How can businesses establish cultures of creativity and innovation? It’s something that was hotly debated at this year’s Dell Women’s Entrepreneur Network (DWEN) event at which Doreen Lorenzo, CEO of frogdesign, argued that start-ups think more creatively than their larger counterparts because they’re less risk- and failure-averse. Doreen claimed that — just as failure in science is regarded as a precursor to learning and great products — so business must also embrace failure as a positive thing.
It’s a sentiment shared by serial entrepreneur Dr. Pippa Malmgren, founder of investment advisory firm Principalis, whose impressive business feats have included serving as the financial market adviser to President George W Bush in the White House and being awarded the World Economic Forum’s ‘Global Leader for Tomorrow’ accolade (to name but a couple!). To Pippa’s mind, everyone, from the individual entrepreneur, to whole economies, is capable of more innovation when faced with adversity.
I sat down with Pippa to learn more about her philosophy on business innovation, and her advice for fellow entrepreneurs.
Pippa, you have an incredible CV! What do you think is the key to your success?
Thank you! I’ve been very lucky; a lot of interesting things came my way. I used to be like the old Soviet Union with a rigid Five Year Plan. That worked very well but I also learned to make room for surprises outside the original plan; it’s a matter of finding a balance between the two.
If you love what you do, you’ll be better at it than anybody and the money will follow.
Tell us a little more about Principalis and why you started it.
I grew up in Washington DC, immersed in politics, with a father who had worked for four presidents as a trade negotiator, so auto parts, textiles, steel and dairy products were normal dinner conversation. It was clear to me that the financial markets are the blood supply to the world economy. Policymakers can move the financial markets with a few words.
So, I realized it was a special gift that I spoke both “Klingon,” the language of the markets, and “Federation,” the language of policymakers. I’m essentially an interpreter, explaining one to the other. That lets me see things coming on the horizon which will be investable. I try to identify themes and trends about risk and prices, about policy and markets, and advise companies about how they will make or lose money in the future as a result.
Explain your philosophy on how business can best breed a culture of innovation
Innovation is key to the creation of GDP. But people define this far too narrowly. Innovation is also about how people and companies reinvent who they are, and redefine the market within which they operate.
I don’t think getting great academic scores is indicative of capacity to innovate. You also need people who grew up playing with engines and radio sets, or with ideas. Practical, hands-on experience counts as much.
Cultures that do not accept, let alone celebrate, failure, don’t have the capacity to innovate. Failure is needed in order to learn and innovate, and when you’ve nothing to lose, the opportunities for risk-taking and creativity drastically improve.
What advice would you offer SMBs looking to make themselves more attractive to investors?
All big businesses started out at the kitchen table or in the garage. Two thirds of the net new jobs are created by firms that employ fewer than 50 people. So SMBs are critical to economic success. They may not have easy access to capital, but this is actually a huge advantage for them. Capital constraints force them to act with immense discipline, and that’s how good businesses are founded.
Once a business model is working, business owners often want capital, but the desire for immediate cash can overwhelm the innovative work they’re doing. Entrepreneurs should never be solely chasing the capital, but should concentrate on doing something they love, which in turn creates better businesses. We would have a better quality and more robust economy if more entrepreneurs built to own, instead of building to sell.
What’s your top advice for any entrepreneur?
Nobody tells you that running a small business is a character test. People will tell you your ideas are crazy. This forces you to decide what you really believe and to stand, usually alone, behind your beliefs. Working in the White House is a character test as well by the way! Both places make you realize that you are both unique and expendable.
Two pieces of advice: 1. Don’t run out of cash. 2. There are two kinds of people: the ones who give you energy, and the ones who take it away. Ruthlessly go with the former.
Why aren’t there more women in business leadership?
There are so many factors contributing to the low number of women in these roles. Head-hunters tell me all the time that many women won’t even take their phone call, or cut it short by saying they’re doing a great job at what they’re already doing, and that’s enough.
Business is a much bigger game than that. I think we all know a man who’s made it to the top who isn’t that smart or well-suited to the job. And we wonder how he got there! It’s likely because he’s good at networking, at being goal-orientated and navigating corporate politics — things many women shy away from because they often favour collaboration over individual winning.
Business is highly competitive and we need more women in the “tournament.” Studies are finding that companies perform better when they have more women in management and on their boards, because a healthier mix of genders, of backgrounds, of ideas, means greater diversity in a firm’s way of thinking and doing business.Business,Entrepreneurs