 Thank you. It's a great honor to be here because that's what we live for, for our students and our alumni and we hope you still have a good feeling about being here, being connected to this university, at least that's what we hope, so we hope also that you will have a good time. Today I would like to talk about why entrepreneurial thinking matters. Why does it matter? And how do I do this? Basically I want to talk with you about my dog. This is Tess. Tess is my dog, Brown Labrador, as you can see. And when Tess was a puppy, like here, about nine years ago, Tess was very playful, very entrepreneurial, I might say, and then I couldn't keep up with him running everywhere, breaking everything, trying everything, et cetera, et cetera. That was quite nice for a few days. And this is Tess as he is now. Tess is basically all day, she's sleeping and eating. That's the two main priorities in Tess's life. And she's quite efficient in sleeping, she's quite efficient in eating. She doesn't stand up before five o'clock and then she walks to a basket and she eats, so she's extremely efficient. And this reminds me of a lot of companies which started out very entrepreneurial, like Robin's company. It's an entrepreneurial company, very playful, risk-taking, doing a lot of new things, exploring the world, being very energetic. Whereas a lot of large, older organizations increasingly start to look like Tess. They're doing what they do quite efficiently, they're doing well, you know, they are not very adventurous anymore. They do not explore other fields or other technologies and they think, oh, we have been doing well in the past, so we will do well in the future. They're like this little bird, thinking that the world around them is peaceful, is not changing, there are no dangers ahead of them. There are no major shifts in the world that might disrupt them or might eat them, actually. Whereas in fact, as you know, in the current business environment, there are a lot of snakes out there. There are a lot of changes in the environment that really, really change the way you have to do business. Really, really, you have to look at new technologies, you have to watch out for new competitors that might disrupt your business and maybe take your place if you're not changing. So a lot of these firms and other organizations, because it basically goes for all the organizations, are like this little bird, thinking everything is going well but not aware of these dangers. And one of the features of today's business environment is that we have increasing waves of disruption. We have all seen the Ubers, Airbnb that are disrupting whole businesses, hotel business, taxi business. But we also saw a lot of examples in, for example, music industry, nobody buys CDs anymore, you just download your music. Video rental, there are no video rental shops anymore. But nowadays, it's increasingly moving into other areas as well. For example, finance, banking. Banking will change a lot in five, ten years' time. Maybe in ten years' time, we don't have banks anymore. Because a bank, Duisenberg even said it before, a bank is basically a computer with a marble arch as a front. So basically, your money is just zeros and ones, you know? And everybody is using mobiles and computers to do business with the banks. So why would they need all these branches? Nobody is visiting a branch anymore. So a lot of digital disruption is taking place there. New entries come in. Google has a banking license in Belgium, for example. And Google is probably better in doing digital transactions than ABN Amuro or ReboBank or ING. Peer-to-peer banking is starting to take off, et cetera, et cetera, crowdfunding activities, et cetera. All moderated by new digital techniques. So basically what I would like to see is that disruption is everywhere in all sectors, even in education. Disruption is going in place. And in 2020, there will be no safe havens anymore. All the fields will be disrupted. The expectations are that within the next ten years, 75% of the current top 500 companies in the world will be replaced by new companies, by other companies that we might not even have heard of or might not even exist today. So things are changing very, very rapidly. And obviously technology is a major driver. Technology is a major driver, like you see here. Amazon is going to distribute packages via drones. And these are, you don't have to steer them by hand, but they're all programmed, all by GPS, all automatic. So these things really change the way we do distribution, for example. Another example is obviously this car. Car industry is changing. Tesla is one of the leading car manufacturers in electrical cars. And basically what is the most important feature of these electrical cars? The power. The power, so the battery technology is key. There are two things basically that are key, different shapes in this industry. This is battery technology and software. And software will be even more important because the difference between a regular car, which has, like a Tesla has about 10 million lines of software code, and a fully self-driving car is 90 million software lines. So the difference is only in software. So because all the sensors are already on board. So it's just a matter of software update, a large software update it is. But that means, if you think about it, these are technologies in which Volkswagen or BMW or Toyota are not very good at. They're really different areas where they have to play. And so that means that companies like Volkswagen have always been the best in terms of diesel technology and gasoline engines technologies. But all their engineers are not that important anymore because they don't know anything about batteries. They don't know anything about software. So that's a big dilemma, right? For these companies, should they fire all these people? Should they hire software people? So the question is whether software companies are becoming the new car manufacturers or whether car manufacturers have to become software firms in the end. So there's a lot of change in every organization. And the problem is, change causes issues. If you look at this picture, this is the German rowing team. And they are very efficient like Germans are, you know. They are very efficient, they do this very well. But the issue is, they do this very well if the water is flat and if it's like 1500 meters, you know. If the conditions are steady. One of you take this rowing boat into this kind of environment where there's a wild water and all kinds of waves. Obviously it doesn't work anymore. And that's the kind of situation we see in organizations too. There used to be around efficiency, they're doing well like Volkswagen, for example. Well, in terms of diesel technology, they are improving. But their environment is changing. And it's very difficult to adapt because it's not about efficiency, but this time it's about agility. Changing your, changing towards new environments, changing towards new technologies. And usually companies, large companies like Volkswagen are not very good at that. So if we look at, you would ask, why don't you change as much? Because everybody agrees when I tell this story, everybody would probably think, okay, obviously you have to change in this kind of situation. But still we don't. Inertia in organizations is extremely strong. It's so difficult to change an organization, any organization. Especially organizations of a certain size. And let me introduce one of our other alumni. This is Friek Vermeugle. He was an alumni here. He did his PhD at this university in business. And he's now working at London Business School. Anyway, he wrote an excellent book called Business Exposed. To my knowledge, it's one of the best management books out there. It's very, very exciting. And in his book, and we also talked about it further, he talked about newspapers. He said, well, I was always a notch. You remember these huge newspapers that we used to have, these broadsheet newspapers. Where you were sitting, if you were on the breakfast table, you were sitting like this. Nobody could sit at the table anymore. And he was riding the tube in London, and he was sitting there. And his neighbors were not very happy about it. So he asked himself the question, why do we still have these stupid, large newspapers? And then he went, and as a researcher, you're curious, so he went to these newspaper publishers. And he said, why are you making these large things? Why don't you go to a tabloid format? And then they say, well, obviously it's cheaper to print these large sheets than having more pages and having smaller sheets. And then he says, well, maybe that's true, but I want to check. As a researcher, you go and check your facts. So he went to the printer. And he asked the printer, and he said, well, how much more expensive is it to have these tabloid format newspapers instead of these broadsheet? And the printer told him, well, actually it's 30% to 40% cheaper to print tabloid format. And then he was amazed. They said, he went back. We went back to the publisher. And he said, oh, no, that's not true. Well, as the publisher said, obviously our customers are used to this format and they like it and that's why they buy us. And if we change, we take the risk of losing our customers. So he went out and did some market research. And then he found out that the few newspaper companies that actually switched to a tabloid format were actually doing much, much better in terms of subscribers. They all gained subscriptions. So he went back and said, that's not true. And then they couldn't figure out what happened. Why these newspaper companies still stick to these large broadsheet formats. And then he came across a history professor at this university. His history professor, well, I know why they are having these broadsheet formats. Because he said there was a tax law in 1712, which said that you had to pay taxes according to the number of pages of your newspaper. So it was very interesting to print large sheets of paper with very small letters. It was cheapest. But the history professor said, interestingly, this law has been abolished in 1876. So ever since 1876, everybody in the industry was still doing the same thing. Not questioning, are we doing the right thing? Are we doing, does the customer want this? Are the new technologies, they were extremely inert. And I think it's a very nice illustration of inertia. And think about your own organization. How many things do you still do? And how many things do you actually question? Are we on the right path? What should we do? How many customers do you ask? What do you want? What are the changes? How much do you look into the environment? What is changing in technology? Questioning everything is very important. But it's difficult because you have these routines. You are efficient, like Volkswagen is very efficient with diesel engines. They have invested a lot of money in their current equipment. They have invested in these engineers. So do they have to fire these hundreds of thousands of engineers? And what are the costs associated with this? Same for the banks, they have all these branches. Well, it's a cost factor now. So do they close everything? It's not easy to change. And these people, obviously, if you ask these diesel engineers, they will tell you, oh, diesel technology is still very much more important and much better than electrical cars, because you can drive 1,000 kilometers and with an electric car only 500. But this will change. In five years' time, probably an electric car will drive 1,000 kilometers, maybe even 2,000 kilometers on one battery. So then who buys a diesel engine anymore? So things are really, really changing, but it's difficult. Verocracy, obviously, is another one in any organization. But also the willingness of people to change. People, a lot of people that are managers in organizations are people like 45, 50 years old, 55. They don't want to change. You know, changing is difficult and changing is... And they have skills that they are not as good with in other situations. So if I played piano for 20 years and somebody says, well, you have to become a DJ because there's a lot of demand for DJs. Well, if I'm in my 50s, I don't want to change into a DJ, you know? And I'm probably not very good at it either. So there's a resistance. I would say, no, no, there's still people coming to my place. If I play piano and people like it and piano will be... You know, it's only for a few years that people like DJs and they will come back to this. But this is not going to happen in many cases. So it's easy not to change. So it's very... But also your core competencies are there. Like I said, Volkswagen's core competence is a diesel technology. So they have no core competencies in electrical cars. So they really have to make a switch. And that's not easy. And a lot of people are not willing to. And then there's this issue of cannibalization. We hear it also at your university. If you start a new study program, the first thing you hear from teachers is, oh, but we shouldn't do that because it might cannibalize on our existing study program because our students might go to that program and not anymore to our current program. So it's not a wise idea. But cannibalization is always a non-issue for me because I like the statement of Guy Kawasaki, who said, kill the milk cow. If you don't, two people in a garage will do. And because at Apple, for example, they had a discussion with their iPad. The people invented, there was a group of people, about 30 people that invented the iPad. And the MacBook people that sold the laptops said, no, no, we should never do that because if people buy a cheap iPad, they won't buy the expensive MacBook anymore. So fortunately, people at Apple didn't listen because they said, wow, if we don't, Samsung will do and others will do and then we'll still lose market share. It's better us disrupting ourselves than others disrupting us. So that's an important lesson I learned. And the other lesson I learned is that organizations only change radically if they are near to failure. So if they almost go bankrupt. Crisis, maybe even like for Volkswagen, now the current crisis with the software, the cheating in the software, might be a blessing in disguise because now they already said we're going to invest more in electrical car technology, battery technology, et cetera. So because they are in a crisis and crisis is a good time, like I said, never waste a good crisis. You can use it to turn your organization around. But many times it's already too late. Like at Nokia. So the question is, are all large organizations doomed? That's a fair question given the environment, given the lot of disruption that is going on. And fortunately, because I'm teaching corporate entrepreneurship which means that you want to make large organizations more agile, that's not the case. Large organizations are not doomed and can survive even in these disruptive environments. And to survive, even John Nasbet said it about 40 years ago, or 30 years ago. He said to survive, big companies today are all deconstructing themselves and creating new structures, many as autonomous units. So what they're trying to do, and even Samsung said it a few weeks ago, they said we want to be the biggest startup in the world. We want to have separate units in which we invest in new technologies and we want to get an entrepreneurial spirit back in our company. And the best thing to do is, that is not to mingle it with the core of your organization, but in the surroundings, let's say, of your organizations, in the border of your organization, start new initiatives, small initiatives like startups. I will come back to that a little bit later. So basically, the advantage of being large is that you have a big brand and that you have an efficient supply chain, et cetera, et cetera. And you have a lot of money often. So what you really want is to create a dancing elephant, an elephant that is big and has all the advantages of a big organization, but at the same time is agile and flexible in changing towards new environments. That's actually what you want to create. The question is how? And one of the key issues that I learned over the past 20 years is that creating what we call ambidextrous organizations is very important. Ambidextrous organizations, ambidexterity basically means that you're equally adapt with your left hand as well as with your right hand. But in terms of companies, it means that you're equally adapt in being efficient in what you do currently as being efficient in exploring new fields. So you do what you do very well, but at the same time, you explore new things. And this is an interesting model for all the questioner who says, well, you should deploy about 70% of your energy and resources in your existing fields, becoming more efficient in what you do, because often that's the money makers that you still have. Volkswagen doesn't earn much money with their electrical cars, but they make a lot of money with the diesel and gasoline cars. So they can use some of the money to look at neighboring technologies, look at things where they can improve and innovate. And they can use, for example, 10% of their money and resources on really radically new things, self-driving cars, fully electric cars with battery technology, software technology. So that means that you can still do well in terms of profits and in terms of sales, but still always have an eye on new windows of opportunities. So you can always see new windows of opportunities opening up, taking options, maybe doing acquisitions in certain fields. And therefore you're prepared for the future. And that's quite interesting. Another interesting one, because we are talking today about how to make large companies great. And one of the most interesting studies that I've seen in HBR, Harvard Business Review, is a study of Rainer and Ahmed on how to make companies truly great. And they set out to look at data of 25,000 companies over a large time period. And they looked, what are the differentiators between great companies and average companies? Where do these great companies stand out that have a significant performance differential with the other companies? And they looked for three basic rules that they could use because three is obviously a nice figure. And they did this study and the first rule they said is better before cheaper. Differentiation was a key. So it's never good to be a price, to try to be a price, to beat others on price only because there will always be another company that has a lower price or gets governance subsidies or even sells below cost price. So there will be no margins. So there's no use. Price competition is useless. And also what we see is that scale is increasingly becoming less important in organizations. Even for large steel manufacturers we see where scale used to be very important. We see that small agile steel companies that are better in providing a specific product for the customers are performing much better than the large steel giants. So differentiation can be by brand, can be by your style, reliability, customer focus. You have to differentiate yourself from the competition. That's key because then obviously you can charge higher margins. I once was at Schiphol and they were selling 24 karat gold iPhones for like 7,000 euros. Who buys this? Then they asked this guy, do you ever sell one? Well, I said I sell average about three a day. Yesterday I said there were two people from China, one from Russia, buying a mobile phone. So differentiation really pays off because you get margins. So going back to this, the second rule they found was revenue before cost. What we all do, if we get into trouble or there is a crisis, we always search for how can we cut costs? We are narrowing down, we're cutting down, but sometimes at the expense of the customer or the product and the service that we want to fulfill. But we see in this study that firm focusing on increasing revenue instead of cutting costs are doing significantly better over time. So go to other markets. When, for example, the construction industry was not doing very well here in the Netherlands, only a very few companies in the Netherlands, construction companies, went to China. But most of them did very well in China because they were expanding revenues because China was not in a crisis. They were building and there was a lot of work and they're still benefiting from that. So in the third rule they found is that there are no other rules. These were the only two differentiating factors. In making companies truly great. And that's quite amazing, right? So if you go back to your organization, keep this in mind and try to live according to these rules, I would say. Let me give a brief example. Have you heard about the Blue Ocean strategy? Blue Ocean strategy is about differentiation. If you have a choice as an organization, you can say, okay, we are same as the others, so we dive into the left, into the Red River. Red River is full of sharks, full of competitors. That's why it's red. It's all blood there. There's a lot of fighting going on. Or you could differentiate yourself in a way that you have no competition or very few competition. Therefore, you rather jump into the Blue Ocean. And the two main examples of a Blue Ocean strategy. One is Nintendo with the Nintendo Wii. Remember, you can play, let's say, games by using a controller that you can control. Because Nintendo couldn't compete on price and performance with Sony and Microsoft. So they had to think about something else. And they found out a way to have a new technology in which they had new competition. Because their target market was old ladies, young toddlers, people. Everybody could play games with their technology. But another example is Cirque du Soleil. There's a lot of competition in theater. There's a lot of competition in circus acts. So they chose to combine the two and have a unique concept. So how do you reach these things? Obviously, like I said, it's very difficult to change internally, to change your core of your organization. So you have to search at the border of your organization. And how to do that is you can do acquisitions. You can enter into strategic allies or you can do corporate venturing. Corporate venturing means setting up new startups as a large organization and letting it blossom and grow in an entrepreneurial spirit. And that's very successful at the moment. It's very hot at the moment. A lot of companies are doing that. The problem with what I've seen with mergers and acquisitions is that they're terrible in general. Sometimes they're good, but most of the time they're terrible. The average merger loses 16 to 49 percent of combined market share. That's quite bad, isn't it? Because in general, you pay a premium of about 35 percent over the market value of a company. So this is generally not a very good idea. Actually, also there was a study from Frank Vermeerl who showed that companies who do a lot of acquisitions actually have often narcissistic leaders. There is a large correlation. He found in a study there was a huge correlation between the size of the picture of the CEO in the annual report and the number of acquisitions that companies did. And also there was a huge correlation between the number of times the word I was used by the CEO and the number of acquisitions. So think about your organization and whether you do a lot of mergers or acquisitions. But over time I learned two things about merging acquisitions. One is that synergy effects are always overstated. It's easier to say, oh, we're going to find synergy effects, but in the end you never find them or it's very hard to find them. Second is that costs are always underrated, understated. So that's what I learned. The other thing that I learned is that alliances are often a very viable, a viable means of mode to do. Because actually what you can do with alliances is cherry picking. You can work with the best organizations in the world and you can say, okay, we want to work and be your specialist on this. For example, Gorillia Games, an Amsterdam-based company. At that time, 15 years ago, they were like a company with 30 people and they wanted to make the best computer game in the world and they wanted to compete with Sony and Electronic Arts and everybody was saying, no, no, that's not going to work. But what they did, they went out and worked together with, for example, a company in Palo Alto in the U.S. which was the best company in designing waterfalls in the game. And they worked with another company in the Ukraine which was the best company in programming the sound of a machine gun. So in the end, they had all these experts, all these best people in there working with them and they developed with 35 people, they developed the best game in the world. Later they were bought by Sony, by the way. But actually that's what's going on. So the question is up to you basically whether you are catching the new waves of technologies and disruption that's going on or whether the wave catches you. That's the main question. Thank you.