FACULTY FOCUS Angèle Beausoleil

An entrepreneurship expert explains how to become a ‘builder.’

In today’s environment, organizations that don’t keep up with customers’ evolving needs are doomed. What is the best way to get a handle on these evolving needs?

The first step in understanding your customers is to accept the fact that you know very little about them. That way, you will remain open to learning. This point is critical, because customers are continuously evolving and adapting.

Once you are aware that you have a lot to learn, you can begin to observe customers: Simply watch, listen and engage with them. The concept of empathy is critical here — and must be practiced. Document what they say and do, and how they respond to different situations and contexts. Then, gather your best insights by grouping them into themes and categories that make sense to your company. Convert these insights into educated guesses, and you can then begin to test assumptions. As indicated, this all starts with being humble about what you know and allowing yourself to be a bit ‘strategically naïve’ up front.

What is the more commonly-embraced approach to innovation today?

Through my academic research and by engaging in the innovation process for over 25 years as an industry executive, I have learned that most companies tend to ‘jump right in’ to innovation in direct response to a negative situation. The trigger could be a financial company facing changes to foreign-investment policies that narrow or eliminate a market for its current services; or a beverage company seeing its sales decline due to a growing number of entrepreneurs providing newer, tastier choices. For these and most other situations, the important questions to ask before jumping in are:

1. What problem are we really trying to solve?

2. Who is directly impacted by this problem?

3. Why do we believe it is a problem, and why does it matter to our customers — and to us as a company?

The aim of these questions is to kick-start a dialogue — not a directive. Once the questions and potential answers are explored, then you can begin to orient yourself towards the type of innovation you need to pursue.

Every innovation team needs to be super clear about exactly what they are seeking to change, because there are at least five types of innovation. If you seek to change WHAT you offer, you are pursuing product or service innovation; if you want to change WHO you are offering your product to, that is market innovation; if you seek to change HOW

you design and deliver your product, that is process innovation; if you seek to change HOW and WHERE you offer your product, that is positioning innovation; and if you seek to change the WHY, HOW and WHAT of your offer, that entails paradigm or cultural innovation.

Talk a bit about the mix of quantitative and qualitative methods that creates the best innovation.

When you observe human behaviour in a natural setting, the end result is a detailed narrative description that constitutes qualitative (‘thick’) data. Combining this with numerical, pattern-validating data can be very powerful. The thick data explains the why and the how of the numerical (‘big’) data, which provides the what.

Even in our increasingly digital economy, field work is critical. You must observe your customers in their natural state, behaving as they do without any artificial probing. The observations that come from this provide insights that, when further researched, can lead to an innovative solution. The good news is that if it is well researched and well stated, your problem is already half-solved.

You have devised a ‘basic recipe’ for innovation. Please describe it.

My basic recipe involves a few key ingredients and three stages or steps. The ingredients are:

• A group of ‘problem owners’ or users;

• One perceived problem or need; and

• A handful of risk-taking problem framers and solvers.

The three steps or stages are: problem or need finding; problem framing; and problem solving. This recipe is easy to customize, as all organizations have access to multiple perceived needs or problems. At least one should be researched, framed and re-framed, solved and then formally brought to market. Here are the directions:

1. Ask yourself what needs to change. Is it your product/service, market position, process or culture?

2. Gather a team that represents all of the key stakeholders that would be involved in that change across functions, systems and markets.

3. Prepare an ‘innovation intent framework’ that is part needfinding, part problem-framing and part problem-solving.

4. Collect and combine need-finding data.

5. Form insights.

5. Wrap your insights into problem-framing ideas (prototypes) and let stand until all stakeholders have had a chance to reflect.

6. Whisk customer feedback into the prototype mixture.

7. Prepare a final prototype for implementation.

8. Bake the innovation and test for rejection or adoption.

9. Save your recipe and continue to experiment with new ingredients.

Apart from the usual suspects, name two companies that ‘get’ how innovation works, and two that have missed the mark.

Adidas is one example of a company that innovates through collaboration — with Japanese and British fashion designers and hip hop artists for shoe and clothing design, and more recently, with plastic a recycling company for textile innovation. Nature’s Path is a Canadian company that started with a few breakfast cereals and now has a portfolio of more than 150 products to suit the evolving tastes of consumers and organic food choices.

Companies who have missed the mark include Target, which failed to understand the needs of Canadian shoppers and provide a merchandise mix and pricing strategy needed for north of the U.S. border. Also, Nortel was once a leading telco that was slammed by increasing changes introduced through digital technologies. It failed to evolve its business model to keep up and lacked proper integration of its

Every innovation team needs to be super clear about exactly what they are seeking to change.

acquisitions. This could be seen as a paradigm or cultural innovation fail.

You have said that the cognitive process involved in ‘sensemaking’ is moving from being ‘mostly in the head’ to a collaborative process that occurs partly in the head and partly in computer-based tools. Please explain.

Over the past 20 years, we have basically outsourced our short and long-term memories to technology: We put our meetings and appointments in our Outlook calendars and we share moments on our Facebook and Instagram accounts. What is so exciting about this shift is that technology has made the inner world of our thinking much more visible. Marketers and researchers can now ‘see’ how people think and observe the context where their choices are being made. Technology is also facilitating our ability to make sense of those thoughts, actions and choices. We can now outsource our processing power to machines that can numerically identify patterns at a faster rate than our brains ever could.

Describe how innovators are tackling the ongoing ‘data tsunami’ via the emerging field of Visual Analytics.

As both a designer and a design thinking educator, I am always eager to introduce the next generation of mixed research and analysis methods that involve human-machine integration. Visual Analytics is an emerging and interactive way of collecting and visually processing data sets using computer processing with human perception. The input is data and the output is visual displays such as text clouds or maps of correlated words, phrases and themes.

With this technology, Design researchers can now collect data from field visits and interviews and input it into platforms that can detect patterns. A simple example is plugging in your field notes into the Wordle platform to see the word frequency count. Long unstructured texts can be analyzed in a variety of ways to surface themes and ultimately, insights. Another notable visual analytics tool is Tableau, which offers big data narratives—converting numerical sequences of data into powerful stories and strategies. I see this as the evolution of business intelligence software.

How do AI and machine learning fit into the innovation and design thinking picture?

My colleagues and I embrace the possibilities of what machine learning and artificial intelligence can offer us — now and in the future—but it is important to remember that technology is still a mediator or enabler for humans.

As a result, innovation will always involve humans, but I predict that pairing human-centric methods with AI tools will be very powerful. Using design thinking to actually design these AI systems will be critical, and that’s one of the key challenges ahead. Even if you have the best technology, innovation doesn’t just happen; it is designed by humans for humans. Angèle Beausoleil is an Assistant Professor of Business Design and Innovation at the Rotman School of Management. She teaches the School’s Business Design Practicum, Creativity and Business Innovation, Design Research and Data Storytelling, and leads the International Design Study Tour. She has also taught at UC Berkeley’s Haas School of Business and the University of British Columbia’s Sauder School of Business and until recently, was the Academic in Residence at Creativebc.

Marketers and researchers can now ‘see’ how people think and observe the context where their choices are being made.

Rotman faculty research is ranked in the top 10 globally by the Financial Times.

You believe entrepreneurship is better characterized as building, and that ‘builders’ are quite different from the rest of us. Please explain.

When people talk about entrepreneurship, a stereotypical image often comes to mind: A college dropout from an Ivy League school who started a tech company in his dorm or garage and now makes billions in Silicon Valley. The problem is, it is very difficult for most people to see a place for themselves in that stereotype — so they assume that they don’t meet the criteria for entrepreneurship. That simply isn’t true.

At Gallup, we think about ‘builders’ much more broadly: A builder is anyone who starts out with a problem or an unmet need and tries to find a solution to it. It could be an actor starting up his own theatre company, rather than waiting around for roles to fall into his lap; a college student who notices an unmet need in her local environment and jumps in to fill it; or someone starting a non-profit to address an unmet need that they see in their community. All of these examples — and many more — fall under our builder definition.

Describe the four principles that must be addressed to build something successfully.

Most of what we hear in the media about ‘helping entrepreneurs succeed’ focuses on the external challenges they face, such as lack of financing, inadequate management training or unfriendly governmental policies. But this lens fails to account for the individual differences between builders. Instead, my colleagues and I take a uniquely psychological approach and focus on unlocking the power of the individual at the centre of all this activity. When a business fails, it is not usually due to resource scarcity, organizational challenges or other external factors — it is due to the decisions and actions of the individuals involved.

We have found that there are four principles for building successful businesses. First of all, self-awareness is critical, because your venture must be closely aligned with who you are as a person. When we work with budding entrepreneurs, we help them become aware of their capabilities, motivations and true passions in life. As individuals attain psychological clarity, they also tend to gain confidence in

their ability to build something sustainable and successful.

Next, we move on to opportunity recognition. Opportunities are all around us; some are visible — such as a process that needs to be improved or a gap between ‘what is’ and ‘what should be’; while others are just waiting to be discovered. That’s why the would-be builder needs to be alert to the changes taking place around him or her: Developments in technology, new regulations, even unexpected events or demographic shifts can present opportunities. Cultivating ‘builder alertness’ is critically important to discovering opportunities.

Of course, an idea is worthless unless there is action behind it, so the third principle is figuring out the process of building your idea into a product — what we call activating on ideas. An effective way to do that is to create a minimallyviable solution to the problem you have chosen to focus on, test drive the idea and take the initial steps to build a customer base.

The fourth principle is building your team. As I said earlier, there is still this idea that entrepreneurship is an ‘individual sport’ where a lone genius builds something all alone. That just isn’t the case. The reality is that there is no ideal builder — just ideal teams. It is important to make sure your team has the distribution of talent needed to build a successful venture.

Tell us about the three roles that are critical to every start-up team.

The first is the Rainmaker. This is the revenue generator and the main customer creator. He or she has excellent sales talent and an uncanny ability to manage risks. The second role is the Expert — an innovator with a focus on product development. This individual usually has expertise in a particular area that fuels product development. Experts tend to be highly independent and are constantly reimagining new possibilities.

The third role is the Conductor, which requires a high level of managerial talent. If a business wants to grow in scale, you need the glue that holds all of the pieces together — from hiring employees, to positioning them in the right roles, to making sure processes are set up so that the product can be delivered on time. Conductors have the ability to manage all aspects of the business so that it becomes a welloiled machine.

Each of these types can start or grow a venture independently; but the real magic happens when the three come together as a team.

Having studied many start-ups as they get off the ground, what have you learned about the path to opportunity creation?

The most important thing we have learned is that everyone can improve their ability to recognize opportunities. Becoming alert and sensitive to the shifts happening around you — whether it be shifts in the market or shifts in customer needs — is something we can all learn to do.

We have identified three steps to becoming more alert to opportunities around you. The first is to start with your talents. Look at what you do in your day-to-day life and think about which particular activities lead to a very high level of engagement, genuine satisfaction or a state of ‘flow’. If all of these conditions are met, you are in your ‘talent zone’.

To discover yours, we recommend keeping an ‘opportunity journal’ for three to four weeks and recording all of your activities on a day-to-day basis. At the end of week four, go through it and you will start to recognize what really puts you in the zone. You will also notice the things that are ‘performance-drainers’. Once you identify your talent zone, you can move on to the second step, which is connecting the dots.

What do you mean by ‘connecting the dots’?

As you identify one or two activities that are in your talent zone and get more involved in them, you will begin to develop an awareness about the problems, gaps and issues related to each activity. This awareness can lead to ideas that can change or improve the situation.

In the book [ Born to Build], we use the example of a college student who loved coming up with new recipes and cooking them for her friends. As she got more involved in doing this, she realized that her campus dining services offered really boring food. She also knew that most of her friends were open to diverse food experiences. So, she connected the dots between her culinary talent, the college dining environment, and her experience of dining with her friends, and an idea took shape: What if she could provide her campus dining service with some unique recipes that were easy to prepare? Maybe they would be open to offering new things on the menu? In short, she started with her talents, was aware of her environment

A builder is anyone who starts out with a problem or an unmet need and tries to find a solution to it.

and connected the dots to create an opportunity for herself.

The third and last step on the path of opportunity recognition is to use your networks to further your idea so that you can take action on it. We suggest starting with people you trust — immediate friends, family and people you look up to, like coaches, mentors or any other individuals in your life who can be a sounding board for your ideas. Then, you not only get feedback on your idea from them, but you also tap into their connections and resources.

In the example of the college student, her academic advisor introduced her to the director of dining services via email and her mentor introduced her to a doctoral student in Nutrition Science, so that she could assess the calorie and nutritional content for each proposed entrée — which strengthened her pitch to the director of dining services.

Any parting advice for readers with a simmering idea?

If you have an idea that is keeping you up at night, my advice is to build a minimally-viable solution to the problem you are trying to solve. Find your first customer, and test and validate your hypotheses. As indicated, your route to the solution will be influenced by who you are, so become more self-aware and in tune with your interests and strengths.

Always remember: Make time to dream big, even as you take small steps towards your goals. Some people will build a for-profit venture, while others will build a social enterprise. Still others will build new products and services within existing companies. When you do any of these things, you create economic energy that didn’t exist before — as well as good jobs and all the things that build a strong economy. My hope is that many of your readers will ask themselves, ‘Is it time for me to build something?’ Sangeeta Badal, PHD, is the Principal Scientist for Gallup’s Building Initiative, where she is responsible for translating research findings into interventions that drive small business growth. She is the co-author with Gallup Chairman and CEO Jim Clifton of Born to Build: How to Build a Thriving Start-up, A Winning Team, New Customers and Your Best Life Imaginable (Gallup Press, 2018).

Create a minimally-viable solution, test drive the idea and take the initial steps to build a customer base.