Fall 2017: Game Changers

Who says there’s nothing new under the sun? Franklin. Tesla. Edison. Ford. Turing. Zuckerberg. The names are ubiquitous, thanks to their innovative and industrious inventions. These men pursued out-of-the-box ideas to better understand the world and, ultimately, improve it. That’s the entrepreneurial spirit.

The entrepreneurial spirit is alive and well at Baylor Business. The Department of Entrepreneurship & Corporate Innovation at the Hankamer School of Business celebrated its 40th anniversary this year. As one of the pioneers in entrepreneurship education, we continue to be on the cutting-edge of the field—as shown in the 2017 Princeton Review and Entrepreneurship magazine ranking of the undergraduate Entrepreneurship Program as No. 5 in the country.

In this issue of the Baylor Business Review, we explore the concept of “disruptive innovation,” how sustainability can drive innovation and some of the accomplishments of our faculty, staff, students, alumni and friends. From the current student who started a peanut butter business in high school to the alumna who founded a jewelry company to aid refugees, Baylor Business graduates share their creative thinking and, while doing so, give back to the world with purpose.

Don’t forget to join us for our annual Homecoming Reception at the Paul L. Foster Campus for Business and Innovation. See the full invitation by clicking here. I look forward to seeing you there!

Terry S. Maness
Dean, Hankamer School of Business

Baylor Business Review, Fall 2017

By Eric Krell

Uber swiftly transformed the taxi industry while magically transforming itself into a verb that business leaders now deploy with mounting urgency: Who can Uber us? How can we Uber our competitor? We need to disrupt—or be disrupted. Despite its recent turmoil, Uber seems like a prime symbol of disruptive innovation.

But impressions can be misleading. So says the professor who wrote the book on disruptive innovation, Harvard Business School’s Clayton Christensen: “Uber’s financial and strategic achievements do not qualify the company as genuinely disruptive—although the company is almost always described that way,” Christensen and two co-authors write in a Harvard Business Review article that appeared roughly two decades after he introduced the business world to his formal theory of disruptive innovation late in the 20th Century. On the other hand, Netflix’s move from mailing rental DVDs to streaming video via the Internet marks an innovation that disrupted the video rental market (and crushed Blockbuster in the process). Similarly, Apple’s facilitation of an application-developers network helped the company disrupt the laptop market by making smartphones the preferred tool for consumers’ online activities. Today, companies like Airbnb, Amazon and Google appear poised to disrupt a number of markets through their innovations.

Christensen felt compelled to clarify his theory, in part, because the phrase has become ubiquitous and frequently misused. A telling chart in the article tracks the number of mentions of “disruptive innovation” and “disruptive technology” in business articles since 1995; in 2010, months after Uber launched, those mentions spiked and have continued soaring.

While learning, or boning up on, Christensen’s theory, business students, professionals and leaders should take time to as ask other fundamental questions about the nature of business innovations and the disruptions they generate. Earlier this year, Uber chief executive officer Travis Kalanick was resigned as chief executive in response to investor pressure and amid the company’s conflicts with regulators, competitors and its own drivers. The global company’s internal struggles focused more attention on the responsibilities game-changing companies have to a broader set of stakeholders—beyond their shareholders and satisfied customers.

Current and future innovators should consider addressing the following questions early in the creative process:

Why are we innovating?
Greg Leman, director of the LAUNCH Innovative Business Accelerator at the Baylor Research and Innovation Collaborative (BRIC) and a former engineer and entrepreneur, is an inventor who holds a number of patents. He says business innovation represents a better way to do something. He also notes that there are inevitably winners and losers following game-changing innovations. That said, those who introduce game-changing innovations can do so in a way that minimizes the number of losers and maximizes the number of winners. “To me,” Leman adds, “the best form of innovation benefits the greatest number of stakeholders possible.”

To achieve the type of “meaningful innovation” Leman describes, hopeful inventors should understand and articulate the purpose of their work early on in the creative process. When working with inventors and entrepreneurs, Leman makes a point of asking them how their innovation matters. “I’m not asking how it might change purchasing behavior,” he explains. “I want to know how the potential innovation makes the world a better place from a practical and/or spiritual perspective.” Addressing this question early on yields a number of potential benefits and can help lead to what Leman describes as “meaningful innovation.”

What game are we changing?
The disruptive nature of recent innovations is evident in the growing number of “most innovative companies” lists that business publications, including Fast Company, produce these days. The differences between the publication’s inaugural 2008 “Most Innovative Companies” list and the 2017 list are striking. Only six companies appear on both lists: Amazon, Google, Apple, Facebook, Alibaba and IBM. While only one company based in China made the 2008 list, roughly 25 percent of this year’s “Most Innovative” companies are based in China. In 2008, 12 of the organizations provided or manufactured technology products and/or services. This year, only five of the “Most Innovative Companies” are not technology companies. Previous innovators such as Procter & Gamble, Target, Tesco and Timberland have given way to Huawei, Snap, Spotify and Slack.

These types of lists reflect the increasingly technological and data-driven nature of business, but they also reflect a bias toward associating business innovations more with technology advancements and less with people and process breakthroughs.

This bias becomes more apparent when looking at innovations through history (e.g. electricity, penicillin and the steam engine). This is not to say that historic innovations are not being developed today; they most certainly are. If artificial intelligence (AI) really will be as momentous as electricity, as Stanford University Adjunct Professor and former Baidu scientist Andrew Ng told The Wall Street Journal, it will give rise to a host of similarly meaningful breakthroughs—in the same way that electricity enabled air conditioning, television, radio, the telephone, the Internet and semiconductor electronics, as Atlantic National Correspondent James Fallows noted in his rundown of “The 50 Greatest Breakthroughs since the Wheel.”

Just as tinkerers and entrepreneurs should be clear on why they’re investing, they should be clear on the ways their innovation does, and does not, change markets, industries and lives.

What are we missing?
Ola’s sharp criticism of Uber shows that innovative companies compete on dimensions beyond technology, such as customer experience, reputation and behavior. But new research being conducted at Baylor University’s Hankamer School of Business by Associate Dean of Graduate Programs Gary Carini and Associate Professor of Management Patricia Norman suggests that strategic decision-makers may be neglecting key, non-technological dimensions of innovation.

The purpose of Carini and Norman’s research is to identify trends related to the mood, emotion and tone of strategic discussions and thinking within organizations. The research involves the application of different content analysis software tools to large volumes of strategy-related articles, documents, analyst calls and other materials. These tools comb through hundreds of thousands of words to identify the most commonly used terms.

Carini and Norman recently applied their content analysis to every strategy-related article published in the Harvard Business Review (HBR) from 2014 through the first quarter of 2017. The most frequently mentioned term used in the 2016 HBR strategy articles was “innovation.” Carini reports that “risk,” “challenge,” “leadership” and “opportunity” also made the top 10. “Innovation” was used five times as often as “disruption,” which suggests that plenty of non-game-changing innovations are being considered at the executive decision-making table. There were also a number of notable absences. Carini points out that “ethics” was not mentioned in any of the 2016 articles.

While few readers of this publication likely would argue against the need for ethics to be addressed in strategic discussions, more business innovators should understand the case for integrating business ethics, questions of meaning and purpose, and broader stakeholder considerations into their planning activities. If AI, blockchain, robotics and/or other still-incubating innovations prove as disruptive to industries and life as their proponents claim, leaders will be scrambling to address a deeper set of questions.

Baylor Business Review, Fall 2017

Reinventing Innovation

By Becca Broaddus

In German, the word for “job” is “Beruf. It literally translates to “calling,” but if you ask Gordian Braun, people tend to forget about that part.

“A position shouldn’t be just a job, it should be a calling,” he said. “I like to reinvent myself constantly. I can do that with all topics around entrepreneurship and innovation.”

Braun, who is from Germany and works in Berlin, went down a traditional path after high school—pursuing a business law and business administration degree at the prestigious University of Mannheim in Germany. It is his biggest regret.

“I was so busy doing both parts of business administration and business law, I didn’t have any time to be creative,” Braun lamented. “Being creative is what differentiates between being normal and being innovative.”

After completing his degree, he made a decision he wouldn’t regret. Braun headed to the U.S. to study entrepreneurship. He received his master’s degree in entrepreneurship from the University of Florida and followed it up with an MBA at Baylor University.

“It’s a character thing,” Braun answered, when asked why he decided to pursue entrepreneurship. “You recognize it early on. You’re always the person who is different. I was always the guy who tried to understand both sides. I was the one doing things differently than everyone else. That’s one thing innovators have. They’re constantly seeing things differently and seeing how you can make things differently.”

He started his first company, a third-party vendor that connected wedding videographers with engaged couples, when he was still in high school. His next venture, during his undergraduate studies, was a record label. If you ask him, those were his “companies for learning,” since they taught him how to build and run a business. His most recent start-up, Locana, was founded during his time in Florida. The company was an online marketplace for local companies—sort of a regionally focused, Amazon-type website with access to goods from nearby mom-and-pop shops as well as national franchises.

Although he’s not currently self-employed, Braun maintains his entrepreneurial spirit at his new gig as head of growth and business acceleration at CleverShuttle. CleverShuttle is a German startup that aims to optimize and change transportation, so it’s more efficient and sustainable. They do so with an on-demand carpooling service, similar to Lyft or Uber, but with company-owned, electric vehicles. Prior to his time at CleverShuttle, he worked for another Berlin-based transportation company, MOIA, directly out of Baylor.

“I never wanted to leave America, but [when I got the offer from MOIA] it felt right to do something really crazy and go to Berlin,” he said. “I’ve never lived here before. I like the challenge to create something completely new that no one can imagine. We found a need, and our goal is to create something that solves problems. In that case, it’s very entrepreneurial.”

For now, Braun is happy where he is.

“If at some point another opportunity comes around the corner, we’ll see,” Braun said. “My overall goal is to be happy and to never look back and regret what I was doing. Since the Florida decision, Baylor and Locana, I don’t regret anything. I do not only not regret anything—the opposite. I loved pretty much everything I experienced and did. That very well reflects with my different life plan. All I want to do is be open for what’s coming and reinvent myself again.”

He has one definitive, tangible goal, though. He wants to move back to the U.S. with a Green Card.

“I love America,” he mused. “I felt more at home there than I ever did in Germany, and my biggest dream is to come back some day.”

Baylor Business Review, Fall 2017

By Becca Broaddus

Innovation isn’t always disruptive, and that’s OK. Entrepreneurs don’t have to turn an industry on its head to make a worthwhile impact.

“In the last 100 or 150 years, we’ve gotten used to rapid technological innovation, so now we’re disappointed if things just get a little bit better,” Peter Klein, professor of Entrepreneurship and senior fellow in the John F. Baugh Center for Entrepreneurship and Free Enterprise, said. “Most innovation is more incremental. It doesn’t radically change things.”

Whether their ideas change their family’s circumstances or the whole world, entrepreneurs take risks on behalf of their ideas. As a former business owner, Department of Entrepreneurship & Corporate Innovation Chair and Associate Professor Matt Wood sought to understand how entrepreneurs decide to take the intimidating plunge into self-employment. He asked, “A great business decision is appealing in hindsight, but what makes entrepreneurs trust an idea will work? How do they make those decisions?” Wood’s research examines how entrepreneurs use prior knowledge and experiences to develop personal decision-making rules. The process is called rule-based reasoning.

His article, “Rule-Based Reasoning for Understanding Opportunity Evaluation,” co-written with University of Tennessee, Knoxville Assistant Professor David Williams, introduces a model for entrepreneurs to understand their thought processes and guide their reasoning. The model, called the Rule-Based Reasoning Framework for Opportunity Evaluation, identifies three levels of rules: environment, opportunity and individual differences.

Environment

Environmental rules refer to occurrences at the industry level. Questions considered at this stage may include: Are there a multiple opportunities in the industry? Is there a short window of time to take advantage of them? What technology would be beneficial?

Opportunity

The opportunity level evaluates the idea itself—gauging whether the opportunity is a novelty, serves a niche customer base or creates positive value. This is the stage where entrepreneurs may ask themselves what the worst-case scenario is.

“A lot of people have kind of an engineer’s mentality to innovation, which is not always the most useful,” Klein said. “The mentality is that all that matters is the quality and features of the product from a technical point of view, but maybe all the customer really cares about is price, that it’s lightweight, durable… and so on. Customers don’t always want the best. Sometimes they want something that is good enough, given what they have to give up for it.”

Individual Differences

The individual difference level accounts for the individualization of decision-making. This is where personality and “gut instincts” kick in. For example, a person’s fear of failure or desire for control is apparent here.

“There is a certain element of innovative or entrepreneurial thinking that is in the gut,” Klein said. “It is not ultimately teachable. I think of it as analogous to music. You can learn how to play notes. You can learn technique. You can learn theory. You can do all that stuff, but it’s not going to make you Mozart. There’s some innate thing that we don’t scientifically understand. It’s just God-given.”

When entrepreneurs take into account environment, opportunity and individual differences, they mentally picture the results of the decision. If a concept goes through the three levels of rule-based reasoning, and it still seems like a good idea, the person will most likely act.

“As an entrepreneur, I’ve made these decisions,” Wood said. “There’s an assumption of high rationality, but that’s not how it works. There’s so much uncertainty. It’s much more difficult than that. I wanted the literature to reflect what I experienced, and this model helps do that… I’m able to bring this framework in the classroom. It’s a tangible way to familiarize [students] with successful ways of thinking and train them to think like entrepreneurs.”

Baylor Business Review, Fall 2017

It’s All About the ‘PB’: Passion + Business

By Becca Broaddus

Allie Buckmaster loves peanut butter. The junior Baylor Business Fellow loves it so much that she started a peanut butter business.

“I really do love peanut butter,” she laughed. “I would eat it every meal if I could. It’s such a versatile food product!”

The company began as an idea at an entrepreneurship summer camp for high school students. At the camp, the summer between her junior and senior year, her team proposed a gourmet peanut butter and jelly food truck called PB Palooza. The weeklong project wasn’t the end of the concept.

When she picked the topic of her required senior project the following year, Buckmaster revisited the PB Palooza idea. Instead of a food truck, she adapted the idea into a fully-fledged business—making and distributing homemade peanut butter.

“I’m so glad I went to that camp,” Buckmaster said. “It opened the door to so many opportunities and helped me explore entrepreneurship. My real passions lie in business and serving people.”

She earned an A on the project, graduated and brought the creamy goodness to Baylor. She has built a network of dedicated customers in Waco, consisting of friends, sorority sisters, faculty members and local business owners she met at a Baylor student-run business showcase.

PB Palooza isn’t her focus now, though. Last spring semester, she stepped away from it while she studied abroad in France, and she’s not sure what is next for her. With a marketing internship at Austin, Texas-based startup Curb, Inc., and a human resources internship at Lockheed Martin on her résumé, Buckmaster isn’t ready to commit to peanut butter just yet. (As a career, at least. She isn’t getting rid of peanut butter in her diet anytime soon.)

She is dedicated to a well-rounded business education now. Buckmaster has three major areas of study (Marketing, Entrepreneurship and Human Resources Management), and she decided to add a French minor after studying abroad.

“I’m not quitting PB Palooza,” she reiterated. “I’m keeping my options open. I’m open to seeing where life takes me. If I were to start another business, it’s because I have a passion, or I want to change something. It’s not just to be an entrepreneur. It has to be something I love. I have to be all in and believe it’s helping and serving people.”

Between studying abroad in France and her business, she has grown personally and professionally at Baylor.

“I have 100 percent confidence in myself now, and I’ve gained independence,” Buckmaster said. “I always underestimated myself. PB Palooza taught me that I could do anything I set out to do. If I’m all in, and I’m passionate, I can’t fail. Even if I don’t sell any jars of peanut butter, that’s not failing.”

She is intent to change the world—with or without peanut butter.

Baylor Business Review, Fall 2017

Leadership Perspective: ‘No Education or Job Experience Goes to Waste’

By Zoi Maroudas-Tziolas
Founder and Chief Executive Officer
Bambino’s Frozen Baby Food
Anchorage, Alaska

You may plan your profession, but life itself will always surprise you. I’m a Baylor graduate, and in 2013 I founded Bambino’s Baby Food, Alaska’s largest baby food company. I grew up in the food business. My family owns an Italian/Greek restaurant in Alaska, and they have deep roots in Mediterranean cuisine and natural farming. This is my foundation; it’s who I am today.

While studying business, biology and organic chemistry, I worked at Hillcrest Hospital in geriatrics and recovery. That’s where medicine, food and business first collided for me. My fascination with medicine and compassion for patients made me think I was destined to become a physician, but my experience in food production and customer service made me aware of something unique. Patients weren’t eating their meals. How could they gain strength without nutrition?

I asked my mentor if I could create a menu that satisfied nutritional needs and flavors, was easy to prepare and cost effective. One month after incorporating the diet, patients were enjoying their meals and recovering faster.

These experiences shaped the foundation of my now thriving business. My history in medicine also gave me the knowledge to expand my food research to allergies and obesity, prompting me to explore retail food choices and government food programs. My examination became incredibly refined and I knew I’d found a large market in need — baby food. My current mission is simple: provide families with fresh, clean, nutritious, traceable and convenient foods that build the foundation for a healthy, happy life.

Consequently, Bambino’s replaced the stereotype of unappetizing, tasteless, pureed baby food and is enjoyed by all generations. Made with Alaskan seafood, vegetables and grain grown in nutrient-rich soils, it’s shipped direct to our customers’ doors nationwide.

Food for Thought

• All businesses are different, but what makes your business a success is the same across all industries: Integrity, value, trust and commitment. Adhering to these values will be your greatest victory.
• As you grow a business or career, you will evolve. I knew Bambino’s met the nutritional needs for cancer, multiple sclerosis, gastric bypass, late-stage Alzheimer’s patients and even bodybuilders, but I had to wait and secure one market at time or I would be spreading the company and myself too thin.
• The people you encounter have expertise in various fields. Listen to them and absorb or you’ll miss opportunities. No education or job experience goes to waste, as the knowledge you collect will make a full circle one day.
• Know your business inside and out, even if you don’t like a specific piece of it. When I speak on national television and radio or for print media, I’m confident in my knowledge because I know how to make the food, do the taxes, ship orders and more. The list goes on forever as a business owner. That’s why you must be extremely passionate about your business. But the best part of being an entrepreneur is you get to pick which 15 hours you work each day.

Bambino’s participated in Baylor University’s LAUNCH Innovative Business Accelerator. LAUNCH offers start-ups and established companies access to the systems and resources necessary to achieve sustainable innovation and market growth.

Baylor Business Review, Fall 2017