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A report on Professor Erkko Autio's inaugural lecture at the Business School

At his inaugural lecture , Chair in Technology Transfer and Entrepreneurship, explained to his peers, business leaders and students why his research leads him to believe that entrepreneurship is about quality, not about quantity.

Each year a sizable number of people decide to start new businesses.  Around 5% of the US population - some 12 million people – begin new ventures.  A predictably high attrition rate means the vast majority of companies never grow to a critical size.

Much of the previous entrepreneurial research studied all of these new ventures.  It did not focus on the high-impact companies that grew to have a real economic impact.

“Imagine 100 ants in a tank building a new nest.  If a biologist knew that just four ants would make a greater impact than all the others together, she’d observe only their methods,” said Professor Autio.  “We’re just beginning to get this clarity with entrepreneurs.  Instead of ants, we’re following the 4% of new ventures that go on to create 74% of the economic benefit.”

Professor Autio’s research suggests that a mere 10% of start-ups even entertain hope of growing to more than 19 employees within 5 years. Those actually succeed are much fewer. Yet, those that do contribute over 70% of expected aggregate economic impact of all start-ups.

High-tech companies involved transferring scientific discovery to business – Professor Autio’s specialist area face five specific challenges:  Creating a market around a technology, building and exploiting innovation momentum, being able to navigate complex adoption landscapes, managing interdependencies within adoption systems and able to cultivate positive feedback.

In each of these areas, Professor Autio outlined strategies that have been deployed successfully by the likes of Skype, MySQL, Apple, Kodak, Blyk and Propeller Heads software. 

But ‘where were the penguins?’ you may ask.  In describing the third challenge faced by high-tech firms – how new technologies are adopted by consumers, Professor Autio explained the Penguin Effect:

“Just like penguins on the ice, uncertain of the risk lurking in the waters, consumers wait until they feel it’s safe to move,” said Professor Autio.  “One penguin jumps in and in seconds the entire colony is in the water.  It happened with iPods, VHS and a whole host of other technologies in the past.  It’s obviously a sure sign of success for any hi-tech venture.”