Episode 13: Helping underdog entrepreneurs succeed

Nadine Habib:

From the corner of Bay and Dundas in downtown Toronto, this is Like Nobody's Business, a podcast of thought leadership and business innovation. I'm your host, Nadine Habib.

On today's episode of Like Nobody's Business, I sit down with Horatio Morgan, Associate Professor of Global Management Studies at the Ted Rogers School of Management. We discuss his new book about underdog entrepreneurs and the framework he's created to help marginalized and minority innovators. He also discusses challenges black entrepreneurs face in their careers and his advice to those pursuing their dreams.

So let's start with your book. You've been telling me a little bit about your new book that's coming out. It's coming out this year and it's titled ... Let me get this absolutely right. Underdog Entrepreneurs: A Framework of Success for Marginalized and Minority Innovators. Can you tell us a little bit about it and what inspired the book, as well?

Horatio Morgan:

Absolutely. So I enjoyed writing this book. It's really a book about entrepreneurs who are innovators from marginalized or minority groups, including immigrants, refugees, blacks, women, and other racialized groups. I was really inspired to write this book because I'm a bit concerned that there is so many people from marginalized groups who are being pushed into entrepreneurship, and oftentimes with very little guidance, if any, on the code-breaking skills that they need to actually succeed against the odds.

So this is what this book is really about: really trying to set them up for success, and the way I've tried to do so is to provide a framework that enables them to analyze the common challenges or obstacles they face and develop personal qualities and strategies to overcome them. What I'd perhaps like to emphasize, as well, is that in the book I talk about the idea that they face something in common that I like to call the Outsider Problem. This is basically manifested in the lack of access to powerful mainstream networks, or the lack of relevant know-how, exposure to stereotype-based discrimination, and especially a stereotype threat.

And by that, I mean they are inclined to underperform at certain tasks, primarily because they are stereotyped as incompetent at those tasks. So that is something that I take to heart, and one of the things I do, in a very careful way, is really to look at precisely how and why they can actually overcome this problem. So a substantial portion of the book deals with qualities or strategies that they can actually cultivate. I do spend a bit of time looking at the benefit of an outward-looking mindset, and what I have in mind here is if they want to grow and believe in their ability to grow and are alert to opportunities, then spectacular things can happen.

I also talk about the benefits of having valuable knowledge from formal education and there's an idea that I address in the book that is perhaps an interesting one. I talk about the notion of having a strategic identity orientation, and what I have in mind here is that I would hope they realize that their self-identity is multi-faceted, and what I'm hoping, too, is that they would realize that there are aspects of their identities and when I talk about the identity, I'm basically thinking about the answer you provide to the question, "Who am I?"

You could say, "I'm a member of this group. That's me." You could say, "I'm a professor. I'm a doctor. That's my role. I'm an entrepreneur and I want to accomplish amazing things and win awards." And you're looking at yourself from the perspective of your role in partnerships. You could also say, "I'm fantastic. I'm clever." And so what you have here is a collective, a relational, and a personal aspect of self-identity, and the key is which aspect of your personal identity serves you best in a given situation or a given time? So that's important.

And once I got there, it made sense to keep going. So I talk a bit about the need for social and political skills. You have to be able to interact effectively with many different people, in many different settings. That's a social part. The political part is I would hope that you learn something about them and you would be able to say something to them that makes them understand that you appreciate them and be sincere about it and then somehow be able to influence how they feel, how they believe, and the actions they take and hopefully actions that will advance your interest. So that's an important thing to do.

So a lot of work went into building this framework. I drew on multi-disciplinary research, very extensive work, but I like stories, so a lot of these ideas are grounded in stories. I return to familiar stories of business leaders who were initially disadvantaged, like Adrian Newey, the former CEO of PepsiCo in the United States. I talk a bit about Jack Ma, co-founder of Alibaba in China. Hilary Devey, I do look at her story a bit. She's the CEO and chairman of the Pall-Ex Group, and she was one of the first women to actually lead a haulage company. So when she approached the freight or transport drivers, they were very skeptical about whether or not she could drive a car, let alone operate a truck in business, so that's a fantastic story. And I also look, of course, at Michael Lazaridis, former CEO, co-CEO of Blackberry Canada.

And of course, these are certainly giants, but I do feature, as well, the stories of the less-known but equally inspiring accounts of people who are doing spectacular things across different countries. So for example, here I talk about Tahani Aburaneh, a former refugee who came to Canada. She's now a real estate expert. I also talk about Ayesha Adu, founder of Power To Girls Foundation. DriveHER, black female tech entrepreneur trying to make a difference. There are stories, as far as Peru, when I talk a bit about Aquilina Flores, founder of Topitop, making clothing for poor people and clothing that could make them feel good about themselves.

And there are other stories. Hussein Shaker in Germany, a former refugee who went on to form a company, Migrant Hire. So this is not the typical academic book. It's really a conversation that I'm having with the world, based on insights that I've gathered from my work and stories that I tell and experience in the world. But perhaps the best part of the book is that I feel I do a pretty good job sending marginalized and minority entrepreneurs off to success with some practical and actionable insights. So these are exciting times.

Nadine Habib:

Yeah, it sounds like an exciting book.

Horatio Morgan:

Yes.

Nadine Habib:

Maybe bringing it back to the term that you had used, the Outsider Problem, I wonder if we could talk about how some of the business leaders now, like Jack Ma, how they used that to their advantage. Is there examples of that, of how they kind of turned that into a positive, rather than something that defined them?

Horatio Morgan:

Well, certainly. That's a very interesting question and it certainly gets exciting if we are beginning to talk about Jack Ma, because in this case, when he started out in his apartment in the 1990s, huddling together around several founders, China had not yet reached the point where it was acceptable to operate a private enterprise. So they were pretty much in the shadows and he had to be very careful. But if I go back to his earlier time growing up in Hangzhou, I think, he once heard that there were foreigners at a hotel, and he rode his bike to go there, to meet foreigners and to learn English. And he kept going there, and at some point, he went abroad, to Australia, I believe, and he met a family and for the first time, he came to understand that there were other worlds outside of China.

What I see in Jack Ma and others is that innate social skills. They are able, somehow, to do four things very well that every entrepreneur has to do well. They're able to come across as reasonably confident, credible. They are also likable, but these are certainly attributes that make a big difference, because what it does, ultimately, because you have so little power, you're on the fringes, the power that you have is the ability to create a positive first impression. And when that happens, you become a part of others' plan who want to see you succeed.

Nadine Habib:

So it is Black History Month, and so I wonder if we can focus on black entrepreneurs and black businesses and talk about some of the types of challenges that are unique to black entrepreneurs and if you talk about that specifically in your book or just in your research in general.

Horatio Morgan:

Well, that's an interesting question, and I think it's fitting to look at that in this context. No, I think there's a lot to celebrate and ponder, when one considers the opportunities, the challenges, and the impact of black entrepreneurs and black business today. In fact, at this very moment, our world is being dramatically altered, in just about every way, by what some are coming to describe as the fourth industrial revolution.

This has been accompanied by a whole stream of different technologies and developments in areas as diverse as software security, Cloud computing, computer vision, artificial intelligence, 3D printing, robotics. So more than ever, the future of black entrepreneurs and their businesses really depend on how well they actually take advantage of the opportunities and manage the challenges in this technology-driven, competitive global economy.

And as I think about this situation, my mind really goes back in time to Elijah McCoy, a black Canadian, or perhaps if you're in the US, you might say an African-American. But he was a mechanical engineer and an inventor, and I find his journey to be an interesting one. If you go back with me, and I hope you do, what you'll find is around the 1830s, his parents are fleeing Kentucky in search of freedom. They would find a resting place and a refuge in Upper Canada. He would spend his early days in Colchester. By age 15, he was off to Scotland, where he was trained for the next five years as a mechanical engineer.

After returning to Canada, he couldn't find work, but he kept going. He would end up in Michigan, where he became a fireman, looking after the trains at the Michigan Central Railroad. And why I find this interesting, if you pause here, because at that point, something special was happening in his time: the first industrial revolution had almost run its course in Britain. People's way of life were altered. We no longer had an agriculture-based economy. It was factory-based manufacturing, and this has now rippled across the Atlantic Ocean, and what we had was a rise of rail transportation system. And there were challenges. One of the main inventions that came out of this time was the steam engine, and that is what was powering the trains that McCoy was looking after.

And what is inspiring, and I hope people do see it that way, is that McCoy made an impact in his time by solving a problem that was holding back that economy, because these engines were unreliable. They were overheating. The axles, the gears, the levers, they needed to be oiled, and each time they needed to be serviced, the entire train system had to be stopped. McCoy solved that problem. He found a way to design a lubrication system that made it possible to constantly oil these moving parts while the train was in motion. I think black entrepreneurs should find inspiration in that and welcome the opportunity to do something special now.

It is certainly different in some ways than the world that McCoy was in, because today, it's not so much invention that counts. It's innovation, the skill, the creativity to recombine the existing ideas and create something viable, something new. Also different is the fact that we are no longer creating things in isolation. We need others. We do create value in networks, in ecosystems, and so that's an additional challenge of being an outsider of these systems of innovation, whether in Silicon Valley, whether in Kitchener-Waterloo. So it ought to concern us that black entrepreneurs may not be fully present in those settings, and if I can think about the challenges, having celebrated McCoy's achievement and what it means for us, they are being held back in certainly certain ways.

I'm not sure if I will say the challenges are different, but I think they experience extreme versions of the Outsider Problem. So what we have, they are weakly embedded in networks that are driving innovation, driving ideas. They are disadvantaged by negative stereotypes and these stereotypes are damaging because it's about their ability to lead science and technology-based ventures. And because these stereotypes work, for the most part, unconsciously, in the minds of private equity investors, business angels, suppliers, mainstream customers, it means that they're not getting a fair shot.

There are study that shows that an African-American entrepreneur who produces a good that is of similar quality to someone who is white, consumers tend to discount the value of that good and they're not willing to pay a high price. And what that can do, it can force their businesses to close prematurely, even though they have a pretty good product.

Another concern is that they come to their ventures less prepared, and the reason for that is they have had fewer opportunities to have accumulated substantial management experience while working for a leading company. So these are difficulties, but what I find encouraging, if not inspiring, is that they are motivated to succeed. They're highly qualified, and especially more and more in science, technology, mathematics, and other areas that are certainly in demand today. So those are important developments and the challenge is how to really harness, help them put together the package that can really help them, not only meet the Outsider Problem, but transcend it and thrive.

Nadine Habib:

All right. And so that brings me to my last question. So how does your framework help black entrepreneurs address some of these challenges? And if you have any words of advice, as well.

Horatio Morgan:

Well, you know what? I think I do share some ideas that I hope they'll find helpful. One of the things I emphasize is the need to commit to ongoing learning and capability development. It's a pretty dynamic world and I can think about a company like Blackberry, you know, because I basically was hoping that this company would rise on the world stage, but one of the things that they had a difficult time doing was really advancing their company. They had gotten themself into hardware, Smartphone, but their real potential, their long-term promise, was in software development and high-security software. So as it turned out, they learned a little too slowly and almost died. Black entrepreneurs can't afford to make that mistake. They have to progressively develop themselves and their products and get feedback.

I also emphasize the importance of cultivating mutually beneficial networks, and this is something that I am very sympathetic about, because what happens in the case of black entrepreneurs, they find themselves a bit isolated, and what that does, it really accentuates their need for a sense of belonging. A lot of black associations, black organizations, can address that need, but I would encourage them not to stop there, because innovation requires diversity. It requires a whole spectrum of ideas, sometimes that are at odds with the ones you hold, so you have to be able to build out your networks into the mainstream settings. Fortunately, today it is possible to build large networks using social media like LinkedIn, Twitter, but even in those settings, you have to be familiar with the rules of the game. What people consider to be acceptable, in terms of content, in terms of favors. You have to be able to learn to use those channels and in a reciprocal way, not just a one-sided way.

And I touch on self-identities, and I think that's a very tricky one, because what I'm suggesting here is that then others should experiment with their self-identities, to not be rigidly defined by them. I can tell you that I am not the person I was at five. I'm not sure I'm the person I was yesterday, but there's something about us as humans. We recognize very well that we're not as same as we used to be in the past, but we're not good at seeing what will become in the future. We think this is us. We're good now. And so we don't change as quick as we should, over time.

But as your ventures grow, you'll meet different stakeholders, and these stakeholders have different expectations of what you should do at that stage, and you will not get the support if somehow you're not transforming yourself in ways that allow you to connect with these stakeholders, whether it is directors on your board, at this point, whether it is analysts in the market, critics, whether it is a social activist group questioning your action. At each stage, you have to evoke some aspect of your identity.

And if I can say one more point, because what some people might suggest, that that is, "That sounds fake. That sounds like you're suggesting something that is not sincere." Or they might say, "It's not authentic." But what I would say in defense, if the argument is that you need to be true to who you are, what I would be struggling with, you would be true to which version of yourself? True to which self? Because you're already changing. So what I see as a challenge is, whatever you create yourself to be, and you're able to really dig into an aspect, even though it might be the least comfortable aspect of you, but if that's the part of you that allows you to rise to a new challenge, it's important to tap into that.

I talk about other advice. I believe that in this book, I avoid extreme positions, that there's nothing that marginalized entrepreneurs can do, because the system is rigged. I also avoid the other extreme position that everything is in their hand. What I believe is that you're everything. Who you are and what you're becoming is everything that has happened to you, including the choices you have made, and I hope they would not let go of that sense of human agency and their ability to transform circumstances.

So that is one part that is extremely important. I could talk about other things, like government support. Maybe one note on that, it will be particularly helpful, especially because there are concerns about their credentials or their competence as innovators. I think they would do well to target prestigious government awards, because what it does, it's almost like a stamp of approval that signals that you're good, and there's evidence that investors consider that, and I could go on, but I think that those who read the book will certainly find other things that they might find challenging, if not worthwhile.

By way of advice, as a parting word, it is tough. It is tough and it is painful to know that you're trying hard and you feel like you're failing, but what I would hope is that whether it's black entrepreneurs, that the despair does not set in. And when you're marginalized, perhaps the most enduring asset you have is your ability to think about yourself, about others, about the world, in the most enabling way. Sometimes that's all you have, and I would hope that they never lose sight of that. Otherwise, I think I'm just excited that there's an opportunity to raise up giants on the fringes of society and see people prosper and flourish.

Nadine Habib:

Well, Horatio, let's leave it on that note. Thank you so much.

Horatio Morgan:

Thank you for having me.

Nadine Habib:

Like Nobody's Business is a presentation of Toronto Metropolitan University's Ted Rogers School of Management. For more information about TRSM, visit torontomu.ca/tedrogersschool. Thank you for listening.