Where Great Ideas for New Businesses Come From

The corundum market, figured the adventure capitalists, would explode. Little did they know that even before their miners put ax to ore, a scientist named Edward Acheson had already created an artificial abrasive -- Carborundum -- that outscored the as-yet untapped corundum.

Worse, the cost of shipping the corundum that was found exceeded its market price, and the material itself turned out to be about as abrasive as coal. The company cratered; embittered investors watched as sales sputtered and the stock price fell to two shares for one shot of cheap whiskey on the informal "barroom exchange."

At the request of the then-desperate founders, Edgar Ober, a St. Paul railroad operator and investor in the company, came up with an elegant salvage plan: instead of trying to sell processed raw materials to sandpaper makers, Minnesota Mining and Manufacturing would make and sell sandpaper itself, coating it with conventional abrasives like garnet at first and moving to corundum later. Despite the evidence, it took years for 3M to accept that its corundum quest was a mistake and that its focus should be on making sandpaper better than anyone else did. The company was not to turn a profit for more than a decade.

Yet Ober's successful exploitation of the mistake left a greater legacy than simply making 3M the world's largest maker of sandpaper. "That gave us our first and most important core competence -- knowing how to put one substance onto another," says a 3M spokeswoman. "That kind of layering technology led to Scotch Tape. Today about half of our 60,000 products have some type of layer, where one substance is adhered to another." -- Tom Ehrenfeld

B-SCHOOL BOHEMIANS

Guess what? Business schools, those most left-brained of institutions, are going right-brained. Mirroring the breakneck agility of the Fortune 500 companies they primarily serve, B-schools today are starting to roll out courses on the most dynamic business phenomenon of the 1980s: entrepreneurship. More professors are studying entrepreneurial behavior (it only sounds like an oxymoron) and coming up with some intriguing thoughts.

The "corridor principle" of Pepperdine University professor Robert Ronstadt enjoys the highest brand recognition in the emerging marketplace of entrepreneurial theories. But there's more: don't forget the "wet-feet model" of University of Southern California professor James Collins, and Loyola University professor John Ward's "coincidental adaptation" approach. And at Harvard Business School, associate professor John Kao defines the start-up process as "an entrepreneurial random walk."

Serious stuff, this. Ronstadt defines his corridor principle thus: "The act of getting into business allows people to see new corridors of business that they would not have seen if they had not gone into business." Start somewhere, anywhere, he advises students; the important thing is to start. "That learning process allows you to see opportunities you could not see before," he says.

The other theories take just as rational a look at what most people would label irrational behavior. Kao views starting a business as a process of individual growth that allows for all of life's improbabilities. "You don't always plan for what happens. And the point of inevitability is not a firmly plotted line," he says.

Some dons see crystalline patterns amid the messiness of business formation. "When you probe into so-called luck stories, you find they are not quite random," says Babson College professor Jennifer Starr. She argues that entrepreneurs stack the deck through implicit if not completely formal (drum roll, please) "luck-shaping strategies." And she distinguishes between truly random events and, er, purposeful accidents. "By doing their homework really well, paying attention to anomalies and surprises, being ready to notice patterns, and having multiple agendas, entrepreneurs increase the chance that something unpredictable will happen," concludes Starr.

-- Tom Ehrenfeld

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