Chairman and Chief Executive Officer, Titan Steel Corporation;
Ewing Marion Kauffman Foundation
Pop quiz, take your pencils out!
Question One: Does high-tech drive high-growth and extraordinary equity
Partially. Think about the following business ideas: a new twist to providing
Medicare-covered prescriptions, an accumulator of clients for DirecTV, a temp
accounting service, a claims handler for insurance companies, and a real estate
Question Two: How many of these firms are high-tech corporate stars?
None. But they are all superstars when it comes to growth. Hospital Partners
of America, Red Ventures, Callaway Partners, Global Risk Solutions, and Noble
Investment Group are listed first through fifth on the current Inc. 5,000, which
ranks America's fastest-growing private firms.
Given these examples, why is it that technology, technology transfer, and
intellectual property continue to be singled out as the sine qua non
for high-impact economic growth? We find the plain truth is that growth
and value emerge from technology and process in a cycle of innovation, starting
with Process or Technology Innovation, leading to Opportunity Recognition,
leading to Business Creation, leading to Further Innovation, leading to
Pervasive attention is given to productivity growth derived from
plug-in-enhanced technology, such as laser welding or robotics—but service
sector gains and business creations, like many of those listed on the Inc.
5,000, are where most of the fast-growth activity occurs. Overall, the
entrepreneur trumps technology in creating value. Or, put another way, clever
science doesn't make a business great; people make a business
Imagine innovation as either a catalyst for fast growth or a consequence; the
former is typified by electric cars using advanced battery technology and the
latter in Netflix, where technology was exploited to deliver movies in a new
way. Studies show that the explosive blast of wind preceding an avalanche
delivers the most devastating impact, not the snow. And, productive
entrepreneurs utilizing fresh technology trigger the power and value of the
enterprise, leveraging either an innovative process or technology.
|The Innovation Value Grid
Catalyst for Business
Consequence of Innovation
Genentech (DNA splice to drugs)
Amazon (Internet connection to books)
e-Harmony (social interactions)
Analyze the "Innovation Value Grid" on to the right. Recall that all five of the
previously mentioned fastest-growing firms are evidence of process innovations.
On this grid, both Amazon and e-Harmony leverage technology, but principally
change a process, thereby improving a customer experience to create value. When
we step up to an ATM machine, stop at a KFC drive-through, or jump on a discount
airline flight, our lives are improved, time is saved, and value is
The direct commercialization of new science or technologies like non-invasive
neurosurgery, anti-viral nano-coated stents, or voice-over Internet connections
via Wi-Fi may be catalyzing innovations. And, in such precise, clear-cut cases,
entrepreneurial success more directly ties to the technology.
Question Three: Does hyper-velocity growth on a broad, sustainable scale
stand on the shoulders of new technology, or in its shoes?
No bright line separates innovation as a consequence versus a cause, because
it is a continuum—nor is advancing technology versus improving process a clean
distinction, especially when factoring in product life cycles. Yet, whether it
is innovative improvements at the local dry cleaner or original software on
a mobile phone, innovation comes in many guises, far from the least being
process innovation (which is a fancy way of saying, "Here's how to do this
And, this is a distinction with a difference: In aggregate, the
fastest-growing companies are on the "improved process" line, with most of them
in the "product/service as consequence" quadrants.
The ultimately unsurprising realization is the "back to the future" element
of the analysis, which means it should be anticipated. Marketing skills and
individuals' ability to recognize and capitalize on opportunity are the great
wealth creators and the triggers for sustainable value creation. A science of
entrepreneurship is evolving, but its ability to detect and direct success will
increasingly center on fine-tuning the entrepreneur, not the technology—just
like the best athletic equipment and training can be applied to all athletes but
can never substitute for singular ability. The lab remains a critical component
in advancing science and well-being, but the center of wealth creation is the
entrepreneur and the non-oxymoron of "old-fashioned process change." In the end,
iterative change, and not the one "big idea," creates lasting value.
Final Question: Does this leave us with an uneasy sense that entrepreneurs
are born and not taught, or that MBAs are the least likely candidates for
I think not. The art will be to grow and then graft the new science of
entrepreneurship to high-potential candidates, creating an environment that
sponsors innovation in process, as well as technology, and recognizes the cause
and effect roles of innovation in wealth creation.
Okay, all pencils down, and Blue Books turned in at the front of the