Seven months from now I will re-enter the workforce with an MBA degree from the Darden School of Business at the University of Virginia. During the past year my fellow students and I pored over hundreds of company case studies, listened to speeches from top corporate executives, and tried to figure out the key to starting, growing, and managing successful businesses. In these conversations with professors, fellow students, and practicing executives it’s become clear that one of the most important drivers of corporate progress is “innovation”.
Many people have had trouble determining where successful corporate innovation comes from. Does it come from the archetypal American entrepreneur inventing a disruptive technology in their garage? A product visionary like Steve Jobs who knew what consumers wanted before they knew it themselves? Armies of Stanford engineers creating the Next Big Thing on the internet? Since I’m not Steve Jobs, don’t have a computer science degree from Stanford, and don’t have a garage workshop for late-night inventing, how am I expected to innovate when I re-enter the workforce in May?
This summer a group of Darden students tackled the concept of corporate innovation by starting their own businesses in the Darden Business Incubator, a program that provides students with seed investment money to fund their business concepts. Throughout the summer the students were expected to use the seed funding efficiently to grow their businesses and make connections with customers, strategic partners, and investors. Some of the companies that emerged from the incubator were “Pop Up Yoga”, an open-space yoga studio, “DealStage”, an online productivity tool for attorneys, and my company, “TeeGee,” which focuses on creating smart toys that grow up alongside a child.
At the end of the summer I left the Incubator with three distinct lessons that shaped my understanding of corporate innovation:
- The solution to most people’s problems wasn’t found in their office, in a business plan, or by analyzing reams of market data. The most important answers came in the form of conversations with customers, phone calls with industry veterans, and by getting out and interacting with people in the community.
- Since the budget for each company was small, students couldn’t afford to spend it all developing a single static product or service and hope that it sold. By creating cheap, functioning prototypes of their products or services, they were able to test the market’s reaction without breaking the bank.
- Everyone’s business concept changed by the end of the summer. Rigid adherence to a business plan usually meant you were going to be dead in the water.
Recent scholarly research on innovation and entrepreneurship backs up these anecdotes. Professor Saras Sarasvathy at the Darden School of Business coins this type of thinking “effectuation”, which is the logic used by expert entrepreneurs to solve problems in highly uncertain market environments. Principles of effectuation include finding ways to reach the market with minimum expenditure of resources, growing your network of self-selected stakeholders, and turning unexpected customer responses into potential revenue streams.
These tenets are also echoed in other models of innovation. Steve Blank, a serial entrepreneur and lecturer at the University of California-Berkeley Haas School of Business, uses the term “Customer Development” to explain the process of rapid prototype development and co-creation of products with customers. The “Lean Startup” model championed by entrepreneur Eric Ries follows the same thinking – creating a “minimum viable product” and getting it into customer’s hands as soon as possible to start getting actionable feedback.
When I re-enter the workforce this May, I’ll be armed with a way of thinking about corporate innovation derived from watching successful entrepreneurs and start-up companies. I’ve learned that it doesn’t take a wheelbarrow full of money, a futuristic lab, or a captivating leader to drive innovation. Anyone can successfully innovate using their individual skills and network of contacts, provided they’re committed to working with and engaging their customers early in the development process and being flexible enough to capitalize on the unexpected.
Tom Giedgowd is a second year Student at the University of Virginia’s Darden School of Business. His company’s initial product, TeeGee, is a smart stuffed animal capable of telling stories, playing games, teaching concepts and interacting with children through smart accessories and speech recognition.