Stanford Report, Jan. 21, 2004
Note to entrepreneurs: Meet new people
BY Mary Petrusewicz
What's good advice for enhancing your creativity in business? Cut the
umbilical cord to the folks around the office water cooler. Mix it up.
Take a class with strangers; seek out ideas from people you don't ordinarily
talk to. Do anything to get out and mingle more with folks from other
professions. Broaden your social horizons, and you just might come up
with the next crazy idea that sparks an industry.
Traditional studies on business innovation do not predict whether an
entrepreneur will be innovative, says Martin Ruef, an assistant professor
of strategic management in the Graduate School of Business. They predict
instead whether an established firm or industry is likely to produce innovations.
"I wanted to examine how people become innovative rather than why they
reject conventional routines and adopt someone else's innovations," says
Ruef, whose latest research looks at what leads people to establish organizations
that employ radically new routines.
In 1999, Ruef surveyed Stanford Business School alumni who had started
new businesses. He wanted to find out what got their creative juices flowing.
He based his study on data from 766 entrepreneurs from a target group
of 1,786, including some foreign entrepreneurs. The metrics for innovation
included the introduction of new products or services; trademark or patenting
activity; exploitation of a new market niche; new methods of production,
distribution or marketing; and industry restructuring.
Looking at entrepreneurs' social networks and their career histories
to see what the connection is to innovation, Ruef concluded that the most
creative entrepreneurs spend less time than average networking with business
colleagues who are friends and more time networking with a diverse group
that includes acquaintances and strangers. "Contrary to common assumptions,"
says Ruef, "the evidence suggests that in many cases strong social ties
do not provide significant new information, so it helps not to be as embedded
in them."
Ruef has found that disparate information and its transmission are keys
to innovation. "Weak ties -- of acquaintanceship, of colleagues who
are not friends -- provide nonredundant information and contribute
to innovation because they tend to serve as bridges between disconnected
social groups," he says. "Weak ties allow for more experimentation in
combining ideas from disparate sources and impose fewer demands for social
conformity than do strong ties."
Entrepreneurs who spend more time with a diverse network of strong and
weak ties -- of family, friends, business colleagues, advisers, acquaintances
and complete strangers -- are three times more likely to innovate
than entrepreneurs stuck within a uniform network. "Diverse networks and
sources of information encourage the diffusion of nonredundant information
and thus stimulate creativity," says Ruef. In terms of the entrepreneurial
team itself, "the more entrepreneurs you have, the more likely you are
to have innovation because people come in with different backgrounds and
perspectives." Ruef cautions, though, that even if complete strangers
spend a lot of time together, the ties among them soon will be the equivalent
of strong ties and drown out the benefits of nonredundant information.
Ruef also has found that people tend to be more creative and innovative
when they are new to an industry. "When I examined the sources of career
experiences," he says, "I found strong evidence to suggest that the longer
entrepreneurs have been in the industry in which they seek to make a creative
contribution, the less innovative they are." Career tenure is not a bad
thing necessarily, he points out, because extensive experience can contribute
to more profitable business in other ways. "Veterans just don't come up
with wacky or creative ideas that can really spark a new industry."
"The relevance of this study to entrepreneurs," adds Ruef, "is that
it helps them identify how they can be creative and innovative, which
in my mind is a goal for a lot of entrepreneurs, who often seek creativity
for its own sake, independently of material gain. The value of the study
to society is that it identifies patterns of socialization that may contribute
to innovation and wealth creation."
