Entrepreneurship Lessons from ESMT’s Silicon Valley Field Seminar

ESMT student Tauseef Afzal discusses what he learned about from a field trip to one of the world’s foremost hives of entrepreneurial activity.

The whole year of the MBA at ESMT Berlin (European School of Management and Technology) is full of learning opportunities. These include lectures by qualified international faculty, case discussions, simulations and visits by industry experts.

For me, however, the most exciting experience so far has been our 12 day field seminar in Silicon Valley at the end of last month. On this trip, My ESMT Berlin MBA classmates and I visited more than 15 companies in different industries including IT, consulting, law, private equity, venture capital, renewable energy, insurance as well as a couple of universities (Stanford University and San Francisco State University).

There are many entrepreneurship lessons to be learned from Silicon Valley – the innovation capital of the world and home of several top US IT firms (HP, Intel, Cisco Systems, Juniper Networks).

Our research plan for this field trip included:

1. A study of Silicon Valley’s entrepreneurial ecosystem to figure out what key factors make Silicon Valley a major innovation hub.
2. Looking at sustainability initiatives in Silicon Valley.
3. Learning about the challenges companies face while scaling up their operations during the growth phase.

Our close interaction with professionals working in different companies and the interactive discussions on the above topics as well as the current issues facing their organizations helped us figure out the answers to our research questions. Here are the entrepreneurship lessons my ESMT classmates and I learned during our trip.

1. For innovation and entrepreneurism to flourish, the entire entrepreneurial ecosystem matters. This includes a culture which encourages entrepreneurship and which accepts failure, the availability of talent (from Stanford and other universities in the area, for example), the presence of necessary third parties like venture capitalists and law firms, and the availability of a large market consisting of early adaptors.

2. For any company, a long term view of its industry is important, but the increasing pace of disruptive innovation in recent times has made it very important for companies to keep a close eye on their environment as well as the companies operating in neighboring /related industries. Any disruptive innovation by these companies can change the whole industry landscape; as we’ve seen in the case of companies like Kodak or more recently Nokia, which  failed to adequately analyze their environment, competitors and the changing consumer taste and thus were left ailing behind by their more innovative counterparts.

3. In today’s global world where companies from different countries can operate freely in several markets, the threat of competition is high; for a company to prosper or survive, it should face the reality and then adapt its focus accordingly. Sometimes a company might find disconnect between its opportunities, resources and strategy – opportunity overload, for example; in this case it might have to choose its options and might even need to forgo some less viable opportunities.

4. Some companies might be successful in exploring and specializing in new niche markets in established industries and adapting their business models to these niche markets. We learned this from our visits to companies exploiting new niches in the renewable energy industry.

5. For any start-up, incremental innovation or slightly better products are not sufficient. It has to surpass the incumbent’s offerings by a much larger margin, the time to market needs to be quicker, there needs to be some specific killer feature and focus.

6. Some companies might need to acquire other companies to fill the internal innovation gap, as a search giant acquired a small social media advertising company to fill some of its shortcomings in the social media domain, and some companies might need to make use of a particular innovation environment; an example of this European companies are opening innovation offices in Silicon Valley.

7. Entrepreneurship is not a piece of cake; it takes much more perseverance, responsibility, planning, hard work, intuition and considerable investment of time than working as a manager at an already running business. Finding the right opportunities at the right moments is very important.

8. Formulating a sound business plan is important. It should tell the whole story: the idea, the solution (key success factors), team, addressable market (total cost of adoption for customers), industry dynamics (competitors, suppliers and barriers to entry), expected revenues, related costs, financing options…and an exit strategy if things don’t go as planned.

9. In terms of sustainability, companies in the Silicon Valley have started some initiatives but there is much more to accomplish in this domain in order to take care of not just profits but also people and planet: the complete triple bottom line.

10. Though growth is very important for companies, sometimes rapid growth brings some problems like dilution of culture, loss of focus, integration issues (especially in case of inorganic growth such as acquisitions). Companies need to take these issues into account.

11. For Europe to become as innovative as the Silicon Valley, the entire ecosystem needs to be enhanced by support from governments, successful enterprises, universities, business schools and the community in general. Moreover globalization and rapid advances in IT related industries has enhanced the importance of regular innovation for all companies and industries.

About Tauseef Afzal

Tauseef Afzal has 8+ years experience working with multinational companies in technical sales, marketing, business development and strategy consulting in the Telecom and IT industry. He did his MS in Communications Engineering at TU Munich, Germany and is pursuing his full-time MBA at ESMT (European School of Management and Technology) Berlin on a Kofi Annan Business Foundation scholarship.