Engineering Entrepreneurship At Penn

Penn’s two Engineering Entrepreneurship courses receive the highest student ratings of all courses offered in the School of Engineering and Applied Science. This paper discusses the importance of engineering entrepreneurship, both from a global economic perspective and from the personal perspective of the engineer. The paper then discusses Penn’s approach to their Engineering Entrepreneurship Program, with particular focus on its differentiation from entrepreneurship courses offered in the business school. The premise of Penn’s Program is that engineers create and lead great technology companies, hiring managers where needed to execute their vision. Engineering Entrepreneurship and Global Competitiveness Engineers and scientists create great companies. Why? Because they possess the knowledge and skills of high-tech innovation, the passion to pursue it, and the discipline to succeed. Many of these companies are well known: H-P, founded by two electrical engineers, Bill Hewlett and Dave Packard; Intel, created in 1968 by two physicists, Robert Noyce and Gordon Moore; and IBM, created originally as the Tabulating Machine Company in 1896 by Herman Hollerith, a mechanical engineer. Companies like these, and legions of other current and former high-tech entrepreneurial ventures, are the drivers of America’s economic growth. America is the world’s leading producer of high-tech products, responsible for about one-third of the world’s production. Moreover, our competitiveness in global markets depends on the diffusion of high-tech innovation into other sectors of the economy. New products, services and processes increase productivity, increase market share, and create entirely new markets. Entrepreneurial companies, and the engineers and scientists who create them, are the sine qua non of this global technological preeminence. Studies find that more than two-thirds of all technological innovation in America, and 95% of all radical technological innovation in America, are attributable to entrepreneurs. In the words of the Assistant Secretary for Technology Policy of the U.S. Department of Commerce, “If innovation and entrepreneurship profoundly shaped the 20 century, they will define the 21.” Recent research shows that startup companies play an appreciably greater role in the commercialization of new technologies than do established corporations. Innovations based on academic research are more likely to emerge from small, rather than large, firms. Furthermore, the nimbleness of small firms allows them to bring new products to the market quicker. Small entrepreneurial companies are recognized as being highly efficient vehicles for the speedy commercialization of high-tech innovation. Page 899.1 Proceedings of the 2003 American Society for Engineering Education Annual Conference & Exposition Copyright © 2003, American Society for Engineering Education By their nature, entrepreneurial ventures will take greater risks and pursue more innovative opportunities than will larger, more risk-averse companies. Consequently, large corporations often look to entrepreneurial companies for technology licensing, acquisition and strategic investment opportunities. At the same time, the smaller firms often lack the resources (e.g., capital, manufacturing facilities, sales teams, distribution channels, etc.) to fully develop and market promising products. To compensate for this lack of resources, entrepreneurs often look to partner with large companies. Such mutually beneficial strategic alliances are especially common in the capital-intense pharmaceutical and biotechnology industries. Engineering Entrepreneurship and Job Security In addition to these national and global factors, issues of personal economic security motivate engineers and scientists in the direction of entrepreneurship. Large corporations, which once provided a haven of job security, no longer do so. In 1960, one in four persons went to work for a Fortune 500 firm; in 1980 it was one in five; in 1999 it was one in fourteen. In 1960, it took 20 years to replace 35% of the firms in the Fortune 500; in 1999, it took only 3-4 years. The stable employment opportunity once provided by the nation’s large corporations has weakened. Today more than two-thirds of the new jobs in America are provided by small businesses. Also of growing concern to America’s engineers and scientists is the recent trend to offshore sourcing of low-cost engineering talent by multinational high-tech firms. A recent article in Forbes describes Motorola’s opening of a facility and hiring 1,000 engineers and researchers in China, with plans to increase this number to 5,000 within four years. Microsoft, Intel, and Sony have similar plans. The cost to these companies of qualified engineers and scientists is reportedly one-seventh to one-tenth the U.S. cost. Similarly, a recent Business Week article describes Intel’s opening of a facility and hiring 950 young engineers in Bangladore, with plans to increase this number to 3,000 within three years. Texas Instruments, Cisco, Microsoft and Oracle are among some 230 multinational companies seeking to hire 25,000 engineers in India. The cost to these companies of qualified engineers is about one-fifth the U.S. cost. Fostered by advances in information technologies especially the Internet this globalization of the engineering job market will, no doubt, have an appreciable, and growing, impact on the employment prospects of engineers in this country. Entrepreneurial Leadership: Hiring Execution Engineers and scientists will choose to be entrepreneurs because of a driving desire for independence, autonomy and self-reliance. Engineers and scientists will be successful entrepreneurs when this desire is coupled with both a passion for technology and effective leadership skills. Based on this premise, the Engineering Entrepreneurship program at Penn is designed specifically to provide the insights, knowledge and skills needed for the successful creation and leadership of high-tech entrepreneurial ventures. At Penn, we emphasize that our Engineering Entrepreneurship courses are intended for engineers and scientists, and that our mission is to educate future leaders of technology ventures. Drawing upon Abraham Zaleznik’s classic article, “Managers and Leaders: Are They Different,” we P ge 899.2 Proceedings of the 2003 American Society for Engineering Education Annual Conference & Exposition Copyright © 2003, American Society for Engineering Education differentiate the leader’s task from the manager’s task. Based upon his research, Professor Zaleznik’s characterizes “leaders” as having a desire for autonomy, as being self-reliant, as being visionary, as seeking opportunities for change, as being risk takers, and as being developers of fresh approaches to technical, economic, human and political problems. These leaders are intrinsic, inspirational motivators of people. “Managers,” on the other hand, according to Professor Zaleknik’s research, prefer to function within organizations, to solve problems and maintain order, to control risk, to reconcile differences, and to focus on how to get things done. Managers tend to be extrinsic, coercive motivators of people. Leaders press for change while managers promote stability. Interestingly, and much to the point of our Program at Penn, Professor Zaleznik finds that leaders have much more in common with scientists and other creative thinkers than they do with managers. Leaders and managers are both crucial to the success of a company, a point underscored in John Kotter’s article, “What Leaders Really Do.” Their skills complement each other in thriving organizations and, indeed, successful entrepreneurs often possess both leadership and managerial qualities. However, seasoned partners of top-tier venture capital firms believe that a visionary leader with a passion for technology is critical to the successful creation and growth of a hightech venture. For an entrepreneurial startup, managers are important, but a visionary, passionate leader is paramount. In the words of one nationally recognized and respected venture capitalist, “Visionary engineers are America’s heroes. We can hire execution.” Penn’s Engineering Entrepreneurship Program Designed specifically for students of engineering and applied science, Penn’s 2-course engineering entrepreneurship sequence appropriately resides in, and is taught by faculty of, the School of Engineering and Applied Science. Courses are approached from the perspective of the student whose primary interest is in technological innovation, whose primary concentration is on engineering and science courses, and who has little or no prior business education. As nontechnical electives, they are designed to supplement a student’s engineering education. These courses focus on the roles of inventors and founders in high-tech ventures. Emphasis is placed on the entrepreneurial leadership role, decisions the founder will face, and the sequential risks and determinants of success during the venture’s early growth phase. While stressing the importance of disciplined management, we emphasize that these courses are about high-tech venture creation and leadership, not business management. For the latter, interested students are referred to excellent management courses at Penn’s Wharton School of Business. The two courses are each cross-listed at both undergraduate and graduate levels. The first course is offered every semester and provides an introduction to the early phases of a high-tech venture. It investigates the knowledge and skills needed to recognize and seize an entrepreneurial opportunity, and then successfully launch a startup or spin-off company. This course focuses on the key areas of: (a) intellectual property, its protection and related strategies; (b) evaluating the market viability of new high-tech ideas; (c) shaping technology-driven inventions into marketdriven products; (d) developing defensible