Trust Center Managing Director Bill Aulet presented a virtual workshop on Corporate Entrepreneurship in times of crisis on April 16, 2020
Antifragility and Corporate Entrepreneurship
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Antifragility and Corporate Entrepreneurship: 24 Observations
by Bill Aulet
Managing Director of the Trust Center and MIT Professor of the Practice
This is a follow-on piece to the interactive workshop on “Antifragility and Corporate Entrepreneurship” that I presented as part of our virtual New Frontiers of Entrepreneurship members-day symposium held on April 16, 2020. These 24 new observations are reflections of what I have seen over the past 30 days as society and business have been impacted by COVID-19.
These are the key points covered in my talk, which you can also watch or listen to above. I encourage you to do so, as the last 30-40 minutes includes a robust Q&A session where I expand even further on what is written below.
It was one year ago that the Trust Center held our first “Frontiers of Entrepreneurship” Symposium at MIT. We had great discussions on many topics with speakers like Peter Senge, Kai Fu Lee, Sue Siegel, Julie Shah, and many more talking about what we at MIT believe are principles around the cutting edge of entrepreneurship.
One very popular area from last year was “corporate entrepreneurship,” and today’s workshop and the following points are an update on what was discussed twelve months ago.
So what’s new? The simple answer is “a whole lot,” but I would say one still needs to build off of fundamental principles that were present back then, but are simply weighted more heavily now.
The easiest way for me to collect and synthesize my thoughts is to revert to an old formula: 24. It has worked for me with “Disciplined Entrepreneurship,” so using this as a framework, I was able to quickly put together an overview featuring 24 new observations that you will hopefully find useful and stimulate your own thoughts.
1. Definition of Corporate Entrepreneurship
In the past when I described what MIT did from a technical standpoint, people from a corporate environment would say, “What you are talking about is just very efficient and effective product development, management, and marketing.”
There was some truth to this, but I feel it missed the bigger point of human capital rather than product. Our goal at MIT is to produce antifragile humans and then antifragile teams. What we mean by antifragile is they don’t break when something stresses the system. If failure happens, they do not wither up and die; they make themselves stronger than before the crisis.
Furthermore, I would argue what we are talking about with corporate entrepreneurship is producing antifragile organizations. You need antifragile people and teams to create an organization, but it does not necessarily follow. Ultimately, products will be an end result of this, but the focus should be on capability, because we don’t yet know what the great products of the future will be.
Read more of my thoughts on this point in an article I wrote on “Teaching Entrepreneurship, Cultivating Antifragility”
2. Siegel / Trudeau’s Law
Sue Siegel, the former Chief Innovation Officer of GE, as well as Justin Trudeau, the prime minister of Canada, both have said the following in different words: “The pace of change will never be slower than it is today.”
In fact, Sue talked about this point at our symposium last year. Just like everyone talks about Moore’s Law and Metcalfe’s Law and how the mere existence of these in the common psyche changed how things function, so too will it be true with Siegel / Trudeau’s Law.
3. Two Operating Systems Separated By a Firewall
In the old view it was useful to think about business as having a powerful legacy that is the core business of the company that drives financial results in the short term. Then you add an “innovation” group that operates much differently with its own culture, unique incentives, different profile of employees, its own separate location, etc.
These two are then separated by a strong firewall where the needs of one are thrown over the wall one way and mature solutions get thrown back the other way. Things have changed. In the new view, we realize that the magnitude of impact and influence of these two groups should be considered more carefully. Turbulence gives the innovation group more of a role and the firewall is not as strong as I had imagined it to be.
4. Fluidity Between O/S’s
As mentioned in #3 above, there is more connectivity between these separate operating systems and the flow of ideas between the two groups must be greater.
5. Management vs. Leadership
While I have talked about this before, never has it been clearer than the past 30 days (March & April 2020) that striking the right balance between managing and leading has always been important, but now the coefficient on leadership is higher than its ever been.
6. Systems Over-designed by Management
Businesses that optimized processes to maximize efficiency (e.g., financial leverage, lowest cost supply chain, etc.) found they had built antifragile systems when this crisis hit. Weak balance sheets or stretched supply chains optimize short-term performance, but left little to no slack or buffer in the system to absorb this shock. This latter approach will likely lead to bankruptcies.
7. Sensemaking Capability
Much like #6 above, those who reduced their peripheral vision and did not have broad networks had little heads up on what was coming and how to interpret it.
This point is expanded upon in great detail in an article written MIT Sloan’s Deborah Ancona on “Sensemaking: Framing and Acting in the Unkown”
8. Clock Speed
I have constantly spoken about the fact that first mover is not an advantage most of the time, but rather it is a disadvantage. Well, let me revise that now …
Getting out there and receiving the iterative feedback loop where you can learn before others can react will give you a huge advantage. If you buy points #2 and #7 above, and #9 below, you will realize that clock speed is everything and getting good data on what is going on right now is crucial.
9. Nobody Knows Anything
Last November when we hosted Marc Randolph, the co-founder of Netflix, to discuss his book, “That Will Never Work,” I heard him say point #9 as one of if not the key message from his talk. Never has it resonated more than in the past 45 days.
10. Rules of Combat
From retired U.S. Navy Seal Jocko Willink, simplify and prioritize. Once you have chosen your direction, take small steps in that direction and then reassess after each small step. You don’t go all in, but rather take small steps, which can be small experiments with a focused direction.
Watch more of Jocko and his tips for “Decision Making in a Crisis”
11. Role of Faith / Hope
Billy Campbell was the last passenger off Flight 1549, known as the “Miracle on the Hudson.” In our Antifragile Entrepreneurship Speaker Series program on “Decision Making in a Crisis,” he talked about one of the things that has made him antifragile has been his faith. Billy’s faith may be different than yours, but the power of believing that it will be okay in the end is not to be underestimated. People must start with hope.
Watch Billy share his story of being inside the plane as it landed in the Hudson River.
12. The Third Crisis
Brad Feld is a thought leader, serial entrepreneur, early-stage investor, and the co-founder of Techstars. In our Antifragile Entrepreneurship Speaker Series program on “Staying Mentally Strong,” he shared that we all need to understand that what started as just a health crisis has morphed into a three-headed monster.
What the world is currently experiencing is a humanitarian crisis, an economic crisis, and a mental health crisis. All of these need to be understood and dealt with if we are to be antifragile and come out stronger on the other side.
Watch Brad discuss the issues around this third mental health crisis.
13. Your Oxygen Mask First
On an airplane, the safety instructions wisely advise passengers to, in the event of an emergency, put their own oxygen mask on first before assisting others. This is a very good analogy to our current crisis. You need to preserve yourself first in order to be strong so you can help others.
14. Nothing Good Happens Quickly
The rules of combat in point #10 advise you to make short-term decisions to buy yourself time. But all that buys you is time. What is the solution?
Figuring this out will take time and you need to sustain yourself personally from a mental perspective, a physical perspective, and an economic perspective to get this work done over an extended period of time. This proverbially is a marathon, not a sprint, so you have to be well conditioned for the long-term.
In our Antifragile Entrepreneurship Speaker Series on “What Are the Opportunities on the Other Side?,“one of our presenters, James McQuivey of Forrester, said, “The next opportunity is not an on/off switch of ‘success/failure,’ but more of a dial.” He shared this is a good way to think about change at this time and that change will take a while. It is not a Eureka moment. It is grinding it out over time.
Watch James discuss this in greater detail in our Speaker Series event.
15. Meditate. Hike. Routines.
Find the small things in life that will help to make #14 happen.
16. Lead with Clear Simple Plans
Hope. Strength. Guidance. Community.
17. Use and Embrace Technology
Learn how to use Zoom, Slack, and the other new tools that are changing the way we are working right now. Invest the time to figure out how to be good at these new technologies and don’t make excuses. Understand the new norms as well, not just the tech. This is critical. As in all areas, don’t hold on to the past.
18. Geography Does Not Matter as Much
Today is now the new normal. It may have been possible in the recent past to work remotely the way we are now, but it was easy to resist or push back against adoption and adaption. In an instant, though, working from home has become ubiquitous.
Just this past week I have spoken to hundreds in Ireland, France, and Saudi Arabia, as well as thousands of participants from over 90 countries in MIT’s COVID-19 Virtual Hackathon. And even more folks around the globe connected with us via the Trust Center’s Antifragile Entrepreneurship Speaker Series.
Again, this was just these past seven days … and now I’m connecting to even more people today during the Symposium. All while I sit in a lone house on top of a hill in the woods of New Hampshire with hundreds of acres of uninhabited land on all sides. Think about that.
19. Stockdale Paradox
From Jim Collins’ book “Good to Great,” comes the concept of the Stockdale Paradox, named after U.S. Navy vice admiral James Stockdale, who was a prisoner of war in Vietnam. Stockdale said, “You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
I have thought a lot about this over the past 45 days as well. It is crucial to balance optimism with realism as none of us can put a time on when this crisis will end. Doing so could lead to you breaking your team and creating a fragile system.
20. Start with Empathy, But Get to “Next Play”
Be sure you first express your human empathy for and acknowledgement of the humanitarian, economic, and mental health catastrophe that none of us would ever have wished for.
Then you can pivot the focus to, “Since this is now the new reality, what are we going to do to make the most out of it?” I find myself thinking about Duke basketball Coach Mike Krzyzewski who always shouts “Next Play!” no matter happens in front of him on the court.
21. Purposeful Entrepreneurship, Not Profiteering
As we go forward, it seems clear to me that great sustainable companies, teams, products, and people will now more than ever before need to be driven by purpose as opposed to profits.
Profiteering puts a target on you. But purpose forces you to look at your core values, which leads to defining one’s corporate culture.
Whatever purpose you land on in point #21, it must be real and authentic, as must the leadership that surrounds the purpose, or it will not last.
23. Antifragile Individuals, Teams, Organization, and Society
It will take all four of the above — individuals, teams, organizations, and society — to get us through this crisis to whatever is next. But remember, it is not pre-destined that if you have antifragile individuals they will come together to form antifragile teams and organizations. Or that antifragile teams will automatically lead to society becoming antifragile. Each of these will take focus, work, and determination.
24. Opportunities on the Other Side
Finally there are always opportunities on the other side. Antifragile individuals, teams, organizations, and societies will have the mind set, skill set, and way of operating that gives them the confidence and ability to make this happen.
As Biggie Smalls said, “’Cause I went from negative to positive”.
As an entrepreneurship center, we have never been more energized. This is a terrible time, but the world has never needed us more, and we will rise to that occasion.
The Trust Center has been working on this for some time, and now we have to walk the talk. We need to lead by demonstrating how to turn anxiety into positive action. Turn a negative into a positive.
There’s a saying that I took from a basketball coach along the way that I brought with me to the business world that has never been more relevant than it is right now. He would say, “The darker the night, the brighter the stars shine.”
We feel we can help produce more stars and this is what energizes us to do what we do every day, now with the greatest urgency, energy, and pride. Our time is now.