MIT Sloan Visiting Associate Professor Aurélie Thiele
It is a truism in career development that you should only do one thing and do it well. You don’t want to pursue multiple business endeavors—that would scatter your energy. Offer a consistent image to the world. Focus.
When I moved back to Cambridge for my sabbatical at MIT, where I earned a doctorate in engineering a decade ago, I thought I knew what to expect. The revitalization of Kendall Square, the Innovation District in South Boston, the new MBTA stop in Somerville, pharmaceutical companies building their new headquarters within walking distance of the Charles River, Google opening an office nearby: I was aware of all these. They were aligned with Greater Boston’s brand as an innovation hub in science and engineering. Left-brain innovation, I call it. For me, that was Greater Boston’s One Thing.
But I was most struck, after I came back, by the amount of right-brain innovation going on—new arts-related offerings that customers pay for. (It is not innovation if it doesn’t have marketplace value.) Everybody knows Boston’s reputation in science, technology, and engineering. But an innovative mindset is sustained by right-brain activities: spend an hour at the museum or two in a theater and view the world differently, especially if the cultural offerings are on the cutting edge. Of course, Boston has all the events that residents count on in a metropolis: open artists’ studios on First Fridays, a book festival every October, a film festival, a jazz festival, community programs at local museums, authors’ events at indie bookstores, and so on. Every large city with any hope to attract the educated, however, does the same. I like to think that Boston is more successful at it—I’ll argue that the Boston events involve writers and artists of a caliber rarely seen elsewhere—but those events alone don’t make Boston special. What does is the role of new works in the city’s cultural scene, and what they mean about Boston’s identity.
Valuing a company is always a mix of science and art, especially for startups. Historically the science has been pretty simple: Find comparable companies and do a multiple of earnings or revenue.
However, three drivers of startup valuation have emerged that are changing the game. “Acquihire,” is the act of buying out a company for the skills and expertise of its staff. It has become so well-known that it is even listed in the Oxford English Dictionary. When Facebook buys a company like Hot Potato, it’s not for the revenue stream or products — it’s for the employees.
Knowledge and innovation generated at universities can lead to the creation of high-impact spin-off businesses. Whether it is through the licensing of intellectual property, partnerships or other informal arrangements, the tech transfer process can play a critical role in shaping new industries and regional economic development.
Research by Eesley and Miller and Eesley and Roberts has demonstrated the role Stanford University has played in shaping the development of Silicon Valley and MIT’s contribution to building a world-class innovation hub in the Kendall Square district of Cambridge, Massachusetts.
While those are examples of successful academic-industry-government ecosystems, the technology transfer system at many universities in the US and Europe is in need of a major overhaul. Its focus is historically rooted in revenue generation rather than in helping innovation. Technology transfer offices in many universities can act as bottlenecks rather than partners in knowledge transfer for economic and societal good.
Thomas J. Allen is the Howard W. Johnson Professor of Management, Emeritus and Professor of Organizations Studies at the MIT Sloan School of Management.
Dr Rory O’Shea is a Visiting Assistant Professor in Innovation and Entrepreneurship at the MIT Sloan School of Management. He also serves as a faculty member at the Smurfit Graduate School of Business, UCD.
MIT Sloan Senior Lecturer and Visting Scientist Barbara Dyer
From The Case Foundation
The Long Now Foundation’s Interval Café is a place for conversation about long-term thinking. Nestled in a concrete warehouse at San Francisco’s historic Fort Mason, the Interval was a fitting watering hole for the nearly 2,500 participants in the recent Social Capital Markets (SOCAP) gathering. SOCAP’s annual pilgrimage to Fort Mason brought together innovators, investors, foundations and social entrepreneurs to “build a world we want to leave to future generations.”
But drive an hour south from Fort Mason to Silicon Valley and you’ll be reminded that short-termism is deeply embedded in our business culture. This epicenter of tech start-ups is defined by a business development norm of launch, scale and exit. Investors are more likely to ask, “What’s your exit strategy?” than “What’s your long-term vision?”
Today’s young business leaders came of age in the era of “short-termism” where companies enter and exit in five to ten year cycles and compete in a world where workers average 11.3 jobs during their careers. Dramatic disruption in the 1980s due to globalization, recession and technological change gave way to financial markets’ relentless push for short-term gains. Jim Collin’s 1994 book Built to Last: Successful Habits of Visionary Companies may have been a last bow to long-term business thinking.
Most of the famous entrepreneurs we hear about are fairly young. We tend to read in the popular press about the Mark Zuckerbergs of the world and assume that all successful entrepreneurs launch businesses in their 20s. However, this couldn’t be further from reality.
Recent studies show that older entrepreneurs are increasing while the number of younger entrepreneurs is decreasing. According to the Kauffman Index of Entrepreneurial Activity, the share of entrepreneurs in the 55-64 age group jumped from 14.3 percent in 1996 to 23.4 percent in 2012. In contrast, the share of entrepreneurs in the youngest age group of 20-34-year-olds decreased from 34.8 percent in 1996 to 26.2 percent in 2012.