Fostering A Taste For Disruption At NYU Stern

That’s what I’m talking about with embracing a growth mindset. A lot of students come in and they believe that to be an entrepreneur and be innovative that they must invent something new. No! No! No! Innovation entrepreneurship is not necessarily about invention. It is about taking resources that you have available to you (and everyone else) has available and seeking a new arrangement of those resources to make them more valuable. So if anyone has ever prepared a meal and taken the ingredients, you can also do the same with the resources that you’re surrounded with in an organization with the competencies, assets, etc. Find a new arrangement and test that new recipe. That’s where growth comes from.

Again, the part about that that which probably relates to several of your other questions is a lot of entrepreneurial centers will put the emphasis on how many businesses have they spun out. They measure their success by how many new businesses have come out of our program. While that’s important and a good marker of successful educational entrepreneurs, it is a dangerous mindset for the educators to get into. Educators have to be focused not on rewarding the results. Educators in innovational entrepreneurship have to be focused on rewarding effort. This means the students have to worry less about their success rate with a new idea or business that they’re coming up with and they have to be more concerned about their experimentation rate.

So the real question for students as they go through their education at an MBA program is not, ‘Will I have a successful business at the end of this program or am I on my way to an episode of Shark Tank or a big valuation with a VC?’ The real question is, ‘How many bold new experiments did I get started during my educational journey here? Those experiments, that constant moving arrangement of ingredients into new recipes to test, is a form of what we often call innovation capital. So it’s treating every idea that you come up with as an item of investment in its own right.

This is, again, quite a different mindset from the way most people think about innovation. They believe, ‘well unless something is turned into a product or service that can be sold on the market, then the idea is worthless. I hear this all the time, ‘The idea is the easy part. They’re worth nothing.’ That kind of thinking absolutely drives me crazy because when it comes down to  is that they’re not interested in ideas, they’re interested only in successful ideas. They’re willing to reap the benefits of those successful ideas. But anything that falls short of that is more bother than it’s worth. Basically, what this encourages in organizations, and a lot of VCs do this as well, is they’re basically enforcing conformity and continuity. Anything else and they’re just creating work for themselves. In their mind, the idea needs to be so straightforward that everyone immediately appreciates its value because investing time in new ideas makes sense only if you succeed.

We’re trying to break that mentality and say, ‘You know what? Every idea is an item of investment in its own right. Think of ideas as currency. Every idea that you have as a student enables you to purchase another idea. Even if your new idea, whether it is a product or service or a new business model, fails, it hardly means it is worthless. It’s going to lead to another idea. It’s going to take you down another path. You’ll combine that with something else. You learn something from every idea. That’s what we call innovation capital. The job four our students in the Innovation Lab is to enable our students to build more innovation capital than their competitors – other students vying for the same positions and careers in the same businesses.

And it’s the same for business. Every organization has to get itself in a position where they have more innovation capital than their competition. The reason for this is fairly obvious but worth stating: There is so much uncertainty in the world. It’s getting exponentially harder to get a read and know what the future is even going to look like. So where there is uncertainty, you need to increase your options. So you can think of ideas and these experiments for students as options on their future. Of course, that increases their adaptability because their adaptability is going to be tested like no previous generation that we’ve ever seen.

With careers, it’s no longer a matter of saying, ‘I’m going to be a banker and that’s going to be my career for the rest of it. It’s [going to be] option A for me, so I’m going to take all the subjects related to Option A.’ The world is not working like that anymore. It’s our job at the Innovation Lab to enable all the students who go through our program to say, “It’s not just about Option A for my career and my trajectory. It’s about being able to do options A, B, C, D, E or any combination of the above based on how circumstances change.

NYU Stern – and the W.R. Berkley Innovation Lab, in particular – offers a number of activities to help students gain entrepreneurial skills and experience.  Could you tell us a little bit about each of these and how they enhance the educational experience of would-be founders at Stern?

We offer bootcamps, which are intense trainings and interactive sessions where students can develop and refine concepts and ideas. These normally run for a full day. The shorter version is clinics. These are normally hands-on sessions for examining, stretching, and refining of business concepts. So this is normally getting into a specific area. So we might have a lean startup for social enterprises clinic for example. Or, we might have a presentation skills clinic for how to effectively pitch an idea.

Just to distinguish, bootcamps will normally take one phase of a process and say, ‘Here’s how you start to examine the competitive landscape.’ And then we’ll go into, ‘Here’s how you go out and do ethnographic research. Once you do this research, usually you record observations and here’s how you turn them into insights. Here’s how you develop opportunities around those insights.’ And then we have coaching. And this is normally individualized feedback on student venture or ideas. We use seasoned entrepreneurs and industry experts from our mentor network to give that feedback.

With the Entrepreneurs Challenge, it’s one of the largest accelerator programs in the world because it runs for eight months. It’s sort of a slash accelerator competition because there is prize money at the end, meaning it has to function like a tennis tournament to some extent where you’re actually getting down to a subset of winners…It is an accelerator program in a sense that we expect all of the teams to go through the programming. Really, the whole competition is there as a vehicle for people learning how to become more effective as entrepreneurs.

The real value of the competition comes in its structure. It provides deadlines and access to the right expertise to help you along. Also, you’re learning key things as you’re going through. The way we’ve changed the programming in the last few years is to emphasize the philosophy of disruptive thinking and innovative entrepreneurship. We’re putting, first of all, less emphasis upon developing business plans and much more emphasis on prototyping and validation of ideas. We’re also putting a lot more effort up front on the conceptual aspects of the idea and the venture. We’re really focusing in on that for all the reasons I said before. Again, not just for the people generating the ideas, but also for the people evaluating the ideas.

The other interesting thing about the competition is that we get 1,200 people register roughly for the last round. That ended up being about 250 teams, 750 entrants, and 16 different schools. What that means is that we’re getting people in at all different levels. In the competition, people might be coming in saying, ‘I’m going into this process just to learn how to be an entrepreneur. I don’t even have an idea yet.’ So we have to start with them. We have to say, ‘Here’s how you spot an opportunity.’ And then you have other people coming into the competition who’ve already been working on an idea. They might already have a prototype. They’re coming in saying, ‘I want to know just how to execute.’

Then, you have the difference in main expertise in all the different students and all the different schools and differences in age and experience. We have undergrads and grads. Alumni are often involved. Faculty is eligible as well. So we have all these different experience levels. Obviously, the business school students are very sophisticated in terms of the business model and being able to write a business plan. And then we have some people who are like students from the ITP (Interactive Telecommunications Program at NYU’s Tisch School of the Arts) who have probably never even thought about a financial statement or maybe never had to develop an operations plan. So the competition is about finding the right level for all participants and making sure there is something in it for everyone.

Where this gets back to the emphasis on disruptive thinking is that even with the students coming through who already believe that they have an idea…and they’re prototyping, a big part of what we do is basically introduce deliberate discontinuity. The whole competition is a device to introduce the discontinuity function if you like. We have to promote them into going back at some point and question the fundamental decisions and assumptions that gave rise to that opportunity or that business venture opportunity that they’re working on. We do this a lot to people at the start of the process.

To give you an example, a new thinking tool we use in the process is a disruptive hypothesis. It’s a device that deliberately introduces discontinuity by coming up with a crazy “what if” question that they possibly couldn’t have asked themselves before. Traditional business education has been great at enforcing continuity and teaching us continuity. There is very little in traditional business school education that introduces to discontinuity. Normally, this is left to chance. This is why people say, ‘Oh yeah, to get inspiration for entrepreneurship or innovation, just go to an art museum. Or maybe you should read a little more.’ They’re saying it’ll happen by chance. This discontinuity will happen by chance. For example, Buckminster Fuller used to have this technique of picking up a new magazine at the newsstand every time he was in an airport or a train station [to do just that].