His name often makes the headlines, and this week was no exception. Entrepreneur Elon Musk, founder of electrical-vehicle innovator Tesla and SpaceX, a private aerospace company that builds rockets in its facility in Hawthorne, California, met with U.S. president-elect Donald Trump on December 14, 2016 for an innovation summit in New York City. Musk joined other Silicon Valley technology titans around the table, such as Apple’s Tim Cook, Alphabet’s Larry Page and Facebook’s Sheryl Sandberg, to discuss governmental support of the tech industry. Musk was also named the same day as a strategic advisor to the president-elect’s Strategic and Policy Forum.
Musk’s most high-profile endeavor these days is space exploration. Along with other private companies like Blue Origin, a commercial rocket business owned by Jeff Bezos, founder of Amazon, SpaceX is dedicated to exploring what many consider “the final frontier,” – outerspace. SpaceX’s first mission to Mars is planned for 2018.
This kind of surge in intergalactic innovation has captured the attention of Wharton professors, who often spend a lot of their time researching new and exciting business trends related to their areas of expertise.
Space exploration is a complex, highly technical and increasingly expensive endeavor that traditionally has been the domain of big governments – like the U.S. National Aeronautics and Space Administration or NASA. But more private firms like SpaceX are jumping into the fray and achieving success. In a recent paper, “Watershed Moments, Cognitive Discontinuities, and Entrepreneurial Entry: The Case of New Space,” Wharton management professors Laura Huang and Anoop Menon — along with coauthor Tiona Zuzul from the London Business School — studied the watershed moments that have enabled this frenzy of other-worldly entrepreneurial activity – also referred to as entrepreneurial entry into the aerospace industry. Huang and Menon recently spoke with Knowledge@wharton about their findings. You can read a full transcript or watch that video interview here.
Below are some highlights from their discussion.
Deep research often starts with a personal passion and a few simple questions. “We are big aerospace buffs,” says Menon. “There has been a huge amount of buzz in the aerospace industry in the past five years or so. There’s Elon Musk, there’s Mars colonization, space travel. Aerospace is a classic example of a hard-to-break-into industry. This is a really entrenched industry with very high entry costs because of capital requirements, skills that are required, and regulatory connections that you need to have. Many people have tried to enter it to do private space and have failed. But all of a sudden, in the past decade or so, a big change. What happened here? Why? What drove this change, and can we understand something about industry evolution and entrepreneurial entry by studying this particular case?
Preparing an academic paper is a big undertaking. “We recognized that [aerospace] is an industry that has a lot of history,” says Huang. “We went back to the 1950s and even earlier. We have 21,000 articles, conference proceedings and documents dating back to that time period all the way to the present day. We looked at what was happening. What are the changes? Where do these changes come from? We also supplemented that with lots of interviews with regulators, engineers, people at all the different touch points in the industry.”
A combination of data and face-to-face helps you draw conclusions. “One of the really fun things about this project was that I got to talk to an astronaut; I got to talk to a colonel in the Pentagon; I got to talk to NASA people. It was fantastic,” says Menon.
“We talk so much about big data now, and I think data is absolutely critical,” adds Huang. “We need data in order to make our decisions, but we also need to remember that you need to have a lens with which to analyze this data, with which to understand this data. That’s where I think these sort of personal interactions — bringing together what your mental model might be, looking at different contexts — are really necessary in order to make sense of the data.”
Big moments in the history of industries shock us and possibly set our minds on a different course. In aerospace, “the first set of shocking watershed moments happened at the end of the 1980s. You get the Challenger disaster [on January 28, 1986, the American shuttle orbiter Challenger launched by NASA broke up 73 seconds after liftoff, killing all seven astronauts on board] — which very shockingly, very vividly demonstrates to the public that maybe the government doesn’t always get it right. Maybe things can go really badly wrong. At the same time you get the Cold War ending, the Berlin Wall falling, and that causes many people to question why we are spending so much on space. Then committees get formed. How do we rethink space? That causes what we call the initial shake-up of the Old Space model.” Even then, it takes time to change the way people think about exploring the final frontier. But continued progress toward private space exploration, like the Ansari XPRIZE, a space competition won in 2004 that encouraged non-governmental organizations to build and launch a spacecraft capable of carrying three people to 100 kilometer above the Earth’s surface, twice within two weeks, paved the way for Elon Musk and other space entrepreneurs.
How people think and respond emotionally to events in an industry may be part of what enables and inspires entrepreneurs to get involved. “The academic literature on how industries change, where do opportunities come from, tend to look at either big breaks in technology, big regulatory changes or some sort of social movement or collective action. [We are adding in this cognitive element],” says Menon. “What we are trying to say is that these watershed moments are big, shocking events that cause [people] to sit back and wonder if things should always be this way.”
“These emotionally resonant events are happening all of the time,” adds Huang. “We don’t know what form it’s going to take necessarily, but they are affecting the mental models. Even if there are technological shifts, it’s co-evolving alongside these other changes in our ways of thinking.”
Where will the next generation of innovators look for entrepreneurial sweet spots? “In entrepreneurial courses, we ask where the opportunities are. Let’s analyze the industry landscape, the technological landscape and the regulatory landscape to find where the opportunities are,” says Menon. “What we are seeing is that maybe we can also analyze the mental landscapes, the cognitive landscapes of the agents, what their beliefs are and how they are changing, as another avenue to think about where opportunities might be and where change might come from.”
Have you heard of Elon Musk? Maybe seen him on an episode of “Big Bang Theory?” Who is he? Why do you think president-elect Trump tapped him to serve on his Strategic and Policy Forum?
Professors teach undergraduate and graduate students in college and also teach professional courses. Another important part of their job is to conduct original research. What is academic research? How does it contribute to society? Use the above article and the “Related Links” tab to support your argument.
We hear often about entrepreneurs starting interesting businesses, but we don’t always consider what motivates them. What is this article saying about what inspires entrepreneurs to enter new industries and seek out solutions to problems?
What is big data? How does it help us do our research and gather support for our investigation of an issue? Is big data all we need to explore and validate our argument?