October 2009
He's Got Game
Newly arrived Asst. Prof. Ethan Mollick, co-author of a book on the video game industry and a former entrepreneur, studies innovation with a unique perspective
 Prof. Ethan Mollick |
For some kids, it's a lemonade stand or carwash that triggers an interest in entrepreneurship. However, for Asst. Prof. Ethan Mollick, the newest member of the faculty at Wharton Entrepreneurial Programs (WEP), his inspiration came in a more unusual form -- cow-shaped door stoppers.
Mollick explains that, as part of a business contest in high school, he started a company in his hometown of Milwaukee, Wis. marketing the unique door stoppers. His advertising campaign was deemed strong enough that he made it to the national finals. While he didn't win, that experience began a long-term interest in entrepreneurship.
In 1999, a year after finishing his undergraduate degree at Harvard University, Mollick decided it was time to try his hand again at starting a business. This time, he teamed up with a former college roommate to form a software startup called eMeta Corp. At the time, e-commerce was hot and the company developed software used to secure and sell information online. Their software not only powered the subscriber log-in systems for the Wall Street Journal and New York Times, but was used by pretty much every publishing site that asked for a username and password.
The quick success of the company presented a lot of on-the-job learning for Mollick. He explains, "In the beginning, we had no idea how to price the product so we gave what we thought might be an insane number to our first big client and they said, 'Sure,' and then we felt terrible afterward because we could have gone higher. There is a joke in software that when setting the price, you say it's X dollars and if they don't blink then you say that it is per year, and if they still don't blink then you say it's per seat."
Eventually, pricing and other issues were worked out and the business settled into a routine, which became a problem unto itself. "They say that entrepreneurship can be a bit like a combat situation -- 99% boredom and 1% terror. We did what we did very well, but we weren't going to expand. I wanted to figure out how to do it more and better the next time -- and understand what made the business tick," he says. So in 2002, he became a more passive partner and started an MBA program at MIT Sloan School of Management. In 2006, eMeta was sold to Macrovision.
At MIT Sloan, Mollick concentrated in entrepreneurship and decided to continue with his studies to earn his PhD. "I was amazed during the MBA program about how relatively little we know about entrepreneurship and how it fits in with the rest of what we know about management. I was interested in thinking more about how to make entrepreneurs successful and the role that people play in shaping entrepreneurial ventures," he says.
His doctoral dissertation focused on the impact of individuals on the dynamics of innovative industries. Mollick looked at the contributions of organizations and individuals to firm performance by studying over 1,500 products across 602 firms in the computer game industry. He found that variation among individuals matters more in organizational performance than expected. More surprisingly, it turned out that middle managers rather than innovators that had a larger impact on firm performance. He explains, "We tend to disrespect middle managers because they crack the whip and make things get done on time, but that also is what makes a project succeed. And research indicates that creativity depends not so much on the individual process, but rather the people who facilitate innovation -- that is the middle managers."
Mollick currently is studying how companies find the best people to join entrepreneurial teams. Looking at 50,000 people's careers in the videogame industry in 1,000 new companies and a few thousand established companies, he is examining where people go and whether the strategy used for hiring in a new venture explains if it succeeds. "Preliminary findings show that for the people that entrepreneurs hire, their past performance is a key indicator of how successful the company as a whole will be," he says.
Another area that Mollick -- who is teaching the Wharton MBA course "Introduction to Entrepreneurship" -- focuses on is distributive innovation. In a recent project, he examined the introduction of commercial software distribution channels for the Apple iPhone a year after an existing underground innovation community had developed. "Initially, the only way software developers could operate was through an innovation community that stressed free software distribution. But the release of an official channel for software sales offered a new path for product distribution," he explains. Mollick is looking into whether developers shift from communities to entrepreneurship, and what factors predict the choice to become an entrepreneur.
He also coauthored a book in 2008 called Changing the Game: How Video Games Are Transforming the Future of Business about how video games represent a fundamentally different way of interacting with the world. He points to the game developed and distributed for free by the U.S. Army, "America's Army," as an example of the power of video games. "That game cost about a quarter of 1% of the U.S. Army's recruiting budget, but in surveys of why people join the Army, the number two reason after patriotism is this game. It's that effective," he says.
Mollick adds that in 2003, people spent nine billion hours playing Windows Solitaire, which is the same amount of time it would have taken to build 500 Panama Canals. "Games have this incredible ability to persuade people to do things and we need to think more about that and how to use them as training and teaching tools," he says.
Now that he, his wife and two children have had a few months to settle into the Philadelphia area, Mollick says he's looking forward to furthering his research initiatives in one of "most exciting" entrepreneurship departments in the country. "It's a nexus of technologists and a very multidisciplinary environment that presents so many great opportunities."
Posted October 2009