Insights on innovation with Brad Furber, COO of the Michael Crouch Innovation Centre
In this edition of Innovation Inside, Samuel Tait speaks with Brad Furber, chief operations officer for the Michael Crouch Innovation Centre at UNSW.
Before taking up his role as chief operations officer for the Michael Crouch Innovation Centre (MCIC) at the UNSW Australia, Brad Furber spent many years working in and around the startup ecosystems in both North America and Europe. With a background originally in law he has been involved in technology innovation as a successful investor, advisor and entrepreneur with over two decades of experience.
In 2014 Brad was appointed to lead and run the MCIC and bring Michael’s vision to life. Samuel Tait spent some time with Brad last year to discuss his viewpoints on innovation and how the MCIC was being set up to support innovation at the UNSW.
Samuel Tait: What is your background and experience with innovation?
Brad Furber: I am from the state of Washington in the USA and have always been entrepreneurial by nature. I had my first entrepreneurial endeavor when I was twelve, which was selling daffodils from a roadside stand to cars where I was paid a commission equal to 10% of gross revenue. It is surprising how much money you can make selling spring flowers.
That lead to similar seasonal endeavors selling Christmas trees in December, and fruit and produce in summers.
Then fast forward a few years and I ended up going to law school, focused on corporate finance. After about five years working as a corporate and securities lawyer for a large law firm, I had an entrepreneurial itch and decided to co-found a boutique law firm with a different business model – no billable hours. We called ourselves ‘innovative business lawyers,’ inspired by the movie Jerry McGuire.
We focused on having fewer clients but stronger, more strategic relationships. We recognised that the clients who we could add the most value to – founders and early stage ventures – were also the ones who were least able to pay for big firm expertise. We created a model whereby we would align our interests with the founders and management teams based on fixed fees and milestones, and in some cases investing our own capital to take equity interests in early stage ventures.
Our model assumed that the equity interests would enable us to do work for many startups that might ultimately fail, but the gains from the winners would compensate for the losses from the losers.
Over a period of years, that turned out to be a sound strategy. We started the firm in 1995, and that turned out to be very good timing, because it was right on the front end of the massive dotcom boom in Seattle and the West Coast.
We limited our services solely to corporate, securities and mergers and acquisitions – we were in the deal-making business, and it was extremely interesting, exhilarating and fun. At least it was until it wasn’t.
After the dotcom bust in 2000, most of our clients were in need of a range of services that we did not provide. ‘How do I renegotiate the long-term lease? How do I terminate contracts with suppliers, partners and employees. How do I slash overhead without being sued?’
We realised that just as our clients had to adjust to the new reality, so too did we. We pivoted our model back towards a more traditional model, and we explored our strategic alternatives. We were fortunate and we found a safe harbor by combining our group with a national law firm that wanted to expand on the west coast.
Next thing you know I was back in saddle at a huge firm, which in this case was about 1300 lawyers. It was a good firm, with a good heart and positive culture, but after a few years I started to feel the entrepreneurial itch again.
One of my consumer internet clients asked me to join as employee number six, where I served first as President and then as CEO. That was my first opportunity to work full-time as part of the management team of a tech company. We bootstrapped our growth, and consistently generated more than $10 million per year in revenue.
Our closest competitor, by the way, was an Australian company called PC Tools. We were competing head to head with them, globally. Our products were electronic software downloads of Windows utility software.
I learned a lot about online advertising. We sold digital goods and the way we acquired our customers was through a variety of online advertising, direct to consumer. We did all kinds of display advertising. Not so much email marketing, lots of search…we’d test anything. We were big spenders on online advertising. The great thing is, you would know the impact of every dollar spent.
If I spend, say $30 to acquire the customer and the average order value is $53, we just made $23. If cost per acquisition went over $50, well, we would try to optimise it, or kill that campaign. Our core competency was optimising our ad spends across digital touch points.
What we were really doing was sophisticated analytics and modeling. It was almost like day trading. We knew how to buy the ads and we knew how to optimise them. In addition to our legacy business, we also invested heavily into research and development, seeking to develop new products and services.
We spent a lot of time and money on a Web 2.0 service called WikiTalk (which we ultimately killed), and we successfully launched a remote access tech expert service called BluePhone. The latter initiative attracted the interest of a public company looking to enter the consumer market, and our software and services business was sold to that company in late 2009.
While I was working for the startup, my wife, who is an MD, went to work for a global Big Pharma that was headquartered in Copenhagen, Denmark.
In early 2010, she was offered an attractive expat position in the global headquarters. Our kids were in middle school, so we decided this would be a unique opportunity for us to live in Europe as a family before they left us for college. So we moved to Copenhagen in 2010.
I got involved with a few startups and accelerators that were expanding across Europe. I did a lot of travel, personal and professional, and through that was exposed the emerging innovation and entrepreneurship ecosystems in Northern Europe, especially Copenhagen, Stockholm, Helsinki, Berlin, Amsterdam, London and Dublin. I also got to experience how the different startup communities have different cultures and ways of working, which leads to different negotiating practices and deal structures than USA.
As a bit of deal junkie, I found this quite interesting, intellectually. Swedes do deals differently than Danes. Germans do deals differently than the English or Irish. The Dutch do business like the Danes in many ways, but so too they are unique.
Given the European history, this is not surprising, but to see it first hand was, for me, a tremendous learning experience.
When we were thinking of going home to the USA in late 2013, we had a number of long discussions where we wondered if maybe we were up for another family journey on a new continent. My wife and I narrowed our list of top cities to four. At the top of my list was Sydney. I had this romantic vision that Sydney would be like Seattle or Vancouver, but with better weather and better access to developing markets in Asia Pacific.
Sydney was not top of my wife’s list, but it was in her top three. Since Copenhagen had been her choice in round one, she agreed to go with my pick for round two. So we took initiative to make the move to Sydney. We moved the family in July 2014, and we’ve been here in Sydney ever since.
ST: From your experience what do you think are some of the biggest hurdles in delivering innovation or enabling corporate innovation programs being successful?
BF: Firstly I’m not an academic so I’ve never published on it. Anecdotally, however, I think many organisations are getting by and doing pretty well doing what they do, so there is no incentive to change (or to innovate).
Some people that I’ve talked to since arriving in Australia think that the fact that this country has had 24 years of sustained economic growth means that the system has never been shocked. It’s usually when something comes apart that everybody buckles down and says, ‘Hey, times have changed, we have to do things differently’.
That is something I have experienced. As I mentioned having a law firm that had a business model that was challenged by a sudden change in the market and we had to pivot in order to adjust to a new reality.
Just thinking about Australia, it hasn’t happened here in a long time anyway, and businesses have not had to go into survival mode, to change, to adapt to completely different market dynamics.
ST: Is that why resilience is a key attribute for innovation, or being successful at adjusting to change?
BF: If you read Thomas Edison he’s got all kinds of great quotes about the light bulb, “I didn’t fail the first 10,000 times, it just took me 10,001 steps to get where I needed to go;” It’s a great quote but let’s be honest, when you’ve failed at sometime 9,999 times in a row you’ve got to be asking yourself if it is finally time to quit.
In my experience working with startups that’s the hardest question. The hardest question is to know when to say enough is enough, or when to buckle down and keep going. And sometimes the only way to assess that is in hindsight.
ST: What do you think is the role of Government in supporting innovation?
BF: I would say that nations and states need to prioritise the innovation ecosystem, and by that I mean the knowledge creation ecosystem. Governments can do that in any number of ways by looking at who the leaders are. All you have to do is look at Singapore, Switzerland, Israel, Finland, and Sweden to see that it’s possible for governments to have a big impact. The United States is a totally different beast, but what they’re doing there works. The US is a different beast because a lot of it has to do with defence spending, which is hard for other nations to replicate.
Having said that, there are other things that I’m aware of that the US does that could be copied. For example they have exemptions from the government tender process for small businesses so that small businesses capture opportunities to work with government. I think about 2% of all government spending is mandated to be with small businesses – when you think of total US government spending – that is actually a massive number.
I am also a big believer that universities and the knowledge created within universities has immense value to society. How you measure it is difficult. I think that is why it is frequently underestimated by the public and by government.
I fear that is also happening here in Australia.
The University of Washington (which is one of the places I studied) ran a great campaign in the past, sometime in the 1980s. It may not be well known, but besides Johns Hopkins, the UW gets the most amount of federal research and development funding of any university in the entire United States. Something like US$950 million a year in federal research funding. Anyways, the UW ran a media campaign that I still remember: “The University of Washington, you’re getting something out of it whether you go there or not.” And that’s so true, you don’t have to go to any particular research intensive university to benefit. For example if you’re suffering from cancer you benefit because they have world-class cancer research that improves treatments.
The UW does a huge amount of research across multiple disciplines that help us every day. I think this is where cities like Sydney, which are great cities to live in, with great research intensive universities, can take a lead. We need to leverage their research more heavily and communicate more effectively about their breakthroughs and impact they have on our every day. If we all play our cards right we going to benefit if government starts to invest heavily in research.
ST: What type of culture are you aiming to build at the MCIC that supports innovation?
BF: I think the three key messages that are important regarding culture are:
- everyone is welcome – this is an innovation centre that’s open to students from every faculty,
- there’s always a better way, which is Michael Crouch’s statement – that is to say it’s a mindset, that no matter what you’re doing there’s always a better way. That includes process innovation or incremental improvements and includes disruptive innovation. There’s always a better way means there’s always a better way, and that is an easy thing for most people to get their arms around, and
- everyone can be an innovator – innovators aren’t just Nikola Tesla types, the wild crazy guy who is a hundred years ahead of his time. Clearly we’d like to have more like him, however there’s a lot of ways to innovate and you don’t have to be a singular genius to do that.
The mindset that everyone can be part of the process is important. Again I’m not an academic but what I have read, if you take Walter Isaacson’s most recent book on innovation for example, is that innovation is almost always a collaborative effort.
Even if you see the movie The Imitation Game and Alan Turing is profiled in this Walter Isaacson book, he wasn’t such a lone wolf in real life as the movie made it appear. Even in the movie he couldn’t have achieved what he did without the rest of the team.
ST: What is the role of diversity in relation to innovation?
BF: It is a fundamental idea behind the MCIC. That it’s open to all students from all faculties, and staff from all disciplines and that includes people outside the university. We also want to power this with strong two way relationships with business. We had a pretty good string of programming when we opened.
We’ve brought in external speakers. We’ve had Guy Kawasaki, and another guy Peter Shankman. We’ve had the head of the innovation lab from Commonwealth Bank, leaders from AMP.
We were part of the Switch Festival last year and we held the Cisco Idea-thon which brought Cisco together with facilities management here, UNSWIT, Intel and others. We want to bring real world challenges to UNSW.
Frankly, this is a great university with a particular STEM focus, and has a really strong engineering faculty. In the age we live in having an engineer on your team is in many instances now a necessary requirement. However having engineers’ alone means you may not know what to build or how to market it.
This university has a huge diversity of students with different backgrounds studying different things. UNSW has a great business school, medical, law, and design faculties, built environment, arts and social sciences, the list goes on. Clever students come from all these faculties and we want to bring them together.
I’m a firm believer in Jim Collins’ ‘Good to Great’ philosophy, and it’s about the ‘Who’ first, then the ‘What’.
When people first started asking me what we are going to do in the MCIC? I was like, ‘We’re going to do a lot of stuff in the centre. We’re going to activate it with idea-thons, hackathons. We’re going to have great speakers. We run a lot of workshops. We’re going to do a lot of stuff. However the first thing we’ve got to figure out is who to hire, that’s the most important thing.’
Get the right diverse group of people on the bus. Then those people individually and collectively will figure out where we’re going to go.
ST: Is there a link between strategy, leadership, and innovation?
BF: Strategy, leadership, and innovation … good question. I think the most important thing again sticking with Jim Collins is, ‘Who.’ ‘Who’ comes before anything else. If you have the right people then you will most likely succeed, and that’s really a leadership question. So leadership is probably the most important thing. The leadership to know who to hire, and who to empower, and who to give resources to.
Strategy then is determined by the group of people trying to innovate. If your strategy is, ‘We’re going to be an innovative company, or create an innovative culture;’ then first you’ve got to get the right people.
Secondly those people if consistent with that mission will come up with the right plans. Trust those people, empower them and allow them to do what they think is right, and yes they will fail sometimes and you should not penalise them for taking risks.
If you’re going to encourage someone to take risks then you should not punish them when not everything goes to plan.
ST: Are there specific tools or processes that you are using at the MCIC to teach students around what innovation is, and how to do it?
BF: This is about the ‘who’ rather than the ‘what’. The MCIC has five full-time professional staff. There is myself, the program manager, the communications manager, and two design coordinators. None of us are academics. We’re not in the business of teaching, per se, we’re in the businesses of running a centre and bringing people into the center who can share with us their ideas and thoughts, lead workshops, exchange knowledge and inspire curiosity.
There’s some of the stuff that we can do, like we can do workshops on Makerspace 101. ‘This is how you use a 3D printer, this is how you use a laser cutter.’
What we plan to do is bring in people from other areas, UNSW academics or senior lecturers who can share with us what they think or know. Or external parties who can share with us what they think or know.
Honestly I would personally rather hear from somebody who’s associated with a particularly innovative company who says, ‘this is what we do.’ For example having Atlassian come in and tell us how they build software, or how they empower innovation. That’s inspiring, that’s interesting. I have found thus far that it’s easier to get externals to come into the centre and teach, than it is to get academics. We hope that will change as time goes by.
ST: Is there a better way in which we can define what innovation is?
BF: I would be interested in a contest where somebody has to describe what innovation is without using the word innovation. We actually were thinking about that recently, how can we describe what we do without using the word innovation.
Having said that I do think innovation is one of those things where you know it when you see it, and you might not even realise how you did it. It may not be a process. It might just be an epiphany.
For example a guy was in the center a couple weeks ago who had a theory about how dreams play a role in innovation. I think we’ve all had that experience where you wake up in the middle of the night and you just know something, have an idea. What was the process that delivered that experience? It’s hard to say.
When we opened last year we used the exhibition space to promote ‘Insha’Allah Surfboards,’ where Islamic art is painted on surfboards. The artist, Phil George, described to me having an epiphany one day … he’s always been passionate about the symmetry of Islamic design and art, which are really beautiful and also his love of surfing. Those are his two passions.
He had this thought ‘hey, what if I combine them?’ For him it was a game changer and it has become his life’s work. That’s part of why we picked it out as our initial MCIC Exhibit. We want people to think more deeply about innovation. Innovation is about a lot more than robots, technology, startups, and drones.
Innovation can (and does) happen in any discipline. You look at some of the most innovative minds in history, Tesla, da Vinci, Einstein, all of those guys were looking at things from a lot of different and diverse perspectives. That I think is the fundamental driver of innovation.
ST: Which three companies do you currently think are doing a good job in the way they approach innovation?
BF: Everybody wants to talk about Uber, be the ‘Uber’ of this or be the ‘Uber’ of that. Whether this approach bears fruit we shall have to wait and see. Most recently I really liked what Google did last year with their company. I liked the fact that they said, ‘hey we’re going to take a Warren Buffet approach and create a holding company.’ I think that was a smart move, so I’ll say Google is definitely one on the list.
Who else is innovating? I think Amazon is an innovative company. In their case they’re willing to drive their business forward on very thin margins in order to capture market share. Hoping at some point in time (I presume) they will be able to pull back and start to capture big profits. For now really they’re pushing the envelope really hard.
I guess I’m showing my American stripes here, as also I think Tesla is innovating and maybe more so when it comes to the battery space rather than the car space.
ST: What advice would you give to people leading their own innovation initiatives?
BF: I think you should create a compensation and promotion system that rewards people who try to innovate, and punishes people who don’t. I think right now a lot of companies will punish you if you try.
They’ll punish you if you try something and fail, but they won’t adequately reward you if you try something and succeed. The culture and the aligned incentive systems need to be tweaked to motivate people to assume risk and go out and innovate.
Whether it’s an annual performance review or some other method, people need to understand that we reward people who try to innovate. Therefore I would suggest companies develop a new approach to performance management. A system where they say ‘look you’re going to be evaluated based on these factors. If you are not collaborating and innovating that will be negative to the evaluation. If you are collaborating and innovating that will be positive’.
It if turns out you’re collaborating and innovating and succeeding that’s brilliant, you should get bonuses for that. You should not be punished for collaborating and innovating and failing (unless it happens year after year after year). I think that’s probably one area that people in their own companies and organisations can look at.