Innovation Economy

I attended a talk by Eli Groner, Israel’s Minister for Economic Affairs. He was at UCLA campus to talk about Israel’s innovation economy and innovation in general. Did you know that Israel with its small population of 7 million people has more successful start-up companies than Japan, China, India, and UK? More than 63 Israel companies are listed on the NASDAQ, more than those of any other foreign country. Eli attributed this astounding success to an Israeli mindset, a mindset of innovation that permeates across all sorts of industries and all sorts of functions, across all levels of hierarchy within organization. 

One example he gave to illustrate this innovation mindset was the mindset of an Israeli young man who went on to a found Netafim, the world leader in drip irrigation. I did not exactly understand the mechanism of this story but the point was that he was told to do something specific (plug the holes where there’s leakage) by his boss, and rather than blindly following the order, did something exactly the opposite(poke more holes in the land).  It was open-mindedness on his part, having thoughtful approach, and having information his boss didn’t have and feeling comfortable enough to defy his boss’s order that brought the innovation.  

Eli went on to say that real secret to innovation is cultivating a culture in which people are not scared to fail, not scared to think independently and think on your own. This line of thinking is something you might have heard before, but it’s good to be reminded and good to hear in the context of another country. As I write this, I worry people feeling jaded and cynical about having heard this sort of argument before because I also felt a little of that…but I think there is SOMETHING to be said about the record, Israel’s track record of having that many successful innovative start-ups. It’s hard to brush aside Israeli minister’s comment just because it’s a message we heard before of “don’t be afraid to fail.” 

Defying authority might be a very hard thing to do in non-western culture . But maybe there’s another way around it in non-western culture. Instead of openly defying authority in the company…you could go to your boss privately and convince him or her why you think you should go with his way, and not the boss’s. Boss and the company has role in this too….making people feel not AFRAID to fail, not afraid of repercussions, and not AFRAID to challenge them….making environment and making precedents so that people can come to you feeling comfortable to suggest something completely opposite to boss’s opinion. 

Anyhow back to this guy Eli. He reiterated that innovation is a mindset, an approach, how we think about things. Too often we do things because we are told or because it’s a way that has been done always. Biblical phrase he introduced in context was “we have eyes but we don’t see.” I think what he was trying to say through that biblical passage is…with our eyes, try to see beyond what we are told, beyond what’s in front of us, and be open to change and other possibilities. 

Somewhat abstract level of talk about innovation but nonetheless it was interesting to listen to. 

Gregory Craig, Inupiat Energy

Greg Craig, CEO of Inupiat Energy company, was a very interesting guy. Full of energy. Very much an extrovert. Straightforward. Did not mince words at all when it came to opinions about certain political figures. Went to high school with Sarah Palin. He also served on President’s export council during the Clinton administration and he said the following about Bill Clinton, which I found fascinating: “One of the smartest guys I have ever met. Best listener. Totally engaged in every conversation.” What does this tell me about being a good leader? Ability to listen…really listen…and being truly engaged in conversations and making others feel listened to and engaged is…an ability that is a must-have for all leaders. Greg could not find a job he wanted out of UCLA Anderson because of ’88 crash but he started his own company and has done really well for himself since then. He became an entrepreneur since  and he gave us leadership points during his talk, especially from entrepreneurs perspective, and here they are.

A) Think BIG. Start BIG.

B) Put all your eggs in one basket, when you don’t have much. (Can’t do this when you have a lot. When you are a big company or have a lot to lose, diversify)

C) Oversimplify everything. (Every good entrepreneurs do this.)

D) Listen to everyone for data. But do your thing.

E) Take ACTION whenever you can. ACT Decisively.

F) Have an edge in business.

G) Do one thing really well at really low cost.

H) Every great leader: great listener.

I) Know who you are and be that and surround you with others who complement you.

J) Have fun. Try as hard as you can.

K) Treat everybody well.

L) Leader is a merchant of hope. (for all employees and for customers)

M) Arrogance kills everything. Arrogance is terrible. Just terrible.

N) If you succeed too much, someone will get pissed off. (referring to Enron’s hostile take-over attempt at his company.)

      

One common advice that I found from both Jim Morris and Greg Craig is that when you are a leader, you should surround yourself with people who have complementary skills to your skills. Greg said that his early company was successful because he found a business partner who complemented him. Greg’s partner was a Swedish man who was very conservative whereas he was not and this combination really kept them out of extremes and made them successful. Ability to find such people who complement you begins with self-awareness, knowing your strengths and weaknesses and finding ways or people to deal with weaknesses.

Jim Morris, Pacific Life

One of the perks of attending business school is chances to meet and listen to business leaders in person and the very first business leader I met in business school was Jim Morris, a 

current Chairman and CEO of Pacific Life, an US insurance company.

Jim Morris, Pacific Life

He was soft-spoken and calm throughout the presentation and there was a reassuring presence about him; his qualities seemed to reflect the industry he was working in and he seemed the right type of leader for insurance industry, which tends to be conservative. He first explained his company and landscape of insurance industry and how he got to his current position. It was interesting to listen to how he never thought of or sought higher positions in his company but several key promotions came his way as he became successful in each of his positions. Then he shared his business philosophies and leadership philosophies.

*Business philosophies

When he was sharing his business philosophies, I felt that he really valued having competitive advantage and sustaining that edge because I heard him mentioning competitive advantage and sustainability a lot.  Do you know what Warren Buffet’s favorite question is when Buffet considers investing in some company? It’s “what happens to your business if you have to increase your price 10%?” Jim explained that, when Buffet sees business owner stammering to answer the question, it’s a business that doesn't have much of a sustainable (competitive) advantage. How can companies achieve that competitive advantage? Competitive advantage can come from any of the following differentiating factors: 1. Price leadership; 2. Product Innovation; 3. Customer Intimacy(Service). He gave Apple as a company that has competitive advantage through Product Innovation and Nordstrom as a company that has competitive advantage through Customer Intimacy. He explained that his company can’t really achieve price leadership because a lot of insurance pricing comes from yields/interest/Wall Street and can’t look to Product Innovation because insurance products can’t be patented and has a very short lead time before other companies come out with similar products. So he focuses on Customer Intimacy or Service as source of his company’s competitive advantage. I thought it was an interesting framework to define how businesses seek to find competitive advantage in the market. Jim also talked about his approach in looking at the business opportunities and called it “flow” and how he has ideas and liking for certain business opportunities but waits for perfect opportunity and time to capitalize on that opportunity to the maximum. So it’s always good to have a range of ideas that are to your liking and look for that “flow” or opportunities to form perfectly and take advantage of such opportunities to the maximum.

*Leadership philosophies

A) Balancing work between Wheelhouse, Stretch, and Totally Uncomfortable.

Jim explained how his day-to-day tasks fall into one of these 3 categories. He said that doing totally uncomfortable  tasks are engaging and can be fun when you learn something new from it. As professionals, I think we all have our own wheelhouse skills and we should definitely keep those skills sharp. But I think doing something stretchy or challenging ourselves to do totally uncomfortable tasks at times are absolutely necessary because doing so will make us grow. Some of things I am experiencing and learning at business school now are stretch tasks and some are totally uncomfortable tasks but going through these and learning from them will make me grow, stronger and wiser.

B) Surround yourself with people with complementary skills to yours.

Jim said he is a big believer in surrounding himself with people that are very complementary to his skills. He is a big believer in knowing one’s strengths/weaknesses and surrounding oneself with people with complementary skills.

C) You can’t over-communicate as a leader

Sometimes we hope problems at work will somehow work themselves out and hope problems will go away. But hope is never a good strategy. Jim talked about Pacific Life’s relationship with one of the old clients and how that relationship almost ended. Jim said that any long term relationships that have been successful, at some point, needs re-investment. At some point, you have to re-invest in it like a new relationship. Jim joked at this point about how his wife of over 30 years said “that’s pretty good advice for marriage too” when Jim previewed his speech to his wife before coming.

Towards the end, during the Q&A session, one classmate asked Jim how he was able to stay at the same company over 30 years and here’s how he responded. He said that he had the respect for the people he worked for and felt values are the same. If values were different and if he had felt his leaders were not looking after him, he said he might have left.  Something every company interested in keeping top talent should think about.

Sheryl Sandberg, Facebook

Sheryl Sandberg is someone in the business world whom I have come to really like over the years. I read a great profile of hers from the New Yorker and I wanted to write down few thoughts that came to me as I read it. Here goes. Check out the article if you have time. It's pretty good read. 
http://www.newyorker.com/reporting/2011/07/11/110711fa_fact_auletta

Unlike most students
You would agree with me when I say Sheryl Sandberg must have been unlike most students. There must be something different in how she got things done and how she gets things done now.
In the article, Lawrence Summers tells a story of how Sandberg typically works. At the World Bank, in 1991, when Sandberg was working as a research assistant , Summers gave her a task of researching on  bailout of Russia. "What most students would have done," Summers says, "is gone off to the library, skimmed some books on Russian history, and said they were't sure it was possible. What Sandberg did was call Richard Pipes," who was a leading  historian of the Russian Revolution and a professor at Harvard. "She engaged him for one hour and took detailed notes." The next day, she reported back to Summers.
I was particularly struck by this section and a sentence following "What most students would have done" because I wondered what I would have done under similar situation. Would I have been like most students? Maybe. Maybe not. What's so impressive with what Sandberg had done is that she knew who to go to and went right to the expert and engaged him for hour and took detailed notes, saving herself a ton of time. 
I reflected on my seven years in tech industry where I was more like most students and less like Sandberg. At times, I tried to figure out the answer on my own, when the right approach was to go and talk to the manager who was in charge or knew history of that particular issue. The key is to know who to talk, find out who to talk to, how to develop relationships with such right person, and how to engage that person. Doing so will get the job done right and with speed. 

Ambition and Humility
As I was reading the article, I realized why I came to like Sandberg over the years. It's because she is the kind of person I would like to be: ambitious and yet humble. In the article, Ken says that Sandberg neither flaunts nor hides her ambition. Mark Zuckberg says "she really wants to get her hands dirty and work, and doesn't need to be the front person all the time." Howard Shultz of Starbucks says of her, "Most people you meet who are highly qualified and accomplished tend to want to tell you all the things they've done and how smart they are. Or they want to impress you. Sheryl is not like that at all." 
Smart. Ambitious. Humble. Sheryl Sandberg.

Connecting the dots or not
Didn't Steve Jobs say you can't connect the dots looking forward and you can only connect the dots looking backward? Well, Sandberg must have been a fan of Jobs because, in the article, asked what she can imagine doing next, she responded, "I always tell people if you try to connect the dots of your career, if you mess it up you're going to wind up on a very limited path. If I decided what I was going to do in college -- when there was no Internet, no Google, no Facebook.....I don't want to make that mistake. The reason I don't have a plan is because if I have a plan I'm limited to today's options. 
I think everyone has a plan or thought about a plan to get ahead in his or her career. I, for one, have thought about a plan. Working hard. Getting noticed. Getting an MBA. Rising up the corporate ladder. Does this help me to achieve or limit me to one path and close other paths or options out there?

Indra Nooyi, PepsiCo

I am fascinated by people and what happens in the business world. As someone who is a student of business, who deals with people and works in the business world, I believe I can improve myself by blogging about people, business world, and people in business. Please follow along my journey if you share my interests. 

My first post is about Indra Nooyi. She visited UCLA Anderson, as part of Dean's Distinguished Speaker Series, to give a talk to MBA students.

Indra Nooyi @ UCLA Anderson, November, 2012

I had no idea who Indra Nooyi was before but I came away from this event very impressed and inspired, by her insights and her remarkable story. She is the Chairman and CEO of PepsiCo, the second largest food and beverage business in the world. What’s even more remarkable to me, personally, is that she was born and raised in India and yet she climbed all the way up the ladder of one of the biggest American companies, as a foreign-born citizen. I think that’s really remarkable. In this event, she took a wide range of questions, everything from impacts of social media to competition with Coca-cola, and she answered them with a level of thoughtfulness and understanding that befits her title. When asked about competition with Coca-cola, she jokingly said, “which company (are you talking about?)”, and drew huge claps and biggest laugh of the day, displaying a sense of humor and a certain confidence and pride about PepsiCo in a very likable way. 

Let me share her story and her insights on few topics, which I think you might find interesting or useful. 

Her mom and Prime Minister/President of India

She shared her story of how her mother would ask her and her sister on the dinner table what they would do on certain issues if they were Prime Minister or President of India. Then she and her sister would give speeches and her mother would vote on who had the best answer. (For those parents out there who have kids, this might be an exercise for you to consider adopting.) Her mom gave her the sense that she could be whatever she wanted to be. She told another story of how her mother gave her a piece of paper, told her to sign her name and write President. Why? Because her mother said to her that, “because one day you can be the President.” Well, she didn’t quite become the President of India, but I think it’s safe to say she has done OKAY for herself. 

Advices to MBAs and aspiring General Managers

During Q&A session, a student asked for advices for MBAs in general and what things to strive for and what mistakes to avoid as an aspiring general manager. To this question, she basically said we have to work hard and there’s no short-cut or substitute for hard work. I found this answer very direct and truthful. She said that when she was our age, she worked her tail off. When she was given a job, perfection was only thing she could accept and she worked all the time and 24 hours was not enough. Also in today’s worlds, everything is more volatile and it’s more difficult to operate in today’s worlds. She told us that we have to get even more of a wide perspective on issues, not just sound bites from social media but go in deep and learn issues, really engaging with issues. I could feel instantly what she was trying to say, how our generation tends to glance things over and have a superficial knowledge about things, not real understanding or knowledge about the issues. “There’s simply no substitute for deep engagement and hard work. You are going to have to put in the hours.”  "Don’t think that the world of the future will mean less hard work." Second piece of advice she gave was to invest in communication skills, very early in life. She said that, as a leader, we have to motivate people, medium-sized and large-sized groups, and write in a way that is simple and to the point and how you communicate will be critically important. If we don’t learn it early in life, we will never learn later in life. The third and last piece of advice was, “when you go to work, don’t go to a job aspiring for the next job. Don’t run for office. If you do the job you are doing very well, next job will come to you.” This last piece of advice aligned with what I heard from Jim Morris, CEO of Pacific Life, who said that he never really looked past his post and then…..promotions kept coming his way at certain points in his career, eventually leading him to his CEO position.

First woman to receive
the Wooden Award

Legendary UCLA Basketball Coach John Wooden

She were to receive a Wooden award later that evening and she shared her perspective on Wooden and his legendary leadership style. The thing she learned by reading and learning about Wooden is the question of how to live a better life. How do you live a life where you believe in yourself and how do you live a life where you believe in others? Coach Wooden often talked about virtues of virtuous cycle versus vicious cycle. Positivity breeds positivity. Believe in people and bring out the best out of them and they become better. I think this is a good lesson for leaders. In contrast, some bad leaders rule by negativity and take out the sticks only. But Coach Wooden emphasized using carrot and sticks, and he emphasized the importance of a team and he emphasized the belief in others as well. I found this Coach Wooden quote I think you might want to read. It's definitely a quote to reflect on.: 

"Leadership is all about helping others to achieve their own greatness by helping the organization to succeed" 

- John Wooden. 

Short-term VS Long-term

She lamented how a notion of short-term has changed from once much longer period down to 3 years, 1 year, and now all the way down to one quarter of 1 year. Realities of stock market where market value of company is set by short-term marginal traders and projections of some analysts might  force CEOs to manage the company only for the short term and doing so would be a disaster for that company. That’s because when you manage for the short term, you are running and pressing the company too hard and at some point, that catches up with you and company crashes and someone has to come back again run it very hard again . She likened it to running a NASCAR race. When you feel like it’s a race, you could make some short-sighted move and crash or run it so hard that the car only run about 20 laps and have to stop and refuel. Or you could run at a steady pace and get more laps out of the car.  She said, “We are not in a race. We are in a long-term, sustainable enterprise building business.” She mentioned that companies cannot run on a quarter…companies have to think about duration AND level, not just level…and CEOs and board of directors have to get more courageous in managing for the long-term as opposed to managing for the short-term brought on by pressures from the outside.

Attracting the best people

Her response on this was something I have never heard before and I think it is interesting. Dean Olian came in and mentioned that Indra ties 50% of her bonus to talent sustainability. I am not sure how that gets measured but nonetheless, I could see that she takes talent recruiting and sustainability very seriously. Her approach in attracting the best people is that she tells people to “bring your whole self to work.” People are husbands, wives, daughters, mothers, artists, and citizens. PepsiCo employees don’t have to park all that they are at the door when they come to work. She wants her employees to come to PepsiCo saying I am all of these things at home and a citizen in a community and a country. This way, employees bring all of their sensibilities to PepsiCo. Then she can tap into all of their capabilities and sensibilities when they bring their whole-selves to work and she can create a better company this way and she makes sure to create an environment in a company that makes employees feel wonderful coming to work at PepsiCo. 

What a woman. What a success story. Incredible insights about how to work, how to be a leader, how to run a company. What do you think?