In order to innovate, young engineers need financial management skills, the ability to communicate and exposure to successful entrepreneurs, Dr Eddie O’Connor told the recent IMC30 conference in UCD
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Author: Dr Eddie O’Connor, chief executive of Mainstream Renewable Power

Looking back at my undergraduate days, students were not educated consciously to be innovators or entrepreneurs, although we were very well trained in the theory and practice of engineering and emerged with the ‘mentality of an engineer’. We were introduced to the culture of the engineering profession and it made a life-long, positive impact on our young minds.

One of the most important characteristics of the engineering culture with which we were imbued was a great respect for facts – and for research into facts.

For the first part of my working life, I was primarily an innovator. By that, I mean someone who made changes within an existing organisation to manufacturing techniques and work practices – for example, when I was managing director of Bord na Móna.

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For the second part of my career, I have primarily been an entrepreneur, starting and managing new business ventures. I have established two engineering businesses from scratch, the first being Airtricity, which was sold after nine years for €2 billion. The second was Mainstream Renewable Power, which is now the world’s largest private developer of wind and solar power, with nearly 10,000 MW in a development pipeline that stretches from Canada to Chile and from Scotland to South Africa.

Reflecting on the difference between an innovator and an entrepreneur, I have come to the conclusion that a certain type of risk lies at the heart of the difference.

CENTRALITY OF RISK

Risk is a way of life for entrepreneurs

For an entrepreneur, risk is a way of life. Whereas the rewards of success can be great, the consequences of failure can be calamitous, sometimes leading to financial and personal ruin. It is the ability to live with that kind of risk that differentiates the entrepreneur from managers, even from innovators, and certainly from bureaucrats. It is a high-wire act without a safety net.

My own research has unearthed what is possibly the best definition of the entrepreneur, published two-and-a-half centuries ago by Robert Cantillon. He was born in Ireland but made, and lost, fortunes as a financier in France and Britain.

Described as ‘the father of enterprise economics’, he defined entrepreneurs as those willing to pay known costs, but willing also to earn uncertain income. He called them ‘non-fixed-income earners’, the very opposite of fixed-income earners like employees and staff. He added that opportunity, recognition and exploitation went hand in hand with the willingness to take on the personal risk of uncertain income.

That particular feature of first recognising and then exploiting opportunities is now accepted as an inherent part of entrepreneurship. Austrian economist Joseph Schumpeter said the entrepreneur shatters the status quo of existing products and services to set up new products and services, a process called ‘creative destruction’. Those of us involved in new business creation can identify with this description of the world in which we work.

I am also taken with Peter Drucker’s emphasis that a willingness to explore opportunities, new ideas and business practices are inherent to entrepreneurship. This means, of course, that the entrepreneur is an uncomfortable person to have around, since such activity always involves changing the established order in an organisation or altering the way things are done.

Embracing change, accepting risk, being curious and courageous, being brave and adventurous… these are the heart of entrepreneurship. But can people be taught to be enterprising and innovative, or are these innate qualities that cannot be learned?

Certain personal qualities are innate, but they can be fostered and perfected. In my company, we use personality testing to screen job candidates because we want our staff to have certain characteristics, like openness and extraversion, which I believe are hardwired into the personality. But at the same time, we engage strongly in training and continuous professional development (CPD).

We reconcile these apparent opposites by recognising that entry into any profession is largely self-selecting but, having entered it, the innate abilities of the entrants can be developed with the right training methods and nurtured within the right learning environment.

EXPOSURE TO PEERS

Most people learn by doing, but also by watching and then imitating others – that is the basis of apprenticeship and internship. Exposure to peers is an essential part of learning best practice. I agree with Jesper Sorensen, who concluded that entrepreneurs learn from workplace peers and the social composition of the workforce in which they are involved.

So, if young people work with entrepreneurs, they are more likely to become entrepreneurs themselves. This simple proposition should guide the way we educate engineers for entrepreneurship and innovation.

I can envisage at least five ways in which this could be done. Although many are already applied in our universities, they can bear repetition because best practice needs constant reinforcement. The five proposals are:

  • At the undergraduate level, there should be structured internships whereby students work for defined periods within selected industries and are required to write up their work experiences. In short, being in the work environment becomes an integral part of the academic curriculum.
  • At postgraduate level, opportunities for internships could be even more varied, whereby students would spend longer periods of time in industry in different formats.
  • At all times, students should be exposed to the real-life experiences of entrepreneurs. This can be done by a combination of conventional lectures, apprenticeships, internships, workshops, mentoring and partnerships.
  • The establishment of campus companies within incubator units inside universities has been sensible but, to get full value from this innovation, experienced mentors are essential in guiding would-be entrepreneurs through the messy, exhausting and often discouraging process of setting up and growing a business.
  • The fifth proposal captures the essence of exposing students to peer behaviour. We should bring the worlds of business and education closer together, perhaps even effect a merger between them. Walls should be broken down and business brought into the classroom and the classroom into business, such as for the purpose of CPD.

There is enormous potential for devising university curricula that make sense to business and, at the same time, encourage students to go into business and to follow their dream.

MERGING BUSINESS AND EDUCATION

Equally, there is great potential in the field of innovation for postgraduate research into products, services and systems that business needs to create in meeting the challenge of creating a carbon-free society – in other words, of helping defeat the threat of climate change.

For example, my company needs a device called a SuperNode, which we have identified as an essential piece of technology in creating a Supergrid. A supergrid is essential if renewable energy is to replace fossil fuels in power generation – a task that has to be accomplished by 2050 as part of the decarbonisation of the economy.

This is an example of entrepreneurship because we are anticipating the future, seizing an opportunity, gaining first-mover advantage and taking on commercial risk.

What we need from academia is innovation, so we have commissioned research from DIT Kevin Street into the design of a SuperNode, which we are confident will be available to us to start building the Supergrid within five years. This is a perfect example of the sort of collaboration between business and the universities that should become an integral feature of educating engineers.

However, there is more to innovation and entrepreneurship than risk taking or opportunity recognition and exploitation. Business needs capital for start-ups, expansion and survival. It follows that in educating future entrepreneurs, training in finance is essential, such as in basic accountancy covering profit and loss accounts and balance sheets and in financial techniques, such as management accounting.

Exposure to financial engineering is even more essential, so that the would-be entrepreneur understands the various forms of financing available to business and knows how to raise the finance. This suggests that internships in banks and finance houses should become commonplace for student engineers and suggests closer co-ordination between engineering and business faculties within the universities than is the case at present.

CENTRALITY OF COMMUNICATIONS

Communications skills should be fostered at university

Raising finance in a risk-averse world introduces a requirement that does not figure as prominently as it should in engineering education – the art of written and verbal communication. The ability to convince others to give or lend you money is utterly fundamental to the success of an entrepreneur. Without money, even the best ideas will remain moribund.

As an entrepreneur, I spend a huge proportion of my time communicating with potential and existing investors, stakeholders, strategic partners, politicians, civil servants, the media and academia. I devote considerable time to public affairs, so the external business environment is as benign and supportive as possible. That requires constant communication, including interviews to radio, television and print media, speaking at conferences and participating in seminars.

Skills in the public affairs field can be learned and, for that reason, should be taught throughout undergraduate years. They should not be regarded as ‘extra-curricular’ but rather as ‘intra-curricular’ activities.

LEADERSHIP AND TEAMWORK

All the research work on entrepreneurship confirms that leadership and team building are core activities for entrepreneurs. These skills can be acquired by observing others but, better still, by participating in teams dedicated to particular projects – even if only organising company social events.

Within business, we invariably operate in teams. In most cultures, decisions are normally taken by consensus within a team, which, in turn, often has to deal with other teams. Entrepreneurs must be good at team building, at putting people into the right positions and getting them to work together.

If leadership is the other essential soft skill of the entrepreneur, then we have to accept that it is inseparable from the articulation of vision and the expression of values. Without vision, there will be no business creation; without values, there will be no business survival.

Great entrepreneurs are strong on vision and values. To me, the key element of the vision is to make the future a part of the present, so that what appears improbable to outsiders is seen as possible by insiders. The key value for me is respect – for staff, the communities in which we operate, our customers, suppliers and our planet; above all, respect for the history and cultures of the peoples with whom we do business.

The articulation of vision and the expression of values are best learned by students from exposure to those who have done both, so that they can emulate success and be inspired to take their own first steps at risk taking. However, I accept that educating anybody for innovation and entrepreneurship is an art and science, a combination of nature and nurture.

Getting the balance right is ultimately the task of educators. That is not passing the buck; it is recognising that division of labour is a sound principle. My message is that in educating engineers, it is crucial for the economy to get the balance right, because engineering is the seedbed of enterprise and the springboard for innovation.

Faced with the great challenge of climate change, it is engineers who will devise, construct and manage viable and essential solutions, such as the creation of carbon-free power generation, on which I am staking my future.

Engineers provide the richest source of entrepreneurs and innovators, more so than any other profession. This makes the task of educating student engineers one that should evoke the very best in our educational system.

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  Author: Dr Eddie O'Connor, chief executive of Mainstream Renewable Power Looking back at my undergraduate days, students were not educated consciously to be innovators or entrepreneurs, although we were very well trained in the theory and practice of engineering and emerged with the ‘mentality of an engineer’. We were introduced...