Intel Disrupted: Why large companies find it difficult to innovate, and what they can do about it

In the 21st century it’s harder for large corporations to create disruptive breakthroughs. Disruptive innovations are coming from startups – Tesla for automobiles, Uber for taxis, Airbnb for hotel rentals, Netflix for video rentals and Facebook for media.

What’s holding large companies back? Here are four reasons:

First, companies bought into the false premise that they exist to maximize shareholder value – which said “keep the stock price high.” As a consequence, corporations used metrics like return on net assets (RONA), return on capital deployed, and internal rate of return (IRR) to measure efficiency. These metrics make it difficult for a company that wants to invest in long-term innovation. It’s a lot easier to get these numbers to look great by outsourcing everything, getting assets off the balance sheet and only investing in things that pay off fast. To do that, companies jettisoned internal R&D labs, outsourced manufacturing and cut long-term investment. These resulting business models made them look incredibly profitable.

Second, the leaders of these companies tended to be those who excelled at finance, supply chain or production. They knew how to execute the current business model.

Intel under their last two CEOs delivered more revenue and profit than any ever before. They could point to record investment in R&D for more expensive chip fabs yet today the writing is on the wall that Intel’s leading days are over.  Why?

Over the last decade, Intel missed two important disruptive trends. First, the shift away from desktop computers to mobile devices meant that Intel’s power-hungry x86 processors weren’t suitable. ARM, a competitor, not only had a better, much lower power processor, but a better business model – they licensed their architecture to other companies that designed their own products. Intel attempted to compete, (and actually owned an ARM license) but fell victim to a classic failure of ignoring a low-end disruptor and hobbling their own chances by deciding not cannibalize their own very profitable x86 business. All of Intel’s resources – fabs, manufacturing strategies, and most importantly executive mindset — were geared towards large, expensive x86 processors, not low-cost mobile cores of someone else’s design.

The result, Intel just laid off 12,000 people, 11% of their company.roadkill

But it’s not over for Intel. Their most profitable segment is very high-end processors used in data centers in servers and the cloud. Today that’s built on the premise that an x86 architecture is the one best suited for big data. It’s becoming clear that extracting intelligence from that big data requires machine learning architectures which are better implemented with non x86 chips from companies like NVidia. It’s possible that by the end of this decade history might repeat itself in Intel’s most profitable segment.

The third reason why companies find it hard to innovate is the explosive shifts in technology, platforms and markets that have occurred in the last 15 years–personal computers moving to mobile devices; life science breakthroughs in therapeutics, diagnostics, devices and digital health; and new markets like China emerging as consumers and suppliers.

Which brings us to the fourth reason it’s harder for large corporations to offer disruptive breakthroughs: startups.

For the first 75 years of the 20th century, when capital for new ventures was scarce, the smartest engineering talent went to corporate R&D labs.

But starting in the last quarter of that century and accelerating in this one, a new form of financing – risk capital (angel and venture capital) — emerged. Risk capital has provided financing for new ideas in the form of startups. Capital is returned to these investors through liquidity events (originally public offerings, but today mostly acquisitions).

Startups have realized that large companies are vulnerable because of the very things that have made them large and profitable: by focusing on maximizing shareholder return, they’ve jettisoned their ability to do disruptive innovation at speed and scale. In contrast, startups operate with speed and urgency, making decisions with incomplete information. They’re better than large companies at identifying customer needs/problems and finding product/market fit by pivoting rapidly. Their size lets them adopt flatter and more agile organizational structures while providing incentives that reward risk-taking and collaboration.

Startups are unencumbered by the status quo.  They re-envision how an industry can operate and grow, and they focus on better value propositions. On the low-end, they undercut cost structures, resulting in customer migration. At the high-end they create products and services that never existed before.

As we’ve seen, corporations are very good at maintaining, defending and refining existing business models, and they’re pretty good at extending existing models by identifying adjacencies. But corporations are weak, and have become weaker, in identifying new disruption opportunities.

Innovation can come from inside the corporation, by adopting Lean Startup language and methods, developing intrapreneurship, and fostering innovation-driving behaviors such as GE’s FastWorks program. And corporations can foster innovation from the outside by promoting open innovation and buying startup-driven innovation. Google has bought close to 160 companies in the last decade. Its acquisition of Android may have been the biggest bargain in corporate history.

So to succeed, corporations must re-think and then re-invent their corporate innovation model, replacing a static execution model with three horizons of continuous innovation: This requires a corporate culture, organizational structure, and employee incentives that reward innovation. It requires establishing acceptable risk level and innovation KPIs for each horizon.

And it also requires understanding the differences between executing the existing business model, extending the business model and searching for and disrupting the business model.

Lessons Learned

  • Even the most innovative companies eventually become yesterdays news
  • To survive companies need to run three-horizons of innovation
    • Horizon 1 – execute their existing business model(s)
    • Horizon 2 – extend their existing business model(s)
    • And for long-term survival – Horizon 3 – search for and create new/disruptive business model(s)


(this article first appeared in the Peoples Daily.)Peoples Daily

Entrepreneurs are Everywhere: Show No. 33: David Comisford and Omar Zenhom

A huge lesson is to raise money at the appropriate time. We didn’t understand our value proposition. We didn’t even have a fully baked-out product. We weren’t ready. So we failed.

Every time I started a business it was because I saw them as good short-term financial opportunities. In hindsight I realize none of these businesses lasted because it wasn’t authentic. I didn’t feel like they were my legacy or something I could really leverage my strengths with. 

Lessons in raising money and making money were shared by the guests on today’s Entrepreneurs are Everywhere radio show. 

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

David Comisford

David Comisford

Joining me in the Stanford University studio were

Listen to the full interviews with David and Omar by downloading them from SoundCloud here and here.

Omar Zenhom

Omar Zenhom

(And download any of the past shows here.)

Clips from their interview are below.

David Comisford is an entrepreneur currently focused on higher education and ed tech. David was named to the 2016 Forbes 30 Under 30 for his work in launching the EduSourced software platform. His previous startup was Frewg, a regional online textbook rental service. 

While building EduSourced, David learned some lessons around getting funded:

David: We weren’t ready to scale when we first took investors money, which tells me that we took the money too early, but I didn’t know that at the time.

Taking money from investors meant that there was pressure to scale, and pressure to hire, and that hire included a high-powered sales executive, but we did this without understanding our own value proposition.

Steve:  You mean that’s who your investors were telling you to hire? Go hire a sales exec to scale?

David: Yeah. I can understand from the outside looking in, that would seem to make sense, bring somebody in who’s done that before, but we didn’t understand our value proposition. We didn’t even have a fully baked-out product. We weren’t ready to layer a sales team on.

The huge lesson for me was to raise money at the appropriate time (or from people who have patience at the appropriate time).

If you can’t hear the clip, click here

Omar Zenhom is a former educator and the co-founder of The $100 MBA and the co-founder of Webinar Ninja, a webinar platform for online business owners.

Earlier in his career, Omar had a series of what he calls side hustles, including a fashion company. The experience taught him that being a founder isn’t just about the money:

Omar:  Every time I started a business it was because I saw them as good short-term financial opportunities. Then I realized none of these businesses were having any kind of longevity because I can’t add value to them in a way that it has meaning to me.

I didn’t really ask, “How can I add my strengths to any business?” I just saw an opportunity and ran with it. It was working and it was profitable so I continued to do it. 

Then I realized I don’t want to do this anymore. It wasn’t authentic. I didn’t feel like this is my legacy or something I can really leverage my strengths with.

If you can’t hear the clip, click here

David launched his first startup, Frewg college textbook rentals, while in college:

David:  Initially Frewg was a hobby. Over time it became an online book rental platform serving Ohio. We developed a simple algorithm for pricing the textbooks, predicting when a price would fluctuate, when a book would go out of print, that kind of thing. We weren’t reliant on a wholesaler, which was interesting. Most people in that business work with wholesalers. 

Steve: How did you learn about the economics of the business? 

David: Initially we learned by doing simple stuff like going to the bookstore and getting information out of them about what do they pay for a book. I took 5 or 10 different textbooks, got their pricing, and then went and compared it to what I could sell  them for.

If you can’t hear the clip, click here

Between Frewg and EduSourced, David tried starting a startup dedicated to digital textbook content. Here’s why it failed:

David:  No one really cared about our solution. That was the biggest reason why it wasn’t going to work. I don’t think I would have known that if I hadn’t talked to people. 

Steve:  No one cared, meaning the students? 

David: The students weren’t my market. It was the faculty that had to adopt the textbooks.

Steve:  So this sounds like a multisided market. There were students, there was faculty, there were content providers, there were re-sellers, there were authors. There were about 20 moving parts.

David: Exactly. I didn’t know when I started how far in over my head I would have been.

It was interesting learning to recognize defeat, and not even think of it as defeat, but think of it as, “I tried this. I had a concept. I developed it as much as I could.” 

If you can’t hear the clip, click here

Omar was a teacher before becoming an entrepreneur. Here’s why he left his teaching job:

Omar: The moment that really clicked for me is I was asking for a promotion that I thought I deserved. The person I was replacing, I was already doing their job for over a year.

I realized that, hey, what if I left today? I put in so much work into this institution. I’ve put in policies. I’ve built structure to this place and I can’t take anything with me. I have no legacy, I have nothing to show for it.”

If you can’t hear the clip, click here

As a founder, Omar learned to leverage his strengths. Here’s what happened with a podcast he launched before the $100 MBA:

Omar:  I realized I’m not a good interviewer. I didn’t take it as seriously as I should have. I thought podcasting was a great idea. I believed in the medium, and I just said, hey this is easy. Just get on the mic and talk to people. I didn’t really have a strategy . 

After 46 episodes we decided to close it down. I realized I wanted to utilize my ability to teach. I never saw a business podcast that teaches. I saw interview podcasts. I saw discussion podcasts with panelists.

But I wanted to do what Coffee Break French or Coffee Break Spanish does, where they have a regular 15-, 20-minute lesson on how to learn that language.

I knew that if I was on the mic teaching, I would have a competitive advantage.

If you can’t hear the clip, click here

Listen to my full interviews with David and Omar by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Deputy Secretary of State Antony J. Blinken.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Entrepreneurs are Everywhere Show No. 32: Evangelos Simoudis and Ashok Srivastava

Innovation outposts in Silicon Valley allow big companies to sense and respond to rapid changes in technology.  Big data is changing how we view the world, and is the fuel for machine intelligence.

How to make corporate innovation work and drive success in startups were the topics of discussion with the guests on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Joining me in from the studio at Stanford University were:

Evangelos Simoudis

Evangelos Simoudis

Srivastava

Ashok Srivastava

Listen to the full interviews with Evangelos and Ashok by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interview are below.

Ashok N. Srivastava leads Verizon’s innovation outpost (their Silicon Valley R&D center) in Palo Alto focusing on building products and services powered by big data and analytics. He is also a Consulting Professor at Stanford in the Electrical Engineering Department and Editor-in-Chief of the AIAA Journal of Aerospace Information Systems. Ashok formerly was the Principal Scientist for Data Sciences at NASA Ames Research Center.

A thought leader in the area of big data analytics, social media, optimization, machine learning, and data mining, he also served as a Venture Advisor focusing on big-data analytics at Trident Capital, and was on the advisory board of several startups. 

Ashok explained how our use of data continues to evolve:
Issac Newton said, “We can understand the world through physics-based equations.” We certainly did. We have a tremendous understanding of the physical world through equations.

Now we’re in a world where we have the ability to take data and try to understand the physical world again, moving from mathematical models to data models, to reveal new things about the world.

I view the kind of the work that I do … as part of that continuum. 

If you can’t hear the clip, click here. 

The right data can deepen understanding of a problem, he added:
Ashok: What we see today are tremendous numbers of data points, billions, trillions of data points, coming in through various systems, but we want to have a deeper understanding of the systems that those data points are generated from.

Steve: Is that what makes machine intelligence possible, not only having the hardware and the algorithms but the a stream of data that was never available before?

Ashok: Absolutely…. If we have hardware and if we have algorithms that doesn’t complete the picture. The third element you need is data. You need to have it at scale, it needs to be updated regularly.

It also needs to be depicting the data-generating process.

For instance, if you want to model an economic system, you need to have economic data. You can’t use weather data to do it. You might be able to use a bit of weather data to understand some parts of the dynamics but you really need to have data that’s relevant to the process you’re trying to understand.

It sounds very obvious, but I’m amazed sometimes that I see that people are trying to solve a problem using data that’s not particularly relevant to a problem. 

If you can’t hear the clip, click here.

Evangelos Simoudis’ is the founder and managing director of Synapse Partners. His investing career started 15 years ago at Apax Partners and continued with Trident Capital. Today Evangelos invests in early- and growth-stage companies focusing on the enterprise in the areas of data and analytics, SaaS applications, and mobility. He is a senior advisor to several multinational corporations and a recognized thought leader on corporate innovation, big data, cloud computing, and digital marketing platforms.

Prior to his investing and advisory career, Evangelos spent 20+ years in high-technology industries, in executive roles spanning operations, marketing, sales and engineering. He was the CEO of two startups.

In his current work, Evangelos helps corporations innovate:
As corporations start to think of how to take advantage of innovation ecosystems like Silicon Valley., they often confuse the vehicles to innovation –a venture fund, or an incubator or something else — with actual innovation.

What I’m trying to make them understand is how to separate those two and to do so they need to  create an organizational structure, an outpost, here in Silicon Valley, to do two things.

They need to be able to sense what is happening in the ecosystem of choice and then respond.

If you can’t hear the clip, click here. 

He also counsels startups to think about potential partnerships with large companies:
Just having an idea is not enough. You need to be able to understand how to take advantage of the market you’re operating in, including how to take advantage of corporations.  

A lot of times entrepreneurs want to create distance from corporations  Today’s environment creates some wonderful opportunities and conditions of the two to come together and create slingshots for taking companies and giving companies and startups, escape velocity.

If you can’t hear the clip, click here

Ashok has taken a Lean approach to innovation at Verizon:
Within a couple of weeks of joining Verizon, they said, “Before you learn a lot about the company, write down what you think we should do.” So I wrote a 9-page charter of what I thought we should do.

It included things like advertising, marketing analytics, cyber security. There were things like drones in there. Very, very far-fetched ideas, frankly. I presented them to our chief product officer and our CTO. Both of them started to see that these things could be executed. I said, “Rather than making a huge investment first, and seeing whether we could do it, let’s build some small prototypes.” Let’s define an MVP, a minimum viable product. Let’s just see if it’ll work. We started to do that in the advertising space first. Just took some things together, wrote some code, made some partnerships.  

Together, as we brought the code, the partnerships together, we started to see, “Yeah. This could be a business.”

Then we ended up buying AOL last year …

If you can’t hear the clip, click here.

Having the buy-in of the company’s highest executives is crucial:
When we had our first discussions about what the Verizon Silicon Valley innovation outpost might look like, the senior executives within the company — the CEO, the CTO, our chief product officer, — said, “We understand that if we’re going to do this, it’s not going to be in Basking Ridge, New Jersey,” which is where our headquarters are, “It’s going to be in California and it’s going to be in Palo Alto.”

They made very, very deliberate choice to do that, to their credit because in formulating the hypothesis that data could be turned into a product, that’s leaping out into the unknown.

Secondly, to do it in a physical geography removed from the headquarters is also a pretty big idea.

They invested in it with capital but, equally importantly, they invested in it with their own attention to detail and attention to the vision that I started to lay out.

If you can’t hear the clip, click here.

As in a startup, listening to customers is paramount for a big company’s innovation efforts, he added:

If it’s an individual, if it’s a company, they all have a point of view and I always assume that they’re acting in good faith and they’re telling me what they really think.

I try to listen wherever I go. Whether it’s with a brand-new employee, whether it’s with a CEO of a big company, anyone, I always try to understand where they’re coming from and what I need to communicate to them so that they have a better understanding of who I am and what I’m doing and why I’m doing it.

Generally speaking, I find that if I take this approach, people realize that I’m there to collaborate and I can listen and … also tell you what’s possible and what’s not possible and why.

If you can’t hear the clip, click here.

In his experience with large companies and startups, Evangelos found one thing critical to success:

Evangelos: For me, there is a common lesson that has come from different perspectives in every stage of my career: the importance of the team.

As an entrepreneur, and later as an investor, I came to see sometimes, by associations, and sometimes very directly, what a good team can do. (And) what an incomplete or a mediocre team cannot do.

The difference is in how you can … achieve the goal that you’re setting up to achieve. 

There are a lot of people who make things happen.

The right team can make the right things happen, and make them happen in the right way.

If you can’t hear the clip, click here.

And he offered the following insight into the VC- founder relationship:

Evangelos: As you understand product-market fit, this is where finessing and reworking of the management team, is very important. You need to understand given who you have and where you need to go in order to capture that value, to create that spectacular success-

Steve:  Does that mean changing out people or does that mean growing people?

Evangelos: You need to be able to change people, you need to be able to put the right people in the right role. This is (why it’s important to have) a cohesive board and a cohesive investors’ syndicate because the investors sit on the board of the company and make the company work.

Steve:  And they need to agree.

Evangelos: Yes.

Steve:  Did you sometimes tell the founders they won’t be taking the company to 10,000 people? 

Evangelos: Actually, I have said that to founders more times than I thought I would and that didn’t always endear me to the founders. Though what has been rewarding is that a number of founders who I had to either change roles or even let go, have told me, “You were right. Now I understand what was happening because I applied it to my next company.”

There is certain amount of … reward in having that acknowledgement.

If you can’t hear the clip, click here.

Listen to my full interviews with Evangelos and Ashok by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: David Comisford, founder and CEO of EduSourced; and Omar Zenhom, co-founder of The $100 MBA.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

 

Hacking for Defense @ Stanford – Lessons Learned Presentations

We just held our tenth and final week of the Hacking for Defense class. Today the eight teams presented their Lessons Learned presentations.

We’re a little stunned about how well the first prototype of this class went. Over half the student teams have decided to continue working on national security projects after this class. Other colleges and universities have raised their hand and said they want to offer this at their school.

(This post is a continuation of the series. See all the H4D posts here. Because of the embedded presentations this post is best viewed on the website.)

IMG_3189


What Were Our Goals for this Class?
We had five goals for the class. First was to teach students to develop the mindset, reflexes, agility and resilience an entrepreneur needs to make decisions at speed and with urgency in a chaotic and uncertain world.

Second, we wanted to teach students entrepreneurship while they engage in a national public service. Today if college students want to give back to their country they think of Teach for America, the Peace Corps, or Americorps or perhaps the US Digital Service or the GSA’s 18F. Few consider opportunities to make the world safer with the Department of Defense, Intelligence Community or other government agencies.

Third was to teach our sponsors (the innovators inside the Department of Defense (DOD) and Intelligence Community (IC)) that there was a methodology that could help them understand and better respond to rapidly evolving asymmetric threats. That if we could get teams to rapidly discover the real problems in the field using Lean methods, and only then articulating the requirements to solve them, could defense acquisition programs operate at speed and urgency and deliver timely and needed solutions.

Fourth, we wanted to show our DOD/IC sponsors that civilian students can make a meaningful contribution to problem understanding and rapid prototyping of solutions.

Fifth, we wanted to create the 21st Century version of Tech ROTC by having Hacking for Defense taught by a national network of 50 colleges and universities. This would give the Department of Defense (DOD) and Intelligence Community (IC) access to a pool of previously untapped technically sophisticated talent, trained in Lean and Agile methodologies, and unencumbered by dogma and doctrine. At this size the program will provide hundreds of solutions to critical national security problems every year.

The result will be a network of thousands of entrepreneurial students who understand the security threats facing the country and engaged in partnership with islands of innovation in the DOD/IC. This is a first step to a more agile, responsive and resilient, approach to national security in the 21st century.

What Did We Learn From the Class?
Not only did the students learn, but the teaching team got schooled as well.

First, we validated that students were ready and willing to sign up for a class that engaged them in national service with the Department of Defense and Intelligence Community. We had more applicants (70+) for the 32 seats in this class than we usually get in our core entrepreneurship class.

Second, we found that the islands of innovation inside the DOD and IC were willing to engage this new and eager pool of talent. We were soliciting 8 problems for the students to work on and had to shut down the submission process after we reached 25.

Third, some students took the class because they thought learning entrepreneurship with tough real-world problems would be interesting. We surveyed their motivations before and after the class and were surprised to find that a large percentage became more interested and engaged in national service. Over half the student teams have decided to continue working on national security projects.

Fourth, other schools have said they want to offer this class next year. To help kick this scale into high gear, the National Defense University will be funding Hacking for Defense at colleges and universities across the country. To train other educators and future problem sponsors we we will hold our first Hacking for Defense/Diplomacy Educators Class September 7 through 9th. Contact Pete Newell peter.newell@gc.ndu.edu to sign up.

Finally, the teaching team (instructors, TA’s, mentors) and students debriefed on our own Lessons Learned from the class. Joe Felter and his research assistants will spend the summer building out the formal educator’s guide (capturing all the “wish we would have known’s” and “here are the points you need to make in this lecture”,) sponsor guide (yep, we learned we need to train our sponsors as well), creating new DOD/IC-specific video lectures. And we will build a knowledge base of DOD/IC acquisition primers, customer development best practices, org charts, etc. Finally, for universities interested in running future courses, HackingForDefense.org will act as a central clearing house for student-ready problems that have been vetted and unclassified. While H4Di.org gets on its feet Pete Newell and his team of RA’s will continue to source problems for upcoming H4D courses.

What Surprised Us?

  1. The combination of the Mission Model Canvas and the Customer Development process was an extremely efficient template for the students to follow – even more than we expected.
  2. It drove a hyper-accelerated learning process which led the students to a “information dense” set of conclusions. (Translation: they learned a lot more, in a shorter period of time than in any other incubator, hackathon, entrepreneurship course we’ve ever taught or seen.)
  3. Insisting that the students keep a weekly blog of their customer development activities gave us insight into their progress in powerful and unexpected ways.

What Would We Change?

  1. Train the sponsors on commitment, roles, etc.
  2. Decide how we want the teams to split their time for potential dual-use products. How much time spent on focusing on the sponsors particular problem versus finding a commercial market. And what week to do so.

This is the End
Each of the eight teams presented a 2-minute video to provide context about their problem and then gave an 8-minute presentation of their Lessons Learned over the 10-weeks. Each of their slide presentation follow their customer discovery journey. All the teams used the Mission Model Canvas, Customer Development and Agile Engineering to build Minimal Viable Products, but all of their journeys were unique.

The teams presented in front of several hundred people in person and online. You can watch the entire presentation here

https://vimeo.com/169155566

Aqualink

If you can’t see the video click here

If you can’t see the presentation click here

Capella Space

If you can’t see the video click here

If you can’t see the presentation click here

Narrative Mind

If you can’t see the video click here

If you can’t see the presentation click here

Fishreel

If you can’t see the video click here

If you can’t see the presentation click here

Sentinel

If you can’t see the video click here

If you can’t see the presentation click here

Skynet

If you can’t see the video click here

If you can’t see the presentation click here

Right of Boom

If you can’t see the video click here

If you can’t see the presentation click here

Guardian 

If you can’t see the video click here

If you can’t see the presentation click here

It Takes a Village
While I authored these blog posts, the class was truly a team project. The teaching team consisted of:

  • Tom Byers, Professor of Engineering and Faculty Director, STVP
  • Joe Felter a retired Army Special Forces Colonel with research and teaching appointments at Stanford’s Center for International Security and Cooperation (CISAC), the Hoover Institution, and the dept. of Management Science and Engineering
  • Jackie Space a former Air Force officer who as an aerospace engineer developed joint satellite and electronic warfare programs. She is currently a Senior Visiting Research Fellow at the National Defense University’s Center for Technology and National Security Policy and Managing Partner at at BMNT Partners
  • Pete Newell is a former retired Army Colonel currently a Senior Visiting Research Fellow at the National Defense University’s Center for Technology and National Security Policy and CEO of BMNT Partners.

Kim Chang was our lead teaching assistant. We were lucky to get a team of 25 mentors (VC’s and entrepreneurs) who selflessly volunteered their time to help coach the teams.

Of course, a huge thanks to the 32 Stanford students who suffered through the 1.0 version of the class.

And finally a special thanks to our course advisor Bill Perry, former Secretary of Defense and Professor Emeritus, Chris Zember, Director, National Defense University – Center for Technology & National Security Policy, Jay Harrison, Director, National Defense University – National Security Technology Accelerator, Dr Malcolm Thompson, the executive Director of NextFlex, the Flexible Hybrid Electronics Manufacturing Innovation Institute, The entire Defense Innovation Unit Experimental (DIUX), Center for International Security and Cooperation (CISAC) in the Freeman Spogli Institute for International Studies, STVP in the department of Management Science and Engineering.

Hacking for Defense will be offered again at Stanford University next Winter.  See you there!

Entrepreneurs are Everywhere Show No. 31: Congressmen Dan Lipinski and Seth Moulton

Lean methodologies have changed the way science is commercialized in the U.S. Now it is changing how we protect the homeland and keep Americans safe and around the world.

How the U.S. government has embraced Lean methodologies to reinvigorate its innovation efforts was the focus of the latest episode of my SiriusXM radio show, Entrepreneurs are Everywhere.

The show airs on SiriusXM Channel 111 (weekly Thursdays at 1 pm Pacific, 4 pm Eastern). It follows the journeys of innovators sharing what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Dan Lipinski

Rep. Dan Lipinski

Joining me in the Stanford University studio were

Seth Moulton

Rep. Seth Moulton

Listen to the full interviews with Reps. Moulton and Lipinski by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interview are below.

Rep. Dan Lipinski is a six-term Congressman and on the Committee on Science, Space and Technology and Ranking Member of the Subcommittee on Research and Technology (and one of a handful with a doctorate).  He championed the National Science Foundation Innovation Corps (NSF I-Corps). I-Corps teaches scientists and engineers how to get their technical ideas out of the lab and into the marketplace using the Lean Startup processes.

Rep. Lipinski also serves on the Transportation & Infrastructure Committee, and three of its subcommittees: Aviation; Railroads, Pipelines, and Hazardous Materials; and Highways and Transit.

Innovation drives the U.S. economy, he said: 

Innovation is really is the life blood of our American economy. … looking back at the stories of Thomas Edison, Alexander Graham Bell and the Wright Brothers, you look at emergence to technology innovation and what it has done for our economy.

We need to continue that. America is full of entrepreneurs, inventor and dreamers.

Coming back to Stanford, reminds me of a German friend when I was here in grad school  It was 1989. He saw the movie, “Field of Dreams.” I asked him what he thought about the movie and he said, “Well, that would never happen in Germany. In Germany, you’d never have some guy with a crazy idea, who’d plow under his field so he can build something like a ball park.” He said, “You just would not. No one in Germany would ever believe that story but in America, things are different. Americans are dreamers. They’re doers.”

I think that’s why we are so good at innovation. We’re risk-takers.

Unfortunately it seems in this presidential election, we’re in a place where we have candidates who instead of growing the pie through innovation, are talking about “How are we going to divide the existing pie differently?” … what we really need to do is to help innovators grow the pie. 

If you can’t hear the clip, click here.

He offered context for the government’s innovation efforts:

The Federal Government plays a critical role in innovation in our country and has throughout our history. If you’re listening to this show on satellite radio, satellite radio was pioneered by the Department of Defense and NASA. If you’re listening on the Internet, DARPA (the Defense Advanced Research Projects Agency) and the NSF (The National Science Foundation) were critical in developing the internet.

Most people don’t know the role that the government has played and continues to play funding most of the country’s technology and medical research. That research is the building block to innovative products. It’s the envy of the world.

If you can’t hear the clip, click here.

Rep. Seth Moulton is a Harvard graduate and U.S. Marine Corps veteran who served four tours in Iraq, including two tours as a platoon commander and two tours as a Special Assistant to Gen. David Petraeus. He was elected to Congress in 2014 and serves on the House Armed Services Committee, the House Budget Committee and the House Small Business Committee.

He spoke about the efforts of the Department of Defense to connect the Defense and Intelligence communities with the Silicon Valley innovation mindset, with their first innovation outpost called DIUx:

Connecting to the Silicon Valley innovation culture is another way to make sure that we’re doing as much as we can to protect their lives of our soldiers as they’re putting their lives on the line for our country.  

He acknowledged the role that the new Hacking for Defense class is playing:

There’s a lot of technologies that could save American lives overseas if we could just get them to the troops and get them more quickly. It’s also a great way for people around the country, whether it’s in Cambridge, Mass., or out here in California, to contribute in the fight against terrorism, to help the young men and women who are out there putting their lives on the line for us. 

If you can’t hear the clip, click here.

The Cold War spurred innovation, Moulton said: 

Rep. Moulton: There was a time in the 1950s and ’60s, when the latest and greatest technology was coming out of the Department of Defense. Then later our advanced technology came from the civilian sector. That’s why we had the most advanced intercontinental ballistic missiles and bombers and other things that we built during the cold war. 

Today, innovation isn’t happening at the big defense contractors as much as it’s happening right here in Silicon Valley. We’ve got to change them all.

Steve:  The Department of Defense and House Armed Services Committee helped start a  innovation outpost out here called DIUx, didn’t they?

Rep. Moulton: That’s right. It was a recognition in Washington’s that we ought to have better connections out here. This is one of the reasons why I come to visit. Not just because I’m on the Armed Services Committee but because I’m one of the youngest members of congress and I’m one of the only member of congress who has a degree in science. I like to think that I can understand this stuff, at least better than some of my colleagues. It’s important that we have these connections between Washington and the innovation that’s going on out here.

If you can’t hear the clip, click here.

As a former Marine, he has first-hand experience with the need to speed defense innovation efforts:

I remember when my GPS mapping system in my Humvee broke down when I was over in Iraq. We had to take it to the base to get reloaded and they brought out a stack of 3 ½-inch disks. A lot of listeners probably don’t even remember what those are.

It was an amazing system … in the late ’80s or ’90s or whatever, but now it’s really out of date. The Department of Defense just hasn’t been able to keep up with the pace of innovation. We would have been a lot better off with iPhones in our Humvees at the time.

We’ve got a lot of work to do on faster integration of innovation inside the Department of Defense. This is something that the committee right now is focused on, including the Republican chairman Mac Thornberry who’s a great chairman, very bi-partisan. One of his priorities is to reform the procurement processes at the Department of Defense so that we can take advantage of all this incredible innovation that’s going on right here at home.

If you can’t hear the clip, click here.

He’s also committed to improving the Veterans Administration to better serve veterans’ healthcare needs, he said:

Rep. Moulton: We have a number of bills that we’re working on. The most recent is called the Faster Care for Veterans Act, which directs the VA to conduct a pilot program with existing applications to make appointments on your Smart Phone. 

We all know the stories of veterans who wait in line for months trying to get an appointment. It’s also a problem with waiting in line on the phone to try to get through to schedule an appointment. That’s what someone in my office who’s a veteran was trying to do one day, and he kept, he got in this infinite loop on their phone system: Press 6. Press 2. Press 3. OK, back to the beginning. Press 6. Press 3. Press 2. Someone else in the office just made a video of it, and it went viral on Facebook.

This Faster Care for Veterans Act is totally bipartisan. Cathy McMorris Rodgers of Washington, one of the leaders in the Republican Conference, is cosponsoring it with me, and it’s gotten a lot of support. My bottom line is this: Our veterans deserve the best healthcare in the world. If there’s technology that’s available to folks in the private sector right now, it should be available to veterans as well.

Steve:  Is the problem with these institutions leadership, technology, bureaucracy that has no incentives to change, all of the above?  

Rep. Moulton: It’s all of the above, but I’ll tell you, from my background in the Marines, I think a lot of it does come down to leadership. The leadership is starting to change. The new Secretary of the VA comes from the private sector. He’s a veteran, but his experience is really in corporate America, and he’s quickening the pace of innovation at the VA. So that’s an example of a place where it’s starting to change, but this is also why we need innovators in government.

The government does a lot of important things and so many people are just frustrated with politics today, especially with the presidential election, that they’re just checking out. Actually, this is the time when people need to check in, and especially young people.

If you can’t hear the clip, click here.

Rep. Moulton said he is inspired by the culture change he’s seen during his short tenure in government:

Rep. Moulton: I like seeing new young people come into government and give some of the old bureaucrats a run for their money. We’ve got to improve the personnel system to give more opportunities to you young people, but I spend a lot of time as one of the youngest members of Congress just trying to get other young people involved. For some, it means potentially running some day, for others it means working on a congressional staff or just doing something else in government where you can be an important contributor to fixing some of the problems in government. … 

Steve: You’ve now been in the world largest bureaucracies, US military and probably the biggest bureaucracy in terms of spending, the US Congress. What still gives you hope?

Rep. Moulton: I’ve been pleasantly surprised by the impact that a freshman can make. I run my office like startup. I got my chief of staff from Silicon Valley. We’re just trying to think outside the box and do things differently and we run into bureaucratic obstacles every single day but we don’t let them stop us. Just in my own little personal experience over the past year, I’ve seen the difference that innovators, than an entrepreneurial spirit can make in government.

If you can’t hear the clip, click here.

Among the ways the government fosters an entrepreneurial spirit is by helping to commercialize scientific research, Rep. Lipinski said:

Rep. Lipinski: Not all research is going to be turned into some new innovation, but there are some things that can be, and that haven’t been, and I think the federal government has a proper role to play in doing that.  

At the Department of Energy I pushed them to create an Office of Technology Transition at the Office of Science so that they can centralize their commercialization activities.

I also was part of helping create the Technology Commercialization Fund created in 2005 to help get research out of labs and into creation of new products.  The third thing at the Department of Energy is Lab Corps which is a … version of the National Science Foundation Innovation Corps.

If you can’t hear the clip, click here.

The NSF I-Corps is the biggest example of this effort, Rep. Lipinski said. To date, more than 800 teams of scientists and engineers have gone through the program which is built on the Lean LaunchPad curriculum.

I don’t have a background as an entrepreneur. It’s not something that’s in my blood so I honestly had never really thought to myself, “If I had an idea, how would I go about trying to do something with that idea?”

Your Lean LaunchPad class, which became the National Science Foundation Innovation Corps, made complete sense to me, to my engineer mind.

You have an idea but before you say, “I’m just going to launch myself full-force into it,” you must find out, “Does this idea make sense to customers? Do people really want this product?” Maybe they want something a little bit different. You need to get out of the lab to figure that out. …

As someone who was a university professor, I know what some professors are like. These are extremely intelligent people, but they spend all their time in the lab. You really don’t know until you get out and you ask questions, and find out what are people really looking for.

The idea of taking a professor, a graduate student working under the professor and they get together with an entrepreneur — someone who has the experience — and work as a team, going through the whole Customer Development and Lean Startup process … just made complete sense to me and I thought everyone would see that. I thought there was no question.

This is so obvious. First of all, I don’t know why no one came up with this before, and once people hear this they’re going to feel like I feel: This is such a great idea, we’ve got to do everything we can to promote this and spread this. 

If you can’t hear the clip, click here.

But while the idea was a no-brainer to Rep. Lipinski, he had to convince others on Capitol Hill to support the program:

Well first of all I got a lot of pushback on the Science Committee. Questions about “Well, should we be choosing winners and losers here?”

A lot of members, mostly Republicans — OK all Republicans — would say, “Solyndra. Remember Solyndra? Remember that our government put all that money into this solar company and it went under, so why are we going to pick winners and losers like this? That’s something the market should do.”

The other thing was, “Well, the National Science Foundation should not be doing this. The National Science Foundation should just be doing basic research. This is not an area the NSF should be in.”

Although if you go back to the original charter of the NSF it clearly lays out that it is something that they should be in. I said, “Look, this is about education. NSF certainly is about education, what we’re doing is educating professors and graduate students about how to be an entrepreneur.”

I still could not get a hearing on the Innovation Corps. … This is the way politics works: 

I was the top Democrat on the Research and Technology subcommittee. Mo Brooksthe Republican chair of the subcommittee, said to me, “I want to have a hearing in my district. If you come to my district for a hearing I’ll come to your district and do a hearing and you can pick whatever topic you want.” So I said OK.

We went down to Huntsville, Ala., he did something with local educators about science education and I said “OK, I want to have a hearing in Chicago. It actually has nothing to do with anything locally,” but this was my chance finally to say “I’m going to bring Steve Blank in and others from the NSF and we’re going to talk about the Innovation Corps.” That was the first hearing.

I tell you, things have certainly turned around since then and I think the Innovation Corps has really been embraced in Washington, especially on Capitol Hill by both sides of the aisle.

If you can’t hear the clip, click here.

The program has had a tremendous impact, he added:

There aren’t that many things that get done in Washington these days, not many things, especially, that really work. I tell you that day that I came out to Stanford, and sat in on your class, met with you, talked with you, I came out of there thinking this is just an incredible idea.  

After the NSF I-Corps had been running for a while I visited and heard the presentations from the I-Corps teams and then saw companies developing from those ideas, venture capital coming to some of these companies that were being formed, I realized this is something that it really works and it’s something that I championed that was right – and good for the country.

The NSF I-Corps is a great idea, something the government needs to really continue to invest in, and I’m very proud of this maybe more than anything else that I’ve been a part of in the 12 years that I’ve been in Congress because it’s working and making a difference.

If you can’t hear the clip, click here.

Listen to my full interviews with Reps. Lipinski and Moulton by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Evangelos Simoudis, co-founder and managing director of Synapse Partners; and Ashok Srivastava, Verizon’s chief data scientist.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111. 

Want to be a guest on the show?  Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Hacking for Defense @ Stanford – Weeks 8 and 9

We just held our eighth and ninth weeks of the Hacking for Defense class. Now with over 917 interviews of beneficiaries (users, program managers, stakeholders, etc.), the teams spent the last two weeks learning what activities, resources and partners they would need to actually deliver their solution. And they’re getting a handle on what it costs to build a company to deliver it.

Understanding the left-side of the mission model canvas (activities, resources, partners, and costs) forces all teams to ask, “Are we building a product for a DOD/IC customer only or do we have a “dual-use” product that could be sold commercially and get funded by venture capital?”

(This post is a continuation of the series. See all the H4D posts here. Because of the embedded presentations this post is best viewed on the website.)

Next week the teams will present their final Lessons Learned presentations.

Two Items for the Bucket List
Two bucket list items got ahead of my blogging so I’ve combined the final two lecture weeks of the class into this one blog post.

Four decades ago my first job in Silicon Valley was with ESL, the first company to combine computers and signals intelligence. The founder of this 1964 Silicon Valley startup was Bill Perry. His work at ESL made him one of the 10 founders of National Reconnaissance.

Dr. Perry eventually became the 19th secretary of defense. But a decade earlier as undersecretary of defense for research and engineering, he was the father of the second offset strategy using software and semiconductors to build smart weapons, smart sensors, and stealth aircraft that helped end the Cold War.

Last week I interviewed Bill at Stanford about War and Peace, innovation and entrepreneurship.

http://ecorner.stanford.edu/videos/4255/Dedication-to-Innovation-and-Nation-Entire-Talk

Second:
I also gave the commencement speech at the NYU engineering school here.

The Left side of the Canvas
If you’ve been reading along so far, you know that this class is not an extended hackathon nor is it a 10-week long incubator. Hackathons and incubators are helpful in getting product teams focused and result in great demos, but you’re left still not knowing whether you have something beneficiaries/stakeholders/users want nor do you know what it takes to deploy the solution to the field. Ultimately you are left without a strategy to turn your idea into a solution that people will use.

Using the Lean LaunchPad methodology our teams do much more than just build a product or understand customer problems/needs. They also learn how to deploy the solution, how to get stakeholder buy-in and how to measure success. And in these last two weeks of class, they learn what activities, resources and partners they’ll need to deliver their solution and derive what it costs to build the company to deliver it.

The teams capture their work in the mission model canvas a framework for each week’s activities. The canvas illustrates the search for the unknowns that new ventures face. The 9 boxes of the canvas visualize all the components needed to turn beneficiaries needs/problems into a solution.

Mission Model Canvas by week
Each week the teams marched through another box of the canvas, testing their hypotheses in front of beneficiaries using the customer development methodology, all while building and updating their minimal viable product. It’s a ton of work. Over the course of the class, each team will have talked to 100 beneficiaries/ stakeholders/ users. The result is evidence-based entrepreneurship.

Team Presentations: Weeks 8 and 9
Over these last two weeks, teams began to figure out the activities, resources and partners their company would need to deliver their value proposition (product, service or both) to the beneficiaries in their sponsor organizations.

Activities are the expertise and resources that the company needs to deliver the value proposition. They might be hardware development, software expertise, manufacturing, launching rockets, funding, etc. Resources are the internal company-owned activities. Examples are a company-owned manufacturing facility, big data or machine learning engineers, DOD proposal writers, venture capital, etc.  Partners are the external resources (third parties) necessary to execute the Activities. i.e. outsourced manufacturing, system integrators, etc. other companies, that will provide those activities.

activities resources and partners

In addition, teams worked on understanding the costs and operations and deployment timelines for delivering the product to their sponsor.

finance and ops timeline

Team Dynamics
In these last three weeks the benefit of having a team of mixed business and technical resources becomes apparent. Teams that are just all technologists quickly grasp product/market fit (the right side of the canvas) but often have a hard time understanding the left side of the canvas (activities, resources, partners and costs.)  When the technologists work together with business focused students as a team, the learning is impressive.

However, the downside is that one of failure modes of teams (and startups) is a team that doesn’t jell. One of the symptoms is technologists going heads-down building product and features without customer input while they defer all of the left-side of the canvas to the business team. Or conversely business team members draw timelines and costs without a deep understanding of the technology hurdles.

Almost every class has a team or two that goes through team conflict – different working styles, different time commitments, pivots taking them to places where they’re no longer interested, etc. Given that 1/4 of startups meltdown over team dynamics before funding, seeing this happen to teams in the class isn’t a surprise. We treat team dynamics as a normal part of learning in the class. (Team members get to grade each other on their contributions as part of their final grade.)

Considering that none of these teams have worked together in the past, the amount of synergy and teamwork in this cohort is impressive.

Skynet

WEEK 8 Presentation

In slide 2 the Skynet team continued with customer discovery using experiments to validate or invalidate their hypotheses. Slide 5 does a good job of separating out their technical versus business activities. Slide 6 did a great job in connecting the activities to the resources and partners they’ll need.

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

In Slide 2 the team made progress on developing their MVP. In slide 3 they realized some of their conclusions about DARPA partnerships from last week were wrong. Slides 5-8 continued their learning about partnerships, and slides 9-11 are a great first pass on costs and financial and operations timeline.

If you can’t see the week 9 presentation click here

Aqualink

WEEK 8 Presentation

Slide 5 is a good summary of activities/resources/partners. Slide 6 connects those to the prototyping and deployment activities by partner and sponsor. Slide 7 lays out a potential field deployment schedule to the sponsor organization. Slides 11-14 show their continued testing of their MVP underwater.

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

Slides 7 and 9 is the team’s first pass in understanding costs, operations and fundraising. They continued their MVP development underwater in a pool at Stanford.

If you can’t see the week 9 presentation click here

Sentinel

WEEK 8 Presentation

The team really got out of the building and traveled to San Diego (at their own expense) and visited the USS Sampson and the 3rd Fleet headquarters. Slide 7 summarizes their activities, resources and partners.

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

Slide 13 is an excellent example of mapping out their costs.  Slide 14 is a great example of diagramming their financial and operating milestones.

If you can’t see the week 9 presentation click here

Capella

WEEK 8 Presentation

This week Capella was so engaged in their customer discovery and pivot to illegal fishing, they missed the assignment.

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

Slides 8 -12 illustrates their activities and costs. Because they missed last week’s assignment, you wouldn’t know from their presentation that they required a partnership with a space launch company :-)  The good news is this team had been distracted and will have news to share in their Lessons Learned presentation

If you can’t see the week 9 presentation click here

Guardian

WEEK 8 Presentation

Slides 4 -6 summarized Guardians activities, resources and partners.

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

Slides 4 -6 summarized their costs and operating plan.

If you can’t see the week 9 presentation click here

Right of Boom

WEEK 8 Presentation

Slides 4 -6 summarized Right of Booms’ activities, resources and partners.

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

Slide 3-5 summarizes their unique findings. This team discovered that their deliverable to the sponsor will not be a product. Instead it will be a series of recommendations on how to better utilize their existing products and data. Slides 6-8 describe the partners which can best deliver these recommendations to their sponsor.

If you can’t see the week 9 presentation click here

Narrative Mind

Slides 3 -6 summarized their activities, resources and partners

WEEK 8 Presentation

If you can’t see the week 8 presentation click here

WEEK 9 Presentation

Slides 3 -10 further refined their partners and summarized their costs and operating plan.

If you can’t see the week 9 presentation click here

Advanced Lecture 8: Costs
In week 8 Pete Newell gave the costs lecture and put it in the context of a DOD program. Slide 3 defined what costs were, slides 4-11 tied it to a specific example.

If you can’t see the costs lecture click here

Advanced Lecture 9: Reflections
In past versions of this class teams would call on beneficiaries/customers until the last week of the class and then present their Lessons Learned. The good news is that their presentations were dramatically better than those given at demo days – they showed us what they learned over 8 weeks which gave us a clear picture of the velocity and trajectory of the teams. The bad news is since their heads were down working on customer discovery until the very end, they had no time to reflect on the experience.

We realized that we had been so focused in packing content and work into the class, we failed to give the students time to step back and think about what they actually learned.

So now we use the last week of the class as a reflection week. Our goal—to have the students extract the insights and meaning from the work they had done in the previous seven weeks.

We asked each team to prepare a draft Lessons Learned presentation telling us about their journey and showing us their:

  • Initial sponsor problem statement
  • Quotes from beneficiaries that illustrated learnings and insights
  • Pivot stories
  • Screen shots of the evolution of Minimum Viable Product (MVP)
  • Demo of final MVP

The teaching team reviewed the drafts and provided feedback to the teams and to the class as a whole. We discussed what general patterns and principles they extracted from all the customer interaction they had.

Dual-use Products
As you’ll see next week in the final presentations, some of the teams discovered that they could best serve their sponsor by building a commercial off-the-shelf product that could be sold widely and bought by the DOD/Intel community. Pete Newell came up with the best diagram I’ve seen to illustrate how the work the teams were doing in this class fit to do just that.

The diagram shows that during the class the sponsor needs drive customer discovery and product/market fit. But continued discovery would now include commercial customers and eventually those commercial customer needs would drive the feature set.

dual use trajectory

Hacking for Defense Educators Class
The H4D instructor team has been busy capturing what we learned (teams, lectures, sponsors, etc.) and we’ll incorporate the lessons from this inaugural course and revise the course materials. As part of our plan to scale this class nationwide to other schools, we’re writing an educator’s guide and offering a Hacking for Defense Educators Class Sept 7th – 9th.

Details in the next post.

Tomorrow, May 31st is the last day of class.

We’ll post the final presentations. Quite a journey for all these teams and their sponsors!

NYU Commencement Speech 2016

NYU Engineering Commencement Speech

Thank you for the opportunity to address you on your graduation from this esteemed engineering school. I’m honored to help you celebrate this important milestone.NYU commencement speech

See the video here

Your life is already full of milestones: Your first steps, your first kiss, passing a driving test, this graduation. And there are more to come: your first job, getting married, buying a house, having a child, becoming a manager, starting a company, retirement – and eventually commencement speaker🙂

In 33% of the commencement speeches this year, 2.8 million graduates are going to hear advice about “follow your own path.” Or “Learn from others”. Or the perennial favorite, “you can make a difference.”

All of this is great advice. In fact, I’m going to give you exactly the same advice. But in very few of these speeches does anyone let you in on why we’re telling you this with such passion and urgency.

So today as we celebrate your graduation I’m going to tell you why.

—–

When I was young, I learned a quote in Sunday school, that has stayed with me throughout my life. It said, “teach us to number our days that we gain a heart of wisdom”. Since then I’ve had a series of interesting careers: technician in the Air Force, tech writer, marketer, entrepreneur, CEO and now educator and mentor.

But this idea has never been far from my mind: That most of us will wake up 28,762 days- and then one day – we won’t.

That means you have about 21,000 days left –  and about 14,000 of them for your career.  So herein lies the urgency.

In every startup I did, every new course I created, and everything I’ve taught, the phrase “make every day count” took on new meaning when I knew how many were left.

So how do you live a life making the most of each day?

That’s the challenge we all face – and we all make different choices on how we do it. But this morning I’d like to share three short stories – about how I made my days count and gained some wisdom from others.

­_________

So my first story is about Taking Risks and Pushing Boundaries

As you enter the working world, you’ll hear things like, “That’s not how we do things here.”  “It’s never been done that way before.”  and “The rules say you can’t do this.”

Some of these rules will keep you from killing yourself on the job. Some are required for you to gain the skills to perform your job. But most everything else people will tell you about rules is wrong.  Not kind of wrong, but spectacularly wrong. It’s ironic because ignoring the rules is what drives innovation and invention. While most visionaries turn out to be hallucinating, the few who are right push the human race further along.

Let me give you an example.

When I retired after 21 years working in 8 startups, I was invited to be a guest lecturer at the business school at the University of California Berkeley. They thought I could tell good stories about what it was like to start a company. Soon I began to pester the head of the department about this new idea I had… that startups are not smaller versions of large companies.

Actually they’re entirely different.

Established businesses execute business models while startups search for them.

Yet everyone – investors, entrepreneurs, academics — expected new startups to follow the same practices that worked for large companies – write a business plan, forecast 5-year sales projections and build the product without ever talking to customers.

I was a lone voice inside one of the country’s leading business schools challenging the conventional wisdom of the last 40 years, proposing that everything we were teaching about starting companies was wrong.

I can’t tell you the number of very smart professors and venture capitalists who laughed in my face. But I didn’t give upBecause I knew the clock was running and I was determined to make every day count.

I saw something that they didn’t and to their credit…Berkeley’s Business School and then Stanford’s Engineering School let me write and teach a new course based on my ideas.

Five years later the U.S. National Science Foundation adopted this class, now called the Innovation Corps, as the basis of commercializing science in the Unites States. This unorthodox idea has become a movement …called The Lean Startup –  and has led to entirely new ways to start companies, commercialize science, and think about innovation.

How did this happen?  Innovation comes from those who see things that others don’t. It comes from people who not only question the status quo But keep persisting in the face of all the naysayers.

Because your time here is limited.

­_________

My second story is about Mentors and gaining the heart of the wisdom

Questioning dogma doesn’t mean rejecting all advice and guidance from others who’ve come before you.

In fact, your career and life can take on a very different trajectory if you find mentors and use that time to learn from their experience.

As an entrepreneur in my 20’s and 30’s, I was lucky to have two extraordinary mentors, each brilliant in his own field. One, Ben Wegbreit taught me how to think – Ben reviewed my first datasheet and returned it with entire paragraphs circled in red labeled “CFP” – I finally got enough nerve to ask him what CFP meant and he said, “Content Free Paragraph”. While Ben taught me how to think, Gordon Bell taught me what to think about. Gordon had the uncanny ability to see the future trajectory of computer and chip technology way before I even understood the problem.

I had no idea I was being mentored and never asked for it. But I sought out these really smart people, because I wanted to know what they knew.

In hindsight I realize that what made these brilliant engineers put up with me was that I was giving as good as I was getting. While I was learning from them – and their years of experience and expertise – what I was giving back was equally important. I brought fresh insights and new perspectives to their thinking.

In hindsight I realize now that mentorship is a two-way street.

Finding a mentor can change your life – this is where you can gain a heart of wisdom.

So if someone takes an interest in your work and career, be open to their advice.  And think about what you can bring to the relationship.

Teach us to number our days that we gain a heart of wisdom.

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My last story is about serendipity and making the days count

Some of you may think you have a clear sense of where your career is headed.  Others of you may still have no idea. But either way, while the days count down, none of you should be worrying about what you will be doing 10 or 20 years from now. Because none of it will happen as you expect.

While your education has prepared you to master the facts, the other half of your brain needs to learn to trust in serendipity. By the way, the engineering definition of serendipity is, that life is too unpredictable to pre-compute. Serendipity is when it all comes together and you put all the days of your life into what becomes that of heart of wisdom.

Here’s the latest way Serendipity changed my life.

Over the last decade I’ve watched the Lean Startup approach to entrepreneurship take off. The National Science Foundation adopted it.  The Lean LaunchPad class is now taught around the world – and VC’s expect entrepreneurs to talk about not just their technology but their customer development findings.

It was amazing to see the movement I started grow and thrive.

Just recently serendipity sent me down a new road that connected dots from 40 years ago to today.

When I was 18 I served in the Air Force during the Vietnam War.

After hanging up my uniform I had little interaction with the military until four decades later, when a group in the Department of Defense invited me to give a talk about Lean methods. Shortly after that, I met Pete Newell, the retired head of the Army’s Rapid Equipping Force – one of the best Lean and agile organizations in the military – and I met Joe Felter an ex Special Forces Colonel. As I spent time with Pete, Joe and the Department of Defense, two things struck me –

Serendipity had just brought together my military experience of 40 years ago and the tools and techniques I spent the last decade building for Lean Startups.

I asked: What if we could teach students how use Lean methods to solve the most challenging national security problems? A new class – Hacking for Defense – was born.

Together with Pete and Joe and support from many others, we just taught this class for the first time – and hopefully will soon teach it here.

We plan to scale the class across the country and create a new opportunity for students to engage in national service—solving problems to keep Americans safe at home and abroad.

How did this happen?  Showing up a lot, and being open to new seemingly unconnected experiences, helped me create something that never existed before.

For me, knowing I was counting the days made me choose to work on things that pushed boundaries and made us collectively smarter.

So what do these stories mean for you?

  1. Take risks and push boundaries
  2. Learn from wise people who may know more than you do
  3. And let serendipity happen.

Of course only you can decide what you will do with the 14,000 days in your career.

But as engineers trained here at NYU you have a distinct advantage. As graduates you’ve been given the tools to design and build things to help people live better lives. You can solve major challenges the world faces.  You can create something that never existed.

Congratulations class of 2016.

My challenge to you – make every day ahead mean something.

Teach us to number our days that we gain a heart of wisdom

Make all the days of your life matter.

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