AUTHOR, PROFESSOR, ECONOMIST, & ENTREPRENEUR
Carl J. Schramm is the author of Burn the Business Plan: What Great Entrepreneurs Really Do (Simon & Schuster; January 2018). He is a University Professor at Syracuse University and former president of the Ewing Marion Kauffman Foundation. Schramm has served in major corporate roles and chaired the US Department of Commerce’s Measuring Innovation in the Twenty-First Century Economy Advisory Committee. He was also a member of the President’s National Advisory Council on Innovation and Entrepreneurship. Follow Carl on Twitter @CarlSchramm
I was a professor at Johns Hopkins when I was ambushed by a great idea for a business providing comparative accounting and clinical outcomes data that I thought every hospital could use to improve their competitive edge one to the other. When hospitals turned out to be less than enthusiastic about the idea — their lawyers told them it was best if they remained ignorant of comparative performance statistics — I had to pivot and find another customer. Turns out that every hospital sells long maturity revenue bonds to build new structures. These bonds are insured against the insolvency of the hospital. My data became the statistical standard by which insurance risk was measured. Today most municipal and hospital bonds are judged for their creditworthiness using algorithms I developed in the first year of my business.
After selling this company, I started several others. Being kind of scholarly, I became interested in the process of entrepreneurship. Years later ended up as president of the Kauffman Foundation, the largest philanthropy in the world the researches and promotes innovation and entrepreneurship. What a wonderful career for someone who thought he would spend his whole life as a professor.
In the healthcare market there are enormous trends underway that will reshape the industry. With the failure of Obamacare to control prices, new combinations of actors are coming together to reduce healthcare costs. CVS, the pharmacy company, has bought Aetna. Cigna has bought Express Scripts. Amazon has jointed JP Morgan and Berkshire Hathaway to create a shared insurance company for all their employees. The winners in the new configuration will be employers whose costs will go down. The losers will be doctors and hospitals who will lose political control to keep their revenues flowing from private patients.
In the other industry I’m in, namely, entrepreneurship, big changes are underway. Research, much of which I have done, has revealed that entrepreneurs are not likely to be successful at 21 coming out of school. The Mozart myth of brilliant youth might describe Zuckerberg but not the other 91.9 percent of would-be entrepreneurs in his age cohort. Rather, the average entrepreneur is 39 years old when he or she starts their first business. One of the outcomes is that people will question why colleges have majors in entrepreneurship teaching people what to do twenty years before they actually will start businesses.
The big news in healthcare is that at last clinical data will be used, applying lots of artificial intelligence and wearable devices, to equip anyone who wants to do the smart thing and take control of their health and to monitor whatever medical attention they might need. More and more consumer/patients can have a hand in overseeing their own healthcare.
See Answer 1. I believe, and have written in my best selling book, Burn the Business Plan, that almost all entrepreneurs are ambushed by their great idea. The idea finds them more often than they find the idea.
Since I’m no longer running a business, there is no news from me. As an economist, however, I am very bullish on the direction of the American economy. The Trump tax cuts cannot help but stimulate the growth of the economy which must result in more startups.
See answer 5
My most difficult moments have always involved being a new CEO and pairing back on staff and reshaping the executive team. My lesson was trust your gut. If people can’t do the job they have to go..there is no training or reprogramming. As one personnel consultant told me, “There is no diet you can give a chihuahua that will make it a great dane.” The right approach is to just do it, but do it with great compassion and make every effort to help the person who has to be fired. It is not their fault that you see things differently, but, don’t forget, you are the boss and the board and shareholders will hold you responsible. I once fired a vice president who received the new very badly and behaved accordingly. A year later, after he had landed a better job that what he was leaving, I ran into him and he thanked me for being honorable, keeping his termination in the context of “its business — it is not personal.” And, of course helping him find a new job in spite of himself. You have to be the grown up
There is no better way to motivate others than to make them part of the decision making experience. If your team “owns” the strategy, the tactical approach that you believe is the one that will optimize the hoped-for result, there chances are enormously better that it will be achieved. This approach also reduces danger to the executive — your confidence that everyone understands the business’ strategy is much increased.
My advice holds for any industry. Your career is a learning journey. By the time people reach their 35th birthday, they are only likely to be working in the field for which they prepared in college in 8 percent of cases! Opportunity, once embraced, and subsequent performance, will lead to the learning needed for constant progress.