to us about the positive impact it has had on the work they do.
YS: In the time since your book was published, what are some notable new findings or innovation examples you have come across?
UP & SV: This is too early to say, but we are seeing that even in firms that are not dependent on technology there are multiple chasms, and the responses from CEOs of firms that are in services sectors, such as hospitality and entertainment, have also faced the three chasms over a 15 to 20-year period of growth.
One of the firms believes too that they are flip-flopping between the second and third chasm due to changes in the team. But we would argue these are not so much chasm-related as oscillations of day-to-day business, because they have matured well.
YS: Can you share some details about the data you have - how many of the companies are large MNCs, how many are small startups, how many are less than two years old? How were you able to get consistency across a period of 30 years? How many of those companies still exist today?
UP & SV: Our work covers a wide range of firms: different sizes, different maturities, different market spaces, different business models, all over a 20-year period from 1995. Some of the firms we studied no longer exist, some are only just getting going. The power of our approach is to integrate the data from all to generate meaningful insights.
YS: What trends do you see in venture capital movement from mature to emerging economies?
UP & SV: Broadly speaking, we think the venture capital model is broken. VC as an asset class will require significant changes if it is to remain relevant. VC funds have managed to extend their lives by "exporting" their models from mature to emerging economies, which is buying them some time, but change will come, as the neo-liberal business model changes.
YS: Has your research covered the ages of innovators? Is there such a thing as the 'ideal age' for an entrepreneur, or can the startup bug strike you at any time?
UP & SV: The "bug" can hit you anytime! But to succeed in a science and technology environment it is probably more likely that the founders will have studied longer and probably worked for a while. In our day-to-day interactions, most of these science and tech entrepreneurs have been in the early 30s to mid 50s.
YS: How would frameworks of frugal innovation and lean startup connect with your frameworks?
UP & SV: We are talking about the journey of innovation and how founders, companies and their innovation have to cross chasms. Together with identifying the hidden chasm (No. 2) we have also synthesised the management tasks, which we call vectors due to the need for momentum to cross each of the chasms, especially the deep and dangerous second chasm.
Frugal innovation and the lean startup are both hugely focused on the very early stages - when ideas are being formed and proved for market. The need to be frugal or to pursue lean methods is, to be honest, not a new insight, because that is what resource-hungry entrepreneurs do anyway. Even in the work of Sarasvathy and Reid on effectuation, they identify the five principles used by expert entrepreneurs as affordable loss, crazy quilt, bird in hand, pilot in the plane, and the lemonade principle.
In our work we, too, have identified the key vectors that need managing to cross the first chasm - in other words, the very early stages of a new venture. So there are indeed overlaps. Hopefully, we have gone deeper and explained the process in more nuanced ways.
YS: How should innovators strike that delicate balance between 'stick to your vision' and 'adapt to a changed world'?
UP & SV: On a case-by-case basis, we would argue that being adaptable in the very early stages is critical as we learn from customers what they really want. It is as we gain experience from the marketplace that we can eventually articulate a vision and then stick to it.
Where we would differ is probably that the "vision" at the formative stage probably needs to be something more like a big opportunity or wicked problem that has been identified and drives the team forward. We need agility and it is better within some boundaries. So even having a vision is a kind of bounded activity - within which we should have the flexibility to do what is needed in the innovation journey.
YS: Do you have some research about innovations in the social sector as well, including NGOs and development initiatives?
UP & SV: We are in the process of addressing this area. One of the doctoral candidates is looking specifically into how social innovation can be progressed using social networks and partnerships where radical science and technology innovations have the potential for making a big impact, but ultimately lack traction beyond proof of concept.
YS: Looking outside the West, what do you see as emerging hotspots of innovation and entrepreneurship around the world?
UP & SV: We get excited by innovation that is being developed to address the needs of the Sustainable Development Goals of the UN, or more generally to solve problems at the so-called bottom-of-the-pyramid. We are less excited by hotspots that have somehow responded to defence spinout technologies or are grossly dependent on military spending as in some countries.
For us, therefore, India is a hotspot of innovation, and now with big programmes like StartUp India and various other initiatives we are very optimistic about new venture creation. Entrepreneurship has become a social movement - actually for some time now, and there is increasing activity all over the world. This is very much needed as we need a class of job-creating entrepreneurs rather than only educating for job-seeking roles.
Scaling the businesses may be another challenge and we can come back to this another time. In more anecdotal ways we have found some breathtaking technologies and startups and what we might say is big thinking in countries like Finland, Denmark, Germany, and Austria, to name a few in Europe.
YS: What are the key success factors for government and industry to work together and grow innovation and entrepreneurship in their countries?
UP & SV:
- To identify the social and economic priorities so that incentives can be provided and barriers mitigated.
- Governments need to understand the meso-economic environment and vectors, and decide how they can intervene to shape these.
- Provide stability with policies that are enterprise-friendly.
- Governments can be huge customers and they can stimulate innovation by being god customers.
YS: What is your next book going to be about?
UP & SV: We are totally focused on The Scale-Up Manual as our next publication. After that, we are thinking about Leading Innovation past Chasm 3.
And we believe there is a portfolio of books, materials and other related content that needs to flow from the new thinking unleashed by our book, 'Camels, Tigers and Unicorns.'
YS: What is your parting message to startups and aspiring entrepreneurs in our audience?
US: To start a new venture you will need to acquire knowledge and skills; your self-belief will need to be at an all-time high and your family and other circumstances need to be just right. All of this can happen and your optimism will carry you forward.
We hope that the insights from learning about the innovation journey will not only carry you forward but will carry you a long way into your success.