Research by Mucking About

I am a long standing fan of the Ig Nobel awards. The Ig Nobel awards are an initiative by the magazine Air (Annals of Improbable Research) and are handed out on a yearly basis – often by real Nobel Prize winners – to people whose research “makes people laugh and then think” (although its motto used to be to “honor people whose achievements cannot or should not be reproduced" – but I guess the organisers had to first experience the “then think” bit themselves).

With a few exceptions they are handed out for real research, done by academics, and published in scientific journals. Here are some of my old time favourites:
• BIOLOGY 2002, Bubier, Pexton, Bowers, and Deeming.“Courtship behaviour of ostriches towards humans under farming conditions in Britain” British Poultry Science 39(4)
• INTERDISCIPLINARY RESEARCH 2002. Karl Kruszelnicki (University of Sydney). “for performing a comprehensive survey of human belly button lint – who gets it, when, what color, and how much”
• MATHEMATICS 2002. Sreekumar and Nirmalan (Kerala Agricultural University). “Estimation of the total surface area in Indian Elephants” Veterinary Research Communications 14(1)
• TECHNOLOGY 2001, Jointly to Keogh (Hawthorn), for patenting the wheel (in 2001), and the Australian Patent Office for granting him the patent.
• PEACE 2000, the British Royal Navy, for ordering its sailors to stop using live cannon shells, and to instead just shout “Bang!”
• LITERATURE 1998, Dr. Mara Sidoli (Washington) for the report “farting as a defence against unspeakable dread”. Journal of analytical psychology 41(2)

To the best of my knowledge, there is (only) one individual who has not only won an Ig Nobel Award, but also a Nobel Prize. That person is Andre Geim. Geim – who is now at the University of Manchester – for long held the habit of dedicating a fairly substantial proportion of his time to just mucking about in his lab, trying to do “cool stuff”. In one of such sessions, together with his doctoral student Konstantin Novoselov, he used a piece of ordinary sticky tape (which allegedly they found in a bin) to peel off a very thin layer of graphite, taken from a pencil. They managed to make the layer of carbon one atom thick, inventing the material “graphene”.

In another session, together with Michael Berry from the University of Bristol, he experimented with the force of magnetism. Using a magnetized metal slab and a coil of wire in which a current is flowing as an electromagnet, they tried to make a magnetic force that exactly balanced gravity, to try and make various objects “float”. Eventually, they settled on a frog – which, like humans, mostly consists of water – and indeed managed to make it levitate.

The one project got Geim the Ig Nobel; the other one got him the Nobel Prize.

“Mucking about” was the foundation of these achievements. The vast majority of these experiments doesn’t go anywhere; some of them lead to an Ig Nobel and makes people laugh; others result in a Nobel Prize. Many of man’s great discoveries – in technology, medicine or art – have been achieved by mucking about. And many great companies were founded by mucking about, in a garage (Apple), a dorm room (Facebook), or a kitchen and a room above a bar (Xerox).

Unfortunately, in strategy research we don’t muck about much. In fact, people are actively discouraged from doing so. During pretty much any doctoral consortium, junior faculty meeting, or annual faculty review, a young academic in the field of Strategic Management is told – with ample insistence – to focus, figure out in what subfield he or she wants to be known, “who the five people are that are going to read your paper” (heard this one in a doctoral consortium myself), and “who your letter writers are going to be for tenure” (heard this one in countless meetings). The field of Strategy – or any other field within a business school for that matter – has no time and tolerance for mucking about. Disdain and a weary shaking of the head are the fates of those who try, and step off the proven path in an attempt to do something original with uncertain outcome: “he is never going to make tenure, that’s for sure”.

And perhaps that is also why we don’t have any Nobel Prizes.

Can entrepreneurship be taught?

“Entrepreneurship can only be self-taught. There are many ways to do it right and even more wrong, but it cannot be processed, bottled, packaged, and delivered from a lectern”, one of my readers – Michael Marotta – commented on an earlier post.

I am not sure I agree with the suggestion of that statement, namely that "entrepreneurship can only be self-taught". Of course we hear it more often - "you cannot teach entrepreneurship" - but I have yet to see any evidence of it. Granted, this is a weak statement, since the evidence that business education helps with anything is rather scarce (although there is some)!

However, the fact that the majority of entrepreneurs did not have formal business education does not tell me anything. Suppose out of 1000 attempted entrepreneurs indeed only 100 had formal business education. It might still be very possible that out of the 100, 50 of them became successful, where out of the 900 others only 300 became successful. This means that out of the 350 successful entrepreneurs, a mere 50 had formal business education. However, 50% of business educated entrepreneurs became successful, while only 1/3 of entrepreneurs without business education did.

My feeling about the potentially influence of business education on the odds of becoming a successful entrepreneur are quite the opposite of Marotta’s. I see quite a few attempted entrepreneurs with good business ideas and energy, however, they make some basic mistakes when attempting to build it into a business. The sheer logic of how to set up a viable business - once you have had a good idea - is something that is open to being "processed, bottled, packaged, and delivered from a lectern" (although that is hardly what we do in B-school).

Having a great idea and ample vision and energy perhaps is a necessary condition for becoming a successful entrepreneur, but it is not sufficient; this requires many other skills, and for some of them, education helps. Out of the 10 different skills needed to become a successful entrepreneur, perhaps only 5 can be taught or enhanced through business education, but those 5 will clearly improve your odds of making it.

Perhaps the majority of successful entrepreneurs do not have formal business education, but I have yet to meet a successful enterpreneur who did go to business school who proclaims his/her education was not a great help in becoming a success. Invariably, those people claim their education helped them a lot. In fact, many of such business school alumni donate generously to their alma mater. For example, one of London Business School's successful alumni entrepreneurs, Tony Wheeler (founder of Lonely Planet travel guides) regularly donates very substantial amounts of money to the School, because he believes his education there helped him greatly in making his business a success, and he wants others to have the same experience and opportunity.

In the absence of any formal evidence on whether business school education helps or hinders becoming a successful entrepreneur, I am inclined to rely on their judgement: business school education helps, if you want to become a successful entrepreneur.

Steve Jobs – the man was fallible

As a student, at Reed College, Steve Jobs came to believe that if he ate only fruits he would eliminate all mucus and not need to shower anymore. It didn’t work. He didn’t smell good. When he got a job at Atari, given his odor, he was swiftly moved into the night shift, where he would be less disruptive to the nostrils of his fellow colleagues.

The job at Atari exposed him to the earliest generation of video games. It also exposed him to the world business and what it meant build up and run a company. Some years later, with Steve Wozniak, he founded Apple in Silicon Valley (of course in a garage) and quite quickly, although just in his late twenties, grew to be a management phenomenon, featuring in the legendary business book by Tom Peters and Bob Waterman “In Search of Excellence”.

But, in fact, shortly after the book became a bestseller, by the mid 1980s, Apple was in trouble. Although their computers were far ahead of their time in terms of usability – mostly thanks to the Graphical User Interface (based on an idea he had cunningly copied from Xerox) – they were just bloody expensive. Too expensive for most people. For example, the so-called Lisa retailed for no less than $10,000 (and that is 1982 dollars!). John Sculley – CEO – recalled “We were so insular, that we could not manufacture a product to sell for under $3,000.” Steve Jobs was fantastically able to assemble and motivate a team op people that managed to invent a truly revolutionary product, but he also was unable to turn it into profit.

When Jobs was fired from Apple – in 1985 – CEO John Sculley took control. Sculley is often described as a bit of a failure, because “nothing revolutionary came out of Apple under his watch”, “he could have done so much more with the company” and especially for “being stupid enough to boot out a genius like Steve Jobs”. However, the years after Sculley took over were some of Apple’s most profitable. The man did something right, and that was focus on exploiting the competitive advantage that Apple had built up.

In management research, following terminology cornered by the legendary Stanford professor Jim March, we often say that firms have to balance exploration with exploitation. Exploration refers to developing new sources of competitive advantage and growth. Exploitation refers to making money out of them. Steve Jobs was “insanely great” at exploration, but not – at the time – at exploitation. Sculley was.

Now Steve Jobs is a legend. And rightly so; our world literally would have looked different without him. However, what Steve Jobs’ legendary status also tells me is that we – mere mortals – are inclined to overestimate the omnipotence of CEOs. We overdo it when we ascribe the failure of an entire company to just one man or woman (e.g. Enron’s Jeff Skilling) but also when we ascribe the entire success of a company to one individual.

Steve Jobs wasn’t omnipotent (John Sculley had qualities Jobs didn’t) and he wasn’t always right (eating only fruits does not eliminate the need for an occasional shower). His day-to-day influence on Apple over the last years must have been limited, given his rapidly and severely deteriorating health. If anything, he simply would not have been able to be around enough to control and take care of everything. Nevertheless, the company did well in spite of his absence. And of course that is his laudable achievement too; he managed to build a company that could do well without him. And perhaps that may prove to be his best business lesson after all: how a great leader eventually makes himself superfluous.

Can countries benefit from having their domestic firms acquired by foreign companies?

When a foreign company acquires a domestic firm, it often leads to outcries of indignation, nostalgia (“another of our once great companies in foreign hands”), and calls for legislation to prevent any more foreign poaching. Politicians and union leaders proclaim that the foreign owners may not be dedicated to keep up investment in the subsidiary, and that the take-over threatens national jobs and other economic interests. “Most governments are reluctant to see their corporate treasures fall into foreign hands”, the BBC wrote in an article devoted to the topic.

But is all this (slightly xenophobic) fear justified? Well, maybe not; at least not on all dimensions. Because we have increasing evidence that foreign ownership of a firm may actually also benefit firms, specifically in terms of their innovativeness. And this increased innovativeness may clearly benefit the host country.

Professor Annique Un, from Northeastern University in Boston, for example, did a pointy study. She collected data on 761 manufacturing firms operating in Spain, examined which ones were foreign hands and what their innovation output was in terms of new products introduced in the market. And the answer was pretty clear: foreign owned firms were more innovative than purely domestic firms.

Interestingly, Annique also corrected her models for the amount of R&D investments spent in the companies, and it turned out that this was not what was driving it; foreign owned companies were not just more innovative because they were investing more. Instead, they were more innovative irrespective of R&D. As a matter of fact, they were able to generate more product innovations for the same level of investment; meaning that they were simply better at it.

The study’s results suggested that they were better at it for two reasons. First, foreign parents seemed to use their domestic subsidiary to channel innovation into the country. Put differently, it seemed a foreign-owned company could tap into its parent’s superior repository of innovative stuff, and most of them gratefully made ample use of that option. Secondly, the foreign-owned companies were simply also better at coming up with new stuff on their own, in comparison to their domestic counterparts. Apparently, something about them being foreign-owned stimulated them to be more agile and creative, which resulted in more product introductions.

Whatever the reason behind this foreign-driven surge in innovation, the host country was better off for it; the evidence clearly showed that the foreign mercenaries stimulated diversity in the markets, giving customers more choice, while raising the bar for everyone. And this is not a benefit we hear many politicians, newspapers, and union leaders proclaim and acknowledge, when yet another foreign corporation is eyeing up their country’s corporate treasures.