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Business Genius Can Be Borrowed

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When Elon Musk was looking to overturn the business models of the auto industry, one of his crucial inspirations was not a car but a computer. Musk has described the all-electric Tesla Model S sedan as his Macintosh.

As different as they might appear, both products faced the same basic challenge, says Professor Luis Martins, director of the Herb Kelleher Center for Entrepreneurship, Growth, and Renewal at McCombs. “At its core, Tesla was dealing with the question, ‘How do you go up against the dominant technology?’ Apple was going up against Intel and Windows machines.”

Like Apple, he says, Tesla’s answer was to compete not on price or functions, but on aesthetics. It created a cult following through obsessive attention to upscale design, from aerodynamic lines to pop-out door handles. It added cachet by building its own network of showrooms — designed by none other than the man who had masterminded the Apple Store.

Call it a case of creative copying. In new research, Martins and former McCombs colleagues Violina Rindova and Bruce Greenbaum find that some of the boldest business models of recent years have been borrowed from other industries.

What’s more, they say, such extreme innovation doesn’t require the genius of an Elon Musk. Instead of the traditional understanding of new business models — as reactions to economic forces — they use concepts from cognitive psychology, which analyzes the structures of everyday thinking. With that framework, they lay out a visioning process anybody can follow to create new business models.

“We wanted to provide reliable examples of processes that are based on a solid psychological foundation,” says Rindova, now chair in strategic entrepreneurship at the University of Southern California Marshall School of Business. “There’s no way to take creativity out of the business innovation process, but we wanted to provide a bit of scaffolding.”

Method 1: Cloning

According to cognitive psychology, what we call creativity is actually the process of reorganizing old models into new ones. Says Martins, “To come up with a whole system of meaning from scratch is quite difficult for the human mind.” Borrowing concepts and applying them in new ways, however, isn’t.

He and his colleagues focus on two common methods for doing just that. One is called analogical reasoning — as in making analogies or comparisons — and it maps the structure of a whole system from one realm to another, as from Apple to Tesla.

As another example, take Aravind Eye Care, a chain of 11 nonprofit hospitals in India. When founder Dr. Govindappa Venkataswamy wanted to cut the cost of cataract surgery for low-income patients, he took his template from a pioneer of fast food: McDonald’s. He went so far as to attend the company’s Hamburger University in Oak Brook, Illinois.

“What he borrowed were processes for standardization, cost reduction, and ensuring quality,” Martins says. “But he made sure to tailor them to eye care.”

Like a McDonald’s kitchen, Aravind’s operating rooms are set up for efficiency. Each has two tables. While one patient goes under the knife, nurses are prepping the next one on the other table. When the first operation is done, the doctor turns around, sterilizes hands, and starts the second procedure.

The trick in analogical reasoning is to pinpoint your chief problem, then look for a business that’s already solved it, says Martins. That’s also the chief stumbling block. “You have to be careful what problem you’re trying to solve,” he says. “If you get that wrong, you pick the wrong analogy.”

As an analogy gone bad, he points to Better Place, an Israeli electric car company that tried to emulate cellular carriers. Just like cell phone customers add new minutes, they designed a model where car customers would load new miles as their electric batteries depleted their charge. The plan was to swap out batteries every 100 miles at charging stations, which were dispersed like a network of cell towers.

After six years, though, the company folded. It turned out that stations were twice as expensive to build as cell towers and that long-distance drivers found it inconvenient to seek them out. “The key flaw in the analogy was that miles don’t just come to you, like minutes on a phone,” Martins says. “Acquiring miles involves the effort of driving to a station and getting your battery changed.”

Method 2: Combining

When Howard Schultz reinvented a once-small Seattle coffee chain in the late ’80s, he didn’t import an entire model from another industry. Instead, he plugged in elements from several different sources — a process the researchers call conceptual combination.

One source was the neighborhood bar, where people socialized over mixed drinks. Schultz’s Starbucks mimicked that and dubbed its counters “coffee bars,” and the bartender became the barista, a job title borrowed from Italian cafes. Says Rindova, “They originally trained baristas to remember the names of all their regulars, to remember their drinks and how to customize their drinks.”

For ambiance, however, Schultz borrowed not from bars but from art galleries, hanging java-themed paintings and photos. He added in ideas from specialty retailers, too, by selling beans with brewing tools and accessories.

That sort of mixing and matching is the essence of conceptual combination, Rindova says. “Analogical reasoning reflects a whole structure. Conceptual combination allows you to modify specific bits and pieces.”

A Checklist for Creativity

Can any CEO develop innovative business models in the same vein as a Steve Jobs or a Herb Kelleher? The answer is yes, the researchers say. They suggest a four-step process for applying both analogical reasoning and conceptual combination:

  • Choose a business concept you’d like to copy.
  • Compare it to your company; see what’s similar and what’s different.
  • Select which elements to borrow.
  • Modify them to fit your business context.

The process is not just theoretical. Both Rindova and Martins use it in their teaching. In one of Martins’s classes, students borrowed an analogy from the dating app Tinder and applied it to the problem of finding tennis partners.

To him, that’s the beauty of both types of reasoning: Anyone can use them. “You don’t have to wait for ideas to strike out of the blue,” Martins says. “You could use this process to come up with hundreds of ideas. It’s a structured process for thinking outside the box.”

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About the Author

This article was written by Steve Brooks of Texas Enterprise an organisation created to share the business and public policy knowledge created at The University of Texas at Austin with Texas and with the world. see more.

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Entrepreneurship

Women on Top in Tech – Laina Raveendran Greene, Co-Founder at Angels of Impact

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Here is our interview with Laina Raveendran Greene, Founder of GETIT Inc. and Co-Founder of Angels of Impact, an impact network focused on women social entrepreneurs helping to alleviate poverty. She is an entrepreneur and social impact investor, whose passion is female empowerment, and enabling women to be key agents to help alleviate poverty in Asia.

What makes you do what you do?
As a minority female Singaporean from relatively humble beginnings, I have never taken anything for granted. I learnt early on that I have to work doubly hard to overcome the “glass ceilings” but if I persevere, I can succeed. That is why I chose to focus on helping women-led social enterprises as I know how hard things are for them and I hope to make things a little easier for them.

How did you rise in the industry you are in? 
I rose by being courageous enough to push against the “glass ceiling” and seizing opportunities open to me no matter where they were. Early on, I realized I would have better opportunities overseas, so I worked in many countries, including Switzerland, USA, and Indonesia and used these opportunities to learn and open new avenues for myself. I now come back to Singapore with many more networks and skill sets.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
Yes, as a minority Singaporean, it may appear that I am not the usual leadership demography in Singapore. In my own way, however, I think I have amassed my own international accolades and work experience such as serving as the first Secretary General for the Asia Pacific Internet Association, CEO of one of the first few tech startups in Singapore in the early 90s, being on the International Steering Committee of the Global Telecommunication Women Network, and most recently selected as one of the 2nd cohort of Edmond Hillary Fellows in New Zealand.

I am now moving to the next phase of using these networks and skills to help other women to social enterprises, which seem to be exactly what I want to do in my next phase of life (after more than 25 years of global work experience).

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? 
It was harder in my younger days, as one of the few women in tech to find mentors but today I do.  Men were reluctant to mentor me for fear of rumors.

How did you make a match if you did, and how did you end up being mentored by him? 
I found my mentor when I was taking an executive program at Stanford. He was one of the keynote speakers and I went to talk to him. Intrigued by my background, when I asked if he would mentor me, he said yes. I meet with him at regular intervals and I always ensure I have put his ideas to test before reporting back to him. I feel that I value his time if I do actually listen and act on his advice.

Now as a leader how do you spot, develop, keep, grow and support your talent? 
The key qualities I look for is an eagerness to learn and humility to be open to new ideas. Also, when asked to be a mentor, I usually give homework and see how proactive they are. Only the ones who do their homework, take the advice and act on it, are the ones I actively mentor.

Do you consciously or unconsciously support diversity and why?
I consciously and unconsciously support diversity, as I see the importance of diversity on true innovation. You never get anything new, talking to like-minded people. It is always good to have different perspectives to create new ideas. I am also an active supporter having faced racial and gender discrimination in my life and want to ensure that others are given a better chance.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb? 
A great leader to me is one who has empathy and humility, and a genuine spirit of service. Today’s challenges such as climate change and social injustice, requires many players to apply their knowledge and skills to solve and have a sense of ownership in solving these issues

Advice for others?
The only advice I can think of is do what you are strongly passionate about. You need to persevere to succeed so it helps if you truly care about the endeavor you are working on.

If you’d like to get in touch with Laina Raveendran Greene, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/laina/

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Callum Connects

Denise Morris Kipnis, Founder & Principal of ChangeFlow Consulting

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Denise Mossis Kipnis’ curiosity in people and the world, lead her to set up ChangeFlow Consulting.

What’s your story?
I’m driven by curiosity. Having been the only one in a room who looks like me for most of my life, I developed a curiosity about who stays, who leaves and who thrives in minority/majority situations including when and how connection and collaboration happen. I was a systems thinker long before I knew what that was, always asking why and so what; and seeing the pieces, the whole, and the places in between. So helping people and organisations move through the complexity of transformation feels natural to me.

What excites you most about your industry?
I see change and inclusion as two sides of the same thing; I don’t practice one without the other. Some people see change as death, as loss, as exhausting. And it can be. But I see in the work I do as an opportunity for something new or hidden to emerge. When an organisation understands that it is first a group of people, who themselves represent and belong to groups of people, and it begins to tackle what it would mean to understand and learn from all that talent, all that diversity, to have them all working for and not against the organisation, to truly unleash all that their people have to offer; that’s magic.

What’s your connection to Asia?
Change and inclusion are personal values as well as professional strengths. For me, living and working outside of the States was a bold experiment to see whether any of the stuff I’d learned about change and inclusion would work outside of the US. My husband and I targeted Asia specifically: it would be the greatest contrast, culturally speaking, for me; and a unique career springboard for him.

Favourite city in Asia for business and why?
Although I’ve practiced in other cities, I am biased towards Singapore. In some ways it’s what Los Angeles is to the rest of the United States, a microcosm of sorts. The regional/global nature of it means that so many different nationalities and cultures are represented. As a result of this mix, you never know what you might get. In some situations, cultural dynamics are obvious, sometimes subdued. The variability is compelling.

What’s the best piece of advice you ever received?
“Never ask anyone to do anything you wouldn’t do yourself.” Michael Rouan.

Who inspires you?
Often it’s a “what” not a “who.” I can get inspiration from a passage in a book or a situation in a movie, as well as a turn of a phrase or watching people interact. I often make the biggest connections between the various threads I’m working on when I’m sitting in someone else’s event.

What have you just learnt recently that blew you away?
I’m honestly not blown away by much. Instead, I’m struck how circular things can be: ideas often come back around with a slightly different twist and I watch the way it shakes things loose for people. I recently sat through a workshop on Self as Instrument, and despite being thoroughly versed already, I learned something. In preparing for a panel on design thinking, I unearthed a new language to describe things.

If you had your time again, what would you do differently?
You’ve caught me at a good time. I’m sitting in appreciation and gratitude for all my experiences, because I wouldn’t be who I was today if all that has happened, didn’t. And yet one thing comes to mind: It wasn’t until I redesigned my website two years ago (shout out to Brew Creative!) that I realised I hadn’t made explicit agreements with my past clients as to what I could share publicly about our engagement, or whether I could use their logos in my promotional materials. In my business, confidentiality is so important, and yet I need to be able to talk about the work as reputation and experience leads to the next success, and so on. It turned out a lot of the contacts I had known had left the organisations where the work was done, so they couldn’t help at that point. So the practice I’m carrying forward is to get those agreements up front, and to make sure my relationships in client systems are broad as well as deep.

How do you unwind?
Science fiction, puzzles, wine.

Favourite Asian destination for relaxation? Why?
Home. I don’t travel to relax, I travel to learn and explore.

Everyone in business should read this book:
Built to Change, by Ed Lawler and Chris Worley. To my knowledge, it’s the first pivot from advising organisations away from stability and toward dynamism, from strategic planning to strategizing as an action verb; to blow up the traditions and rigidity that impede organisations from developing change capability.

Shameless plug for your business:
We’re taught that there are two kinds of people: those who see forests, and those who see trees. There is a third type, my type, and we see the ecosystem. Worms, climate, birds, the spaces in between. This is the perspective organisations need to be successful in solving complex problems and thriving in change.
ChangeFlow uniquely blends four disciplines (two of which are multi-disciplinary in themselves): organisation development, culture and inclusion, change management and project management.

How can people connect with you?
Facebook: https://www.facebook.com/ChangeFlowConsulting/
LinkedIn: https://www.linkedin.com/in/dmorriskipnis/
LinkedIn Company page: https://www.linkedin.com/company/4862954/
Email: [email protected]
Website: http://www.changeflowconsulting.com

Twitter handle?
@ChangeFlow

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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