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Tufts Financial Network: The Imagination Crisis

Tufts Financial Network Speaker Series Event Imagination Crisis April 25 2013 Speakers Bhaskar Chakravorti IBGC Fletcher Lynda Applegate HBS Harvard Steven Koltai U.S. State Department Global Entrepreneurship Program Navjot Singh, Senior Partner Head McKinsey Boston
From left: Bhaskar Chakravorti, Lynda Applegate, Navjot Singh and Steven Koltai. (Matthew Modoono for Tufts University)
A palpable curiosity could be felt at the Ritz-Carlton on the evening of April 25th, as the extended Tufts network congregated for an installment of the Tufts Financial Network’s ongoing lecture series. The topic was innovation and its prospects, an issue of both profound and far-reaching consequences for both the world as a whole, and the professional and personal interests of the students and alumni in attendance. At hand for conversation was Navjot Singh, Senior Partner, McKinsey & Company and Head of McKinsey Boston, Lynda Applegate, Sarofim-Rock Professor of Business Administration and Head of the Entrepreneurial Management Unit at Harvard Business School, and Steven Koltai, Managing Director and Founder, Koltai & Company, Serial Entrepreneur and Former Senior Advisor to Secretary of State Hillary Clinton for the U.S. State Department's Global Entrepreneurship Program. Moderating the forum was the Senior Associate Dean of International Business and Finance and Executive Director of the Institute for Business in the Global Context, Dean Bhaskar Chakravorti.

As seats were taken, the discussion of this topic began in an innocuous manner, as Dean Chakravorti raised the light-hearted but poignant cover of The Economist that touched on the issue. The image of the toilet, in all its useful glory, served as a constant rubric for innovation throughout the talk. Each participant brought a markedly different viewpoint to the discussion. While there was agreement that innovation is a cumulative process, opinions on its current status, and the most important factors to ameliorate the factors influencing the process, were debated extensively.

The beginning of discussion began with a defense of present-day innovation, as Professor Applegate shared the theory of “punctuated equilibrium,” in which innovation is a process marked with points that spur a stream of innovation from a single dramatic impact. Innovations such as the cell phone, and the following commercialization leading to apps, mobile money, and further possibilities, was one of these examples she used to explain how innovation proceeds. She finalized these comments by stating that present-day innovation is moving at a profound pace, and worry, as demonstrated by the The Economist, was overstated.

Tufts Financial Network Speaker Series Event Imagination Crisis April 25 2013 Audience Questions
The panelists take questions from the audience. (Matthew Modoono for Tufts University)
Mr. Koltai, building on the idea of punctuation leading to a cumulative process, stated unequivocally that innovation is a “basic human function,” and is inherent in a portion of the population. He warned that the prototype of these entrepreneurs is not the Steve Jobs of the world, but rather, those that face tremendous adversity, without a proper “enabling environment,” and yet succeed.  Drawing on his experiences in the Middle East during the Arab Spring, he concurred with Applegate, stating that the pace of innovation was, in fact, accelerating, and fears of its demise were over-wrought. He tempered these comments by stating that while these entrepreneurs seem to thrive in such an oppressive environment; our duty is to cultivate those that have expressed such characteristics. Dr. Singh agreed, stating that if you take any company, the innovation is coming from a handful of innovators that can be easily identified.

Applegate continued the conversation by defining entrepreneurship as the “relentless pursuit of opportunity without regard to the resources currently controlled.” The crux of this definition, she asserted, is that entrepreneurs are “opportunity-seeking.” That said, entrepreneurs who strive without resources must be given those resources eventually. This statement led to her next point—that we need to encourage risk taking. Every potential entrepreneur attempts to weigh the risks of following a potential opportunity; it is up to society to incentivize that pursuit of risk. 

Singh, much to the delight of both the audience and Chakravorti, mounted a defense against this missive. The crisis, he argued, is not monetary. Rather, it lies in our conformationist educational system that punishes those that are “outside the box.” The culture of creativity, he argued, has been lost. He challenged the audience to think of “one big idea a day.”

Tufts Financial Network Speaker Series Event Imagination Crisis April 25 2013 Fletcher School IBGC Institute Business Global Context MIB Networking
Audience members speak with panelist Steven Koltai after the discussion. (Matthew Modoono for Tufts University)
Koltai, drawing on his experience in government, asked what can be influenced and what cannot be. He argued that a portion of innovation will certainly come organically; however, the growth will only come with fertilizer. The amount of investment, cited by Koltai as government funding, is simply not enough. Chakravorti sought to expand on this, asking Singh, whose specialty focuses on pharmaceutical companies and their research and development, about the best approach to investment. Singh, however, stuck to his previous points, and in perhaps the most poignant segment of the program, asked the audience how often they had brainstormed a big idea. As the audience polling came in, it became apparent that, despite the high qualifications of the Tufts students and alumni present, a very small minority had innovated in recent times. This led Singh to ask why these brilliant minds had failed to be innovative, despite the resources present. This is a reflection of our schools, he argued, and a problem of utilization of dollars spent and the true impact resulting from these budgets. Furthermore, Singh, continued, the venture capital model is not dead, it simply needs to diversify.

Applegate and Koltai furthered the points made by Singh regarding education. Koltai specifically referenced the Tufts business plan competition, which encourages innovations and entrepreneurship, and creates an ecosystem that supports these entrepreneurs. The entrepreneurs that need financing, it seems, are not only those that operate in difficult environments, but also those that are within an educational system. Financing of these entrepreneurs must not be simply contained to the developed-to-developing world relationship; rather, financing freedom, and the adoption of innovations, should be encouraged though a free flow of information throughout the entire world.

Tufts Financial Network Fletcher School Master of International Business MIB Students
Master of International Business students at the Fletcher School pose for a photo. (Matthew Modoono for Tufts University)
Singh brought up the example of Japan – a society which does not allow risk-taking, and, perhaps even more so, the possibility of failure. The statistics do not lie, as the number of start-ups in Japan is quite low, especially considering its developed nation status. The formula for innovation and its proliferation is simple, he argued, and it is simply a cultural aspect, one that can be assisted by a form of education that enhances society's willingness to take on these risks. Thus, the problem is not with the children being educated; rather, the system, both educational and societal, that is educating the children. We must have “patience for failure”—something seized upon by the younger members of the audience—that allows those to continue risk-taking throughout the world. Rather than dwell on failure, Applegate commanded, we must be able to assume failure, and move forward in a learning process. We must be able to do this by growing our society as a whole, specifically focusing on our belief system and how we view each other in our currently ultra-competitive environment. The stigma surrounding failure must be completely revamped by our society.

Applegate corroborated on this point, citing the local firm Endeavor as an example. Their measurement of five different kinds of capital—economic, human, intellectual, social, and cultural—is the type of all-encompassing perspective we need as we approach how to stimulate and cultivate innovation. Cultural capital is perhaps the most overlooked, and Applegate expounded on this: an example of Middle Eastern women, and their ability to speak with one another in an open forum, drove this point home throughout the audience.

Perhaps the most pervasive lesson the audience left with is the need for an innovation ecosystem: one that encourages those that are willing to take risks, and furthermore supports them through failures to adapt and change their methods to accommodate investment. Koltai aptly summarized by repeatedly highlighting the commonality that ran through the crowd—not only an interest in innovation, but the Tufts association shared by everyone. This relationship, he expounded, allows those to sense the backing of a community such as Tufts, and to take risks that lead to innovation. Leaving the panel amongst a hail of optimism and camaraderie, it was difficult to disagree.

Harsha Kodali is a first-year Master of International Business student at the Fletcher School, where he focuses on international finance and banking and development economics. Harsha has experience in the fields of financial services and international development.  He holds a Bachelor of Arts in Economics and International Relations from Claremont McKenna College.  

View the full video of the event