Tag Archives: entrepreneurship

Did you know the story behind your Gore-Tex outdoor clothes?

This post is another reflection on the to be published book by IMD Professor of Marketing, Stuart Read.

W.L. “Bill” Gore was an employee at Dupont working on Teflon applications. Very early in the 1950’s, he envisioned that Teflon was promised to a bright future as a coating material for cables in the computer industry. However, Dupont was not convinced and refused to invest.

In 1958, Gore created his own company with his wife in his basement: WL Gore & Assiociates was born. 10 years later, they were employing 200+ employees and Gore cables were used on missions to the moon.

Later as the competition increased in the cable coating industry, Bill and his son figured out a way to stretch the material so that it could be woven as fabric: Gore-Tex was born.

That’s a great success story, isn’t it?

What is also interesting with WL Gore & Associates is their unwavering commitment to Innovation.  All employees are called Associates and carry the same level of authority. So Leaders can only emerge if they have followers for their projects and ideas.

Finally, Gore quantified the optimal team size and built his organization accordingly. As a result, a manufacturing plant at Gore will never exceed 150 Associates in order to keep personal engagement, commitment and accountability high.

Obviously the model has merits. But what could be some of the drawbacks? First off, production costs must remain high as there will be no plant with more than 150 associates, so production volume is capped. In order to double the production capacity, a new plant is required rather than extending the capacity of the existing one. What is true for production costs is also true SG&A costs (Selling General & Administration): as units are small, there must be a lot of overhead costs in the Gore model. Last but not least, corporate governance of a lot of small units of 150max associates must create some interesting challenges.

On the other hand, a lot of small and autonomous units makes it a lot easier to divest a business as it is not tightly intertwined and dependent upon shared resources provided by the corporation.

All together, the Gore model looks very interesting as an incubating model for a growing business started from scratch. You can keep it separated until it reaches the critical mass and then and only then integrates it into a bigger business unit. I have seen that in the past and did not understand the rationale for it. Now I do !

Creating and growing a business requires focus, attention and a mindset that varies greatly from the one commonly shown by corporate executives. So applying to innovation an organizational model that is radically different from the one we use to run mature businesses may help to ignite and sustain in major corporations a spirit of innovation and entrepreneurship that they are struggling to nurture otherwise.

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Becoming self-aware of Threat rigidity

I had the privilege to get a sneak preview of one chapter of the book about entrepreneurship to be published by IMD Professor of Marketing, Stuart Read. In his book, he describes an experiment that was conducted with senior corporate executives in order to assess if and how they rely on predictions based on past experiences to make decisions.

Executives were split in 2 groups: 1 group had to deal with a very mature industry with very little change. The other group was challenged by having to deal with uncertainty in the same mature industry (new entrants, M&A., new products.. etc).

As we would expect, executives dealing with the stable environment based their decisions on predictions in line with their past experiences.

However, what is interesting is that the second group of executives that had to deal with uncertainty seemed to rely even more on predictions based on past experiences even though there was obviously a disconnect between what they were used to manage and the new situation. As the scenario became more and more challenging, they relied even more on predictions even though the disconnect kept increasing…

In conclusion, in front of a threat, people will mostly react based on what they know even if what they know is not appropriate to deal with the situation at hand. This is what is called “Threat rigidity”. This seems very human: in front of a new situation that you have no clue how to deal with, you will first try to do what has been successful for you in the past.

But that was not the end of the experiment. Uncertainty was tested on Executives both in the form of threats and opportunities. Interestingly enough, when faced with threats, people relied more and more on predictions based on past experiences while when faced with opportunities they were a lot more open to try out new things and adopt an entrepreneur spirit.

Here is an interesting learning and something to always keep in the back of our mind: When faced with a threat, we will always have a natural tendency to try to deal with the situation based on what we know even if there is no connection. By default, we may only allow ourselves to be innovative and entrepeneurial when we see an opportunity and a positive outcome.

Unifying economic challenge of the Arab Muslim world

What is currently happening in Tunisia, largely echoed on the media, reminded me one of the chapters of the “Start-up nation” (Cf. yesterday post) . As a matter of fact, I found in the book one paragraph that let me puzzled and made me wonder what kind of visionary skills will be required to fix an issue of this magnitude. This is an excerpt from the book, just make up your own mind:

“The unifying economic challenge for the Arab Muslim world is its own demographic time bomb: ~70% of the population is under 25-year old. Employing all of these people will require the creation of 80 million new jobs by 2020. Meeting this goal means generating employment at twice the US job growth rate during the boom decade of the 90’s. The public sector isn’t going to create these jobs. “The stability and the future of the region is going to depend on our teaching our young people how to go out and create companies”, said Fadi Gandhour, a successful Jordanian entrepreneur.”

As you can read above, it will require more than management skills to fix a systemic issue of this complexity and scale. It will require a bold vision and true leadership skills to make it happen. Any volunteers? 😉

Amazon.com: Start-up Nation: The Story of Israel’s Economic Miracle (9780446541466): Dan Senor, Saul Singer: Books

Amazon.com: Start-up Nation: The Story of Israel’s Economic Miracle (9780446541466): Dan Senor, Saul Singer: Books.

 

 

 

 

I have always been puzzled when I was reading the news to see major tech companies like Google, Intel, Cisco and others establish their R&D labs and production plants in Israel. Given the geopolitical instability of the area, I was wondering what were the business benefits of going there vs anywhere else in the world… until an Israeli colleague of mine recommended that reading to me.

This book has been a true discovery. I discovered that I knew very little about Israel as a nation, about its history and finally about its economic miracle.

If you are curious to learn why there are more startup’s per capita in Israel than in any other countries of the world, this is the book to read. If you would like to understand why Israel has succeeded where Singapore, Korea and Dubaï keep failing, this book will give you hints. Finally, this book is a treasure of true leadership and entrepeneurship lessons.

Hopefully when you will have reached that point, I will have triggered your curiosity and you will be looking for ways to order the book nearby in your country.

Enjoy the reading !

3G Leadership

A while back, I was listening to Dr. Daniel H Kim, co-founder of Pegasus communications about “3G leadership” or Third Generation Leadership. I found his presentation enlightening. A replay can be found here with the following password: stia2010 

Why 3G leadership?

  • Because the 1st generation (G1) post world war II had a world to rebuild. Many of them were truly entrepreneurs and innovators
  • The second generation (G2) is the one of the managers, as we know them today: many of them inherited of the empires built by the leaders of the 1st generation. They are very much focused on making the numbers and fine tuning the system so that it delivers the best possible outcomes. Not much entrepreneurship in this generation of leaders and not much innovation either…
  • However, we have now reached the breaking point of diminishing returns where the time we spend in improving the system is no delivering benefits that outweigh what we invested in it
  • That’s the reason why we now need a third generation of leaders (3G), who will again heavily focus on entrepreneurship and innovation in order to deliver business value

What will set 3G leaders apart?

  • Most of the leaders as we know them today start by sharing with their organizations strategies, objectives and initiatives. Corporate Communications is usually heavily involved in that process so you can feel reasonably confident that the strategy will be communicated in a way that can be understood by most.
  • However, even though it should be understandable by most if not all, it does not seem to take off. So would that mean that we are missing some key ingredients?
  • Indeed, Dr. H Kim suggests in his presentation that strategies themselves should be rooted in people values and purpose. If people cannot relate the organization strategy to their personal values, beliefs and purpose in life, the reality is that they will not be committed to it beyond the salary they get at the end of every month for the work that they do
  • In that context 3G leadership is all about unleashing the power of the organization by anchoring its strategy in values and a purpose that can be shared with people at all levels
  • Obviously this goes far beyond and is far more complex than “next year we will grow revenues, increase margins and reduce costs…”, which by the way is no strategy because I know no company that would not adopt it as a goal for the coming year and the many next to come?!?!?

Taking risks

I heard a great saying yesterday in the movie “Joueuse” by Caroline Bottaro. It was “When you take risks, you may lose. However, when you take no risk, you can only lose”… I thought there was a lot to learn from it in our personal as well as professional lives.  Food for thought…

Learning entrepreneurship

I was listening the other day to an interesting IMD webcast by professor of Marketing, Stuard Read. It was free by the way. The purpose of the webcast was to kill some old myths about entrepreneurship like:

  • You need to have an MBA to be an entrepreneur
  • You need a business plan
  • You need to raise funds from capital riskers

During the webcast, Stuard Read, who is definitely an iconoclast, had at heart to show that all the above were myths that the vast majority of entrepreneurs never had and will most probably never need…

What did they have then? What set them apart which made it possible for them to start their own venture? They had a good dose of common sense, which they applied to create a prosperous business. How did the magic happen? They started by making an assessment of the means available to them in order to build a product (or a service), they did not try to raise funds, no, they tried to optimize the use of what they had readily available to them. What else? Once they had a product or a service, which they could build or deliver, they started to think about what they needed to bring it to market. Again they did not think about raising funds to start off a big promotion campaign, no they started small by leveraging their immediate network (family, colleagues and friends, neighbors…etc) and if the idea was good, the network was doing the rest.

What is the take-away? Some innovations have been so disruptive, so unexpected that it was basically impossible to foresee them. Not even our best marketing gurus would have guessed there was a market for them. The idea, the service or the product created its own market. There is no magical recipe for what will be the next big success story but one thing is sure, if you never try, it won’t be yours…

Someone during the webcast asked the question: “what is the difference between an inventor and an entrepreneur?”. An inventor made an invention and stopped there, the entrepreneur brings it to market. The entrepreneur can be an inventor… or not. An entrepreneur can nicely complement a great inventor, who does not know how to bring his or her ideas to market. The entrepreneur is not the capital risker in that case, the capital risker is just injecting cash and expecting a return on his investment. The entrepreneur is the one that will take the idea and make a business out of it.