I attended the San Francisco Supernova Mixer Tuesday night, where John Hagel and John Seely Brown from Deloitte’s Center for the Edge presented their research on the Big Shift– “a major new effort to track the real impacts of what we call the Network Age. ” My copious notes on their talk are posted here.

Corporate America Doesn’t Know How To Succeed In The 21st Century – And Now It’s Hitting Their Pocketbooks

The basic message was that Corporate America is broken because it is not adapted to utilizing the powerful technologies of the digital age. Pinpointing with precise metrics exactly what corporations are doing wrong and providing prescriptive solutions proved very difficult. All they could show was a million and 1 correlations that in aggregate mapped the overall downward trend of Corporate America. While untangling the problem was like untangling a geek’s rat’s nest behind his computer, the solution was quite clear: talent development. The future of business is dependent on developing people, in many cases your employees, to be leaders and innovators in their respective fields. To do that they need to be able to participate in knowledge flows and have built-in structures and habits to absorb our increasingly exponential pool of tacit knowledge. Corporations are doing a terrible job of talent development.  Don’t get lost in complex economic theories and financial manipulation, focus on you developing people. We are a culture now, that is dependent on innovation, not over optimizing and over leveraging paradigms past their expiration date.

In the digital those who are successful are lean, nimble, fast learners, who utilize increases in knowledge flow to amplify creativity, collaboration and innovation.

And passion is more important than ever. Because only those with passion are able to keep up with the pace of change.

The way I see it big centralized corporations are dead. Meaning nearly all of the Fortune 500. The startup atmosphere, with small teams of innovative, highly driven people, for now is king. But eventually we’ll find ways to scale our structures back up to take advantage of increased size and more brain cycles, without the bureaucratic inefficiencies of today.  But the new kind of corporation will look radically different than anything we know today. It will a new kind of institution re-imagined from the ground up built upon the fundamentally new set of rules of the digital era.

Universities Are Stuck In Old Paradigms, Too. They Are Failing At Their Core Purpose

Since my focus for the last year has been understanding what it takes to be successful in the context of how we educate ourselves, this prompted me to ask the question, if corporations are doing a terrible job of talent development  how our universities doing? The institution accepted worldwide as the format by which we should develop our young people. And as you might expect the answer I got from everyone I asked at the event, was that universities are just like corporations: well adapted for old paradigms, and woefully inadequate for the rapidly changing digitally dominated world.

Two seats away from me I met a student who is a junior at Stanford. Perfect I thought, “Here’s a guy who is at the university credited with perhaps the most entrepreneurial spirit of any university in the world. This will be a great way to get some feedback and test out some of my hypotheses.” And as you might have expected he confirmed my hypotheses, leaving me both dismayed and excited at the same time. Dismayed because one of the best universities in the world is failing at its core purpose, and excited because the necessity of the organization I’m creating has increased drastically.

The Best Way To Make An Impact and Learn At The Same Time. Why Do Very Few Do It?

I asked the student what the startup culture was like for undergrads at Stanford. He said that Stanford didn’t really want to invest in their undergrads, because the value proposition was much higher for the graduate and Ph.D. students because most undergraduate startups fail to make any money. I think that’s a big load of crap. How can you not invest undergrads? The biggest technology companies in the world today were started predominately by people who dropped out of their undergraduate education in order to pursue a start up. Think Apple, Microsoft, Dell, Oracle, in fact I think Google is the exception.  How can you not nurture the entrepreneurial spirit of undergraduates at Stanford? My friend Jeff Seibert who graduated from Stanford last year and is the cofounder of DFJ backed startup Increo Solutions, said they were just one of maybe four or five startups that came out of their graduating class, and he wasn’t even sure if all of those could be taken seriously.

I then told the Stanford student I was talking with that Stanford should invest in its undergrads to undertake startups for the learning opportunities alone. Most of the people who I’ve talked to who have been involved in the founding of startup organizations almost unanimously agree it has been the most exciting and intensive learning experience of their entire life. The student agreed with me, “Oh yes, the learning experience is great, I mean, that’s all there is with the first startup, because you’re probably going to fail anyway, if it’s your first.”

That’s a very dangerous statement to believe. Yes you have to logically acknowledge that the facts say that most startups will fail. If you go into the start up experience expecting it to fail but knowing it will be a great learning experience, it will fail and it won’t be a great learning experience. The concentrated learning only happens as a result of the intense focus that occurs when you have 100% commitment and the resolve to never give up until you make it work. The learning can only happen as a byproduct of your desire to succeed. If you go after the learning experience, you will have neither a great learning experience nor a successful venture. I’ve heard the equation that Understanding= Knowledge + Action. And that makes sense to me. That is why the best way to learn is by doing. Happiness is the same way, the more you go after it directly, the more elusive it is. This is probably because when people go after happiness they go after the pleasures instead of the gratifications. Pleasures make you feel good in the moment but have no lasting effect on your happiness. Gratifications trigger no feeling in the moment but make you lastingly happy. Think Flow. For more on this read Martin Seligman and Mihaly Csikszentmihalyi.

You have to emotionally believe you going to succeed but logically know that it’s very difficult. It’s this kind of Orwellian doublespeak, of holding contradictory truths in your mind, that is essential for people who dare to be different, and dare to change the world.

Stanford should fund its students based on the value of learning experience alone. They need to get them on a trajectory to solving the world’s important problems now, because if they get sucked into the corporate world, and get used to the comfortable wage, they will never be able to turn back, and another potentially innovative soul is lost. And boy, does the world need every innovative soul it can get right now.

Seth Berger who founded AND1 while he was in college expresses the sentiment well that the time to start your first business is while you’re young. I linked to the quote in another draft I’m writing right now, so don’t be surprised if you see it again.

Berger:  Start a business before you go get a job. Here is the reason. If you go get a job, you are going to succeed…. If you come out and work, what are you going to make? 50K to start? You tell me.

So let’s say you are 21 and you get out of school making $60,000. You do real well and three years later they say, “I am going to send you back to grad school. I am going to pay for you. Then, come back to work. When you come back you are making $175,000.” Five years after that, you are going to be making a half million bucks. You are going to have a husband or a wife, two kids, nice car, summer home, country club. At what point are you going to say, “I am going to go start my own company.”? The answer is never.

What you will do is work until you have made enough money, somewhere in your 50s, to go do something you really want to do, instead of now, when you are broke…. When I got out of graduate school and I drove a Honda Civic Hatchback. I was broke. I didn’t care. It just didn’t matter. But once you get used to the good life, you won’t go back. So if you are thinking about starting a business, start the day you graduate. You don’t need experience. You don’t need money. You don’t need someone else to tell you that you can do it. Just go start it before you get used to making all that money.

Succeeding Isn’t Complicated. Just Commit.

You have to believe with all your heart, with complete emotional congruence that the startup you are working on is going to make it BIG. In the early 1900′s Andrew Carnegie commissioned Napoleon Hill to interview the world’s 100 most successful people, an impressive undertaking that included the likes of Thomas Edison, Henry Ford, and Charles Schwab. This book is the oft quoted Think and Grow Rich. What Napoleon Hill discovered was that there is a basic process that every successful person went through with little variation. The foundation of any successful venture is a visionary who has a definite purpose and a burning desire to succeed. He also has faith that no matter what happens, no matter what challenges are thrown his way, he will be able to overcome them. He has 100% believe that he will succeed, even when he is teetering on complete collapse. And it is that kind of conviction that ends up being the difference between success and failure.  The 3rd thing all the people he interviewed did, was create definite plans of action and begin carrying them out immediately. Many times their initial plans were wildly off the mark. But that’s to be expected, it’s very rare that you will strike gold on your first attempt. The point of that first attempt is to get the feedback to make your second and third attempts successful. Thomas Edison is famous for finding 10,000 ways a lightbulb wouldn’t work before he found one way it would, and he completely revolutionized the world as a result of his determination. That that same dogged persistence, not coincidentally, is possessed by every other successful person that Napoleon Hill interviewed. What they all had was incredible ability to persevere through failures, regroup and create new updated definite plans of action based on their lessons learned until they found one that worked. Now there are other things that you need along the way in order to accelerate your growth, this includes things like mastermind groups learning how to be decisive, and specialized knowledge, but these complimentary skills will fall into place naturally if you pursue the process of burning desire + faith + organizing a definite plans of action + persistence in the right order.  You will notice interestingly that most success stories are very similar to one another and that’s because there are certain rules of success that work. The challenge isn’t to find new ways to be successful it’s to find new ideas you want to be successful with.

In Made to Stick the Heath Brothers also noted that most successful, or as they call it, sticky ideas also followed a similar pattern. “We will give you suggestions for tailoring your ideas in a way that makes them more creative and more effective with your audience. We’ve created our checklist of six principles for precisely this purpose. But isn’t the use of a template or checklist confining? Surely were not arguing that a “color by numbers” approach will yield more creative work than a blank-canvas approach? Actually, yes, that’s exactly what we’re saying. If you want to spread your ideas to other people, you should work within the confines of the rules that have allowed other ideas to succeed over time. You want to invent new ideas, not new rules.”

People think that they need to have mastered a huge laundry list of skills before they even begin. You don’t. You just need to begin at square one with a burning desire to do something, anything. Seth Godin in his recent TEDTalk on Tribes describes this phenomena as well, “It’s fascinating [that] all tribe leaders have charisma. But you don’t need charisma to become a leader. Being a leader gives you charisma. If you look and study the leaders who have succeeded, that’s where charisma comes from, from the leading. Finally, they commit. They commit to the cause. They commit to the tribe. They commit to the people who are there.”

The Power of Purpose and Knowing What You Want

Purpose is incredibly powerful. When you have purpose the right opportunities seem to flow magnetically to you. This isn’t some bullsh*t metaphysical phenomena like the Secret or the Law of Attraction where the universe just gives you whatever you asked for. Scientifically, it is probably explainable by understanding parts of the brain like the Reticular Activating System, which basically controls what you focus on. And when you can control what you focus on you begin finding possibilities all over the place. When you don’t control what you focus on you end up just satisfying your Maslow’s hierarchy of needs, sex, food, comfort, rinse repeat. Here are two examples to illustrate the power of purpose the first is from Colonel Colditz, the second is about understanding the flight path of an aircraft that knows its destination.

“When people know their desired destination, they’re free to improvise as needed and arriving. Suppose I’m commanding an artillery battalion and I say we’re going to pass this infantry unit through our lines forward. That means something different to different groups. The mechanics know that they’ll need lots of repair support along the roads, because if a tank breaks down the bridge the whole operation will come to a screeching halt. The artillery knows they’ll need to fire smoke or have engineers generate smoke in the breach area where the infantry unit moves forward, so it won’t get shot up as it passes through. As a commander, I could spend a lot of time enumerating every specific task, but as soon as possible know what the intent is they begin generating their own solutions.”

“When an airplane takes off it has a flight plan. However during the course of the flight wind, rain, turbulence, aircraft, human error, and other factors keep knocking the plane off course. In fact the plane is off course about 90% of the time. The key is that the pilots keep making small course corrections by reading their instruments and talking to the control tower. As a result a plane reaches its destination.”This is the power of knowing where you want to end up and making continual adjustments along the way, while staying true to your values.

Let me again return to my observation of Stanford’s ineffectual culture. If Stanford’s culture fails to encourage most of its students to be entrepreneurial, then why does it have a reputation as such an entrepreneurial institution? It gets its reputation from a few very successful startups that are by and large outliers in the community. I’m willing to bet the culture is not very different from your average, stodgy, nose-to-the-sky Ivy League institution, but it does have one key difference: proximity to the innovative and vastly more creative corporate culture of Silicon Valley, which a student with strong initiative and motivation can easily tap into, and use as a launching pad. But the culture does not directly encourage this, and it seems as if it directly discourages this type of behavior, impregnating students with the feeling that they must have lengthy resumes and many degrees before they can do anything of importance. I think an educational institution should be measured more on how many students even try, then on how many succeed. To put it another way, if we want to judge how entrepreneurial a culture is, we should look at how many students are attempting to start entrepreneurial ventures in Boolean fashion — did they try to start one or not, not how successful the most successful startups are.

Leave Your Nest

Another thing that this student said that really surprised me, was that this was the first entrepreneurial event he had attended that was not on campus. That’s astounding. How can you not take advantage of the incredible opportunities to meet amazingly creative people, that come to public gatherings in the Bay Area every day. I don’t blame him, I blame the culture. Some people end up making an impact because they naturally pursue the goals in the right way. But those who don’t focus on the right things on their own, yet still have a desire to make an impact, should be pointed in the right direction by the talent development institutions, today known as universities, that they are a part of.

After the event was over, I waited for my turn to talk to John Seely Brown, and asked him how he thought universities were doing as far as talent development goes. He agreed that they are making the same mistakes as corporations. I asked Kevin Werbach, a renowned professor at Wharton the same question and he gave me the same answer as well . But of course, he doesn’t think universities will die, he thinks the middle of the road certainly are in fact headed towards the gutter, but people still need to be certified, and the top universities will still be able to capture value if the best faculty stick around. But what if the faculty leave because they have higher leverage environments to place their energy? I think this is a likely possibility. But more on that in a future post.

Even though Stanford brings amazing events on campus, it’s incredibly important to go to events like the one we were at off-campus. The best part of the event was the questioning and networking afterward. I can get the information and lecture online, from the web stream on my couch at home. But I can’t get the on-the-fly introductions, the rapid feedback based on the same lecture we all witnessed, the rekindling with familiar faces, and the chance to meet exciting new people I’ve never met before. I made new contacts and got new leads and I exposed myself to more positive randomness than any sheltered event on campus can produce. This is certainly not to say that on-campus events are not valuable, they can be very valuable, but I find it amazing that so many students have never walked out the back door, to participate in the very beneficial activity of attending events in Silicon Valley.

In this post I have used Stanford as an example of the failure of Universities to develop the next generation of young leaders.  In a future post I will go on talk more broadly about why the current educational model isn’t well adapted for the 21st century and why entrepreneurship is the process uniquely suited to remake the world in the 21st century. While you’re waiting, I’ve described many of my thoughts on this here in the 12 minute speech I gave at the World Future Society in mid-July.

Other ideas inspired while writing this post, but didn’t make it into the post:

- Almost everything that is valuable that has been created by humans began first as an idea in someone’s mind.

- I got tons of great feedback tonight, I am now ready to go to more networking events. There’s a natural rhythm to putting your head down and moving projects forward, and going out to a lot of events, meeting people, networking your ass off and getting feedback.

- I wrote the foundations of this blog post on my cell phone while walking to BART.