Image courtesy of Marianne Jakobsen

I felt an immense need to break out of this and traveled to Israel, where I learned the meaning of ‘economic disparity’. This disparity, which I had never experienced in Denmark, truly was what set me off on my path. I moved to England in the late 90′s, where I studied and graduated with a generation set on becoming Internet billionaires, and founded a software start-up. I wanted to work hard and be rewarded for it.

This sense of disparity, I believe, drives large parts of the entrepreneurial eco-system. The promise of big returns in a short number of years leads us to work more hours and travel more miles than in any other profession, sacrifice relationships (ALL entrepreneurs in our main fund’s portfolio went through a divorce), whilst retaining a razor sharp focus on becoming ‘successful’.

But entrepreneurs are only an exaggerated version of most humans: We have been brought up and educated to strive for a relatively narrow goal: Growing our material wealth. Our expectation is that our wealth will increase throughout our life and that it will enable us to consume more. We now know, although we might be denying it, that this growth in wealth is not sustainable given the limited resources of our planet.

When I recently hosted a group of danish lecturers at MIT, they inevitably asked the question ‘What can we do in Denmark to become as entrepreneurial as in the US?’

These days I am wondering if this is the right question asked by the right people. The question on my mind is: How can I evolve to shift my focus and basis for competition away from external metrics such as ‘profits’ and ‘material wealth’ towards more sustainable metrics, such as ‘consciousness’ and ‘connectedness’? What metric can I find that is as powerful at grabbing my attention as that of the share price of my company and ultimately could replace it?

In some sense, although I am still not comfortable with the notion, I am asking ‘Did we have it right in Denmark all along?’

The journey

Over the first few weeks, through simple exercises like ‘empathy walks’, creating sculptures depicting our current reality and nightly reflections, our lecturer, Otto Scharmer, took us through his ‘Theory U’ and set us off on a journey of Self discovery. A journey that would lead us to profound insights and change that you otherwise would only see after a near-death experience.

Down the U

On our way ‘down the U’, we learned to overcome the voices of judgement, cynicism and fear. We learned to listen not only with an open mind and heart, but also with an open will.

For me, this part of the journey included an empathy walk where I met with a 3x cancer survivor. It was an amazing, energizing experience. We discovered that identifying and discussing experiences that we had in common allowed us to connect at a deeper level.

In a following class, we created a sculpture of our current reality. My sculpture was very simple. It consisted of a little blob, me, standing in front of a big blob, the world. My interpretation was that I was standing there waiting for the right opportunity to save the entire world. At the time I failed to realize the meaning of the sculpture and it was only at the very end it became clear what my hands were trying to tell me through the sculpture.

Connecting to the Source

We had learned to connect with others. We had let our hands describe our current reality. Now it was time to connect with our inner Self. Otto took us through a visioning exercise during which we opened the gate into our future, saw it and  came back with advice for our present self.

We were presencing, sensing the emerging future possibilities in the present.

My vision involved my wife and children looking at happy people slowly running passed us, people we had helped, who were thankful for what we had done for them.

Crystalizing the vision

My vision only slowly started to make sense to me, but I had the basis for asking the right questions. In a lecture where we were joined by two exceptional speakers, a social entrepreneur helping young people in Cambodia to learn IT skills and a ex-McKinsey consultant with years of experience in organizational and personal development, I started exploring the meaning of being ‘whole’ with the latter speaker.

Artist R. Padre Johnson

This is when things started to crystalize for me. I understood that to be a ‘whole’ person meant to be whole with not only myself, but with my family, friends and community. Separating myself breaks the whole. The future I had seen in my vision was one where rather than having achieved things on my own, I had achieved them with and from within my family and community. I had felt happy because I was whole.

Moving to action

As our visions crystalized, we began prototyping them. This took each of us in wildly different directions over the last weeks of the course.

My wife and I began baking together, something we both enjoy, as a way of becoming whole. Whilst doing this, we spoke lightheartedly about the idea of maybe starting a bakery that would sell all the great danish pastry that we both love so much. But how could we prototype that idea?

Then one night we came across the website of the movie ‘Waiting for Superman’. It linked to DonorsChoose.org, a place where school teachers can post projects they would like to undertake in their classrooms but need funding for.

We decided that we would bake some ‘chocolate kisses’ and sell them at MIT Sloan to raise money for a school in Dorchester that wanted to buy books for their empty bookshelf. A prototype that also would ‘do good.’

One Thursday morning we started baking and, together with our 2-year old, went down to the lobby of the school over lunch to sell them. Everyone was super supportive of the cause and loved the treat, so we ended up raising $116 to support the teacher’s project.

The last supper

In the final class that same night, Otto opened the floor for those willing to share their experiences and prototypes. One by one, we stood up and shared our experiences. It was a very deep, emotional event. Something fundamental had changed in each one of us. We had woken up to the fact that we create our own realities, and in just 6 weeks we had become empowered to change them. Each person’s story was one of how they were starting to do so in small but fundamental ways.

I stood up and told the class about my vision of being whole with the family, how we had started baking together and how we that morning had gone out selling cookies to raise money for books.

The picture of my sculpture flashed by as I finished up. The sculpture of me standing in front of a big blob of problems, worrying about finding a way to solve all the problems of the world at once, yet doing nothing but standing there.

Tears came to my eyes as I realized that I had finally done something. Maybe only something small, only a prototype, but definitely something inherently good.

Image source: http://www.mansibhatia.com/2010/06/empathy-and-sympathy/

We discussed how we had both grown up in small villages, and how we recalled people greeting each other on the streets, how we were more exposed to people from different walks of life due to the physical boundaries and diversity of the village. In today’s urbanized, digital culture, it is too easy to escape the diversity of humanity. We can live amongst people very similar to us and participate in online communities, which on the one hand allow us to connect to a community, but on the other hand strengthen our ability to shield ourself from people different from us.

Alicia has done amazing work on creating a community for cancer survivors using Twitter. We discussed how strong communities often form when people go through similar experiences, especially periods of hardship, either at the same time or of the same nature. The strong bonds in these communities, the members ability to feel extreme empathy for each other, is based on this shared experience that they need no words to describe to each other.

She spoke about a friend who had described the experience of chemotherapy in a single sentence, along the lines of ‘riding a car with the windows down going backwards on a roller coaster track‘ – an experience similar to one I had, not in a hospital, but at Six Flags. This led us to start sharing more personal experiences, which helped us deepen our understanding of each other further.

The insight that we had from this is that empathy is based on finding common ground either through well chosen rhetoric (in the academic sense of the word) that enable us to recall experiences, and how they affected us, that relate to those the other person is experiencing, or by having gone through an identical set of experiences ourselves and therefore inherently feeling empathetic towards the other person.

We felt energized by the experience and agreed the following: Within 24 hours we will introduce each other to a person that we feel the other should meet. We will do an ‘empathy walk’ with that person, and then repeat the same process of introductions. Our hope is that this will ignite a new ‘empathy walk’ movement that will inject much needed eQ into our society. Get in touch if you want to get involved!

As part of the project, we developed a new framework for cross-market diffusion. This framework is useful for innovators that have technologies with applications in multiple markets and need to decide in which order to enter the markets.

Background

The question the framework aims to answer is this: Given a general purpose technology (GPT) and a set of markets, how can we prioritize entry into each of the markets such that we achieve the highest aggregate diffusion and hence returns?

We propose that the following set of factors play a role in how readily a market will adopt a GPT and how attractive the market is for the innovator to target:

• cost of co-invention[1]
• cost and quality required of the GPT[2]
• referenceability of existing markets
• expected ROI

The Framework

Cost of Co-Invention

The cost of co-invention is the cost incurred in including the GPT in a market specific product. For example, given a new battery technology, how costly is it to (re)engineer a product based on this new technology? This cost has a first order impact on downstream manufacturers willingness to integrate the GPT into their product.

It is worth noting that by cost we refer to both the actual costs as well as perceived risks associated with basing the product on this new technology. For never, more exotic technologies, the perceived risk will be higher and hence the cost of co-invention will also.

The cost can be shared between the innovator of the GPT and the downstream manufacturer to overcome an imbalance in cost of co-invention and expected returns to the two parties.

In the framework the cost of co-invention, i, is described by

i = O*R                    where

O = relative cost of co-invention downstream

R = relative risk of failure

Cost and Quality Required of the GPT

Economies of scale and learning are assumed over time to lower the cost of the GPT. Initially the GPT will therefore only be attractive to markets that benefit sufficiently from the new GPT to accept the higher cost. As cost is reduced, new market opportunities will open up.

Similarly, the quality of the GPT may limit its applicability, but over time process improvements will increase quality and again open up new market opportunities.

In the framework the cost/quality requirements are described by

w = Q/C                   where

Q = relative quality requirement of the market

C = relative cost requirement of the market

Inter-Market Referenceability

The Diffusion of Innovations theory tells us that diffusion follows an S-curve. Some individuals and organizations are early adopters, some the early majority some laggards etc. One factor that influences the rate of diffusion across the various adopter groups is the availability of relevant references.

Similarly, some markets are early adopters, some early majority etc. and references from one market may either help or hinder adoption in another market. As an example, consider how innovations from Formula 1 racing easily could be diffused into road cars, whereas innovations from the road car market would find it harder to be accepted in Formula 1. In marketing we often refer to this as spill-over: Some market segments can help drive sales in other segments and this is usually not a bidirectional relationship.

Hence both the cumulative diffusion as well as direction of diffusion is important. In our framework we capture this referencability by means of assigning a market to a peer group

p = [1..10]            where

a smaller number = more likely to adopt without a reference and

markets regarding each other as peers have the same number

Expected ROI

The expected ROI should of course be taken into consideration when choosing markets. However, it is important to note that this variable is internal to the firm owning the GPT whereas the others are attributes of the markets. Also, although higher ROIs generally are better, higher ROIs often are associated with higher investments and higher risks, which may not suit the innovator. It is therefore informative to interpret the framework with and without this variable.

Applying the Framework

We found that to apply the framework we often had to combine solid data with estimates based on our knowledge of the market. E.g. ROI is usually straightforward to estimate based on pricing and market size, whereas referenceability often had to be estimated.

For each of the factors we calculate/estimate their values and then rescale them to the range 1 to 10. This allows the results to be plotted in a 4 dimensional ‘spider web’ plot. We also calculate the length of each market vector and use this to provide the recommendation for the order in which the markets should be entered.

Battery Technology Example

Our interpretation of the results for the battery technology market is that the cost of co-invention is smallest for Power Tools, as they already sell products with battery packs and it is a simple case of swapping out the technology inside the battery packs. For New Cars however, the cost of co-invention is relatively high as it requires redesigning e.g. the battery management system etc. in the car – or building an entirely new car around the battery!

Power Tools and Bicycles are relatively similar in terms of cost/quality constraints. Small cells and higher acceptance of failure means that these two markets are likely to pay higher prices and accept lower quality than the Van Retrofit and New Cars markets.

Because Power Tools already use batteries, they are the most likely to want to adopt without a reference. Bicycles would be relatively more likely than Van Retrofit or New Cars to accept a reference from Power Tools, but Van Retrofit and New Cars regard each other as peer markets and are therefore close in terms of referencability.

ROI is however more attractive for New Cars than other markets and bicycles likely to provide the lowest ROI as it is a very small market.

To get an absolute ranking, we calculate the length of the 4 dimensional vector for each market and normalize (1.00 being the most attractive market). From this we determine that Power Tools is the most attractive market to target first. For the second market, Van Retrofit and Bicycles are very close so the choice should be to go for Van Retrofit first, to get ‘closer’ to the New Cars market in fewer steps, assuming that is the aspiration.

Wireless Networking Technology Example

For Ember’s wireless networking technology, the ideal sequence in which to target the markets is shown above. Rather than following this sequence, Ember dabbled in most of the markets since 2003 and has only recently begun focusing on the Power / Utility Automation market. We believe this has resulted in a lower than possible increase in shareholder value, increase in competition and a suboptimal approach to protecting its IP.

Conclusion

There is no doubt that additional work needs to be done to refine and validate this new framework, for example by considering how each factor should be weighted. However, these early results indicate that it could provide a valuable tool for managers facing the market entry decision.

In addition, there is one key question the framework does not address: At what level of diffusion within a particular market are you in the best position to enter the next market? Must you have reached the early majority within the market? The late majority?

Thanks to Andre Hamman, William Palm, Josiah Seale and Vivek Raghunathan for feedback on the framework.

[2] T. Bresnahan, M. Trajtenberg “General Purpose Technologies: “”Engines of Growth?””

Not only do we waste resources creating these unnecessary physical objects, we waste additional resources transporting them around, building warehouses to store and shops to sell them, buying shelves to hold them, libraries to lend them from…and just imagine how many CD and DVD players we could avoid manufacturing!

Where to start

I suggest we start with what I currently call ‘at home’: Business Schools. Nobody would raise an eyelid if our tuition was increased by $600 and everyone was furnished with an iPad and told that only digital course readers and text books were to be used.

Even at a small school like MIT Sloan, that would probably save around 8,000 books and 800,000 photocopies per year. Admittedly a lot of books and course readers are reused, but then I am one of those who like to keep my books for future reference.

Please Apple, start focusing on education again and make sure that all business text books become available in iBookstore!

Free me!

For the nostalgic amongst you, don’t worry, you get to keep what you already have.

Personally, I would pay good money for a service that would collect all my books, CDs and DVDs and swap them for digital copies in iTunes and iBooks. My apartment would be less cluttered and next time I have to move my 1000 kg worth of books would fit in my back pocket.

So to some entrepreneur out there, start writing that business plan!

Assume

• all this water travels an average of 100 miles from source to kitchen
• the average truck used to move the water can haul 30 tons of goods
• the average fuel efficiency for a truck is 8 m.p.g.

This means that 200 million miles are driven every year to transport the water, resulting in 25 million gallons of fuel being consumed. This is equivalent to the average yearly consumption of 43,000 passenger cars.

That’s just for transporting the water from local sources, not from Fiji or France; I am also ignoring the energy cost of producing the bottles, bottling the water and keeping it cool in the fridge. Then there are the 200 billion bottles that we throw away each year…

Lastly, many studies show that filtered tap water is better for you than bottled water. The fluoride added by most water plants even helps prevent tooth decay and cavities!

The message: The $10.99 a water filter costs will do our planet and your smile a lot of good.

Here are some rules that might help you achieve happiness nonetheless:

1. Agree hours – at home and at work. Sit down with your colleagues, partner and kids and define very clearly which part of your day belongs to them. For example, agree that you work Sunday 6pm to Friday 6pm, and that Friday 6pm to Sunday 6pm is family time.
2. Pay attention – give everyone 100% of the time allocated to them. Your partner does not want you to read emails while you are talking to you and your colleagues do not want you to change diapers while you are on the conference call with a client.
3. You never work from home – though you may work from the home office. Agree on a boundary that is respected by all parties. Don’t allow interruptions in the home office and don’t be tempted to sneak into the home office during family time.

These are only quick fixes that help you get 10% of the way there. To really find balance you must become ‘whole’ with yourself, your family and your community… [Read more...]

Business schools reported record application numbers last year, whilst companies downsized to survive the economic downturn.

As Jerry York, former CFO of IBM and Chrysler and current member of Apple’s board of directors, stated in his recent lunchtime lecture at MIT Sloan, we should expect to see booms and busts more frequently in the future. We must therefore learn to deal with them.

For managers and employees alike, one of the most challenging issues in a downturn is handling layoffs. As a manager, you work for months and years to build the right team and are suddenly faced with having to dismantle all or part of it. As an employee, you face loosing your job and good colleagues.

To start a dialogue about the subject, I recently interviewed three people who had worked in organisations that downsized as a result of the financial crisis. Their stories were diverse and interesting and offer insights into current practices.

Alien Abduction

“The entire company was invited to a meeting. 30 of us went into one room for a meeting lasting an hour. 120 of us went into another room for a meeting lasting 2 hours. When the 2 hour meeting was over, the 30 people in the first meeting had already been shown out of the door.”

Rumours had been circulating for some time that the company would have to lay off staff. As a result, staff had not been as effective and focused as usual. A company-wide meeting was finally called. Some were called into the larger conference room, some into one of the smaller rooms. They were given a good update on the state of the business and told that 30 of 120 staff would be laid off that same day. After an hour, mobiles started going off. When the group from the larger conference room finally came out of the meeting, the 30 people had already been asked to pack their things and leave the office. Their meeting had ended an hour earlier.

Picking up the pieces

The teams then had to pick up the pieces. It was not always easy, as no information, passwords etc. had been handed over. Fortunately key members in each team had been kept, so there were no gaping holes in their knowledge. When needed, the teams reached out to employees that had left, but those employees had little incentive or reason to help.

The targets were not changed officially, it was only acknowledged behind the scenes that they could not be met. Management wanted to keep the pressure up for the company to achieve the best possible result.

Dealing with Clients

The state of the world economy helped the teams position the cutbacks with their clients. Everyone was feeling the crisis, and the company therefore chose to be very upfront with clients previously managed by staff that had left. They tried to match the level of interaction clients were used to and on difficult calls, managers would join in to help address concerns they had about the company.

Political Correctness

“We were given no information on why a person was fired. They simply wanted to be seen to cut across the board. Past performance suddenly meant nothing and the performance appraisals became a joke over night”

Everyone in the company could see the writing on the wall. The industry had been hit hard by the recession and it was just a question of time before lay offs had to be made. Then the first person was tapped on the shoulder. While he was in the one-on-one meeting with the manager, HR came to clear his desk. As he stepped out of the meeting he was handed a box and asked to leave.

No reason

This went on and on. Although everyone knew the lay offs had to happen, nobody could make sense of what the criteria was for choosing who got laid off. It became apparent that performance played no role. It was all about political correctness. People were fired across the board and given no reason why they had been chosen.

The fact that high performers were fired and demoralised the rest of the team. If hard work and contribution was not recognised, and you could be fired for no reason, then where was the incentive to work hard? The performance evaluation system became a joke over night.

Uncertainty

Fear and uncertainty became the new performance driver. The amount of work remained the same. Everyone had to work harder, but kept quiet because they were afraid of loosing their job. There was no clarity on the plan moving forwards, the only thing staff knew was that hard work would not protect us.

Friends Don’t Commit Sabotage

“When you build a team and encourage friendships to build, you can’t simply tell people to leave. You need to help them find jobs, offer counselling sessions and so on. In return you retain mutual trust.”

The process was well planned. The teams had been told that in a meeting that the global economic crisis was affecting their business, although no reference to layoffs had been made. It simply set the expectations of a challenging future.

Visible and fair

The company culture had encouraged strong bonds to form between all team members, and this played a key role in the downsizing process. A month after the initial meeting, the company gathered its staff and asked them for possible solutions that could help avoid lay offs. Were possible, it was avoided, and were not, the process was made clear, visible and fair.

Strong friendships within a team played a factor in selecting who to lay off. Everybody was encourage to help their friends and colleagues find alternative employment and counselling was offered when needed. Staff served out their notice unless they chose not to. There was no fear of sabotage – leavers did not wish to harm the friends they left behind.

Business as usual

The team leaders took a ‘business as usual’ attitude and communicated it well to the team. The learning curve was an issue as there had not been much redundancy in the team, but it was manageable and the workload dropped in line with the number of people laid off.

Friendships remained in place and leavers still speak highly of the company.

Thoughts and Conclusions

Jeffrey Hollender of Seventh Generation recently commented that corporations need to stop thinking about people as easily disposable assets.

The first two stories prove that the problem Jeffrey points to exists, the last one that there are better ways. If Jerry York is right, 21st century managers will need to start building skills in this area today.