Final Report and becoming an Esienhower Fellow

I have been neglecting this blog after I came back. Too busy with SKALI .

As part of my program I had to submit my final report. So here is my report

Eisenhower Fellowship 2007 Multi-nation Program
End of Program Final Report
Tengku Farith Rithauddeen, Malaysia

Introduction

The Eisenhower Multi-Nation Program (MNP) has been both hectic and enlightening for me professionally and personally. After 15 destinations during a short period of 8 weeks I have not only learned and met my program objectives, but I have also have a different perspective of the United States. Another valuable aspect of the Program is the friendship that I have fostered with the other Fellows in MNP.

Program Objectives

My objectives were as follows:-

€ To study and understand community based and affirmative action policies of local and federal governments in the development of entrepreneurship;
€ To study and understand on the impact of the Web 2.0 or the new Internet to the industry and entrepreneurship;
€ To study and understand how large and mid-size corporations e-Business initiatives

The objectives are inter-related and can be summarized by the intersection of he 3 circles below:-




The three large circles i.e. the main objectives of the Program, which I originally planned to discover and research is of course valuable but not as much of a value as the discoveries and findings in regards to the intersection of these 3 circles of Entrepreneurship, Web 2.0 and E-Business implementation.

Achieving the Program Objectives

I have had various meetings covering the 3 main circles and such meetings allowed me to explore on the intersections as well. The table below depicts the meetings and program activities which relate to particular objectives

Entrepreneurship Web 2.0 E-Business Implementation
NBIA Annual Conference (Seattle), Kauffman Foundation (Kansas City), Washington University (St. Louis), Florida International University (Miami), Research Triangle Regional Partnership (Raleigh), Hutchison Law Group (Raleigh), CED Entrepreneurship Center (Raleigh), National Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) Conference (Raleigh), University of North Carolina (Chapel Hill), North Carolina Technology Association (Raleigh), Babson College (Boston), Howard University (Washington DC), National Foundation of Teaching Entrepreneurship (NYC), New York University (NYC), Weill Cornell Medical College (NYC), Enterprise Florida (Miami), Rivervest (St. Louis), Oakwood Medical Management (St. Louis),
Science and Technology Advisor to North Carolina (Raleigh),
Web 2.0 (San Francisco), Franklin Templeton Investments (San Francisco), Comcast (Philadelphia), Red Hat (Raleigh), Meadwestvaco (Richmond), Air Products (Philadelphia), Comcast (Philadelphia), Wireless Philly (Philadelphia), Peak 10 (Raleigh),

Other Meetings relating to International Trade and competitiveness

• C&M International (Washington DC)
• Stonebridge (Washington DC)
• Harvard School of Strategy and Competitiveness (Cambridge)
• Starr Foundation (NYC)
• American Economy lecture (Philadelphia)

Other Meetings related to Leadership

• Young Professionals Organization (Watertown, MA)
• Micheal Useem, Wharton, University of Pennsylvania (Philadelphia)

Other Visits and Meetings relating to Civic Society

• Columbia Presbyterian Hospital (NYC)
• Pew Charitable Trusts (Philadelphia)

Other visits relating to American culture

• American Culture Seminar (Philadelphia)
• Native American Museum (en route to Grand Canyon)

All together there were close to 40 meetings and visits during the Program.

(a) Entrepreneurship in America

Entrepreneurship is high in the US due to its long history and culture of risk taking and acceptance of failure. The United States is a land of opportunity and it’s a land of immigrants. Immigrants came to the “New Land” to find new opportunities and new beginning. Such new comers left all to risk a new life in the US.

This history is important to understand the cultural ability of Americans to absorb risk. In fact most interviewed has highlighted that to succeed, a person should fail first. Like Jack Welch said “I will not hire a person who has never been fired”


The Environment is very important

The environment in which entrepreneurship is practised is very important. However what is the “Environment”. Many models of innovation has adopted the Triple Helix Model (adapted
from Etzkowitz & Leyesdorff, 2000) as depicted below: -



The Triple Helix model depicts innovation and entrepreneurship occurs when there is a collaboration and intersection of University, Government Industry. Many development models have used this concept including Malaysia. However many countries such as Finland and Malaysia has not realize innovation and entrepreneurship using such model. The model is flawed because it does not consider the main player- The Entrepreneur.

A better model in to depict the Environment is the Double Helix model (Brännback, M., Carsrud, A. & Krueger, N. (2007), “The ‘Molecular Biology’ of Regional Innovation Systems, Research Papers in Business Studies from Åbo Akademi University #6, Åbo: Åbo Akademi) as below: -


As depicted in the diagram above, innovation and entrepreneurship will occur when the Entrepreneurship Assets, Innovation Assets and Bridging Assets are strong and reinforcing.


Innovation Assets (stocks and flows of ideas),

Entrepreneurial Assets (stocks and flows of relevant human and organizational capital)

-and-

Bridging Assets (proactive persons and mechanisms to both coordinate and encourage the interaction of entrepreneurs and ideas and to proactively connect both with resources)







Using the above model the following can be deduced:-

€ Promoting Innovation Assets
o Fuelling entrepreneurship early in High School encouraging youth to experiment and practice business e.g. National Foundation in Teaching Entrepreneurship (NFTE)
o Promote cross industry or intra disciplinary entrepreneurship to promote innovation and ideas e.g. Howard University, Washington University, Babson College, UNC and FIU.

€ Promoting Entrepreneurship Assets
o Entrepreneurship can be taught and this is what Kaufman Foundation has been active in via Universities by teaching the right tools in entrepreneurship. Babson’s model to entrepreneurship is also successful model.
o Promote practice rather then theory. YPO model for learning as presented by Bob Halperin is a useful method.
o Teach entrepreneurs on Family owned business e.g. Florida International University

€ Promoting Bridging Assets
o Outreach programs early in teaching entrepreneurs in Universities e.g. mentoring programs.
o Funding – promote funding by informal investors rather then VCs. According to the Global Entrepreneur Monitor (GEM) report informal investors are 4 times more to invest in start up stage rather then formal VCs.
o SBIR and STTR funding mechanisms where customers are involved in innovation will assist in market entry.
o Innovation close to customer demand like Weill Cornell Medical College in New York City is also a strong Bridging Asset.

(b) Web 2.0

Although Web 2.0 was coined and became a market realization 3 years ago, many industry players are still puzzled where it will go. Google, Wikipedia, Myspace, Skype are all Web2.0 companies and their recent acquisition has boosted the development of the industry to a growth rate of 600% per annum.

Google vs. Microsoft

There is not doubt that Microsoft is threatened by the growth of Google. Microsoft Office suite and OS business is being challenged by free and shared software offered by Google.

The main issue is that it is not just about a battle between two giants but a change in an industry that will challenge traditional IT and software vendors like Microsoft


Now Consumers later Enterprise Businesses and Organizations

The main Web 2.0 companies had always been for the consumer market e.g. Google, MySpace and Skype. However at the Web 2.0 Expo there are signs of companies providing Web 2.0 Technology and Business model to the enterprise and government market.

Although still low in numbers, I can see some more companies (smaller and big) challenging the existing business model of software vendors.

Lower cost of start up in Web 2.0 companies

Entrepreneurship and Web 2.0 has also changed how new Internet companies are being formed. First the cost of setting up such companies will not be as high as compared to the Web 1.0 companies. Exit may not be via floatation but via trade sale.

(c) Implementation of E-Business in Corporations

E-Business implementation in corporations is still touching the surface and more opportunities are available. However, E-Business implementation, like many other regions, is still very expensive, require tremendous training and change management; and take a long time.

One company has taken 4 years to get the main platform throughout the company but face greater challenges in the customizing solutions to its current market environment.

However, many companies have taken the opportunity to co-locate back-end processes to cheaper locations and utilize E-Business applications to ensure proper management and monitoring of such functions.

Personal Highlights

The trip has been very enjoyable. For my wife, Elfina, it is her first trip to the US. She was able to experience all aspects of the Untied States which will not be able to experience during short vacations or business trips. Some of the key aspects that had an impact on my personal experience were as follows: -

• Hiking down the Grand Canyon while it snowed. It was the first time Elfina saw falling snow
• Experiencing Southern hospitality and food in North Carolina. Don Hobart, the USA Fellow for 2007 was a very good host.
• Learning from about cultures and countries from other fellows, which will include some collaboration that I would like to initiate.
• Sharing my thoughts of the program and the US with other fellows.
• Talking to a beggar in San Francisco which gave me an insight on Disability Insurance and how much such people can make in a month from begging.
• Scenic and beautiful drive to Newport Beach, Balboa Island and Orange County, California.


Additional Learning

American Culture and the media - Black, White and No Gray.

I wrote earlier in my Blog (www.tengkufarith.blogspot.com) about Dr. Weaver’s lecture on American culture. In my writings, I said that Americans tend to believe on the Good and the Bad or Black and White. To the Americans what they are doing is for the best of interest to all humankind. Anyone that disagrees on this belongs to the opposite camp - The Bad.

On foreign affairs, Iran is considered the opposite camp.

During the sensitive situation of the British marines being captive by the Iranians, I was personally relieved that both the British and the Iranians had made concrete steps to settle this via diplomacy.

Furthermore, Iran’s agreement to let the British soldiers go would have injected Goodwill in current foreign affairs between Iran and the West.

However, Iran’s move was reciprocated by accusations of a hidden agenda. I was in Los Angeles when the Iranians freed the British soldiers and I noticed the American media pounding on the issue with scepticisms. To the American Media, Iran is the evil empire and anything good by them should be responded by extreme caution and distrust.

What ever the Iranians’ intentions are, we may not know. But shouldn’t a positive move like the freeing of British soldiers be reciprocated by another positive reaction like a “Thank you and let’s move towards a better understanding”. However the opposite was the reaction of American Media.

I know Iranians and as much as the West things Iran as being an evil empire, the contrary is true of what Iranians think of the West. The majority in Iran are moderates rather then extremists, and like many in the rest of the world no one wants another invasion just like Iraq.

The American media’s negative reaction had fuelled extremist views and further the gap of understanding between Iran and the West. Any goodwill that can be capitalized by the freeing of the British soldiers had been neutralized by a more aggressive negative reaction by the western media.


Leadership and changing a culture

In regards to entrepreneurship, there is no doubt Malaysian culture needs to change to be more risk taking and accept failure. For example, our Bankruptcy laws should be changed to provide a time frame for Bankrupts to start fresh should their venture fail.

But how do you change a culture? A model provided by YPO is a good concept for such changes: -


To answer the question how do you change a culture? The answer - only through leadership. An organization or individual(s) will need to act as leaders to change a culture.

Seeing (and talking) is believing

Before I came to this program, I had some preconceived ideas of the United States. To my delightful surprise, many Americans and Asians share the same dreams, visions and do ask the same questions.

I must thank the Program to bring such enlightenment to me and allowed me to have the mental closeness between US and Malaysian beliefs.

There were two occasions which allowed me to express and communicate on some issues on wrong information in regards to Malaysia.

First was the meeting with C&M International and Stone Bridget in Washington DC. Both organizations are advising US Businesses in Asia. At the meetings, I managed to communicate the reasons of an Affirmative Policies in Bumiputera industries and companies. I highlighted the reasons to the Affirmative Policy is to build the critical mass of Bumi companies that are able to compete globally. Such policies are seen as a critical component to accelerate the growth of these Bumiputera companies.

Second, was at Howard University which I had to explain on a mishap of an African – American individual being detained by Malaysian Police for 24 hours. Following my explanation to Howard University students, they had proposed to have a yearly session with the student community and other Eisenhower Fellows with the intention to promote better understanding and cooperation.

On both occasions, I was allowed to explain which allowed better understanding between all parties on the issues.

In light of these two positive occurrences, I feel that we cannot rely on our Governments to foster understanding between two nations but to further accelerate programs like the Eisenhower Fellowships to promote understanding between different countries.

Acknowledgements

I would like to express my Gratitude to the Eisenhower Foundation, the management and trustees that allowed me and other Fellows to join this program.

Special thanks to Dan Geisler, and Rachel Meadows who have been so accommodative and helpful in setting up close to 40 meetings for me.

In addition, I would like to express my sincere thanks to the Foundation for the understanding and making this trip an enjoyable and not so strenuous event for my wife, Elfina who is expecting our fifth child.

I sincerely hope and look forward for the opportunity to provide the assistance to all Eisenhower Fellows in fostering better understanding among the different countries.


Tengku Farith Rithauddeen
MNP Eisenhower Fellow 2007
15th of May 2007

Good Marketing Experience at FAO Schwarz, New York City

Was at FAO Schwarz in New York City and did a customized hotwheels for my two sons. They had video to show how the cars are made. Obviously, it is really not what it seems but it was good concept of brand experience for both FAO and Hotwheels..and when i showed it to my kids, they loved it. They got more excited on how the cars are made rather then the end product themselves.

Fadzlan car video



Faidz car video

Black, White and No Gray.

I wrote earlier in this Blog about Dr. Weaver’s lecture on American culture. In my writings, I said that Americans tend to believer on the Good and the Bad or Black and White. To the Americans what they are doing is for the best of interest to all humankind. Anyone that disagrees on this belongs to the opposite camp - The Bad.

On foreign affairs, Iran is considered the opposite camp.

During the sensitive situation of the British marines being captive by the Iranians, I was personally relieved that both the British and the Iranians had made concrete steps to settle this via diplomacy.

Furthermore, Iran’s agreement to let the British soldiers go would have injected Goodwill in current foreign affairs between Iran and the West.

However, Iran’s move was reciprocated by accusations of a hidden agenda on the part of Iran. I was in Los Angeles when the Iranians freed the British soldiers and I noticed the American media pounding on the issue with skepticisms. To the American Media, Iran is the evil empire and anything good by them should be responded by extreme caution and distrust.




What ever the Iranians’ intentions are, we may not know. But shouldn’t a positive move like the freeing of British soldiers be reciprocated by another positive reaction like a “Thank you and let’s move towards a better understanding”. However the opposite was the reaction of the West.

I know Iranians and as much as the West things Iran as being an evil empire, the contrary is true of what Iranians think of the West. The majority in Iran are moderates rather then extremists, and like many in the rest of the world no one wants another invasion just like Iraq.

The American media’s negative reaction had just fueled extremist views and further the gap of understanding between Iran and the West. Any goodwill that can be capitalized by the freeing of the British soldiers had been neutralized by a more aggressive negative reaction by the western media.

No wonder we can’t solve our problems.

American Patriotism

The US is a proud country but these are changing times and even patriotism by the Americans are being questioned. They are looking hard in the mirror.

Entrepreneurship is about the Mix and Match

St. Louis was wet and cold except for the last day we were there. It was a nice walk to the Knight Center (where we stayed which was equipped with accommodation for executive education) to the Skandalaris Center – the center of entrepreneurship, Washington University at St. Louis.

We were given a presentation by its Center’s head, Ken Harrington. During the presentation I found out something new. Here it is…Entrepreneurship is driven by innovation which in turn is driven by the Intersection of cultures, societies, industries etc.

Hmm..Intersection ? What is that??

What Ken or the Skandalaris Center is saying is that innovation will be developed by the merger (intersections) or fusion of ideas that may originate in other domains or industries.

Well here are a few examples: -

· Google = Merger of Search engine (ICT) Technology + Online Advertising = USD141 billion
· iPod and iTunes = Hardware + Online technology + Music/ Entertainment industry + its cool design = more then USD1 billion
· Myspace = Online technology + Sociology (the need to interact) = USD580 million.

Get what I am saying??

Process to Innovation is not enough

Ken mentioned that the normal process of innovation i.e. taking the idea to market that involves Business Plan is not enough but the entrepreneur must also do the following:-

1. Increase his or her network intersections in other areas because innovation relies on this. So the idea that entrepreneurship should be limited and taught in a vertical or specific group of certain students is wrong.
2. Understand these intersections
3. Know how to identify the opportunities in these intersections.
4. Use the tools needed (and this needs to be learned) to capture the opportunities in these intersections.

In fact, I am writing this Blog at the Web2.0 Conference in San Francisco is all about Internet and Social networks (sociology). In 2 years Web2.0 grew at 622%.

USA VC vs Malaysian VC

Today in St. Louis, I had the opportunity of meeting Tom Melzer. Tom is a senior financial figure in the States, being served in the Federal Reserve under 3 Presidents. In my discussion with him, I can summarize the drastic differences between an American VC and a Malaysian VC...here are the main ones.

(i) American VC tend to be very focus in particular sector (ICT only or Biotech only or Medical Devices only etc.) , Malaysian VCs will invest in many sectors.

(ii) Because of their focus, the American VC has the depth and can put in substantial business building expertise

(iii) Both country VCs will tend to invest in later stages rather then Idea and Seed.

(iv) 8% dividend rate for its pref shares (non -cumulative) for US VCs compared to Malaysian VC rate of 10% - 25% cumulative dividend pref shares.

(v) The insurance, pension and large funds tend to invest in the VC industry (about 5-10% of their funds). In Malaysia most funds come from the Government.

(vi) American Private Investors in VC funds tend to have direct tax credit by expensing out the mgt and operational fee of the VC management company. Investment premium tax allowance is at 15% instead of the 30% rate for personal income tax.

Tom did highlight that VCs tend to invest in later stages and that there are many aspects of the eco-system that gets to work before a VC invests into a company....

(i) A strong incubation to assist in the physical and soft infra of new and later stage companies.
(ii) Strong demand for a particular sector or specialization e.g. the medical faculty in Washington University, St. Louis has a large R&D budget that provides an economic stimulus in commercialization.
(iii) Networking by the local business councils bringing together funders, entrepreneurs, university and other relevant specialists.
(iv) Grants and angel funds to provide funding in the early stages of the venture. These are funders prior to the VC investment.

The Culture of Failures

In our new book, SKALI LAGI, I mentioned that Entrepreneurship is about failures and not about successes. I expanded that entrepreneurship is about getting up when ever you fail.

For entrepreneurship to strive, a community or country needs to accept and (in fact) celebrate failures.

I think the main reason to the United States success in entrepreneurship, is its tolerance to failures. It is this tolerance that has provided its propensity for risk.

Today I met with Dr. Raul Perez, whose father immigrated from Cuba in the 1960s after the Communist took over. Dr. Raul's father came to the States without speaking English and (at that time) medicine in Cuba was behind to the States.

Well, Dr. Raul's father survived and did very well. He concluded this is the land of second chances and of new opportunities.

The United States for many people are a new beginning after failures or being a social outcast in there own countries. So when a failure occurs or someone has had some failures, they do not take this against a person.

Can Malaysia celebrate failures and learn from it ? Maybe and like the Kauffman foundation said it takes some small successes first and to show everyone that failures will lead to successes.