The following is a conversation between Danny Warshay, the founding Executive Director of Brown University’s Nelson Center for Entrepreneurship and author of See, Solve, Scale: How Anyone Can Turn an Unsolved Problem into a Breakthrough Success. and Denver Frederick, the Host of The Business of Giving.
Denver: The Entrepreneurial Process, one of Brown University’s highest-rated courses, has empowered thousands of students to start their own ventures. The professor for that course states that entrepreneurship, unlike what many people believe, is not a spirit or a gift, but rather a process that anyone can learn and that anyone can use to turn a problem into a solution with impact.
He is Danny Warshay, the founding Executive Director of Brown University’s Nelson Center for Entrepreneurship and author of See, Solve, Scale: How Anyone Can Turn an Unsolved Problem into a Breakthrough Success. Welcome to The Business of Giving, Danny.
Danny Warshay, the founding Executive Director of Brown University’s Nelson Center for Entrepreneurship and author of See, Solve, Scale: How Anyone Can Turn an Unsolved Problem into a Breakthrough Success
Danny: Thank you so much, Denver. Really happy to be here. Thanks for inviting me.
Denver: You know, this course is given at a liberal arts college, which doesn’t have a business school. How does it fit into the curriculum at a place like Brown?
Danny: Doesn’t that sound crazy?
Denver: It does.
Danny: Entrepreneurs taught in an environment with no business school. Yeah. You know, my background is business itself. I went to Brown. I was a liberal arts student there. I studied history. I fell into an opportunity to be part of a software company that we built up and sold to Apple.
Most of my career I’ve spent in the business world. I have an MBA from Harvard. I worked at Procter & Gamble for a little while. I ran a venture capital firm and a series of other startups. And so, my background is business. I’m not allergic to business. But when I was asked 17 years ago… kind of out of the blue… to come back to Brown and be a professor and teach entrepreneurship, I had to think for a minute.
How do you teach entrepreneurship in a dominantly liberal arts environment? And I realized my appointment was in the School of Engineering, and I had always heard this phrase… maybe you or your listeners have heard it… “entrepreneurial spirit.” Have you heard of that phrase? Yeah. We all have, and I did back then, and I had to say: I don’t know what the heck that means.
And I certainly wouldn’t know how to teach a spirit. And so, I thought, you know, imagine in the engineering school, if we were told we wanted to teach people how to build a bridge, we wouldn’t say, “Just go out there and have the bridge-building spirit and, you know, throw up a bridge, and if it holds up the cars and the trucks, Great!”And if they come crashing down to Earth, then just go out there and have more spirit.
And I realized it’s kind of the way people were talking about teaching entrepreneurship, and I thought that would be insane. Like no one would trust us to teach anything else if we taught people how to build a bridge that way.
And why would they trust us to teach entrepreneurship as a spirit? So, I realized, especially in a liberal arts environment, we teach people how to solve problems in all sorts of ways. The scientific method, for example, even if you’re not going to be a scientist, you learn that method and you might use it in all sorts of ways throughout the rest of your life.
And I thought, just like in bridge-building where you can distill some fundamental principles of: a beginning, a middle, and an end, that all bridge-building has in common, I realized that entrepreneurship could be a methodology, a process for solving problems. And that’s really the definition I use. And, in fact, you can, and I did distill some fundamental principles that all startup ventures have in common, even though one venture is very different from every other.
And that became the “See, Solve, Scale” process that you mentioned in the title of my book, How Anyone Can Turn an Unsolved Problem into a Breakthrough Success. And I know we’re going to talk about those particular items, See, Solve, Scale, but that’s the method, and that’s how you can teach in a liberal arts environment.
And it’s proven true. Just last night, our Center had its biggest event of the year, the Brown Venture Prize Competition, a pitch event, $50,000 on the line, and the eight teams that pitched to a panel of judges represented a very wide range of types of problems they were solving, and a wide range of types of entities they were creating to solve those.
And I was really proud of that. That’s what entrepreneurship at Brown in a liberal arts environment stands for– identifying consequential problems, figuring out how to solve them on a small scale, and then figuring out how to scale those solutions so you can have what we call “impacted scale.”
Denver: You have demystified it. And that’s what happens with so many things that we have; we hear: “It’s, oh, beyond my reach; that’s for somebody else.” And you have really proven otherwise.
Danny: Well, you’re right. You’re right. Often, I think people feel like: Oh, well that’s a trait you have to be born with.
Denver: Absolutely.
Danny: You know, you have to be kissed by the spirit of Steve Jobs when you’re very young, and it’s only for extroverts or only for people of certain races or backgrounds or genders. And so much of our mission at the Nelson Center, and so much of the mission of my teaching and so much of the mission of this book, See Solve, Scale, is to debunk those myths that you’re talking about.And indicate and teach and empower everybody who’s interested in solving problems to do so through this See, Solve, Scale methodology.
Denver: Yeah. And, you know, and that definition that you just touched upon for entrepreneurship, another part of it is without regard to resources currently controlled, and this is a little counterintuitive because you have basically made the point that scarce resources can work in your favor. Now, you’re going to have to explain that, Danny.
Danny: That’s true. I talk about these polar opposites and, you know, I teach a lot in big companies, big nonprofits, big governments, big organizations all over the world. Just last Friday, I did a workshop based on this book for a group of UN workers who are working on climate change.
And especially when I’m working in big contexts that I have to explain these details, the two polar opposites are, as you say, the benefits of scarce resources and the burdens of abundant resources. So, should we unpack those a little bit?
Denver: Please do.
Danny: Yeah. The benefits of scarce resources applies when you may be a pure startup or even before a pure startup. And one of those myths, one of those biases is that you need a lot of money, or pedigree, or experience, or training. You might have to come from a background of wealth or abundance, and that’s not true at all.
In fact, especially in the first part of the process, the See stage, when you’re just trying to figure out what the problem is to focus on, and then even in the Solve stage where, iteratively, you’re making small bets to try to figure out the solution. It’s so much better not to have a big amount of resources, because those resources will get in the way.
They will make you conservative. You will act in a way to protect them. You can imagine if you’re in an established company, you have a way of doing business that may have been working for all these years. It’s hard to disrupt that internally.
Denver: Yeah.
Danny: It’s hard to embrace other points of view to engage other kinds of people with different backgrounds, diversity in ways that you haven’t had to thus far. And so, those abundant resources can stand in the way.
One really good example of that is the Casper Mattress Company, which you may remember I highlight in the book, because its founders, Luke Sherwin and Neil Parikh, were my students when they were at Brown. They started Casper knowing absolutely nothing about the way you’re supposed to build a mattress company.
They like to say, I like to amplify: The only thing they knew about the mattress business was that you slept on one. They had no money. They had no training or pedigree. The only thing they knew was the See, Solve, Scale method from my courses. And the fact that they had scarce resources worked to their advantage.
They were able to see different ways that you might construct a mattress company, that you didn’t have to go to a showroom; you didn’t have to have a salesperson breathing down your neck; you didn’t have to commit to a 10-year life of a mattress on average. You could have it delivered to you in a little box like you would order anything online.
You had a hundred-night free trial. It was branded in a way that appealed to younger people… all sorts of different ways of approaching the mattress business. At the time I published the book about a year ago, they were doing $400 million in sales. They had completely overhauled the business.
If they had been one of the incumbent mattress businesses in that industry, there are abundant resources of how you normally manage a supply chain, how you deliver a mattress, how you brand it, how you can’t give a free trial, all of those typical ways of doing business, a ton of money, a ton of built-in infrastructure; all of those abundant resources would’ve got in the way.
Then, you could argue they were in a way better position than Luke and Neil to figure out how to innovate in the mattress business because they knew the business, but the fact that they knew it was in their way. So, the benefits of scarce resources applied to Luke and Neil who didn’t know anything, who didn’t have any money or pedigree; and the burdens of abundant resources applied to the established incumbents in the mattress industry.
Denver: Yeah, when I was reading that part of the book, I was thinking about scarce resources, and the word scrappy came to my mind. You’re scrappy. You know what I mean? You’re duct-tapey, and you’re just trying to make things go. But as you say, that’s where innovation comes from.
You know, a related concept that you talk about is bricolage, and that’s someone who makes do with whatever is at hand. And in this book, you provide an example through Coca-Cola. Tell us about that.
Danny: Yeah. Such a great example. I love this. You know, the two watch phrases here are in the See stage: you’re looking for what the problem is. I teach this methodology, especially in big companies who aren’t used to using this approach, but it’s actually a methodology that I learned in brand management at Procter & Gamble.
It’s the ability to see things how they are. In order to diagnose what the problem is, find and validate an unmet need. So, the first part of the process is structured around this phrase: It is or What is. The second part, the Solve stage is where you’re being creative and innovative and seeing things differently.
And the watch phrase there is: It could be or What could be. Simon Berry was a development worker who noticed that we were incapable at the time of getting some simple salts into the hands of families whose children were dying of diarrhea in parts of far-flung Africa and other places. And these simple health solutions could not get to them because the distribution network was broken, or it didn’t exist.
At the same time, he noticed that Coca-Cola was bragging that they were able to get their product, bottles of Coke, through their own amazing distribution network, to every point in the world. Their adage was: we wanted to have Coke at arm’s length from everybody in the world… and they were pretty much able to do it.
Denver: Yeah.
Danny: And so, rather than just complaining about it, Simon Berry approached Coke and said, “Is there any way we could leverage your established distribution network?” And he looked at the typical shipping container of 24 bottles of Coke, and noticed that toward the top where the bottles converged on themselves, or diverted from each other, there was a little V-shape of space.
And he created a package for these life-saving health salts that would cure people of diarrhea. And he packaged them between the little V-shaped space, open space of these distribution containers that Coke was using. He collaborated with Coke and created, based on the established distribution network that Coke already had, he made do with what was already there.
And so, rather than just saying, “Well, it is the fact of life that we don’t have an established distribution network for life-saving medicine to send to children.” He said, “Well, the established network that Coke uses could be a network that we use.” And that’s a great example of bricolage, leveraging what you already have, rather than creating something from scratch anew.
Denver: That is a great example and it’s interesting how he kind of designed it for Coca-Cola, too. Often when you go and you just ask them that question, they’ll say, no. But when you begin to show them how this could be done in a pretty seamless way, it can really change the dynamic.
Danny: Or even for Coke, you’re right, even Coke had to change its mental fixedness, that’s the fancy scientific word. They had to break their mindset to see that what was, was not necessarily what could be. And, you know, this concept of breaking your mental fixedness is such an important part of the Solve stage and, you know, we can talk a little bit more about what that means or how you do it, or some examples of it.
But I love the Simon Berry example because he changed his own mindset. He broke his own mental fixedness to see the difference between what is and what could be. And he had to change Coke’s too, and he did so.
Denver: Yeah. Let’s continue with the See stage since you brought it up. And one of the things that’s a key aspect of that is something that you refer to as bottom-up research, which you learned, of all places, at Proctor & Gamble. Tell us what it is.
Danny: That’s right. Yeah. P&G, I would not really describe as a terribly entrepreneurial place, a wonderful place nevertheless, really smart people. I learned a lot there that I didn’t realize until later would resonate in my teaching. And I use a few mini case studies in the book and in my teaching from Proctor & Gamble.
One, a Tide example; one, a Dawn Dishwashing liquid example. And so, one of the things that’s so critical, in fact, if people ask me: What’s the most important part of this whole See, Solve, Scale process? It’s the first step.
Denver: Yeah.
Danny: Finding and validating an unmet need. And the reason is and especially because I’m surrounded in my engineering faculty appointment by really smart tech people. Tech people, especially, not only, but especially tech people make the classic mistake that I always warn people about –of being what I call “a solution in search of a problem.”
And that’s something you want to avoid. It’s often what people do. They leap to the solve stage. In a lab, or in a makerspace, or in their homes, or in their, you know, small studio; they think of a solution to something that is not necessarily a demonstrated problem, and they rush out to try to sell it. And that usually is not successful. You’d be lucky if you happened to stumble across a problem.
Denver: Yeah. They say: Fall in love with the problem and not with the solution. And what happens often is they fall in love with their solution.
Danny: That’s absolutely right. And, look, I don’t blame them. They’re enthusiastic, right?
Denver: Yeah.
Danny: We all are excited about what we’ve created, but it takes discipline to be a successful entrepreneur. And the most important part of that discipline process is to start by being what I call anthropological and empathetic. Put yourself in someone else’s shoes to, in their natural environment, observe them behaving naturally and listen to them.
Maybe ask some open-ended questions to learn: what problems are they really facing. And by the way, it’s not as simple as just saying, “What problem are you experiencing?” because sometimes the consumers or the patients or the people don’t themselves know that they’re experiencing a problem.
And I talk about that in the Tide example for the listeners who might read the book. And it’s really important to learn this methodology in a way that doesn’t intervene in a way that changes people’s behavior. And that’s why I talk about how surveys are not good.
Denver: Yeah.
Danny: Focus groups are not good. Pitching people really early on something is not good. This is about relaxing your bias and simply observing and listening to people behave naturally in their own environments.
Denver: You know, I was looking at some of the recent presidential campaigns. And, as you point out, these surveys and focus groups do absolutely no good. They’re wrong all the time. And it’s either because people are aligned, or people really don’t know. But the things that have done better is looking at how much time people spend online at a candidate site.
So, the key is really the behavior of what people are doing, not what they tell you– maybe what you want to hear, or even what they think.
Well, I’m going to go with a different example at this stage. and I love this one. And really, the examples you give in this book, Danny, is what animated it for me, and I love the one about prenatal vitamins. Why don’t you share that story with us.
Danny: Sure. That’s a company called Premama that came out of one of my undergraduate courses a number of years ago, a wonderful entrepreneur named Dan Aziz. This was a small group in my course. I require them to do the See, Solve, Scale process, form a diverse team and figure out a problem to solve, solve it iteratively on a small scale, and then scale it.
Dan and his group actually had not formed a diverse team initially. They were a group of four guys, athletes, who wanted to do something in the nutritional supplement space, and just hadn’t arrived at something that they could sink their teeth into. And so, I said, go spend a little time at Whole Foods up the block from the Brown campus and do some more bottom-up research.
And that meant, in that context, just to observe and maybe ask some open-ended questions of people you see in the nutrition aisle, and they came running back to me and they said, “Professor Warshay, we think we’re onto something.” And I said, “What?” And they said, “Well, we saw a whole group of pregnant women throughout the afternoon coming into the aisle, pulling off this bottle of what are called prenatal vitamins, looking really unhappy, and we observed them, and we asked some open-ended questions.
We didn’t even know what a prenatal vitamin was.” This, again, was an example of the benefits of scarce resources, being able to see things that you didn’t necessarily know anything about, not being saddled with your pre- established biases about what you think you know. But they asked some seemingly naive, kind of open-ended questions, and it became clear that women hated taking prenatal vitamins.
They were really big and tough to swallow. They tasted bad. They made you nauseated and constipated. They were awkward to carry around and broadcast that you were pregnant. And so, long story short, this group of four guys, who to the best of my knowledge even today, will never be the consumer for prenatal vitamins, they, in conjunction with a product development group I put them in touch with, created a new line of prenatal vitamins that are packaged as powder in these little packets that they patented.
You can add them, dispense them to any drink you’re used to taking. They are not tough to swallow. They taste good. They don’t make you nauseated or constipated. They’re easy to tote around discretely and not broadcast to the world that you’re pregnant or even sexually active, looking to get pregnant. And they then created a whole line of additional vitamin supplements for the same target market of women.
Eventually, they diversified their team, which they needed to do. But bottom-up research was the basis of their whole discovery– observing people behaving very naturally, not biasing them by a survey or a focus group, not interviewing.
Denver: Yeah.
Danny: This is not interviewing or cross-examining. This is simply trying to detect a problem that people have that they may not even know they have or wouldn’t know to tell you they had.
“And a big part of what we’re looking to do in this methodology, See, Solve, Scale, and that any reader or listener will be able to do, is to learn to relax that bias and to look at the world in a new way, break their mental fixedness so that they can see things that allow them to create new solutions to problems that maybe people didn’t even know existed.”
Denver: Yeah. My takeaway on this was, again, beware of the experts, you know because, again, I think a contrast with that top-down that you make the point about is that top-down is pretty much what everybody thinks, and it’s going to put you in a very narrow band, and you’re not going to really get as innovative and creative in terms of coming up with a venture where the bottom’s up.
And this is where ignorance is bliss, you know; you’re just observing, and I guess observing is a lot harder than it sounds, isn’t it?
Danny: You’re absolutely right. You read the book closely. I say in the book, I say in my training: Observing is harder than you think. And I won’t ruin it here. There’s a reference to a really good video that demonstrates it for you. I have some QR codes throughout the book, and also in the companion to the audio book, which I narrate.
And it’s a very compelling video that lasts about 20 seconds that will demonstrate to you that adage, that observing is harder than you think. There’s also a really great study that some researchers did at Harvard Medical School where they showed some lung tissue under a microscope to board-certified radiologists who are used to looking at lung tissue all the time.
And, again, I won’t ruin the specific details that are mentioned in the book. But it’s shocking, it’s surprising. It’s almost entertaining to see how badly these board-certified radiologists noticed an anomaly under that microscope.
Denver: Yeah.
Danny: It may also be similar to what you just said, where the vitamin manufacturers who are making these prenatal vitamins, the mattress manufacturers who are making these mattresses, these doctors who are used to seeing things under a certain microscope in a certain way, have the burden of abundant resources.
They have too much training; they have too much bias. And a big part of what we’re looking to do in this methodology, See, Solve, Scale, and that any reader or listener will be able to do, is to learn to relax that bias and to look at the world in a new way, break their mental fixedness so that they can see things that allow them to create new solutions to problems that maybe people didn’t even know existed.
Denver: Yeah. Yeah, you’re right. It’s really the downside of best practices. No innovation comes if you’re following best practices, tried and true. Let’s get onto the second S and that is Solve, where you develop a value proposition. Walk us through that, Danny.
Danny: Sure. You know, too often, especially in my work with big companies, big organizations of all kinds, governments, and big companies or big nonprofits, they forget that there is a middle stage. Even if they do the first See stage really well, they figure out what problem to solve, they’re burdened by needing to deploy large amounts of capital or resources or foundation grants.
And they leap right from See to Scale. I saw that when I was at Procter & Gamble. When I was there, any brand that was launching had to have projected a minimum of $250 million in sales. And that’s just often not the way the world works. Certainly not in the iterative stage of solving problems.
And so, in the Solve step, you develop what I call: a value proposition. And the key word there is that it’s iterative. It’s through an iterative process that you develop a small-scale solution to the problem. And it’s a very fun step because it incorporates new and maybe even surprising creativity and innovation techniques that I share in the book.
You learn to do something really important, which I call “diverge before you converge,” and that’s in the spirit of two-time Nobel laureate, Linus Pauling. He once said, “The best way to have a good idea is to have lots of ideas.” And so, you have to develop a portfolio.
I deploy a technique called Systematic Inventive Thinking, which offers five creativity templates that the researchers who created this SIT process, including a good friend of mine now, Amnon Levav– with whom I did a bonus section at the end of the narrated audio book– created. And it’s demonstrated to be the most successful ways of solving problems.
And then, I also share a technique called Nominal Group Technique, which sounds very complicated, but it’s a pretty simple technique for engaging both extroverts and introverts when you’re in a group of people looking to solve a problem.
So, I don’t expect that anybody opening this book or listening to the audio version knows anything about solving problems. I assume that you need to have some tools in your arsenal. And so, I share a whole bunch of them, and it tends, as I say, to be a really fun, enjoyable, interesting experience, and ways that you can have breakthroughs that are different from what you might find if you just dumped whatever, what happened to be in your head at the moment.
Denver: Let me ask you about one more technique– geographic follower.
Danny: Geographic follower is one of these really surprising techniques. It’s one that I talk about through a case study in the book called the R and R case, where a protagonist, who had no team members, no resources financially, figured out an insight when he was traveling on business to Canada, and he saw an opportunity to create a trivia game based on a template he saw there called Trivial Pursuit.
Denver: Oh, yeah.
Danny: And he brought back that concept into the United States. He partnered with TV Guide and created a TV Guide-branded trivia game. That concept already existed in Canada, north of the border, but he knew through his own experience in pattern recognition that things that worked well in Canada tended to work 10 times as well in the United States.
And so, he didn’t have to invent the concept of a trivia game. This blew the mind, I remember, of a Chemistry professor at Brown, who was in one of my workshops, Christoph Rose-Petruck. He was a brilliant chemist, and when it came to learning this concept of being a geographic follower, he lit up and said, “Wow, I have knowledge of all these insights from other people’s labs all around the world.I am not stealing them because they’re in the public domain, but how I might apply them to solving consequential problems is at my disposal.”
And so, it’s often the case that people don’t invent something from scratch when they’re a successful entrepreneur. They gain insight by learning about what other people are doing in other contexts, and they do not steal their IP, but they kind of import the insights that they used elsewhere into a new context. And that’s an approach called being a geographic follower.
Denver: Yeah, I love that one too. And it’s also part of, I think, our challenge of staying too much in our lane. There’s a real lack of peripheral vision. If we ever read more and looked at what other people were doing and said, “Oh, that could just work maybe a little bit differently in my space,” that would be great.
Danny: Well, it’s like Bob Reese, the protagonist of that R and R case says, When you play Scrabble, you don’t have to create new letters each time. You can append one of your letters onto an existing word.
Denver: Exactly.
Danny: And you get a lot of credit for that. So, it’s kind of what you just said. You could modify somebody else’s approach that operates elsewhere and use it in your own context in a way of being a geographic follower.
Denver: Absolutely. Danny, is it easier to make an innovative idea feasible or a feasible idea innovative?
Danny: Such a great question. And what a softball, because, you know, I say that over and over in the book. That’s an adage that I attribute to a very close friend and periodic collaborator named Bob Johnston, and he is an innovation expert. And, of course, when I heard him say that when he came to class one day, it hit me over the head because I thought: that is a brilliant insight.
Yes, the truth is: it is far easier to turn an innovative idea feasible than to make a feasible idea innovative. And you can think about why, because if you are thinking about feasibility from the beginning, it constrains your thinking.
You tend to think about all the reasons why you couldn’t do something rather than all the reasons if you’re thinking innovatively, of why you could. And, you know, imagine if Simon Berry had been limited to just thinking about feasibility, he probably never would’ve thought about redesigning a package of life-saving salts to fit neatly into some space available in a Coke distribution package.
He would’ve banged a head against a wall about all the limitations in the developing world. And instead, he thought about an idea that was innovative and then eventually figured out a way to make it feasible. It’s so much better to think about what I call and what Bob calls, “wild card ideas.”
Denver: Yeah.
Danny: He likes to say, “These are ideas that are illegal, immoral, or could get you fired.” And he doesn’t literally mean that; he’s not promoting immorality. He’s just saying that too often, especially in a big company context, we’re constrained by all the rules against why you can do something that you think you want to do.
And so, yes, that adage is super important. It’s often hard to follow though. You know, I’m working with my students in class now at the stage where they’re coming up with their new idea portfolios, and they’re constrained in their thinking, and I’m constantly pushing them, “No, you’re worried too much about feasibility. Don’t worry at all in the beginning about how you’re going to get something done. Just think about an idea that might be a solution to one of those needs you’d identified in the See stage.”
Denver: Yeah, you don’t want to shut down your own creativity. Let’s get to the final S, which is Scale, which you would look to do to create a sustainability model. And you say here, Danny, that it’s important for the entrepreneur to think big, and I mean really big. Why is that important?
Danny: I think it partly relates to the question you just asked, which is that if we think in terms of narrow scope based on what we think the feasibility is, we’re not going to fundamentally solve the problem.
If we’re starting off with big, consequential problems, in fact, I qualify the kinds of problems you ought to be looking for, and those are strong and enduring problems, and we have no shortage of those, right? I mean, healthcare problems, financial sector problems, climate change problems, systemic racism problems.
We have no shortage of big problems. And so, what we lack is enough people to go solve them. If we’re tackling consequential problems, eventually, not at the Solve stage where we’re not layering in lots of resources, where we want to iterate, fail fast and fail cheap… tolerance for failure… but in the Scale stage, we’re looking to attract resources of all kinds.
Could be in a nonprofit where we’re attracting grants, could be in a research facility, could be in the military where we need government funding, could be more typically perhaps in a corporate setting or in a for-profit setting. We, at that point, need resources where we can achieve the vision of thinking big.
And this, again, is where we need to break our mental fixedness. And so, we also use, and I teach in the book and in my courses and workshops, another technique from Bob Johnston called the Landscape Exercise, which forces us not to think about from this day forward, but envision 20 or 30 years in the future… first what the problem might look like, if it festers and persists.Then what a solution might look like 20 or 30 years in the future. And then I share a technique for reversing that process and inventing backwards.
And in that way, I always see a team or a group or an organization pushing its mental fixedness way beyond its near-term limitations based on feasibility. And thinking about its value proposition that it created on a small scale in the Solve stage to be way bigger.
Denver: Yeah.
Danny: And then it’s much more rewarding. The last thing to say there is it’s counterintuitive to think that big will contradict risk. Sometimes people think that keeping an entity small and tidy, that you could wrap your arms around, that nobody notices, stays off people’s radar is a good way to combat risk, and that’s not true.
The data that I share indicate the opposite, that if you think big, if you envision big, and if you execute big, if you dominate a space with a really valuable solution, essentially market share, you know, as we would’ve said at P&G, you will be so much better positioned to be successful and to really solve the problem in a fundamental way.
And so, scaling is the third part of the process. And by the way, my students through the years were the ones who put me up to write this book. I didn’t even think about writing a book. I didn’t know I could be an author any more than I knew I could be a teacher when I was asked kind of out of the blue 17 years ago to do this. But my students said, “You’re not doing the third step of the process.
Denver: Yeah.
Danny: You’re not scaling.” And good for them. And I thought, “Hmm, interesting when the students become the teacher.” But they were right. And so, if I wanted to have big impact in the world of entrepreneurship, I myself needed to learn how to scale and think big.
And it was my students who really nudged me to do that. And that’s partly what we’re doing here on this podcast. It’s partly what I do in my teaching now in workshops in different contexts all over the world. And it’s partly what the book is achieving through its readership.
Denver: Well, I really like that concept of thinking big. I do a lot of corporate culture work with nonprofit organizations, and I got to tell you, the ones who have the boldest vision have the most engaged staff. You know, you can’t get your staff and your team and your donors excited unless you’re really trying to fix a problem at a major scale, and this incrementalism doesn’t do it.
Danny: You have this insight from your own. And if it’s okay, I’ll just share real quickly an example of a classmate of mine named Patrick Moynihan.
Denver: We’re going to go there next as a matter of fact.
Danny: Oh, okay. Okay. So, Patrick Moynihan was an amazing person when I met him back in the early ‘80s at Brown. We were dorm mates actually as students. And then, when he graduated, shortly after he became a Catholic deacon and his interests started to gravitate toward the country of Haiti, he built an amazing school, a Catholic school, and year after year was graduating very poor students whose life was changed because of the intervention of Patrick and this Catholic school.
And he would come back to campus and see me, and he was usually larger than life and lit up. And one day, he came and I could tell that something was bothering him. He just did not seem his happy Patrick self. And he said that he had been out trying to raise money to expand the school, maybe to one other school, two other campuses.
And he just was striking out, and he was talking to really, really wealthy people for whom the amount of money Patrick was asking was inconsequential. And he said, “I don’t know what’s wrong. What do you think is happening?” And I said, “I know what’s wrong. You’re thinking too small. You’re asking for too little money.”
“These people who have an enormous amount of resources are looking for a return on their investment philanthropically the way they would if they invested in anything.” And so, I introduced him to one of my star students, Daniel Breyer, who worked with him using the Landscape Metaphor exercise that I just described.
It forced him to think beyond the feasibility of the constraints he was facing in thinking about one more school or two more schools. And by breaking his mental fixedness using this landscape exercise, envisioning 20 to 30 years down the road, he completely overhauled the vision for what became the Haitian network, not the Haitian school.
He went back with a completely new Think Big plan to these same donors, and they wrote big, big checks. And it all became true because of the scale method of thinking beyond your near-term limitations and envisioning something big for which you don’t yet have a concrete plan. And that’s why the second part of the definition that you cited before– without regard to the resources currently controlled– is so important.
If it were just a problem-solving methodology, that might apply to science or to product development and big companies. What distinguishes it as entrepreneurship is that you need to do it without regard to the resources currently controlled.
And in Patrick’s case, that meant that at least thinking about this big wasn’t initially dependent or constrained by his immediate-term resources, and freeing himself to do that was why the Haitian school became the Haitian network.
Denver: Yeah. You know, and it’s amazing when you think 20 or 30 years out, it breaks us from the present. because when you ask people to think three years out, they’re going to take exactly what’s happening now and extrapolate, you know, for the next three years. We think things are going to stay more the same than they actually will. But you go out two decades, you’ve got to go into a different space.
I want to dig in a little bit deeper there on scaling at nonprofit organizations, because I know you work with some nonprofits, and I also know you make a point in the book that there’s some built-in limitations or challenges that nonprofit organizations have just because of the sector that they’re in. Give us your thinking on that.
Danny: Yeah, I’m agnostic about what type of entity you need to be in order to scale. In fact, I deliberately call it not a business model, but a sustainability model. And that’s borne out over the now over 3,000 students I’ve had in all sorts of contacts, teaching at Brown and at Yale, and at Tel Aviv University in the summers, workshops of all kinds in different contexts, as I say, big companies, governments, the military.
I just did a couple of workshops for the US Air Force. And very much to your question into the area of expertise you have, working in the nonprofit world, all of these elements of the See, Solve, Scale process apply very well to the nonprofit world.
I have a lot of experience doing work with a wonderful group that maybe you or some of your listeners know called Seeds of Peace, a group whose mission is not to sell widgets… it’s to achieve Middle East peace. And I work with their fellows who had been either Palestinians or Israeli teenagers and went to a camp in Maine, and I get the pleasure of working with them.
Yes, this approach of See, Solve, Scale works really well, you know, in the nonprofit world, and it’s a challenge sometimes to have the heads of these nonprofits realize that they’re entrepreneurs as well as anyone else.
And so, the issues that I articulate in each stage, certainly doing bottom-up research, is really critical. You know, when Patrick had to do, to envision what might be possible for creating something much bigger than his initial vision, he did bottom-up research. He had to think about what are the unmet needs beyond this one school.
When he had to think about what a solution might be to those unmet needs, he discovered he had to iterate using Systematic Inventive Thinking, Nominal Group Technique, some of the other techniques, and very much in terms of scaling. Sometimes, I don’t know what your experience is, but nonprofits tend to get hung up on that.
We have this nice, tidy group of funders… this nice, tidy group of constituents we’re addressing. How do we scale in a way that’s going to be sustainable is not always on their radar because they think they can just amp up the approach to fundraising that they’ve always had. And that’s usually not the best way to do it.
So, I’ve never had an issue related to nonprofits that is actually so different. The challenge with a nonprofit is that they have some implied constraints that for-profits don’t have. You mentioned Dan Pallotta, and he would say that, you know, donors scrutinize things like overhead percentages, and they won’t let you use their donations to lure talent away from the for-profit sector, because you can’t pay them as well.
You can’t advertise on anywhere near the scale of what for-profit allows. You typically can’t take the kinds of risks that are encouraged in the for-profit environment. You don’t have the same amount of time to find large-scale solutions as the for-profit sector might allow. You don’t have a stock market or a context in which to raise money in a more typical way that you would see in the for-profit world.
It isn’t to demean nonprofits. It’s at least to acknowledge that there’s some constraints that you don’t see in the for-profit world. And at least, like my students, we’re agnostic. It’s not like we put the do-gooder nonprofits on the third floor and the for-profit capitalists on the fourth floor.
Last night at the Brown Venture Prize competition, we had a mix, for example, of for-profit and nonprofit. The only thing that we require, and it’s what I teach and what I share in the book, again, is in this third scale, more than just a donation approach: You need to have a sustainability model that lets you have scale and have a long-term approach to have impact.
So, nonprofits benefit a great deal. I work with lots of them and, you know, I’ve seen them implement this approach in ways that have revolutionized their whole vision for impact.
“Entrepreneurship’s a team sport. It’s generally not a solo sport. Only 16% of ventures are solo-founded, and those tend to do worse than those who are on the team. And if it is a team sport, then I need to share a lot of detail about: how do you construct that team.”
———
“You need to embrace the diversity that everybody brings to the table. You need to create a space in which people feel safe to bring their true, authentic selves. So, it’s not just checking a diversity box; it requires looking beyond what all the members have in common to leveraging the full extent of what every member might bring to the team.”
Denver: Yeah. And to your last point, I talked to a lot of nonprofit organizations, and this idea of creating a sustainable business model is becoming so prevalent that they do need to have earned income from the expertise that they have.
And many of them are actually trying to cover their entire nut from earned income and are really looking at philanthropy as sort of the growth capital, the innovation capital to do completely different things. And they’re not all that good at it, many of them, but it’s a place. But you’re absolutely right about some of those limitations.
You know, one that drives me crazy is having too much cash on hand. Maybe not Brown or Yale, but you know, many of the social service agencies say, “If I’m a good steward of money and I got $8 million in the bank, the donors are going to say, well, they don’t need the money. And then, you know, COVID comes along and people say, Oh, they’re so irresponsible. They don’t plan for the future. Well, you won’t give us the money because we have too much.” But I do think that’s beginning to break down.
Couple of other topics in the book I just want to touch on briefly because I think they’re important. Another topic in the book is inclusivity. Talk a little bit about that and how we can make entrepreneurship more inclusive.
Danny: Well, to begin with, let’s identify the problem. The statistics are pathetic. They’re embarrassing. Mainstream entrepreneurship has excluded big swaths of our society. Only 2.3% of venture-backed startups are led by women. Only 1.5% are led by Latinx founders. Only 1% are led by Black founders.
Let’s just state the statistics and be really clear. This world of entrepreneurship has ignored, excluded, discriminated against big percentages of our society who are equally entitled to be problem-solvers, and who we need to be problem-solvers.
So, it behooves us all to include many people who’ve been excluded, neglected or discriminated against. That’s a serious problem. It’s a serious problem that through research and engaged learning, experiential learning, my colleagues at the Nelson Center are doing a good job of disclosing and uncovering and fixing.
So, in the book, I talk about the idea of: What does it take to create a really good, really effective venture team, because entrepreneurship’s a team sport. It’s generally not a solo sport. Only 16% of ventures are solo-founded, and those tend to do worse than those who are on the team. And if it is a team sport, then I need to share a lot of detail about: how do you construct that team.
And I do. And so, the secret is, the main point of it is diversity of all kinds. Diverse teams produce the kinds of what we might call creative abrasion that leads to breakthrough solutions. Teams whose members come from all different kinds of backgrounds contribute different skills.
They embrace different points of view. They comprise different personality types. Remember, I said introverts and extroverts, races and genders, and they draw on these differences to develop breakthrough solutions. Unfortunately, the data show that most entrepreneurs tend not to form diverse teams. More than half of venture teams are formed with friends and family, and the research actually shows that those teams are less likely to succeed.
Denver: Yeah.
Danny: But it’s not just diversity. The companion element is that you need to embrace the diversity that everybody brings to the table. You need to create a space in which people feel safe to bring their true, authentic selves. So, it’s not just checking a diversity box; it requires looking beyond what all the members have in common, to leveraging the full extent of what every member might bring to the team.
And then, so, one of the biggest surprises in this section of the book where I talk about this is that even if you do have a diverse team comprising people from all different kinds of backgrounds, many of those teams focus only on what they share in common, rather than leveraging what I might call the full range of diverse expertise and insight available.
And in cases like that, where you have a diverse team that’s only leveraging where teams overlap, and that’s actually a small part of that overlap, those teams actually underperform, homogeneous teams.
Denver: Yeah.
Danny: That’s really kind of depressing. The real sweet spot is not just to have a diverse team, but to have a diverse and inclusive team.
And that was the word you used before, which is so important. This comes from some really good work from Frances Frei and Anne Morris at Harvard Business School. They allowed me to share a beautiful graph of a Venn diagram that illustrates this visually better than I can explain it with words.
But in short, if you just have diversity without inclusion, that team will actually perform worse than a homogeneous team. And if you have a diverse team that is also inclusive, where everybody on the team can feel like they can bring their authentic self to the table, that’s the sweet spot. That’s where you can really outperform anybody else.
Denver: Finally, Danny, you know when I read a book, I always love to learn a new word or a new concept, and you delivered, and if I pronounce it correctly, it’s Ikigai. Tell us what that is.
Danny: Ikigai is a wonderful word. I didn’t know it until a few years ago until my youngest daughter, Marin, who was doing some counselor training/ leadership training at a camp, learned this concept. Ikigai is living a life of meaning or a life of purpose. It’s a wonderful Japanese word. And she came to me, and Marin said, “Dad, I think, I’ve stumbled onto this word in my training that has to do a lot with what you try to teach.”
So, I learned the word and I’ve started to share it everywhere I go. It’s now embedded in my training and in my teaching at Brown and around the world. And it’s very much a feature, as you saw in the book. By the way, I was just in Japan with a group of our students, and it was wonderful to talk about Ikigai in Japan.
So, Ikigai comprises these four elements. Do something that you are really good at, we might call that drive. Do something that you love to do, we might call that passion. Do something that has purpose, adds meaning to the world, we might call that purpose. And do something that’s going to pay you fairly for the value you’re adding. And usually, if you are able to construct your own Ikigai around those four elements, you are much more likely to be successful in entrepreneurship.
And frankly, anything you do, it’s not limited to the world of problem-solving. But I include that in the book as a highlight, where there’s some depth, and I share some research because, and I’ve seen this, you can be academic toward your attitude of See, Solve, Scale. You can find a problem through bottom-up research.
You can solve it iteratively with scarce resources. You can eventually layer on more resources through a scaling method with a good intention to have impact, but you’re not likely to be successful unless all four of those Ikigai elements are aligned. Is it something you’re really good at? Is it something you really love? Is it adding meaning to the world? And is there a model to pay you fairly?
And I would commend that Ikigai model to anybody listening here today on The Business of Giving because I find that it’s useful no matter whether you’ve fashioned yourself an entrepreneur or problem-solver, or no matter what you do.
And if you’re unsatisfied with what you’re doing in your career, in your profession, in your life, I’d recommend taking a step back, using this template of Ikigai and thinking about it, whether it is truly something that you are good at, love to do, adding meaning and pay you fairly. And usually, I find when I’m talking to anybody, it could be an executive later in their career, if they’re not quite in line with at least one of those Ikigai elements, that may be the source of their dissatisfaction and maybe of their lack of success.
So, I think, Ikigai is a really good place to focus to begin with, even what area to focus on because, again, you don’t just go out there and start doing bottom-up research randomly. You need to do it in an area that is consistent with your Ikigai.
Denver: Yeah, Ikigai sounds like the perfect recipe for intrinsic motivation. You got those four things going, and you don’t need external motivation. You get up every morning just ready to tackle the day. Danny, tell us about your website and some of the resources listeners will find on it.
Danny: Sure. I actually promised this in the book and, even this morning, as I often hear from people every day now who’ve read the book, they’re eager to find additional resources.
I say that to my students anywhere in the world, that engaging in this See, Solve, Scale method in a training environment is just the first part of a relationship with me. Best way to get in touch with me could be through my website, dannywarshay.com. There is a very rich bed of resources there.
There are videos of some of my former students, Ben Chesler from Imperfect Foods, who teamed up this idea to solve the problem of food waste. And, you know, at the time I wrote the book, I asked Ben himself to characterize his See, Solve, Scale trajectory. He did so in the book; at the time I published the book, Imperfect Foods was doing over $250 million in sales. They had raised over $200 million in venture capital.
They were employing over 1,500 people in 43 states, and they had saved a hundred million pounds of food waste. Emma Butler, a woman from my class at Brown, also wrote a section of the book, and the problem she was tackling was the need for adaptive clothing for women who had different shaped bodies.
There’s over 600 million women around the world who need adaptive clothing because they may be in too much pain for a variety of reasons to dress themselves. There are videos of Emma and Ben, and also a woman named Gwen Goude from Zimbabwe, a whole bunch of other resources at dannywarshay.com, and then an invitation to join the LinkedIn network of See, Solve, Scale with a link on that Danny Warshay site.
Plus, you could just go to LinkedIn. And through either of those, you’re welcome to reach out to me and, you know, I love being in touch with readers of the book or listeners of the audio book. And this is designed to become a See, Solve, Scale community, which it’s already becoming.
Denver: Wonderful. Well, for all of us in the nonprofit sector, See, Solve and Scale is a job description, and this is a perfect book to help you do that job better and more effectively. Thanks, Danny, for being here today. It was an absolute delight to have you on the program.
Danny: My pleasure, Denver. Thank you so much for having me.
Denver Frederick, Host of The Business of Giving serves as a Trusted Advisor and Executive Coach to Nonprofit Leaders. His Book, The Business of Giving: New Best Practices for Nonprofit and Philanthropic Leaders in an Uncertain World, is available now on Amazon and Barnes & Noble.