B2B vs. B2C Innovation Growth

More funding is going to consumer (soft) applications versus (hard) technology products. Who is making the product technologies today? Multi-Nationals like GE are taking the lead, see "GE Makes India a Lab for Global Markets" here from Wharton.

Are the breakthroughs like the printer and the personal computer no longer the domain of Silicon Valley?

From the Wall Street Journal "For Silicon Valley Start-Ups, Funding Boom Is Lopsided" here.

How green was my Valley!

As the president of TIE Carolinas, an entrepreneurial non-profit, I engage with business men and women from across the world. A trend is clear and omniscient - the world at large, specifically Asia and Africa, have a populace that is aspirationaly committed to improving their lot... from the mother living in the Mumbai ghetto whose girls are working as data entry clerks to the Asian billionaires building the 21st century multi-nationals. I do not find it true of business men and women in the USA, where I have found the entrepreneur unable to "dream" for the past three years... dreams, which are essential to risk taking. Are things improving... they will and can though in a new paradigm yet to emerge.

Thanks to Financial Times for an excellent analysis of the reality of technology driven leadership and entrepreneurism in the the USA... Mr. Richard Waters writes in "A dip in the valley" - "Early stage investors appear to be losing interest in the painstaking work needed to sustain America's lead in the advanced industries that can generate many future jobs."

An example showcasing a macro trend in full swing (though it impacts micro economics as well) is: "When Massachusetts came up with $58m of incentives in 2008 to encourage Evergreen Solar to build a plant, it looked like the US state had found a new lease of life for a disused military base. Until last week, that is. Evergreen is shutting the facility with the loss of 800 jobs. The future location of Evergreen’s wafer making: a plant in Wuhan, China."

[Click to enlarge the graphic in the right.]


Again I am reminded of Gordon Moore's (Intel co-founder) lament that chasing returns has left a gap in invention in the USA. More strongly worded though is: "The belief that American individuality and creativity somehow assure future leadership is “a clear exposition of the arrogance of empire”, warns Michael Moritz, one of the Valley’s leading start-up financiers. Freed of “the debilitating effects of affluence”, he adds, “the need to succeed is far greater in the emerging economies”."

The article discusses US's inability to turn out enough engineers, decreasing share of its world R&D spending, sense of decline in the US, some of the existing invention's business being lost to Asia (ex: LED), etc. The article documents Mr. Moritz statement,"A company that loses its ability to develop its own manufacturing is on the road to oblivion."

And of course, such a conversation cannot end without evaluating current and desired policy - One area being talent, growing it, acquiring it and maintaining it: "Sophie Vandebroek, a Belgian engineer who moved to the US in the mid-1980s to train, says that at the time it was “the place to be – this was where the hot research was happening”. Ms Vandebroek stayed and eventually became chief technology officer at Xerox – in spite of the low status accorded to engineers in the US: “It’s kind of at the bottom of the professions.” Now, she and others warn, US immigration rules that make it harder for foreign students to stay, along with the availability of good jobs at home, are causing the country to leach much-needed foreign workers."

The second, the conduction of business: "If it is not to become left behind in businesses such as [solar, energy storage, green tech], the industry’s leaders say, it is time for a policy rethink. “Simply put, the US needs to decide it is ‘open for business’ and willing to compete in the global marketplace for factories and jobs,” says Paul Otellini, chief executive of Intel. “Costs are higher here, not driven by labour rates but rather by lack of incentives or tax credits that are available to US corporations in most other countries.” Without education reform, there will be a “critical engineering skills gap [that] will ultimately translate into fewer jobs and inventions in this country”."

The article concludes with the Valley still has a spark, "But for the country at large, it would not pay to take that much for granted."

See the complete article here.

Innovation & Entrepreneurism in the West

I serve as the President of TIE Carolinas, see details on TIE here. Innovation and entrepreneurism, whether in-market, through corporations, within non-profits or government driven remains important to our membership.

Good entrepreneurs are known for one quality above all... they act on their belief. John Gapper's blog in the Financial Times "Educate or Import the New Entrepreneurs" here is a good read to highlight the current pitfalls that are only deepening for the aspirational mind who wants to create in the West.

Here is an interesting insight from the article:

"“The great American investment in the wellsprings of science and technology was justified to the public by the cold war,” says Bill Janeway, a managing director of Warburg Pincus, the private equity firm. Mr Janeway would like the US to try again on the basis that the private sector, left to itself, will not invest in such fundamental technologies."

Mr. Gordon Moore (Intel Co-Founder) was awarded the lifetime achievement award by The Marconi Society in 2006. He voiced his concern then that corporate R&D is moving away from the kind of fundamental research that wins Nobel Prizes and toward a narrow focus on business goals. "That's great for the company," he said, "but somebody has to fill the gap."

The article puts forth the key to success in the 21st century:

"The biggest innovation challenge for the US in relation to Asia is not financial but human. China enrols 15 per cent of the world’s university students and 40 per cent of new degrees there are in science and engineering, compared with only 15 per cent in the US. Meanwhile, 68 per cent of US engineering doctorates are now awarded to non-US citizens."

The reality is, it will not be like it was in the 20th century for us in the West. We have to invent a new now to turn it into a successful innovation for the future.

A French Entrepreneur in Tennessee

The Financial Times profiles Bruno Durant of Silver Bait LLC - "...the owner of what must be the world's only vertically integrated worm factory."  It is a refreshing look at what the USA continues to represent for the willing and hard working entrepreneur.  See article here.

Growing Entrepreneurism - "Start-up Visa" to Dubai?

Interesting piece on offering visas to individuals who plan to start new businesses in a location that is not their native country.  The concept is discussed in the Abu Dhabi newspaper, The National, in an article "Making Dubai the global hub of start-up success", here.

The article provides comparisons to major start-up centers of the world such as San Francisco with an evaluation of infrastructure, tax consideration, etc.

Roger Martin - On Designing the Future

My astute friend from McKinsey, Samvit Kanoria forwards "What's Thwarting American Innovation? Too Much Science, Says Roger Martin", in Fast Company, see here.  The article highlights Mr. Martin's focus on creativity in innovation being a combination of science and design aspects of product or service development working together.

For the scientist, he states - "The future has no legitimacy for analytical thinkers."

Mr. Martin thrashes the large management consulting companies and lays the blame of innovation bottle neck on a corporate structure mired in research and analysis of the past - "But what they analyze is the past.  And if the future is not exactly like the past, or there are things happening that are hard to measure scientifically, they get ignored."

Mr. Martin is asked - "Are you saying that the regression analysis jockeys and Six Sigma black belts have got it all wrong?" and he states - "Well, yes."

Interestingly, my tenure at P&G was during the time Roger Martin was advising A.G. Lafley and I was a part of the substantial changes brought within P&G's approach to business.  See information on some my work related to Virtual Shopper here on my friend Franz Dill's blog, who also was one of the founders of the P&G Innovation Centers.

Though Mr. Martin speaks candidly, yet the change he suggests carries pain to the corporate as a whole and the machinery of suppliers supporting it.  Corporate innovation remains more perception than reality, with incremental results seen in their markets from licensing, buyouts, etc.  Breakthrough innovation remains the domain of the entrepreneur, one who can imagine a future unburdened by the past!

The Economist Looks at Business Through Schumpeter's Eyes

This is probably the best article I have read to date that puts the past, the present and what may be the future of business and management into perspective. The Economist's "Schumpeter, Taking Flight" is a new column launched on September 19th, 2009, read here, says of Schumpeter - "Joseph Schumpeter was one of the few intellectuals who saw business straight." I agree.

As an entrepreneur and a global businessman, Schumpeter's concepts on economics have made the most sense to me. Especially, the concept of "Creative Destruction" (see a primer here) has been a key to my thought process in the past twenty years as I conduct and build businesses around the world. The Economist states:

"[Schumpeter] regarded business people as unsung heroes: men and women who create new enterprises through the sheer force of their wills and imaginations, and, in so doing, are responsible for the most benign development in human history, the spread of mass affluence."

I look forward to the Economist's perspectives as it perceives business today through Schumpeter's eyes.

TiE - The Indus Entrepreneurs and TiECON 2009

The Economist recently cited in the article "Global Heroes" here, The Indus Entrepreneurs (TiE) as one of the premier entrepreneurial organizations in the world.

I am proud to say that I am a charter member of the organization. TiE (see global website here) is a non-profit organization with the mission to - "... to foster Conscious Entrepreneurship Globally by Educating, Mentoring and Networking."

The above article states:

"TiE was founded in Silicon Valley in 1992 by a group of Indian transplants who wanted to promote entrepreneurship through mentoring, networking and education. Today the network has 12,000 members and operates in 53 cities in 12 countries, but it continues to be anchored in the Valley."

TiE is hosting the world's leading entrepreneurial conference in Silicon Valley on May 15th and 16th, 2009. See details here.


I recommend the TiECON 2009 conference and the TiE organization to all entrepreneurs, successful and budding alike.

The Time has Arrived for Entrepreneurism

A very good article from the Economist - "A special report on entrepreneurship: An idea whose time has come" here. The report connects entrepreneurship and economics:

"Today entrepreneurship is very much part of economics. Economists have realised that, in a knowledge-based economy, entrepreneurs play a central role in creating new companies, commercialising new ideas and, just as importantly, engaging in sustained experiments in what works and what does not. William Baumol has put entrepreneurs at the centre of his theory of growth. Paul Romer, of Stanford University, argues that “economic growth occurs whenever people take resources and rearrange them in ways that are more valuable…[It] springs from better recipes, not just more cooking.” Edmund Phelps, a Nobel prize-winner, argues that attitudes to entrepreneurship have a big impact on economic growth."

The report believes that entrepreneurship going mainstream also lies in "... that the social contract between big companies and their employees has been broken."

The report discusses a fantastic effort by the World Bank:

"In 2003 the World Bank began to publish an annual report called Doing Business, rating countries for their business-friendliness by measuring things like business regulations, property rights and access to credit. It demonstrated with a wealth of data that economic prosperity is closely correlated with a pro-business environment. This might sound obvious. But Doing Business did two things that were not quite so obvious: it put precise numbers on things that people had known about only vaguely, and it allowed citizens and investors to compare their country with 180 others."

TheFunded.com - VC Evaluation

Are you an entrepreneur? If so, do you know about TheFunded.com? A decent place to look at evaluations of VCs across the globe and more being added daily.

See details in a Wired article here.

The Global Entrepreneur and Frontier Markets

A friend in Atlanta was having furniture manufacturing outsourced in early 1980s to China with supply to North America. A Danish friend at the age of 29 was negotiating in 1980 with a Chinese manufacturer in Hong Kong to out source shoe manufacturing and setting up the supply chain for Europe. Another friend in Atlanta was on his first annual trip of one month in 1984 to design ceramic pottery for the North American market. These trips continue to this day for him.

Today, my friends are high net-worth individuals who could write the book on how to conduct business in burgeoning markets… if only I could persuade them.

All these folks have two things in common (1) They are global entrepreneurs, (2) They predicted a trend of the future and captured it. They were seizing the Frontier markets of the early 1980s.

Today’s Frontier markets like South Africa, Tanzania, Pakistan, Morocco, Egypt, Israel, Jordan, Tunisia, the Gulf Nations, Vietnam, Thailand, Indonesia and a few more including the Eastern European countries, offer the Entrepreneur the opportunity of outsourcing that has been previously captured as stated above.

Yet I believe that a new prospect has emerged. I believe the Frontier markets are comprehending that without adopting innovation they will become emerged and deployed (pun on developed) while facing the same old pains of developed countries. This comprehension must understand that breakthrough innovation is the domain of the entrepreneur. This is where the global entrepreneur engages, the individual who is defining Globalization 3.0 per Thomas Friedman:

“... around the year 2000 we entered a whole new era: Globalization 3.0. Globalization 3.0 is shrinking the world from a size small to a size tiny and flattening the playing field at the same time. And while the dynamic force in Globalization 1.0 was countries globalizing and the dynamic force in Globalization 2.0 was companies globalizing, the dynamic force in Globalization 3.0-the thing that gives it its unique character-is the new found power for individuals to collaborate and compete globally ..."

This article here from Arabian Business provides a few interesting insights.

Speed is a property of essence in Frontier markets. Here is an example – New York took say 75 to 100 years to come out of the ground and become what it is from financial to infrastructural standpoints. Dubai is knocking at the door of doing the same in 10 years. If the infrastructure pieces, for example, Information and Communication Technologies can be implemented at exponential speeds,  the business of doing trade and commerce can begin at a far rapid pace than previously imagined. The same old models of conducting business do not apply. As a result, the emerging and frontier markets conduct business in Free Trade Zones with new ones being developed across Asia. FTZ’s allow removal of bureaucratic and taxation barriers for conducting global business – a perfect environment for a G3 entrepreneur. Click here to see an example FTZ - Ras Al Khaimah Free Trade Zone. RAK is the Norhtern most Emirate of United Arab Emirates.

Coming back to the entrepreneur let’s look at ICT as an example, parts of which are in itself becoming the entrepreneur’s domain and belay comprehension by the old regime tied to the wire. Why would a large communications company want to spend money on researching and building out WiMax? They have too much invested in the co-axial or fiber network. They do not have the agility nor the speed and definitely not the desire of companies such as AirBand to fail quickly, recover, rebuild, go and capture new markets.

This is the domain of the G3 entrepreneur who exists independent of borders, can conduct business anywhere, can solve the needs of multiple demographics with varied solutions and who will find business in non-local geographies.

This makes me wonder whether my friend at AirBand has expanded to Tianjin or Mumbai. And if not, then why not?