Chron of Philan Interviews Sonal Shah and Melody Barnes

Details are still slowly emerging about what Obama’s Office of Social Innovation is going to do. Here are a few more via The Chronicle of Philanthropy’s interview with Sonal Shah (Director of the office) and Melody Barnes (Dir of White House Domestic Policy Council). From the piece by Suzanne Perry:

Q: The office does not have the budget to award grants. How do you see your role? As a bully pulpit?

A: Ms. Barnes: We’re more than a bully pulpit. There are four staff people, several of them with significant experience in this area. We’ve got some good and experienced minds working on this. They’re also working with the staff in the cabinet agencies and the departments to leverage all of our resources as we’re reaching out and working with business and philanthropy.

Ms. Shah: We’re also a coordinating body, so we can bring different groups together from different agencies. We can bring someone from health care, someone from the social-innovation fund, and someone from education together to have a conversation about doing things similarly across the board and working across agencies.

As we see ideas that may not necessarily fit into one agency or another, we can also help direct and create partnerships that might not otherwise have existed. A lot of the foundations will come here and we’ll know about projects or programs taking place in different agencies and being able to link them up with the right groups that are working on it and figuring out ways that partnerships can happen.

Q: Will you have a formal structure—an advisory board, for example?

A: Ms. Barnes: We are investigating and thinking about that now and engaging with our senior colleagues here. But we already have had so many meetings and conversations with the philanthropic and business and NGO [nongovernmental organization] community that we’re getting great ideas.

Q: Are you planning any kind of formal unveiling of this office?

A: Ms. Shah: What we wanted to do, to be fair, is accomplish a few things and then talk about how the social-innovation fund is working. We didn’t just want to announce an office and not have anything backing it.
We’ve been working away; the national-service legislation is a big part of what we were working on, we’re working on a few things for the summer. As those pieces come together, you’ll see more discussion about it.

Q: What are your immediate priorities?

A: Ms. Shah: We’ll be focusing on the social-innovation fund, which we believe is critical for setting a precedent for other types of programs. We’ll be working closely with our colleagues in various agencies to see if there are ways to create parallel funds or at least to harmonize some of our discussions.

The Entrepreneurial Research University

Jonathan Ortmans, a Sr. Fellow at the Kauffman Foundation, has a nice posting discussing the Entrepreneurial University. ASU, GMU, and others are used as examples of large research universities choosing to be entrepreneurial.

Ortmans highlights a paper that came out a conference last summer called The Future of the Research University: An Institutional Innovation. Kauffman and the Max Planck Institute hosted the event.

From Ortmans’ post:

At this conference, a consensus seemed to emerge: universities can only effectively become incubators of entrepreneurship and innovation if they themselves practice entrepreneurship. For example, Arizona State University’s (ASU) Michael Crow turned this institution into a force for innovation by reconceptualizing a large public university as an academic enterprise. Today, ASU competes for research funds, bright students and faculty and it strives to be responsive to the changing needs of its local and global constituencies. It collaborates with other academic institutions, business and industry, much like a private enterprise.

This “reconceptualization” involved several non-traditional university arrangements. Transforming ASU involved abolishing academic departments, creating new ones, and even helping to found entirely new academic disciplines. This is not surprising. The idea of universities explicitly fostering entrepreneurship in business is quite radical. Traditionally, universities have preferred to partner with government and to shield themselves from private industry.

The paper is worth reading as it compares and contrasts US institutions to those around the world. As we know, higher education in the US has always been more decentralized and schizophrenic than other national systems of higher education. This is one reason for US higher ed’s vitality.

Angel Investments Down, $ Per Deal Up

From the Potomac Tech Wire

Angel investment groups on average invested 9% less last year than in 2007, according to a new survey by the Angel Capital Association (ACA). Despite a 4% increase in the average investment per deal ($276,918), the average number of investments per group fell 16%. Angel investors cited a decrease in individual member wealth, the overall decline of the economy and a lack of exit opportunities as the most prominent reasons for the decrease. “Heightened selectivity by angels and venture capitalists has clearly amplified the financing challenge young ventures are facing today, even at collapsed valuations,” said John Huston, chairman of the ACA. “However, highly capital efficient start-ups that can reach cash flow break even with just a few million dollars of investment are having no trouble attracting capital.”

Toilets, not Scale, the Key to Successful Retailing?

Paul Howell of the WSJ reviews George Whalin’s new book Retail Superstars. The book profiles 25 successful and creative retailers who have been able to thrive in an era dominated by corporate giants such as Starbucks and Best Buy. From the review:

Then there is Jungle Jim’s International Market in Fairfield, Ohio. The store’s 300,000 square feet of space allow it to carry everything from $8,000 bottles of wine to hogs’ heads. The doors to the restrooms are designed so that customers think they’re going into Porta Potties, only to find beautifully appointed restrooms inside.

Actually, restrooms are a bit of a theme in “Retail Superstars.” At Abt Electronics, in Glenview, Ill., “the Abt family’s obsession with customer care extends to everything with which a customer comes in contact. Often overlooked in retail and a persistent source of consumer ire are unkempt bathrooms.” The men’s and women’s rooms at Abt Electronics, “designed like those you might find in a five-star hotel,” include marble floors and counters and other amenities. In Scottsdale, Ariz., the restrooms in A Celebration of Golf are replicas of those at Augusta National, the Georgia home of the Masters golf tournament. Like Augusta’s caddies, the store’s salesmen wear white jumpsuits.

Georgetown BSchool Hires 13 Profs, Says No to Entrepreneurship

According to the Washington Business Journal, Georgetown’s McDonough School of Business has hired 13 new professors for the fall. None teach or research entrepreneurship — well entrepreneurship is mentioned once in the press release, but as an after thought in describing an instructor who does not have a PhD and spent a major part of their career in corporate finance at Lockheed Martin.

I have looked around McDonough’s site and see little regarding entrepreneurship. There appears to be a club and a few classes, but not concentrations, research centers, or entrepreneurship centers. They do host the Mid-Atlantic Business Plan, but the MIT Enterprise Forum actually runs the event.

I just attempted to call the Dean’s Office (George G. Daly) to find out more as Daly was quoted in the article and press release. His office pushed me off to associate Dean Chris Kormis. She was not available. I will hopefully hear back from her soon.

So, at this point, I am not sure why Georgetown didn’t hire any entrepreneurship profs in this hiring spurt. With entrepreneurship being the fastest growing field in business education this appears to go against the trends.

Uber Philanthropists Plotting Global Takeover?

Chronicle of Philanthropy is reporting that America’s top philanthropists held a secret meeting earlier this month to discuss global problems. According to their post:

In a quiet meeting closed to the news media and the public, Bill Gates, David Rockefeller Sr., Oprah Winfrey, and other leading philanthropists met in New York this month to discuss ways to promote efforts to solve growing social problems in America and abroad.

Together, the philanthropists in the room have committed a total of more than $72.5-billion to charitable causes since 1996, according to Chronicle of Philanthropy tallies.

The unusual event occurred May 5 at Rockefeller University and was organized by the Bill & Melinda Gates Foundation. Among the high-profile participants were Ted Turner, Warren E. Buffett, George Soros, and New York City Mayor Michael R. Bloomberg.

While I respect many of the folks mentioned and think they are some of our best social and commercial entrepreneurs. I find this meeting, however, a bit obnoxious and am interested to know what kind of actions these folks would recommend to ’save’ the world. They are all (or were) ‘disrupters’ who forced change on the establishment. Clearly they are now the establishment.

I also find this interesting given Zoltan Acs work looking at the importance of philanthropy to American dynamism.

Southwestern Oklahoma State Wins Biz Center Award

Some of the news out of this week’s National Small Business Week celebration. From an SBA email,

The Small Business Development Center Service Excellence and Innovation
Center Award honors an SBDC Service Center for its excellence in providing
value to small businesses and advancing program delivery and management
through innovation. The Southwestern Oklahoma State University SBDC
provides key resources and services to the state’s small business community,
and is part of the network of the Southeastern Oklahoma State University
SBDCs. The Southwestern SBDC has consistently exceeded its goal of capital
infusion. These funds, received from SBA loans, private bank loans, venture
capital, and individual direct investments to help local firms get started,
totaled more than $16 million last year alone. In addition, it assisted in the
start-up of 37 new businesses. The Center is known state-wide for its
reputation of dedication to the success of entrepreneurs, particularly the
underserved. It serves 15 rural counties of southwest Oklahoma and,
specializes in providing counseling and training, financial assistance, and
assistance to veterans.

VC Investors Don’t Care About BPlans

Writing a business plan is something virtually every entrepreneur and entrepreneurship student does. A new study out of U of Maryland, authored by my friend David Kirsch and co-authors Brent Goldfarb and Azi Gera). From the NYTimes article by Brent Bowers:

Researchers found that venture capitalists, who screen hundreds or thousands of solicitations each year, pay little or no heed to the content of business plans. Instead, the study said, because they make decisions “under conditions of high uncertainty,” venture capitalists rely on instinct and their expertise in ferreting out information by other means to evaluate the prospects of a business.

That means, the study said, that they pay little attention to the documentation from entrepreneurs about their academic credentials, work or start-up experience, previous success in raising equity capital, ability to form a top-notch management team or even how much money they want.

“In general, business plans don’t matter,” said Brent Goldfarb, an associate professor of management and entrepreneurship at the Robert H. Smith School of Business, who wrote the study with David A, Kirsch, also an associate professor at the school, and Azi Gera, a doctoral student. “Nobody is going to read them.”

That assertion flies in the face of the conventional wisdom that writing a business plan is one of the first and most essential tasks an entrepreneur should undertake, Mr. Goldfarb acknowledged. But, he says, the report’s conclusions jibe with the feedback he gets from venture capitalists.

What Happened @ Wharton’s BPlan Competition

There are some smart people at Wharton (and within the broader UPenn neighborhood) so its worth reading about their business plan competition. From Knowledge@Wharton:

Competing for more than $70,000 in cash and prizes, the eight teams that reached the BPC finals presented their plans on April 29 to a panel of judges and an audience of nearly 300 venture capitalists, business leaders, faculty and students. The competition is open to any University of Pennsylvania student and is managed by Wharton Entrepreneurial Programs.

Despite the challenges of starting a business during a down economy, interest in the BPC was higher this year than in the past two years. More than 160 teams entered the contest compared to 145 last year and 151 the year before. BPC 2009 launched last fall with the submission of students’ business concepts. The teams then competed throughout the year for a spot as one of the eight finalists.

The range of industries/firms is pretty fascinating: from open source toy robot teddy bears to online bill splitting services (think roommates paying rent/cable/etc.)… Good stuff. Good on you Wharton.

Entrepreneur v MBA Debate Continues

I recently completed the first draft of a policy analysis brief investigating the state of entrepreneurship education in higher ed — especially at the grad school level.

It turns out most of the endowments, classes, centers, etc. are located within MBA programs. However, many studies (Moutray, Bhide) show that most entrepreneurs/self-employed are not MBA holders.

I came across a MaRS Blog (out of the University of Toronto) post that delves further into this argument. Keri Damen offers some insights by highlighting some research contrasting MBA thinking and entrepreneurial thinking. From Damen:

It’s not a surprising distinction given the old adage that entrepreneurs are born, not made, and the fact that everyone seems to be doing an MBA these days. However Bill Taylor’s blog takes it a step further and argues that the differences between the two are becoming more important and that it’s time to change our minds about what kinds of people are best-equipped to become the business leaders of the future.

Taylor cites Professor Saras Sarasvathy’s interesting research about entrepreneurial thinking in which she’s discovered that MBAs use “effectual” reasoning while entrepreneurs use “causal” reasoning. According to Professor Sarasvathy, the causal reasoning of entrepreneurs “begins with a pre-determined goal and a given set of means and seeks to identify the optimal -fastest, cheapest, most efficient, etc.- alternative to achieve that goal.” An MBA’s effectual reasoning “does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with.”

Gonna go check out Sarasvathy’s research. Any thoughts?