«We have entered the age of entrepreneurship» – An interview with Marc Gruber, global top scholar in entrepreneurship research
Professor Marc Gruber from the Rochester-Bern faculty is teaching our participants innovation and entrepreneurship in the course block 'Strategy and Leadership'. He is also part of the evaluation committee for reviewing and grading the growth projects in order to ensure academic standards for on-the-job development and to award the credits required for the Master's degree.
The New England Journal of Entrepreneurship (NEJE) recently recognized Marc as one of the top 5 most prolific authors globally in entrepreneurship research for the last 15 years, and he shares the global #1 spot for the last 10 years. We are pleased to have a renowned thought leader in the Master in Wealth Management. In an exlusive interview with Maria Gonzalez and Oliver Amrein, Marc shared his view on innovation and entrepreneurship and conveyed the challenges and opportunities for UBS Wealth Management and the program participants.
Oliver: How would you classify our current business environment?
Marc: We are living in an age of unpredecent technological progress, which opens up significant new business opportunities for creative, entrepreneurial minds. Companies that are able to identify and capture opportunities quickly have more chances than ever to beat leading competitors. In fact, we have entered the age of entrepreneurship – and it is here to stay!
Oliver: What are your main research topics?
Marc: My university home base is EPFL (Ecole Polytechnique Federale de Lausanne, Switzerland) and in my research I focus on three main areas. First, I am interested in high technology entrepreneurship, and conduct scientific research on questions such as 'how can firms utilize technology and bring innovations to the market','how can entrepreneurs create new business models or utilize digital capabilties', 'how is entrepreneurship done in the emerging sharing economy' or 'what are the underlying mechanism that allow new companies such as AirBnB or Uber to win the markets without significant tangible assets - but just platforms'.
My second research area focuses on economic policy. Here, I work together with several European governments in order to bring the unemployed back into the labor force by creating their own ventures. This is an area where I can act as a researcher and consultant, and provide evidence-based guidance to policymakers on how to design policies to help the unemployed start new companies. In many nations, employement alternatives are lacking, and entrepreneurship is a viable alternative.
My third research area focuses on better understanding the mindset of entrepreneurs. I want to understand 'what does it mean to be an entrepreneur?', ‘do they have a defined indentity?’, 'why do certain personalities engage in entrepreneurship' and 'how do entrepreneurs’ thinking diverge from the thinking of other actors in business?’ Getting solid answers to these questions is also important for established firms, given that they need more and more corporate entrepreneurs who are able to identify and execute on opportunities in their organization.
María: Could you define in a few words what is an entrepreneur and an intrapreneur?
Marc: This is not an easy question, as there are, in fact, many definitions out there! I like to define an entrepreneur in a fairly straightforward way – an entrepreneur is someone who identifies and pursues an opportunity for value creation, and an intrapreneur does so in a corporate environment.
María: Have you got a mantra that encompasses the essence of an entrepreneurial journey?
Marc: Yes, I do! It is from Peter Drucker – he once said: "you do not create a company for creating a product, you create it for creating a customer"!
Oliver: Why are intrapreneurship and innovation key for UBS Wealth Management?
Marc: Intrapreneurship and innovation are essential ingredients that will allow UBS to identify and capture value creation opportunities that arise from the manifold technological advances that we are seeing nowadays. However, there is a catch: UBS is a key player in the financial industry with a great reputation. Yet, because of this great reputation, the bank also needs to careful with the “level of experimentation” it engages in – failures that are normal in innovation need to be managed with significant attention so that the bank’s reputation as a “solid place that takes good care of your money” is not tarnished. The bank’s excellent reputation is also a major asset that the new fintech competitors cannot draw on. This is a major shortcoming for them!
But let’s look at this competitive threat more closely, as UBS faces it from two sides: there are the "swarms" of small fintech start-ups that aim to disrupt the value chain and often focus on the “filet pieces” of that chain. And there are the big technology “sharks” such as Apple, Google or Paypal that attack the financial incumbents. This puts a lot of pressure on UBS – from left and right! But, overall, I am optimistic – because of the important initiatives happening on the innovation front at UBS, and due to fact that UBS is a trusted brand, is present across the globe, and has a pool of well-educated talents. These key assets need to be connected with the intrapreneurial spirit and new technology. Technology can be seen as a threat - but it is also a major new opportunity that allows to capture significant new value!
Oliver: At the moment there's so much going on in the fintech space. We need some navigation here. How would you detect the signal from the noise?
Marc: This is not an easy question either. If we look at the big picture and remember the first internet boom and bust in the early 2000, we see some similarities. Most of fintech startups struggle to build trust fast in order to capture the opportunity that they have identified, and to really succeed. This is the “liability of newness”, in particular in the financial industry. However, blockchain technology could be the new thread of trust going forward, providing a new form of social-types of security, which might help new companies to build significant levels of trust in a faster way.
Oliver: What is the tension field for UBS in innovating our business?
Marc: Compared to other industries such as the technology industry, the financial industry and, in particular, UBS faces a bigger tension when it seeks to balance traditional aspects such as security, trust and solidity with opening up for radically new innovations and smart failures. UBS needs to find its way of leveraging the new technologies without losing its reputation of solidity and security. Usually failures highlight issues that do not stand for a trustworthy bank. Look at Apple or Google – they do not experience such a strong tension.
Oliver: What key learnings do you want to deliver for our participants in the classroom?
Marc: First: the why. As we live in the age of entrepreneurship and fast technological change the identification, development and capturing of new business opportunities is a responsibility for each and every employee in the firm. You have to pursue new business opportunities collectively and systematically to allow the company to tap into new business opportunities. This can be learned, but it needs an open minded employee.
Second: the how. I like to provide frameworks and tools that participants can apply in order to identify and shape their opportunities and, finally, integrate them into the business. At UBS, the WM Innovation Rocket is the space for linking back radical business ideas to the existing organisation. You need such a landing zone and you need to know where and how to land. For that purpose, my course delves into the all-important mechanisms underlying the key steps in the opportunity lifecycle – as it happens in a larger organisation.
Oliver: From your experience of interacting with our program participants so far, what is your advice for them to take more out of the classroom lessons?
Marc: In my view this is a mindset issue. Usually, in a first step, participants come up with an idea that is their own brainchild. This is great, because building ownership and conviction for your own ideas is key to entrepreneurship. But good entrepreneurs are also able to take a step back and look at their opportunities as an object that they can shape and adjust when they test it with clients and other stakeholders. In short, you own the opportunity, the opportunity doesn’t own you!
Also, as an entrepreneur you need to keep on exploring during the whole opportunity journey and be ready to add, substract and rearrange parts from the original idea. In this way you will gain a deeper understanding of what is the vital core of your business opportunity.
Oliver: This resonates with my observation in the last market places. On the one hand our program sponsors encourage our participants to build enough conviction for their business opportunity in order to persuade others to endorse the idea and help to turn it into reality. On the other hand they remind them not to be too advocative while pitching their own ideas.
In principle, there are two sides of the coin. Our participants need to put enough substance into their ideas in order to become purposeful confident about it and inspire others to follow them. And they need to stay alert for the challenge and critisim they face when they test their ideas, because not always the first idea is the the best idea to implement.
I see a confirmation bias here which might be a roadblock for success. As human beings we tend to seek for confirmation of our best ideas. In consequence we lack full awareness for the benefits of constructive challenge from the environment: to discover the feasible opportunity shape. In some cases this means to go back on square one or even start a new game. These are the tough moments of truth for our participants to learn on-the-job, to build their leadership aptitude and to drive adaptive execution.
Oliver: From your experience of having reviewed fifty growth projects, what has surprised you?
Marc: It is the passion the UBS professionals put into their growth project, because everything comes on top of their daily workload and they have no guarantee for success. They are soldiers of fortune. Furthermore, the fact that the growth project portfolio is well diversified with projects across the full range of core business enhancements, incremental innovations and disruptive innovations. Here are some examples - I am amazed by project teams who want to leverage new technology for enhancing established processes and products, innovating the business model or scaling up global collaboration. I am also impressed by the many projects teams who adopt an existing technology or best practice from one region or function and roll these solutions out on a larger scale.
Overall, global incumbents like UBS shall have all cells filled in their global business opportunity portfolio. Such companies need all project types in the portfolio to exploit today's opportunities and explore tomorrow's opportunities. Of course, the moonshot projects are typically the most exciting ones to talk about, but their significant potential goes along with a higher risk of failure – and the teams need to take full ownership for success and failure. And both outcomes provide important learning opportunities.
Oliver: To my surprise quite a lot project teams want to create new wealth management technologies either by enhancing existing systems or introducing new ones. However, in my view the technology creation path is more complex, challenging and risky. In comparison, the early adopter utilisation of latest available technology and the mobilization for mass execution can be the easier way for success. When is it worth to pusue the exploration path from scratch? And when shall we skip the first step and focus on the exploitiation path?
Marc: Yes, indeed, both approaches are important in innovation and they entail fairly different challenges. In a way, the early adopter firm has the key benefit that it can observe which solution will prevail. Yet, it also faces the risk that it still may be too late to catch up with the initial movers. In order to assess whether a “wait and let’s see” strategy is best, it would be key to understand if there are any factors that will drive diffusion and adoption for the initial movers – such as, for instance, network effects or economies of learning.
María: What do you expect to see in to upcoming growth projects? What is the trend?
Marc: I’d personally like to see more projects that embrace new technologies and business models, and take a fresh look at the banking industry. UBS has key assets that we already talked about, and it would be important to capitalize on new technologies and business models by finding synergies with these assets. Why not attempt to rethink banking following the Uber or AirBnB business models? Using blockchain technology?
Oliver: When you compare UBS with other financial companies where do you see the thought leadership difference?
Marc: What I see at the moment is that UBS takes an outstanding approach with the holistic growth project portfolio and the innovation rocket. Both are well thought through and positively reinforce each other. I also got the impression that there is relatively strong support from the company. For sure there's always space for more, such as giving employees dedicated time to innovate (think of Google‘s 20% approach), more digital savviness, or larger amounts of project seed funding, in order to have more time, capabilities and money for the exploration of new opportunities. However, the right percentage needs to fit for UBS.
Maria: How can we foster the intrapreneurial culture in the organization – living a culture of innovation and ownership by applying the key learnings from the Master in WM Classes?
Marc: Fostering a culture of intrapreneurship cannot happen overnight. but once it is achieved, it can serve as a lasting source of competitive advantage. It takes many different steps, and education is one of the main ones. For instance, after my course in the Master in WM, I expect that participants go back into the organisation and are able to execute some of the key learnings. Importantly, as they have learned new things in the classroom they are in a good position to teach back and inspire others.
Furthermore, what works well in companies like IBM and Google are innovation jams with a large group of employees exploring new business opportunities. I got the impression that UBS has a pool of talented people who can be engaged more strongly with such collective initiatives.
Oliver: In UBS we have started with innovation jams such the WM Innovation Challenge and the UBS Grand Challenge where employees submit ideas that are evaluated by a jury in order to pass the first tall gate.
Marc: Yes, this is an excellent example of how intrapreneurial thinking can be fostered. I also recommend embracing smart failures, because you typically can learn more from failures than from successes. If employees dare to fail and get the support when they fail smartly, then they will dare the bigger moonshots that are needed . As said before, managing the tension between project failure and still being a “solid” institution is the crucial challenge for established banks.
Oliver: How would you differentiate a smart failure from a poor failure? Can you elaborate on the value of learning from failure?
Marc: A smart failure is a learning opportunity – and needs to be studied in a careful manner. Failure is normal in innovation, as, by definition, innovation entails doing something new and unproven. Once this is clear, failure is just a normal outcome and should not be stigmatized. Unfortunately, there is way too much stigmatization of failure in our European societies…yet, if one understands the game of innovation, you know that you will sometimes have to face failure. And then you ask, what can you learn from this experience – was the execution process flawed? Did we lack the right internal support? What went well? What were our fall-back options?
Oliver: In our maket places with program sponsors the stakes are high. Some participants fear to fail and do not present. What can we learn from this? What advice can you give in such situations?
Marc: Failure is never fun – but then again, innovation and failure are two sides of the same coin. And it is essential that this is understood by everyone. Why not celebrate a smart failure together…and point out what the organization has learned.
Maria: What do you like about the collaboration with the UBS team?
Marc: I like the positive spirit you have in your team and the drive for ongoing program development and execution. In my last session in Course Block 'Strategy & Leadership' I enjoyed the close collaboration with the WM Innovation team. When you can work hand-in-hand in a seminar, then you can create a coherent participant experience. In this way, participants realize that what we are teaching them in the seminar is desired and recognized by the organization. So I am curious to see the upcoming growth projects and look forward to our next classroom sessions! Keep on pushing, we are living in a world of excellent opportunities!
If you want to join the next interview with Marc or have some interview questions, please contact maria(dot)gonzalez(at)ubs(dot)com.