Whether you’re an entrepreneur, a small business owner, or simply running a small team, having an entrepreneurial mindset is so important. Author, speaker, and consultant Rita McGrath says constantly looking at where your next opportunities are coming from and making sure you’re up to date and fresh is what the entrepreneurial mindset is all about, and it all begins with changing the nature of competitive advantage. Rita is one of the world’s top experts on innovation and growth. In this episode, she joins us to talk about sustainable competitive advantage and what makes an entrepreneurial mindset, how we can create it within our organization, and how we can all benefit from it.
I’m very excited to have Rita McGrath joining us. Rita, welcome.
It’s a pleasure to be here.
Rita, for those who don’t know you, can you explain what you do?
I’m Rita McGrath. I’m a professor at Columbia Business School as well as an author, a speaker and sometimes a consultant.
Your clients have included GE, Prudential, LinkedIn, Pernod Ricard and Cognizant, a whole bunch of other names that people know. Take us back. Let’s get started before you got into speaking and consulting. What did that look like? How did things begin for you?
This part of my career had its start when I went to the Wharton School for my Ph.D. I worked in the Snider Entrepreneurial Center there. We were fortunate to be doing quite a lot at the time of what’s called action research, meaning you’re actually working with companies to learn what makes them work and not. My first couple of assignments were I ran a three-year research program with Citibank. They funded our program for three years. What they wanted us to do was create case studies of ventures that had succeeded and ventures that have not and try to tease out from those case studies whether there were any lessons that could be learned to position for greater success down the road. We also did some work for a Belgian mining company that was in the process of trying to transform themselves into more twentieth century industries and that’s where it began. It began as part of my Ph.D.research back in the day.
Here you are, you’re still a Ph.D. student. How do you leverage that experience into actually going out into business for yourself?
I took the role as a professor at Columbia. In that environment, you’re teaching students, you’re taking courses and you have companies coming through. My colleague and I at Wharton continued to work together on joint client work. You’d go to conferences, you’d meet different executives there or they’d read something that you wrote and say, “I had that issue as well.” We’ve got a lot of interest in our work on discovery-driven planning, which was back in the ‘90s. That was a famous Harvard Business Review article, which essentially made the point that when you’re planning for something that’s highly uncertain, you can’t plan the same way that you would if you were planning as though you had a platform of rich experience. The popularity of that article is what got me then into the corporate venturing space. It was very popular. It became part of the toolkit that people used when they’re thinking about doing something that’s new.
Do you think that having a platform of being a Ph.D. student at Wharton was one of the things and also doing this research allowed you to get into organizations or to maybe have conversations that otherwise would have been challenging if you were out on your own as a consultant or looking to do work for the client directly without that type of positioning or backing?
Yeah, I do. I think it’s a signal that you’ve done something and stuck to it long enough that you’ve got the degree and you’ve got the credential. The process of doing Ph.D. teaches you a very disciplined way of solving problems. It teaches you to be respectful of boundary conditions. It teaches you to be careful about not confusing causality with correlation and a whole bunch of other useful things. From that perspective, training really helps. What the angle is to the outside world, it’s a marker that you’ve achieved something. It’s credibility. It’s like if you want to go into business of medicine, it’s better off if you have a degree that says that you know something about it.Help yourself first. Do your homework before you start asking people for their time. Click To Tweet
Your message focuses on creating an entrepreneurial mindset within organizations. That’s one of the key themes that I took from looking at your work. Tell us about what that means and why is having an entrepreneurial mindset, even if you’re a part of an organization, so important?
It begins with the changing nature of competitive advantage. Back in the day, when I was first doing my Ph.D., even then in the world of strategy, we had this idea that what you wanted to do was find an attractive industry and then set yourself up in an attractive position in that industry. Then exploit your advantages for as long as you possibly could. The holy grail was something called a sustainable competitive advantage. What we’ve found over the subsequent years and I would argue that digitization, globalization and these other forces that really have changed the world in which those theories were written. What we’ve seen is that competitive advantages are increasingly transient. What that means is you need to bring strategy and innovation together. If you’re going to do that, it also requires thinking like an entrepreneur. Thinking of, “What’s the next advantage? How do I create a consistent proficiency at innovation? How do I run things through my innovation pipeline in such a way that I can contribute to growth myself?” That’s as much about culture and mindset as it is about anything else. That’s where the whole entrepreneurial mindset idea came from.
A lot of your work and your focus in terms of working for organizations is actually helping the organization to apply or benefit from the entrepreneurial mindset. In your experience, even in your own business, but looking at those around you as well, how do you feel that mindset can be applied to let’s say the independent professional, the consultants and the speaker? The person who’s either just running it themselves as a business or running a small team. How can they also benefit from that mindset?
You’ve constantly got to be looking at where your next opportunities are from. You’ve got to make sure you’re up to date and fresh. That requires keeping on top of trends. It requires looking out into the future a little bit and making sure that you’re not falling behind in terms of what’s going on out there. One of the challenges I see and I see this especially on the speaking market is you’ll have this idea and it becomes very popular. You have that idea, you’re very sought-after and people can get into a rut. Then the question is, “What’s new? What have you done that’s more recent?” If the answer is nothing, then that’s a problem. I definitely think there’s a need to keep fresh, keep on top of trends and keep on top of what’s changing in the environment even if you’re basically running business for yourself.
How do you find the best way to apply that? For someone reading this, they might get that concept of you have to stay fresh. Does that require reading books and reading multiple newspapers and blogs? What is for you the best practice? If someone came to you and said, “Rita, I want to make sure that I’m staying at the cutting edge. I want to be able to see around the corner before I start turning. I want to create that advantage in my business.” What would you tell them? What would be some advice that you might offer them so they could start to actually put that into practice?
This is actually a topic I talk about in chapter one of my new book. The book is literally called Seeing Around Corners. In chapter one, I borrow a page from Andy Grove’s playbook. As you may recall, he was this very well-known CEO of Intel. He wrote a great book back in the ‘90s called Only the Paranoid Survive. In that book he said, “If you want to know where spring is going to most make itself manifest, you have to go to the periphery because that’s where it’s most exposed.” The way I would talk about that is snow melts from the edges. By that, I mean you need systematic ways of getting out to the edges and looking at what’s happening. That can take a variety of forms. Clearly getting out of the building. Sitting at your desk is not going to help with things. I think having diversity in the people that you regularly come into contact with. Are you talking to people who aren’t at all just like you? Are you engaged with organizations that might introduce you to a diversity of experiences? What are you doing to learn about some of the new technologies? How are you following up on that? Certainly, reading is good. The principle that you need to devote time to learning and to absorbing rather than to doing your work is really important.
There’s a whole issue about keeping your skills fresh. If I were to think about just something really simple like the marketing environment now versus ten years ago. It’s a completely different animal. We’ve got social now, we’ve got all kinds of practices around data collection, which however you think about, it certainly has made a big change. We’ve gone mobile. We’ve seen a lot of things shift even in the last couple of years. How are you making sure that you’re fresh and on top of that? The last thing is are you regularly getting feedback from your peers and from your environment that will help you to improve? Your audience is probably likely successful people. One of the troubles with being a successful person is that people either won’t give you feedback or don’t think you want it or you don’t realize you need it. The only way to improve is to get that feedback from the external environment.
One challenge that people may face in trying to apply that or even take that in is there’s a lot there. There’s a lot that you offered in terms of different directions and ways that people can absorb or try to attain that knowledge, that information developing their skills. How have you been able to apply that in your own business and life? There are a lot of different places that you can go to get that information or different ways you can take it in but doing it in a way that you don’t become overwhelmed. I think also because we have so many options these days, it’s like the Shiny Object Syndrome of different opportunities that come our way. How do you ensure that you’re not just grabbing at the next shiny object that comes your way and assuring that you’re still benefiting from focus?
I’m a beginning, middle and end person. When I do, I’d talk about it on to my agenda. I think about how it’s going to go from where it is to where it needs to get to closure on it. The first thing is to be fairly disciplined about your priorities. What I observe a lot of people do is they just let themselves get chased around by their own email. There comes a point when you have to say, “This is really important. It needs my personal and immediate attention. These other things are not that they’re unimportant, but I don’t need to personally be dealing with them. There’s a whole piece about making those prioritization judgments. When it comes to big commitments like, “Should I accept a speaking engagement or not? Should I take on a new client or not?” I actually have a scorecard that I use. What I do with that is go through all the different things that come into play. How much of my time is it going to take? Does it involve a huge amount of travel? Is it something that I find intrinsically? Is it on topic or not? You can send a little scorecard up for yourself and then compare different activities against each other in that scorecard.
What you’ll find is a couple of things. First of all, there’s no perfect opportunity. There are always problems with something. Secondly, is that there’s usually a cutoff. If you accept to do something and it falls below a certain level, chances are it’s something you would prefer not to be doing. Becoming more aware of that I think is helpful. It speeds up the whole process. I’m very lucky I’m in a profession where I basically get paid to think, which is awesome. As I’m preparing for speeches or courses or writing, there’s a lot that I’d naturally come across that keeps me in conversation about what are the latest things that are happening.You’re never going to be able to handle all the details yourself. You have to spend money on someone to help you. Click To Tweet
You talked a little bit about the different opportunities that we all have these days around being able to acquire clients and whether it’s social or in different kinds of media, different tactics, channels and so forth. For you as you made that transition from the role you were in before into launching your own business, what did you find was the best path to actually be able to get clients? Was that a challenge for you at any point or did things click nicely into place?
By the time I was spending substantial time on my own business, I already had books written and lots of articles. I already had a reputation for work in this particular area. That makes it much easier obviously if you’re known for something and being an expert in something that is unusual. That body of work made it relatively easy, plus I work at a university so people come to us. From a cold start, you have to be able to answer the question, “Why would someone come to you?” If you sent them an email and said, “Let’s have lunch or something,” would they say yes and then why would that be? People have to be clear about that in their own minds. I don’t know about you, but I get an awful lot of, “Can we have lunch or can we have coffee? I’d like to pick your brain.” I’ll say to people, “Tell me what you want to talk about.” “I just like to pick your brain.” “Have you read anything over off it?” “No.” “Why don’t you do that?” It’s not that you’re not willing to help, help yourself first. You do your homework before you start asking people for their time.
What you mentioned there is really important. I’ve also observed that, and I find that when you push back and apply from a respectful way to people and just saying, “Tell me more about why you want to meet her or how I can help you.” Probably 50% or more will then not respond. They were interested but they weren’t committed. They weren’t very serious. The moment you push back a little bit and actually require them to do a little bit of work, they tend to disappear. It’s a nice way to qualify people out and make sure that you’re spending your time wisely.
Most of us want to be helpful. When I was younger, my instant answer would be yes. You can clutter up a whole week very quickly with all these meetings and lunches with people who you barely know. Some of that may be very helpful. I had lunch with somebody who is part of this cool incubator organization and I learned so much. It was fabulous. I’m not saying turn everybody down and don’t be accessible. The kinds of conversations that you don’t want to have are either they’re not completely sure of what I do anyway, so they don’t even know what to ask. They’re coming in and it’s clear that either they’ve mixed up who I am or what I do or they haven’t done the work to prepare. It’s an important thing with clients as well. I think what a lot of consultants who just start out do is they get these meetings and they think, “I’m going to this meeting. Once I got this meeting that it’s naturally going to progress to the next big thing.” You go and have this meeting and you never hear back. You’ve spent all this time and energy getting a meeting without being clear as to what would that look like all the way through.
With the benefit of hindsight, Rita, if you look back over your career to this point, what do you see as maybe being one of the greatest lessons that you learned? Some people might have looked at it and maybe you even looked at it at that time as a mistake or a big challenge that seemed insurmountable. Looking back on it, you recognize that it was maybe a pivotal time or an important moment that if you would have known how to deal with it beforehand, you could have avoided it or benefited from it a different way. What stands out to you?
In any career, I think you have to decide which are the things that are your true path versus which you think is appropriate? I’ll give an example. If you were going to work for a consulting firm or a law firm or something, the Kool-Aid you would have been drinking for many years is that, “Nirvana is to become a partner.” One of the things that as I’ve moved through my career is, “Did I want to confine myself to basically academic work or was I more interested in having an impact in the world?” The answer came back when I was a little more interested in having an impact in the world. Not that I don’t respect and think the academic work is super important because it is. My skill set seems to be to take that theory and those ideas and be able to frame them in such a way that people can actually apply them. As I worked through my career here, that clearly became what I felt really jazzed about. I’m not sure if that’s what you’re looking for. It wasn’t like a super big setback or anything. It was more of a realization that this is where I prefer to take things, but that’s just the priorities.
Did you encounter any big setbacks or any challenges? I remember one time when I was in Japan building our business over there. There was one moment where I thought things were going to blow up and I started questioning why I was here and was I really cut out for this? It was a moment that I still remember to this day, even though it’s a decade-plus later. Is there anything like that that stands out for you as a challenging time or something that you camp against?
Any career is full of false starts and missteps and mistakes that people forget afterwards. That’s normal for anybody. Probably the first most challenging thing was in a Ph.D. program. To put it in context, I was pretty young, but I’ve been managing a group for about eight years by that time. I was working in the management department. It could be forgiven for thinking I maybe knew a thing or two about management. When I started taking these Ph.D. courses and reading the academic literature, it was awful. I didn’t know anything. I felt every conversation had begun before I’ve got there or it was going to begin afterwards. I remember sitting in the library at Wharton banging my way through this article by John Child. Child’s article was about something like strategic choice. His whole thesis was that the decisions that managers make matter to organizational outcomes.
I have to tell you as I was reading this thing, I’m thinking to myself, “That’s blatantly obvious. It’s like, “Why would I be here getting this degree if I didn’t believe that?” It’s like becoming a monk. You have to learn the rituals, you have to learn the language, you have to learn the incantations and how things are done. It’s a tough learning curve. Especially since I had a Master’s of Public Administration, but I didn’t have a disciplinary degree like Economics or something like that. I had to just throw myself into it. Blessedly, I had a fantastic chairman, fantastic advisor. My chairman was great and they helped me learn the ropes. Those first two years were really tough. Plus, my daughter was two and our son was maybe four, so I had all that going on too. It’s a tough couple of years.
On your consulting page on your website, you list two main offerings in addition to the speaking, which I know is a big part of what you do in addition to teaching. You list on that page engagements, then the second is workshops and webinars. Do you find most buyers start by hiring you for speaking and then that leads to a workshop and then that leads to a larger engagement? What does the typical buying process look like in your business?
Be willing to say no to some things. People are very happy to waste your time without being willing to compensate you for it. Click To Tweet
It’s all over the map. I’ve been trying to change the pattern out of it for years. The things you go into that you think are just one off and, “I’ll give a nice speech,” they can turn into analysts. You think, “This is going to be a lot of work,” for whatever reason, the management changes or they have a change of heart or strategy shifts or something. I wouldn’t say there’s one clear path through those. Some companies only want hands-on workshops and so forth. Often, I’ll bring other people in with me on those kinds of engagements because I have a limited bandwidth. We’ll come into my company once every month and consult with us on getting this particular innovation thing done. An example would be a very typical one. In that case, I would have a team around me that would do a lot of a project-level work. A typical way that would run is I’d probably be working with the senior team and then my associates would be working with the actual project-level people at the cold face as it were. That’s a model that does work. The speaking sometimes does turn into follow on things and then you just never know.
There are always things that pop out of place that you wouldn’t expect them to come from.
That’s fascinating to learn how people find me. You would have thought by now there would be one path and it could be, “I saw you were quoted in the New York Times or there was this interview that was done with you. I ran across this video that you did four years ago.” For most of your audience, it’s getting that alignment between the person with an issue that they could use some help with and the budget and the timing. Getting those three things lined up together is not always easy.
That takes us beautifully into the next question that I have for you, which is that many consultants feel overwhelmed by client work and then having to market and build their own business. You speak, you teach, you write and you create videos for books and blogs and all that kind of stuff. There’s a lot that you’re doing. We’ve seen this in our own business too how important it is to have different types of media, whether it’s a YouTube channel or this podcast or article contents and speaking. There are lots of different things because different people consume information in different ways and they find you in different ways. What I want to ask you is around productivity. You have a lot going on. How do you approach productivity or set your day or your week to ensure that you’re able to maintain high levels of performance and really get a lot done?
The first thing to realize is it’s not me all by myself doing all this stuff. I have a team around me. Pam, who I’m sure you’ve worked with, handle the scheduling. There will come a time in your business if you’re successful where you cannot keep on top of everything. What I find with a lot of younger consultants or people that are just starting out, the thought of actually spending money on someone to help them with stuff, they’re very reluctant to do that because they’re like, “That’s money out of my pocket.” You can’t look at it that way. You have to be looking at it as an investment in building your business. That’s the first thing to realize, which is you’re never going to be able to handle all the details yourself.
The second thing is to realize that there are going to be some things you’re not good at. To have someone who does your billing for example. Unless you’re the kind of person who gets a charge out of Excel spreadsheets, you can’t afford to get somebody to do that for you. The first thing is figuring out what it is that you’re doing that you don’t need to be doing. That then hones you in on what are the things that only you can do? Getting clarity around that is a good first step. The second thing is managing your own agenda. “What are the five or ten things that are right at the top of my agenda that I have to address? What are some of the things that given all the other pressures on me, it’s a must-do, nice to do and if I have time?” That’s the categorization.
Also being willing to say no to some things. I’m a positive person and the fact that I’m here, I’m able to say yes to things. There are also some things where, “Honestly, I don’t need to do that. That isn’t going to be as great for me as something else.” Early in your career, you’ll get a lot of these opportunities to give free speeches. When you’re building up your book or business, it may indeed make sense. What you’ll find is that people are very happy to waste your time without being willing to compensate you for it if you don’t start putting some rules around that stuff. There comes a point when that isn’t as valuable as it might have been at one point. Knowing when to make those transitions in your career matters too.
Rita, I want to thank you for coming on and sharing with us here. I also want to show that people can learn more about you and your work and especially your books because you have several of them that people would gain and benefit a lot from. What’s the best place for people to go to learn more about you and your work?
I’m looking forward to it. That will definitely be on my list. Rita, thank you again so much.