Innovate or Evaporate?

Posted: September 9, 2012 by Rashmi Assundani in Ecosystem, People, Planning, Startup

Innovate or evaporate – this seems to be the new mantra for sustaining businesses. Given the high failure rate of entrepreneurial activity, entrepreneurs naturally ask  ‘How do I continue to innovate so I don’t evaporate?’ Constant innovation depends on access to information and ideas, and the access to information and ideas depend upon the entrepreneur’s ability to network.

In my mind, networking has become a clichéd term which ranges from meeting people in parties to having a Facebook and LinkedIn account. It can be an exhausting exercise as also a resource intensive one. When I was little, I would hear my entrepreneur father tell me networking requires energy, time and money.  For an entrepreneur, all these resources – time, money and energy, are precious and also limited. The obvious question would then be: How can an entrepreneur network with greater efficiency and effectiveness? Should I network with my ‘close and deep’ contacts or should I spread my wings? Where should I expend my resources?

On the one hand are the close and deep networks – networks with folks that you trust and maintain deep relationships. Everyone knows everyone and such a closed network is trustworthy, offers access to resources, information, opportunities, capital, market and labor to entrepreneurs in these communities, and therefore serves as a natural business incubator to the new entrepreneurs. Since norms of co-operation are high in such networks with strong-in-group ties, deviance in behaviors and the threat of opportunism is low. However, there is a flip side to it: such networks may limit entrepreneurs to information from outside sources, thereby serving as mobility barriers for additional or different opportunities. Therefore, if seeking diverse information is critical for entrepreneurs, then what are the mechanisms that offer them opportunities to reach outside these close and deep networks?

Open networks – networks that have disconnected clusters or are loosely connected – are mechanisms to offer such opportunities. For such networks, you need to spread your wings and reach out to disconnected individuals or clusters. The strength of these weakly connected ties lies in helping you reach more people to reach more non-redundant information, providing more alternatives, information and opportunities for adaptation and innovation. This sounds exciting, but for a practicing entrepreneur the implications are demanding. This requires lots of time, lots of energy and lots of resources.

As an alternate, consider spreading your wings by attaching to people who may serve as a bridge for you – a bridge to connect you to disconnected and independent clusters. Therefore, instead of reaching out to these disconnected clusters independently, you are now reaching out to some specific people/institutions that further connect you with relevant clusters – this helps maximize your resources. Consider individuals, organizations, and institutions that span multiple markets and technology domains and that have the capacity and ability to diffuse knowledge from where it is known to where it is not.  Entrepreneurs can engage institutions such as area universities, research and science parks, Chambers of Commerce and support agencies such as the Small Business Administration for great support.

On a final note, consider networking for a purpose. As an entrepreneur, your time and energy are the most valuable resources that you possess. Spend them judiciously to re-align your business to constantly evolve and innovate.

Rashmi H. Assudani, PhD. is an Associate Professor of Management & Entrepreneurship at Williams College of Business, Xavier University.

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