Innovation and entrepreneurship: exploring the conditions needed for successby Stuart Pallister, EHL Hospitality Insights
Her ambition was to be an astronaut but she became a diplomat after holding senior executive roles at Microsoft and Expedia. So not exactly a linear career path but one providing a wealth of experience. At a recent panel discussion at Ecole hôteliere de Lausanne, U.S. Ambassador to Switzerland and Liechtenstein Suzan G. LeVine and her entrepreneur husband, Eric, shared their insights into innovation and entrepreneurship. Also taking part were EHL professors Margarita Cruz and Carlos Martin-Rios.
“In the United States, what characterizes innovation is a freedom to fail and learn from failure and a freedom to fund failure which in many cases is more important,” the ambassador said. “It’s the willingness to try and learn, instead of worrying about trying and failing.”
Ask most people about innovation and the U.S. and it is likely Silicon Valley will spring to mind. It is, for many, the quintessential innovative and entrepreneurial hub. For the ambassador, though, Silicon Valley is just one of a number of centers of innovation and entrepreneurship in the country.
“There’s a lot of innovation happening all over the U.S., with different flavors, but there’s a tendency for some folks to say, ‘why can’t we be more like Silicon Valley?’ … My answer to that is don’t be more like Silicon Valley, be more like Switzerland. Look at the key characteristics that are unique and special about this place, or wherever you’re from … Learn from what’s happening in the U.S. and learn from our amazing intellectual property protection laws, our very favorable bankruptcy efforts that we have in the U.S. to allow people that freedom to fail and recover from that failure.”
“Learn from the environments and ecosystems that have been built around tech-transfer from universities, so there’s a lot to learn from,” Ambassador LeVine said. “Here in Switzerland you have multilingualism that’s profound, the dual education system, where people come up with practical as well as academic skills together … And yet at the same time, I think the focus here on precision, quality and ‘stick-to-it-ness’ and the stigma associated with failure is in some cases an impediment to further innovation.”
And her advice to EHL and other educational institutes which are looking to foster innovation and entrepreneurship? “A radical idea would be get rid of grades ... Imagine instead if it’s just about competencies. Imagine if you’re able to accomplish this, you can move on to the next level, a bit like video games. What we’ve seen in the U.S. is there are some schools, especially high schools, that are trying this competency-based, rather than age-based progression, because why should you be able to move further if you are not fully competent at it?”
“Plus we’re in an environment now where innovation is also much more about collaboration. And when people look at these extreme levels of innovation happening it’s because they’re all at the coffee shop sharing their ideas, they’re riffing off one another ... It’s a much more collaborative environment that doesn’t foster a curve, doesn’t foster grades. It fosters certain levels of mastery but where it’s much more free, and that would be, I suspect, a fairly radical concept.
The ambassador’s husband, Eric LeVine, also led teams at Microsoft, where he and his colleagues initiated error reports to get feedback from users about software crashes so these could be rectified. He then went on to set up the wine portal, CellarTracker.
“I was at Microsoft for 13 years and then built something as a hobby and let friends use it and saw the potential for it to just do something interesting. I frankly wasn’t worried about what’s the business going to be. I gave myself, when I left Microsoft, two years to figure that out. Was it a hobby or was it a business? Should I go back to MS or go to Amazon, whatever? But I had an idea and I wanted to run with it.”
“So I was very focused on what business I was going to be in and not be in. That said, people kept coming and offering money and I had competitors, some of whom blew close to 10 million dollars doing very similar things … I felt if I took someone else’s money, the whole conversation would shift and turn into discussions about profitability and monetization … I could make much more money in the short term but I would crush this flower. I would ensure it was smaller over the long term ... So I’m all about, take a great idea, nurture it, get critical mass, and then don’t get ahead of yourself but figure it out, focus.”
“People worry too much about monetization so don’t constrain yourselves. Focus on critical mass. You don’t want to be haemorrhaging money but you want to build something that is focused.”
During the panel discussion, the couple stressed the need for diversity in companies. Eric LeVine said that study after study from McKinsey and others have found that more diverse organizations generate better results than less diverse ones. “If you think about it, the more you have people that come from diverse backgrounds, have different ideas that generate conflict. You push, ideas, you hammer away at them, and you get to a better result.”
“Now one of the funny things about this is, groups that are more diverse actually will generate statistically better results than groups that are less diverse but they also feel less good about it.”
The ambassador went on to cite the example of Jonathan Sposato, who has sold a couple of companies to Google. “He rocked the west coast last year when he announced that he, as a funder, would only fund those companies that have at least one woman co-founder.” It was, she said, a business decision, not just a statement about what society should be doing. “He’s a business person. He believes he’ll make more money because those companies will make better decisions and will have better results.”
During the session, the couple offered advice to students and alumni on their start-ups – among them, Extras Me, Beelong and Isara -- and stressed they should be including women from day one.
“When I started my career at Microsoft I was the only woman who was hired on to the MS DOS team. This was the Jurassic period of technology and I was the only woman with 10 men. During the first week I was there, they were naming a feature on the new product and these guys were about to name the feature something like Maxi Protection Technology … I meekly raised my hand and said gentlemen if you use this, [it would be] for something people use once a month. They fortunately listened to me and named it something super boring but at least not super embarrassing … So my piece of advice is to bring in another person as a co-founder who doesn’t look exactly like you all.”
L - R: Carlos Martin-Rios, Margarita Cruz, US Ambassador Susan D. LeVine, Eric A. LeVine, Stuart Pallister
During the questions and answers portion of the session, the couple spoke candidly of their life together. “Society writ large needs to do a better job of dealing with dual-profession couples and affording them the space and dignity to make whatever decisions they want”, Eric LeVine said. “So whether that’s mom out front and dad at home or both working, whether that’s them taking turns, ours is more like a double helix where it’s been very dynamic over the past 20 years we’ve been together and probably will be over the next 20-40 years.”
“The recession affected us very, very deeply and neither of us were working at Microsoft at the time,” Ambassador LeVine said. “[Eric] was working on Cellartracker and all of a sudden, we needed money. We needed benefits and it was clear at that moment that somebody had to be working in a more responsible job than a start-up. And so I ended up going back to work at Microsoft which was a great opportunity as it was a big company … When life throws you curveballs and you have to figure out how to hit them.”
“May my non-linear career be a lesson that everybody at this point can have a non-linear career. For me, my north star throughout has always been impact. I wake up every day thinking how do I make the world a better place? And that guides my decisions.”
“My message is dream big. Make sure you can do any and everything you choose to do. You may have to make some decisions along the way that are very difficult but you have the power, especially where you are in your lives, to do everything and anything you can. There’s never been a better time in the history of our world than there is today. You have every opportunity before you. Please take full advantage of that”.
EHL Assistant Professor Carlos Martin-Rios writes:
From an organizational viewpoint, we can think of innovation as either disruptive or incremental. Most businesses will follow an incremental approach to innovation. Maybe because of the fear of failure and because innovating is expensive, even if you’ve planned for success there’s no way of ensuring that you will get you some return. So most companies invest in a very incremental way.
Hospitality is an industry that is traditionally rather more incremental in the way it approaches innovation. Lately, mainly because we have newcomers to the industry – AirBnB and other disruptive companies – we are seeing more and more companies taking a more proactive approach to innovation. So we might see the hospitality industry -- hotels, restaurants, and many others – change more quickly in the next 5-10 years than they’ve done in the last 100 yrs.
Our students do appreciate this rapid pace of change and of innovation. It’s more about taking risks. So I think it’s a wonderful time to look at innovation, particularly in the hospitality industry and our school is pushing ahead in a very decisive way.
Margarita Cruz, EHL Assistant Professor of Entrepreneurship, adds:
I see a new type of entrepreneur here at EHL: young women and men who are very excited and confident about the industry. Most of my students already have either a business or a business idea that they want to implement.
We have a very entrepreneurial culture at the school and, given the infrastructure, there are many ways of supporting the ideas of the students and also the way they come to implement these.
When it comes to failure, I think they’re wary, but are less scared than my generation, even though there’s probably only an age gap of 15 years or so.
As for the need for diversity, research tells us that women have lower success rates than men when starting businesses and there are very many reasons for that, including the fact that venture capital doesn’t support women in the same way it does for men. There are biases towards men so this is a sad reality.
On the other hand, when we compare projects of the same quality between start-ups founded by men or by women we find that the biases are not so marked. So all those female entrepreneurs are going to have it a bit harder than the men out there, but then you have to guarantee that whatever you write in the business plan or how you pitch your idea, it has to be of really high quality.
The ambassador and her family will be leaving Switzerland on January 20th, 2017 – the day of the inauguration of President-elect Donald Trump – in order to return to Seattle. In a message on Facebook to her social media community, the ambassador said that the opportunity to serve as President Obama’s personal representative in Switzerland and Liechtenstein had been “rewarding, humbling, and truly awesome – beyond our wildest imaginations!”
Stuart Pallister is Associate Director of the Lausanne Hospitality Research Center and Editor-in-Chief of EHL Hospitality Insights.
The panel discussion on innovation and entrepreneurship was held at Ecole hôteliere de Lausanne (EHL) on October 26, 2016.
First published December 2016.