Outline for a Crazy Business idea

Introduction

I was thinking yesterday of getting a job. Realizing that this is almost impossible (unless you know Swedish), I thought about becoming self employed. I came up with this idea that may be far fetched, but may also work. It encompasses innovation, creativity and business creation.


Idea:

Initial investment: 9160 Euros that may be amortized in approximately 2 years
Monthly gross income: Approximately 2600 Euros (if business is constant)

Start a business that focuses on improving the student’s academic performance. The idea would be to provide focused database of teaching materials designed for both undergraduate and graduate students. The database will be classified depending on the majors thought at the university. The model is focused for now only on JIBS, but it may be expanded for the rest of the Schools. For simplicity, we will call our business from now on Business X and the administrator Y.

Place:

Several rooms would be provided for students. The ideal location would be closest to the main campuses or student residence halls. The ideal room arrangement for this place would be three rooms interconnected on one side of the apartment, separated from the other half of the place by a corridor. The other side would be comprised of two rooms and a water closet.
The three rooms would be equipped with tables, chairs and sofas. The other side would be a recreational room, equipped with a coffee machine and some game consoles. The corridor would have hangers and will serve as a welcoming space for new comers.

The corridor will have a multitude of shelters filled with teaching materials. An employed student will re responsible for handing over the papers to the “customers”. In order to keep track, students will be allowed to borrow only one piece of work at once. The returned works will be closely inspected for any sign of damages.

Database:

The paper database will be divided according to the major programs, classes and teachers.

They would include:
-past exams - they will be bought from the JSA Center and consist not only of present exams, but also past ones, examinations that Business X purchased along the years.
-summary of chapters- they will be related to the present but also past books that the university used and uses during classes.
-work assignments, essays and even printed blog writing of students- Business X would purchase these materials from students.
-Business X will not only have blank exams, but also solved ones that will allow students to compare their solutions with the correct ones. Some essays will also be graded with the same grade that the student who submitted it received from the teachers. Also they may include comments made by the professors on their writings. This will be done of course only with the permission of the submitter.

Membership fee

The business would ask for a membership fee that would be updated monthly or offer a pay per entrance alternative for irregular visitors.

Why not infringe copyrights?

Hopefully I am right in what I say, but if not, please leave a comment.

Past Exams:
I was amazed that JIBS provides past exams in exchange for money. I found this magical place in the JIBS’ JSA center. Business X would purchase a couple of copies from each possible exam. Also, Mr. Y will make regular visits to the JSA center and check for new releases. Business X intends to rent these papers to students at a lower price that it would cost the student to buy a copy. In fact, all the “customers” of Business X would be prohibited to copy any material that is handed over to them. There will be no Xerox machines at that place and students will not be allowed to leave with any of the “company’s” possessions. I figured that if the library buys the books and allows the students to read them without breaking any copyright laws, then the same may apply here. It would be unwise to allow this to happen also because the business would loose its competitive advantage.

Student made summaries, work assignments, etc.:
I looked through the internet and I could not find any rule that prohibit the distribution of summarized material from a book, compendium, etc. As long the references are made correctly, the paper could be considered an independent piece of work.
Students need to go through chapters in order to prepare for exams and many would write summaries of these chapters in order to make it easier for them to recapitulate during final exams and midterms. At least this is how I proceeded. After the completion of the class I would usually throw away all the summaries. In some occasions I would keep them, day-dreaming that I would use them again as references and guidelines in my future endeavors, but they eventually ended also in the garbage bin. Regarding the papers and essays - I would just store them in a file somewhere on my computer and forget about them.
Business X would purchase these materials (purchasing also the ownership rights) from the students who finished the class and would prefer some cash instead of a filled paper recycler in the garbage room.
If the student would surrender to Business X all his work for the class he/she just completed, consisting of 3 essays and a summary of the book, he/she would receive approximately 650 SEK.

Why will this work?

You would probably ask yourself who will be a member or pay for such a thing?
It happened to me at least once per year to remember a day before that I have an exam and that I did not studied for a long time at that class. I remember staying late those nights, drinking endless cups of coffees and going to the exam hoping that the essay question that counts the most would be from the first part of the semester, from the chapters that I managed to go through.
Business X can help students that find themselves in that unfortunate situation. It may provide the resume of the chapters faster than if that person would choose the alternative of reading! Plus it will offer just the pure facts, without obvious examples that sometimes can be found in books.
This is not, of course, the best way to study, since the student would probably forget those things after two days, and in order for the information to settle, it must be reinforced with examples, BUT in lack of time, the alternative that Business X provides can deliver more facts to the student and may offer him a better chance to get a higher grade compared to having the possibility to read only half of the material.
Further more, if the student did not understand some issues that were presented in the book, the resume may offer a better understanding. Schematics, drawings and explanations made by a student for another student are always easier to understand than a page full of text.
Another reason would be the GenEd classes (General Education). During my undergrad education, our system was made in such a way that it would require the student to take at least two classes from fields like History, Exact Sciences, English, Arts, etc. I noticed during my College years that a lot of the students didn’t like these classes and study not because they want to, but because they have to. My roommate for example, who was following a Major in Mathematics didn’t exactly like “The history of Jazz” (a class required in order to obtain GenEd points in Fine Arts). He hardly studied at all and received barely a passing grade. Business X can offer him the shortcut: a higher grade for the same, insufficient allocation of study time.

Business X would also carry vast past exams purchased along time from JSA. We offer the following advantages:
-possibility of rental- why buy them when you need them only once?
-huge database – exams purchased in the past will also be available.
-we offer some exams that are already solved, with step by step explanations.
All these are competitive advantages over the JSA center.

Business X would also offer past essays from students. Students may find it easier to make their own essay once they see others’ work on the same topic. Business X does not encourage plagiarism, and the works of other students are presented for the sole purpose of providing some sort of guidance. They must remember that the University has all the electronic versions of all the students who submitted their work, plus probably a series of web search engines like turnitin.com.

Why not library?

Students may prefer the library, since it has a greater collection of books and they are free, but Business X focuses on a niche segment that surpasses the library in the area of “class related resources”. Also it provides not only the study environment that can be found in the library, but also an isolated recreational room, where students may take a five minute break without disturbing the others.

Quality of service & opportunities for students who collaborate with Business X

Business X will put a lot of emphasis on quality. All the potential purchases would pass through a pre-inspection process. Payment for the work would be made based on the easiness of the reader to comprehend the information, amount of information per page, summary length, page layout, etc. For the essays, papers and blogs payment would be made based on the same criteria stated above plus the grade received from the professor (by doing this, Business X also encourages students who want to sell their work to strive for better grades).
Also Business X may also offer part time jobs for students who:
-make resumes of books required for classes but are not yet in the company’s database
-offer tutoring lessons to groups of students (the students will pay additional for these tutoring classes, Business X working just as an intermediary)


Database:

The business will start with 280 writings. 140 essays and 120 summaries will be provided from the beginning. Every month, Business X will enrich its portfolio with 14 new essays and 10 summaries. Considering an 8 month/year activity, the firm will enlarge its database with 192 papers. The more the company will operate, the less it will have to spend due to the cumulative effect. But in the financials, I neglected this, and wrote the amount spend as a constant.

Financials

I could not import the excel spreadsheet, so I made some alteration to the format.
Remember that the prices are calculated EUROS!!

Cost of the INITIAL investments (I multiplied the number of items purchased with the average price of one item). Furniture price approximations were taken from IKEA.com

-------------------------------------
DATABASE -average cost for a essay, paper: 140*15=2100
DATABASE average cost for a summary:120*20=2400
Coffee machine (recreational room):1*400=400
Play Station:1*400=400
Plasma TVs:2*800=1600
Tables (study rooms):3*60=180
Chairs(study rooms):12*15=180
Sofas:3*400=1200
Shelves (corridor):1*300=300
Unpredicted additional costs:1*400=400

TOTAL INITIAL INVESTMENT:9160 EUROS

--------------------------------------
Sources of income

membership fees per months =130(members)*25(price of membership)=3250
tickets sold per months=200(tickets)*2(price of ticket)=400

TOTAL MONTHLY INCOME: 3650 EUROS


--------------------------------------
Monthly fees

Rent including bills:1*1000=1000
Money allocated for additional essays, summaries, etc:1*200=200
Salaries for students per week (summary making):4*200=800
Wages for full time personnel (week):4*200=800
Marketing expenses (flyers, posters):1*100=100
Unpredicted expenses:1*100=100

TOTAL MONTHLY FEES: 3000 EUROS

-------------------------------------
Monthly Gross income:650 EUROS
Yearly gross income (8 months of activity):5200 EUROS


I am waiting for your comments

In some cases cathing the wave with the right board may be more important than beeing a good surfer.

In my home country (Romania) businesses evolved whenever a major social, political, technological, economical change occurred. Rather than steadily appearing after 1990 and presenting a constant increase in number, major Romanian business boomed whenever changes in the macroeconomic, political, technological, social, etc were made present. This is a normal evolution of a capitalist market, since every major shift opens new niches that can turn into successful business opportunities. So it was more important to catch the right wave rather than have the right skill.
I am not saying that a brilliant entrepreneur would not make a difference, but it was a lot easier to expand in a newly created sector and benefit from the first mover advantage rather than to enter in an already saturated sector. I would also want to point out that the companies that were in a particular market sector for a long period of time found ways to increase efficiency and become very competitive. This level of effectiveness certainly lags the one of the large western companies specialized in same activities (evidence for that being the fact we hardly have any firms that compete on a multinational level), but nevertheless surpasses in many cases any newly formed local company, regardless of who founds or manages it.

The ideal solution would have been to open a business in the past and expand as fast as possible. The present day niches become less frequent and the ability for one to take the start in such a race is almost impossible since it:
-requires huge capital (like recent business opportunities in the energy sector for creating Aeolian windmills - even if they require huge initial investment, they turn out to be very profitable if you find the right piece of land, since there are plenty of government subsidies and EU funding available)
-requires to know the information well in advance (Transelectrica, the Romanian institution responsible for allowing independent energy generating plants to connect to the National Energy Distribution grid was already saturated with applications that surpassed the grid acceptance potential even before the Aeolian Energy Projects were made public)
-may quickly become a battle ground where small, inexperienced and financial fragile entrants fight a loosing battle even from the beginning. New comers need to expand in niches that big companies operating in the same industry would find unattractive and without sufficient potential for them to allocate time and money.

Given that, several barriers are already set for the young, new entrepreneurs of today before they even consider starting a business. Even if they manage to come up with a great idea that bypasses all the above mentioned problems, they will still require a decent financial infusion into the start up. The Romanian system makes it hard for such companies to acquire that initial capital. You need to either come with some collateral or prove that you have a steady flow of cash, like a salary, or some sort of expertise in the field you want to open your business. But if you do not posses any of these guarantees that may allow the bank to trust you with the future repayment, and cannot find an alternative source of financing (family, friends, angels), then you find yourself stuck.

So there are a lot of barriers in today’s Romanian business world that became more stringent as time passed. There is little space for small businesses and in the case some decide to enter, they should be prepared for fierce competition. It is a market where size and financial power determines the winners. Good entrepreneurs may find it very hard to succeed without proper backing up. Their true value may be useful only after they manage to enter the game and secure a market segment without becoming a target for the big competitor’s.


References:
"Boom of the Aeolian Energy sector" http://business.rol.ro/content/view/69305/2/, last visited on 18 Sep 2008
"Entrepreneurial lessons" http://www.startups.ro/lectia-de-antreprenoriat

Creativity seminar - the correlation between GMAT and entrepreneurial thinking

I would like to discuss about the article made by Shepherd, D., Douglas, E., Fitz-Simmons, J. (2008) MBA Admission Criteria and an Entrepreneurial Mind-Set: Evidence from “Western” Style MBAs in India and Thailand. Academy of Management Learning & Education, 7(2)

“We find that MBA students with higher GMAT scores have career mind-sets that are more averse to work effort and risk , and therefore, the GMAT may discriminate against applicants with a greater propensity to behave entrepreneurially. “ (Shepherd, D; p 158)

This quote can be found at the beginning of the article and has the purpose of summarizing the results of the research conducted. I do not deny the results and the tests conducted based on the information given, but I wonder about the reliability of the result. I thought about some factors that might have bised the results.

1.First of all, the sample size is very small. Due to this, the precision of the test results may not be accurate, since only some preferences of a narrow portion of the population size may show up.

2. In order to increase the reliability of the survey, the study should have included more variables that were not thoroughly discussed. Social and financial background or the desire to migrate towards the western countries as a future goal may also have some impact on the outcomes.

3. The case is valid only for the two countries from which the students were surveyed. Even though a sublime generalization is made towards the end of the reading, we should nevertheless consider the result applicable only for that narrow segment.

4. The surveyed group was composed of students who “were on average relatively young; all with at least a bachelor’s degree” (Shepherd, D. p 165). Statistics show that the average age of entrepreneur is 37.6 (Simon C. Parker “The Economics of Entrepreneurship: What We Know and What We Don’t” University of Durham, Durham, UK), meaning that most of these survey takers may later still turn out to disagree with part of the test results.

5. Top Universities in India require huge tuition fees (http://www.indiaedu.com/top-educational-institutes/top-universities/index.html, last visited on Sep 16 2008). Many students have the to get a loan in order to be able to attend. This financial pressure will determine them to become more risk adverse and prefer a “safer route”, meaning finding employment and a decent wage after graduation which will enable repayment of the debt. These variables could have been included in the test conducted.

6. GMAT is “designed to measure basic verbal, mathematical and analytical writing skills” (http://www.gmac.com/gmac, lat visited Sept 15, 2008). Overall it is a widely used testing platform that grades students based on the same scale. It examines among other things, the ability of the person to process information and conduct logical and analytical tasks. Top results may point out students that are clever, bright and quick thinkers. This, together with impressive work experience, good GPA and extracurricular activities are the criteria that top Universities look for.
In developing countries like India and Thailand, financial security is a priority. Top Universities offer students a better chance to attain that security, and the applicants that gain acceptance have all the reasons to assume a possible financially stable suture. Once this subconscious idea is present, there is the tendency of students to try to reduce risks and aim for a job that requires less uncertainty at an above average wage, which together with a high social status, may turn out to be sufficiently enough. High GMAT score may not “discriminate against applicants with a greater propensity to behave entrepreneurially” (Shepherd, D; p 158), but simply makes these people more risk averse and reluctant to take such a path.

Open Debate on Jonathan Drori's speech: Why we don’t understand as much as we think we do

The author starts with 4 questions:
1. Where does the seed take all the stuff that enables it to turn into a tree?
2. Can you light a bulb using wires and a battery?
3. Why is it hotter is summer than in winter?
4. What is shape the Solar system?

Before you click on the link, try to answer them.

Link: http://www.ted.com/index.php/talks/jonathan_drori_on_what_we_think_we_know.html

! The 7 year old had better scores than MIT students

Reasons: Gaining of knowledge from common sense from observing the nature
Adults: Misconception of the real world as it is learned from books

Question to debate about:

Is school an impediment towards our true education?
Do we have less creativity after than before school? If so, why continue studying and gain “knowledge” that separates us from the real word?
Should we observe things and experience them hands on rather than engulf ourselves in books, diagrams and schemes?


By the way, the answers to the questions:

1. Air
2. Yes. He shows a picture
3. Rays from the sun are spread out more
4. Round

Source: www.ted.com, last visited on Sept 07 2008

CREATIVITY SEMINAR - Ways to increase creativity and effectiveness within your company

I thought of some creative approaches that may increase efficiency in a business. A manager is encouraged to try out as many of them as possible, but at the same time try to monitor the cost of the investment and the benefit it brought back in order to see what strategies fit best for his/her particular enterprise.

DIVERSIFY YOUR JOB

The company should encourage employees not to focus only on their respective jobs in which they specialized, but also to try as much as possible to study a bit of every function that exists in the company. Many ideas may come observing or working in other jobs. Also this will enable easy tasks to be switched among employees, thus embellishing the every day working dull pattern and making the work more interesting and fun for everybody.

FLATTEN YOUR BUSINESS

Eliminate unnecessary management levels. This will save you money, time and increase efficiency. Try your best to make your business flatter by eliminating middle or higher management if they do not represent a vital segment for the company. But be careful not to loose control of your activities!
Also, now that the company is flatter, everybody should adopt equal positions towards one another (at least when it comes to sharing ideas and opinions). Always try to follow this rule: when no vital decision taking is involved, everybody is equal in the company and every idea or suggestion has equal weight, without regard of who said it.
Don’t be afraid to get your hands dirty! No manager, CEO or any person that has an upper function should hide behind his/her big desk and give orders. They should try instead to place themselves in the shoes of as many employees as possible and see how improvements could be made in that area in order to increase the local efficiency and creativity level.

REDUCE BUREAUCRACY

Reduce bureaucracy wherever it is possible. This will facilitate the flow of information throughout the company and eliminate bottlenecks or loss of information that may appear if the information is passed through different layers of management. Having a very stratified structure will make it almost impossible for workers to be heard. Let’s take an example here: if a blue-collar worker, who is basically the heart of any labor oriented business, has a complaint or an idea to share with the CEO within a stratified company, then the chances of the report to pass from the worker to the supervisor, then to the leading supervisor, then to lower, middle and upper management all the way to the secretary and then the CEO will probably be unlikely to happen or just take too much time to actually mater when it finally reaches the desired person.
Also don’t use special forms or formal reports for sending information within the company. Better have a face to face discussion. Rely better on the speed and easiness of the employees to communicate their thoughts in an informal way. Remember to listen to their thoughts, ideas and suggestions and learn as much as you can from them.

TAKE CARE OF YOUR PEOPLE

First of all, hire wisely. I would like to partially agree with Sutton R., who wrote in his article “The Weird Rules of Creativity” (HBR, September 2001), about hiring a couple of people that have nothing to do with their work related activity. Indeed, these persons that have not yet been academically indoctrinated and haven’t yet settled in will pose a lot of nonconformist questions and come up with various thinking approaches that would have been instantly excluded from the mind of an experienced employee who already has a solid thinking pattern formed along years of work.
I do not agree though with the author’s point of view in regard to hiring people that make others feel uncomfortable. In my opinion, these persons will create a lot of problems later on, even if they are brilliant in what they do. Cliff S. writes about such a character in his article “What a Star – What a Jerk” (Harvard Business Review, September 2001) showing that these individuals negatively disrupt the entire cycle of the company (with or without their rude personal remarks), bringing discomfort within the business and making a lot of employees diverge their attention towards him instead of on the company’s tasks.
Most of the people that I would suggest hiring instead would be independent individuals, knowledgeable in their field, but communicative, flexible in thinking and eager to discover.
As a good entrepreneur, try to discover from the interview as many traits as possible. Aim for the independent risk takers. Under the right control- free environment they can achieve a lot. Do not offer them big salaries in the hope that they will perform better, because this may inhibit their willingness to take risks. It is wiser to go with bonuses, which should be awarded for every innovation they come up with, even then ones that do not bring any significant financial revenues to the company.
When it comes to improving the level of creativity and effectiveness of this team, it is crucial to provide the proper working environment in which they can evolve. Build a business that revolves around ethics, values and integrity. Employees need to be content with the environment they work in, with their jobs and with their contribution to the society. This may lead to a more dedicated team that is willing to work and follow you in better and worse.
Another tip would be to invest as much as possible in quality. People get frustrated if things break over and over again. Even if the purchases cost you more in the beginning, you will be better off in the long run, by avoiding the maintenance bills and the unnecessary waste of time. It is enough for one of your employees’ computer to crash in unexpected times and for him/her to lose all the unsaved info to ruin his/her entire day. Always have the critical equipment like the Xerox machine, computers or the fax machines in top shape.

ENCOURAGE COMMUNICATION

Organize events in which your employees get to know one another, exchange ideas, hobbies, family info, etc. Celebrate birthdays and organize various trips together. Try to become more than just a boss – be a friend. Meet with the team of Fridays afternoon at the local pub and buy them some beverages for their hard work and dedication. Try to keep the team involved in common activities, so that they feel comfortable working together.
Have anonymous feedback boxes and encourage people to use them so that you are up to date to the complaints or announcements your employees want to tell you and the rest about. Always have a constant flow of information from them. One of my University professors always said that “No news is bad news”, meaning that if nobody reports anything then something is definitely bad. We are all humans and we always make mistakes. It is in our nature. So a company that we, as imperfect individuals, build can never be perfect either.
Also try to have as many open spaces as possible. When it comes to brainstorming and coming with new ideas and innovations, a big working room in which people have the opportunity to talk to one another and exchange ideas fast is far better than individual office spaces. Try to keep people to work in close contact.

BOOST THE OVERALL CONFIDENCE AND ENCOURAGE INNOVATION

The leader of the company should always have clear visions and objectives. Try to look as confident as possible. Have a strong stomach and don’t let confusion or fear show when situations get difficult. Your employees will have the tendency to be more assertive if they take you as their work role-model, if they know that a true leader is guiding them.
Invest in training as much as possible in order for your employees to feel confident in their respective fields of work. Try as well to provide the right equipment to everybody. This boost will give them courage to further explore and welcome the unknown. Encourage all new attempts they make, even if they do not work from the first time. Try to give useful tips if possible.
Allow them to work on their own, but always set deadlines when doing so. Let them be flexible with their assigned task, but also responsible when it comes to handing in the work. Do not interfere and don’t be persistent in monitoring their every-minute activities. Give them freedom to allocate their own time, but have feedback on their progress during brief meetings while having lunch or set general, informal meetings at the end of the day. Don't be afraid to criticize, but do it in private, and always praise somebody in public.

VERTICAL INTEGRATION

Make customers work for you: multilevel marketing is always welcomed because it offers customers the opportunity to become part of the business themselves. Offer them the opportunity of becoming distributors since they may turn into a powerful marketing tool. The best, cheapest and most effective advertising technique today is the word of mouth. By empowering your customers with the task of selling your products, they become more responsible, have the incentive to vend and will try their best for the moral and/or financial satisfaction which they will get in return (which may be in the form of a commission or product bonuses) but also, and most importantly, infiltrate your product among their friends (and later on unknown customers) and push the sale. Don’t put any pressure on them by imposing sale quotas or deadlines. Have them work for you because the want to. This way your team will sell with pleasure and be really dedicated to the task.
In my country AVON used this technique and quickly penetrated the market (especially the young segment of teenagers and college students) by collaborating with students that wanted to earn some additional income.
Encourage these persons to be creative and reward them for the sales they make. Offer them some basic selling guidelines, but don’t impose too many limitations. Let them be creative when selling, let them find their own way to make the sale. They will realize on their own the most effective and efficient way to make the transaction. Also ask for feedback. Maybe some innovative replies may turn into future selling techniques.

CREATIVITY SEMINAR - reflection on the Module literature

I would like to discuss the article by Sutton, R. entitled The Weird Rules of Creativity (Harvard Business Review, September 2001)

Introduction

The writer’s approach seemed non-conventional and irrational in some cases. His entire article is founded on denying the idea that “creativity would flourish in a fun, low-stress work place, where conflict is held in check and managers keep a close watch on how money is spent and people use their time” (Sutton, R., 96).
Sutton’s futuristic concepts redefine the basis of hiring employees and they radically rearrange the internal processes of any firm. I find it hard to believe that well established companies or companies that find themselves in not so competitive markets would reorganize their internal structure and follow his steps. Reasons may be the high costs of change, fear of losing ground in case the ideas don’t work, reluctance towards abandoning their logistical system that proved to work and of course the suppliers and customers that may prefer certain values within the institution that would be lost within the transformation. If a company decides to take such a path it must be aware that the risk will go up, a good enough reason to make the stakeholders reluctant towards adopting such a tactic, the banks to renegotiate the loan interests (if any), the insurance companies to raise the firm’s insurance rate, employees to ask for raises due to the uncertainty of the work environment, and so on.
In my opinion, this article is directed mainly towards startups or businesses that are in very aggressive markets and lag a competitive advantage. These establishments have nothing to loose, an important factor that would determine them to be risk takers. The author tells of some success stories, which transformed small businesses into huge enterprises or boosted sales of the big companies, but neglects to talk about the failures many encountered while trying to adopt such strategies. Sutton’s ideas may earn a company high profits but at very high risks that many are unwilling to take, since his concepts of “placing bets on ideas without much heed to their projected ROI”, “ignoring what has worked before”, “taking perfectly happy people and goading them into fights among themselves” (Sutton, R., 96) seems far fetched.

AGREE/DISAGREE

I will go now a bit deeper into the text and focus on some Sutton’s “weird ideas”

-I liked his belief of rewarding both successes and failures. It is important not to discourage people and boost their confidence whenever a mishap has happened. And after all, a lot of ideas may be good, but badly marketed or directed towards the inappropriate market segment. The best way to come up with new ideas is to keep on trying, brainstorm as much as possible and rely on the quantity of ideas produced.

-I partially agreed with the idea of not screening the candidates you hire. Sutton offers some examples of companies like Xerox, HP or Dyson Appliances that made a huge success upon inexperienced people, the ones that had nothing to do with the field they worked in. The author seems to neglect though some background info about these people, their interests and education. Indeed, working in a field for a time and gaining a lot of knowledge in that area tends to make you "narrow minded" in time. Fresh workforce may be the answer, but they must posses some knowledge in that field and some work dedication. If there is no dedication and love for the job, there will be no willingness to come with new ideas. Finding this precious “devotion” within a person during the hiring interview may be hard, because the individual may be a good faker and willing to lie in order to get the job, security and money. You cannot rely on work related questions either, because you are looking for “fresh” characters, so you need to gamble.
Once hired, performance monitoring cannot start, unless that person is accommodated, integrated and familiar with the place. If, after all this time, you observe that the performance is mediocre, you inevitably find yourself in a lose-lose situation: you may fire that person and take the same risks with somebody new, wasting more time and money, not to mention insider information about the structure of your company that person gained during that time, or just stick with the same, unproductive, not experienced, not knowledgeable person till you have a better idea to where to relocate him/her.

-I disliked the writer’s idea of hiring people who make you uncomfortable or dislike. In the right environment, with the right team, this idea may work, since you may create an environment in which everybody is independent to think of his/her own and not be influenced by the rules, ideas and thinking patterns of the people that they wanted to abide by.
But in many cases this happy scenario may lead to breaking the team spirit, isolating the employees or just splitting the workforce into small, unproductive groups that spend more time fighting than building something innovative. The working place is usually not tension free, people have to deal with deadlines all the time, while stress and frustration often appears throughout the day. The last think you would need is to work with somebody you find it hard to connect, or is simply dislike because of its character, the aggressive remarks he makes or simply his ego. This may probably result in segregation from that individual and even aversion towards the working space, company and job.

-I dislike the idea of ignoring the people who have solved the exact problem as you face. Peaking at the solution may give you a fast answer, but it will indeed stop any new idea of flourish. I suggest first to try to solve the problem on your own and then see if the already existing solution is better. Adopt the best one. But always look at others for inspiration, because life is not long enough to allow you to figure everything out.

-I dislike the encouragement of the author to “ignore and defy superior peers”. Certain order need to be kept within a firm. R&D is a very expensive department in every firm and the budget and planning is well thought. If some higher official tells you to move to the next project, then you move on. Of course those people have less information about the progress of the work you were conducting than you, but it would be unwisely to spend more paid time and company’s resources on continuing the project on your own. Your chances of finishing it alone, without having a team and always hiding from supervisors (in the case you are dependent on the company’s equipment) will probably be small, plus you will lag behind on the assigned project thus raising suspicion. Or you could do double the work and try to realize them both. In case you succeed and the company has no proof that can correlate your work as its property, you have two alternatives (we’ll take as an example a technological breakthrough): since you worked behind the company’s back, nobody knows about this, so you are free to either sell it to the higher bidder on the market or announce the company about your invention (which would be the ethical thing to do, since you used their equipment and time) and receive a decent bonus. You will be amazed how many prefer to be guilty millionaires rather than ethical middle-class workers.

CONCLUSION

Since I am a risk taker, I would not disapprove of applying many of his ideas if I had a huge company, but I would try this “experiment” only on a remote segment of my R&D Department since I am very skeptic about this high risk – possible high return tests I read about.

Example of innovation in the present music idustry

Tiesto, one the top DJ in the world, was among the first to bring modern music one step ahead. A DJ that used the idea of combining a classical instrument like the violin with a new age beat (trance and electronic dance music especially).

http://www.youtube.com/watch?v=BZmE3fUKU5U

For those who aren't into this kind of music, skip to min 2:20, for the rest... enjoy every moment of it.

Is innovation always beneficial?

Today we had Module 2 for the Entrepreneurial Growth class. After referring to Howards H. Stevenson and David E. Cumpert’s “The heart of Entrepreneurship” – Harvard Business Review (March-April), 85-94, everybody was so bias towards being an innovative, risk taking, R&D oriented entrepreneur, that needs to invest and seize the opportunity.

I have two comments that I mentioned in class, but I will also post them here:

1. One of it is pretty straight forward: do not take that approach unless your industry demands it. If you are a company that specializes in hand crafted glass objects for example, you don’t need to look for anything innovative. Just be a good “trustee” and look for those long run contracts with the retailers and suppliers.

2. Investing in all that R&D and innovation to be ahead of the game will ultimately reflect as a higher final product. I had an example about the ATV market, in which Chinese copycats managed to bypass many of the patents that Western R&D oriented companies implemented on their top of the art ATV machines, but still managed to come up with good enough replicas that worked in most cases as good as the western devices. They kept the quality at reasonable standards, in order to be able to compete on the same market, BUT sold these machines at 70% of the price of the competitors. This was because they skipped the entire R&D process and did not incur the costs of many of the competitors’ trial projects that failed.

I purchased an ADLY (or Herkules, as it is known in Germany) quad which used to produce parts from Can-Am or Bombardier (which is like the Mercedes for ATVs) until they decided to start their own line of production. The price of this Taiwanese vehicle was far bellow the competitors and encapsulated many of the parts I usually see at Can-Am or Yamaha. I had no major problems with it so far and I am still happy of my purchase.

My point is that companies that copy competitors and add up a decent markup but keep the overall price of the product lower may end up having a bigger market share and a bigger ROI as their competitors, without having to look for innovative thinking or devote capital in research.

They may be profitable without having innovative entrepreneurs!

What will happen to Romanian’s educational system and labor market? Open debate

This article is NOT related to the main topic, but it raises issues that maybe other countries face. Feel free to skip this part if you don’t feel like reading.
But in case you read it, please be kind enough to post some comments and suggestions.

I will tell you about Romania’s educational system. Hopefully the country’s EU integration will spur some reforms and investments in the educational system, but for now, the circumstances look like this:


1. Most school are financed by the government => the funds that reach each school/college/university are not sufficient.
Schools have hardly been restored or updated with proper equipment. I remember having to pay “the school fund” in order to buy new benches, paint for the window frames and even white chalk.
In 2008 the education system received record funding: 6% of the GDP. Romania’s GDP is around 157 billion dollars (wikipedia, http://en.wikipedia.org/wiki/List_of_European_countries_by_GDP , last visited in 02/09/08). This means that education gets around nine and a half billion dollars. Now let’s compare this with some other countries in Europe, many of which compensate also with tuition (information taken from “Education at a Glance 2002, Organisation for Economic Co-operation and Development”, http://www.statistics.gov.uk/STATBASE/ssdataset.asp?vlnk=6447, last visited on 02/09/08):

UK -4,7% of GDP =>133 billion $ towards education
Germany -4,7% of GDP =>171,6 billion $ towards education
Denmark – 8% of GDP => 28 billion $ towards education
France -6% of GDP =>170 billion $ towards education
Sweden -7,7% of GDP =>38,6 billion $ towards education
Austria – 6,3% of GDP =>26,3 billion $ towards education
Belgium-5,3% of GDP =>28,8 billion $ towards education
Netherlands – 4,8% of GDP =>38 billion $ towards education

2. Another issue in Romania is the low salary of the professors due to insufficient monetary allocation. This led to shortages in the educational labor force, but not only. I will enumerate some other negative effects:
2.1 A lot of brilliant professors relocate themselves, working for companies that pay decent wages, al least high enough to cover for their degrees.
2.2 Some professors that work for the state owned universities may be inclined to accept bribes
2.3 Quality of education decreases because the incentives to teach are very low, due not only because of the financial reasons, but also due to the student body (which I will discuss later on) and the lack of educational equipment.
2.4 The future supply of labor will be constantly decreasing, since students view this segment as a financial unattractive one.

3. Low student involvement. I will talk about this in the next fragment:

I finished my high school in 2003. During that time, the “trend” of studying abroad was really starting to catch up. Students hoped for something better, an environment that had the means and resources to allow somebody to evolve.

Reason for leaving: the Romanian educational system was and mostly still is a wreck, as I previously mentioned. Poorly equipped classrooms, lack of proper libraries, non user friendly and too theoretical oriented teaching materials, low scholarships compared to high costs of living, and especially the high corruption level that allowed you to pass any exam or obtain any Diploma just by sending “presents” to the right persons, all added up in creating a low incentive for mass students to have the desire to evolve academically. Exceptions applied in some cases, but the general thinking pattern was the following: why not party and hang out with friends instead of study impractical theories that I would either forget till the end of my University years or most of it never apply during my life? The knowledge that I will require for doing my future job will be taught to me anyways when I will get hired. And that job will probably not even be in the field I am studying… So why not relax, develop my social skills (because, after all, this is what present Romanian employers look for) and just cheat my way through the exams, or, if I have the financial means, talk to the professor between closed doors in order to try to come to some sort of a “compromise” that will benefit us both. And believe it or not, this is a very effective method to take the easy way through school.
These type of students will know how to talk and act much better than the students who had to skip all the social meetings in order to study; this “cheating” student will have the proper academic records (at least on paper) and, if this student is a sociable, fast learning and pleasant figure and has at least some left over brains in his head, it will probably be promoted much faster than the student who followed the rules and who will end up in a cubicle working for half the wage and putting double the effort and brain power.

So, I am asking you these questions:

Why is this technique of skipping most of the university educational period working so efficient? Why do those students who skipped school and became more “street smart” usually earn more than the students who followed the rules? Why do they get the good jobs, work in Western countries as delegates while their hardworking friends quickly end up in a cubicle at a multinational corporation being exploited? (this is not a general rule, but usually this is the case).

How could we change this trend? What should the government do? Private schools appeared, but most of them accept everyone as long as they pay the tuition fee which is about 1000 euros per year. They don’t want to risk becoming more demanding, because this way they will loose the tuition of the student they expelled.

Romania is slowly running out of experts in many fields, since most students don’t have such a solid background that enables them to grasp advanced issues in that particular area, plus no company is willing to spend on training, especially if it takes prolonged, more than expected, periods of time. And remember that this is the happy case in which the employees found work in the same field as the one they graduated in.
The remaining few experts are usually recruited by companies from the western countries through the help on an attractive salary (at least for an Eastern European), a very profitable strategy, since these firms save a lot of money that would have otherwise been spend on training.
How can Romania cover this shortage of specialists?