Batten Institute Annual Report 2011-12

2011-2012

ANNUAL REPORT

11/12 ANNUAL REPORT

TABLE OF CONTENTS 2

FROM THE EXECUTIVE DIRECTOR

4

MISSION

5

HISTORY

6

ACADEMIC YEAR HIGHLIGHTS

7

INSPIRED EDUCATION

11

TRANSFORMATIVE RESEARCH

17

CONSEQUENTIAL VOICE

23

ENERGETIC COMMUNITY

28

FINANCIAL STATEMENTS

FROM THE EXECUTIVE DIRECTOR This past year, the Batten Institute began its second decade with a nice recognition. In September, The Princeton Review for Entrepreneurship magazine ranked the Darden School of Business as having the 3rd best entrepreneurship program in the world – our highest rankings to date. This recognition reflected our evolving and deepening programs in entrepreneurship and innovation including such curricular and extracurricular initiatives as Batten Scholarships, Batten Venture Internships, the Darden Business Incubator, Innovation Lab, and business plan and concept competitions.

In October, we held the first Jefferson Innovation Summit bringing 60 thought leaders to Charlottesville to discuss how to create and sustain an entrepreneurial society. Featuring a dialogue in the Rotunda lead by CNBC’s Tyler Mathisen, the Summit led to the drafting of a Declaration of Principles, outlining a set of seven principles fundamental to an entrepreneurial society.

In November, we held our third annual E*Conference at Darden. Focusing this year on how to innovate and effectuate, the conference provided an opportunity for students, alumni and community members to learn how to be entre-

OUR QUEST TO DELIVER ON FRANK BATTEN’S CHALLENGE TO BECOME ‘THE PREEMINENT THOUGHT LEADER AND EDUCATOR IN ENTREPRENEURSHIP AND INNOVATION’ IS AN ETERNAL ONE.”

preneurial. Featured at the conference was Darden’s annual business concept competition.

In December, the Batten Institute moved into its new offices on the second floor of Darden’s Camp Library. This was a significant milestone for Batten as this is the first time the Institute has had a well defined space with our marquee on the door. It also contributes to the transformation of the library into a research library for the 21st century.

In February, we convened our second gathering of the Innovators’ Roundtable, bringing together chief innovation officers from leading corporations with Darden’s expert faculty. Discussions focused on how to create an agile innovation organization especially in a world of increasingly globalized R&D operations.

In April, we hosted a large gathering of venture capitalists here at Darden to hear pitches by a number of University-affiliated ventures as part of U.Va.’s annual Venture Summit. Featured at the Summit was a recent Batten Briefing looking at innovation in the green tech sector.

2 | ANNUAL REPORT 2011-2012

In May, we held our third annual Darden Entrepreneurship and Innovation Research Conference featuring paper presentations, panel discussions, and keynotes from leading academics from around the world. This year, we held the conference in partnership with the Academy of Management as part of their Entrepreneurship Exemplars series.

Over 120 scholars visited here in Charlottesville, and another 500 participated online.

We also laid the groundwork for a number of important emerging initiatives: In April, we closed on a gift that promises to be transformative in our efforts to build the entrepreneurial ecosystem at the University and in Charlottesville. The new W.L. Lyons Brown Innovation Lab will more than double the space of our existing i.Lab and allow us to extend our Incubator to ventures from all of U.Va. and the Charlottesville community.

Working with the Virginia Governor’s Office, we will convene our second Jefferson Innovation Summit in September, the Jefferson Innovation Summit for the Commonwealth, focusing on the role that state and local policy play in creating entrepreneurial ecosystems.

This spring, we began an effort to reinvigorate our research initiatives to help focus our intellectual capital generating efforts. Enlisting Darden faculty to take significant leadership roles, our revamped initiatives will leverage our research resources — our grant program, fellows, and research associates — to increase the exposure and impact of the work we do at the Institute.

While we have begun our second decade at the Batten Institute, we continue to look forward. We maintain an entrepreneurial spirit and a hunger to grow and improve. Our quest to deliver on Frank Batten’s challenge to become “the preeminent thought leader and educator in entrepreneurship and innovation” is an eternal one. We continually strive to deliver on our mission to improve society by cultivating principled, entrepreneurial leaders and by creating knowledge about the transformative power of entrepreneurship and innovation.

Onward and upward!

Michael J. Lenox Associate Dean and Executive Director, Batten Institute Samuel L. Slover Professor of Business Administration Darden School of Business

BATTEN INSTITUTE

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MISSION The Batten Institute seeks to improve society by creating knowledge about the transformative power of entrepreneurship and innovation and by cultivating principled, entrepreneurial leaders.

To fulfill its mission, the Institute has adopted a four-pronged strategy.

FRANK BATTEN, SR. 1927-2009

INSPIRED EDUCATION Cultivate the next generation of entrepreneurial leaders through rigorous academic and experiential programs.

TRANSFORMATIVE RESEARCH Create thought leadership through a diverse portfolio of research projects of consequence to business and society.

CONSEQUENTIAL VOICE Engage leaders through a broad array of channels to directly influence the world of practice.

ENERGETIC COMMUNITY Foster a diverse and collaborative community of scholars, students, alumni and practitioners.

4 | ANNUAL REPORT 2011-2012

HISTORY In 1996, University of Virginia alumnus Frank Batten Sr. and his family gave the Darden School a generous gift to be used for the establishment of a community of scholars and practitioners who would pursue leading edge research and develop educational programs in entrepreneurship and innovation. In 2000, after a subsequent gift from Frank Batten Sr. the former CEO and chairman of Landmark Communications and founder of the Weather Channel, the initial community formally became the Batten Institute.

MORE THAN 70% OF DARDEN STUDENTS TAKE ENTREPRENEURSHIP COURSES

The Batten Institute was officially launched in January 2001 with Bob Bruner as the Institute’s first Executive Director. Early initiatives included expanding the Darden Business Incubator and establishing the Batten Fellows program. Darden faculty member, Jeanne Liedtka, assumed the post of Executive Director in 2004. Under Jeanne’s lead-

40 BATTEN VENTURE INTERNSHIPS FUNDED ANNUALLY

ership, the Institute launched a major initiative in Organic Growth and Innovation and set in motion the creation of the i.Lab. Current Executive Director, Michael Lenox, joined the Batten Institute in 2008.

Today, the Batten Institute is organized in two operating units, a research center focused on academic scholarship and Darden’s Center for Entrepreneurial Leadership, focused on student activities. The extensive programs and initiatives supported by these units bring

MORE THAN $1 MILLION AWARDED ANNUALLY IN SCHOLARSHIPS

together scholars, students, alumni, and business leaders, fostering a diverse and energetic collaborative community in support of the Institute’s mission to create knowledge and improve society.

Since 2000, MORE THAN 150 GRANT-FUNDED RESEARCH PROJECTS undertaken by more than 75 scholars BOOT CAMPS offered in Venture Capital, Entrepreneurship, and Health Care

MORE THAN $80,000 IN STUDENT GRANTS ARE AWARDED AT U.VA.WIDE COMPETITIONS ANNUALLY

46% OF INCUBATOR COMPANIES remain active after 5 years BATTEN INSTITUTE

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2011–2012 ACADEMIC YEAR HIGHLIGHTS OCT

2011

NOV

2011

FEB

2012

E-CONFERENCE: INNOVATE.EFFECTUATE

APR

2012

MAY

2012

DARDEN RESEARCH AND AOM EXEMPLARS CONFERENCES

UVA ENTREPRENEURSHIP CUP UNIVERSITY OF VIRGINIA VENTURE SUMMIT

INNOVATORS’ ROUNDTABLE

JEFFERSON INNOVATION SUMMIT

6 | ANNUAL REPORT 2011-2012

INSPIRED EDUCATION

CENTER FOR ENTREPRENEURIAL LEADERSHIP The Center provides a broad array of academic and experiential programs for students supporting dozens of exciting courses, a business incubator, full-time internships, business plan and concept competitions, workshops, boot camps, mentorship opportunities and scholarships.

AT A GLANCE

#3 IN THE U.S. FOR

EXPERIENTIAL PROGRAMS

SCHOLARSHIPS

THE PRINCETON REVIEW FOR ENTREPRENEUR MAGAZINE, 2011

120 UNIQUE VENTURES AND 270

10 FULL

ENTREPRENEURSHIP,

ENTREPRENEURS/PARTICIPANTS

CURRICULAR INITIATIVES

40

HOSTED IN THE DARDEN

BUSINESS INCUBATOR

SCHOLARSHIPS AWARDED ANNUALLY, VALUED AT $971,600 FOR THE 2011-12 ACADEMIC YEAR

SINCE 2000

ENTREPRENEURSHIP COURSES

$85,000

PROGRAMS AND INITIATIVES

70% OF DARDEN

AND BUSINESS PLAN COMPETITIONS IN

ENTREPRENEURSHIP AND INNOVATION ELECTIVES

THE ACADEMIC YEAR (FUNDING PROVIDED BY THE INSTITUTE, THIRD SECURITY, AND PARTICIPATING SCHOOLS UVA-WIDE)

VENTURE FAIR FOR DARDEN ALUMNI AT REUNION LAW CLINIC WITH UVA LAW SCHOOL E*TECH MASH-UP INTERNET START-UP WORKSHOP INNOVATION LABORATORY INNOVATE.EFFECTUATE. ONLINE ENTREPRENEURSHIP CONFERENCE

STUDENTS ENROLL IN

#1 RANKED

FACULTY BY THE PRINCETON REVIEW, 2011

AWARDED IN CONCEPT

32 SUMMER

VENTURE INTERNSHIPS FUNDED IN 2012

8 | ANNUAL REPORT 2011-2012

CURRICULAR INITIATIVES FORWARD-THINKING COURSES The Institute’s research arm supports scholarship that advances the fields of entrepreneurship and innovation, and this research often manifests itself in novel, forward-thinking new courses, such as “Corporate Innovation & the De-

DARDEN EXPANDS ITS BUSINESS INCUBATOR TO LAUNCH MORE ENTREPRENEURS’ BRIGHT IDEAS

sign Experience,” “New Product Development,” and “Starting New Ventures.”

DARDEN’S i.LAB Research supported by the Institute also takes the shape of groundbreaking initiatives, such as Darden’s i.Lab, a non-traditional, flat-classroom teaching environment that includes a design-build studio where students can transform their ideas into physical prototypes. A number of Darden’s new entrepreneurship and innovation courses are steeped in design and multidisciplinary thinking and are taught in Darden’s i.Lab.

In the summer of 2012, Darden began expansion of its existing innovation laboratory to include a new cutting-edge Darden Business Incubator facility. The i.Lab will be named the W.L.

ENTREPRENEURSHIP CONCENTRATION

Lyons Brown III Innovation

In 2010, an entrepreneurship concentration was launched as part of Darden’s

Laboratory, for the alum-

MBA curriculum. The concentration lays the foundation for a deeper under-

nus who championed the

standing of corporate and entrepreneurial success, covering topics such as

project. When the facility is

how to create value not only through new products or services, but with novel

operational in the summer

technologies, business concepts, organizing structures, transaction/financing

of 2013, the incubator will

mechanisms, distribution channels, and market segmentation.

admit an expanded group of entrepreneurs. Admitted

EXPERIENTIAL PROGRAMS

Darden students will be

The Center builds on Darden’s academic offerings with a range of experience-

potential entrepreneurs

based programs and initiatives, providing students the critical skills they need

from the larger U.Va. and

to create successful real-life businesses upon graduation.

Charlottesville, Virginia,

The Center’s experiential programs include a business Incubator, numerous

joined by qualified, high-

communities.

competitions (including support for national and global competitions), funded internships, workshops, boot camps, and mentorship opportunities.

The Center’s experiential programs enjoy a broad level of student participation and interest. In the summer of 2012, the Center hosted 16 companies in the Darden Business Incubator. To date, 46% of Incubator-launched or supported companies remain active enterprises after five years.

The Center also sponsors three major competitions each academic year: the Darden Concept Competition, U.Va. Entrepreneurship Cup, and the Darden/U.Va. Business Plan Competition.

U.Va. received outside sponsorship from Third Security for $50,000 awarded to U.Va. Cup top winners. Overall, a total of $85,000 was awarded at the aforementioned competitions during the 2011-12 academic year.

BATTEN INSTITUTE

Inspired Education | 9

INSTITUTE-SUPPORTED COURSES SOLVING BUSINESS CHALLENGES IN REAL-LIFE SETTINGS

BIOINNOVATION

The Center also actively develops or supports alumni and student entrepreneurship groups and networks, such as Darden’s Entrepreneurship and Venture Capital Club—Darden’s most active student organization—and the E*Society, a group that connects entrepreneurs from various schools across the University of Virginia.

BATTEN SCHOLARSHIPS Ten full scholarships are awarded annually to incoming Darden MBA students

A multidisciplinary course

interested in starting their own ventures or becoming innovative leaders at

drawing students from

established companies.

Darden, U.Va.’s Department of Biomedical Engineering,

Lucas Rogers (Class of 2013) spent the summer

and the schools of nursing,

of 2012 in the Darden Business Incubator further

architecture, engineering,

developing Mobile Motions, his venture that will offer

and medicine. Students col-

a smartphone app which allows the user to perform

laborate across disciplines

various functions through motion control by tapping

to identify and frame clini-

into technology native to the phones. Rogers’ Batten

cally based challenges at

Scholarship and acceptance into the Incubator program provided the funding,

the U.Va. Health Center.

time and space needed to create a prototype. In coming to Darden after working as an engineer for General Motors, Rogers has “always envisioned myself as an entrepreneur .… I keep a journal of ideas and a list of problems with solutions. This was an opportunity to work on one of those.”

THE TECHNOLOGY ACCELERATOR Students master the process of adapting technology to the needs of the market, creating an actionable strategy, and developing the skills necessary to launch a start-up.

Lendstreet, a peer-to-peer lending venture, was founded by R. Jerry Nemorin (MBA ’08) and developed in the Darden Business Incubator during the summer of 2010. Unlike other peer-to-peer lending operations, Lendstreet provides loans to distressed debtors to help them restructure their debt. “People can’t get equity loans anymore to pay off credit card debt,” said Nemorin.

Batten Scholarship recipient Jordhy “J.V.” Ledesma (MBA ’12) joined with Nemorin to further Lendstreet’s growth in the summer 2011 Incubator. “The scholarship gives you more leverage to work on your business and takes the risk out of being an entrepreneur,” Ledesma said. Anticipation for Lendstreet’s launch is growing: it has been featured in Forbes and discussed in leading financial blogs. Nemorin believes that Lendstreet will further serve its users by teaching good spending habits and helping them establish a higher credit rating, “This is a way to help people who are distressed minimize the future impact of their debt,” he said.

Learn more: www.batteneship.org

10 | ANNUAL REPORT 2011-2012

TRANSFORMATIVE RESEARCH

INITIATIVES The Institute supports a diverse portfolio of research initiatives in entrepreneurship and innovation. Current initiatives address five topics of critical importance to society:

ENTREPRENEURIAL FINANCE

ENTREPRENEURSHIP EDUCATION

FACULTY LEADER: SUSAN CHAPLINSKY

FACULTY LEADER: SARAS SARASVATHY

Financial capital plays an important role in

Recent decades have brought an explosion

most entrepreneurial ventures. However,

in activity in the field of entrepreneurship

robust data on financing events and inves-

education, with the number of U.S. colleges

tor networks for businesses is scarce.

and universities offering courses related to

This initiative takes a rigorous approach to

entrepreneurship. This initiative seeks to

developing data and analyses that explore

illuminate effective strategies for teaching

how entrepreneurs in public and private

entrepreneurship and to better understand

business build investor networks and

the outcomes of these programs.

finance their operations.

ENTREPRENEURIAL INNOVATION AND SUSTAINABILITY

INNOVATION AND GROWTH FACULTY LEADER: EDWARD HESS

FACULTY LEADER: ANDREA LARSON

Shrinking markets, unrelenting competition,

Global concerns about sustainability

and swiftly evolving technologies challenge

have resulted in a wave of new products,

the vitality of every business enterprise,

processes, technologies, markets and

large and small. This initiative examines how

ways of organizing business — inside

innovation can be the engine for sustained,

firms, through supply chains and across

internally generated business growth.

vast networks of stakeholders. These entrepreneurial innovations are creating markets in clean energy and materials and generating product substitutions that yield future goods and services. This initiative focuses on the mechanisms by which entrepreneurship and innovation can simultaneously drive a firm’s market success and discover solutions to critical societal challenges.

ENTREPRENEURSHIP IN EMERGING MARKETS FACULTY LEADER: GREG FAIRCHILD New businesses are crucial for sustained economic development. This initiative supports research projects focused on entrepreneurs and the ingredients of entrepreneurship: seed-stage capital, mentors, sound social institutions and a culture that welcomes new ideas and educates and supports those who pursue them.

12 | ANNUAL REPORT 2011-2012

FORUMS The Batten Institute supports the formation of online

FACULTY LEADERS

forums, communities centered on the topics of entrepreneurship and innovation.

Spearheaded by Darden Professor Saras Sarasvathy, the Society for Effectual Action, is dedicated to the groundbreaking form of entrepreneurial thinking known as effectuation. Effectuation fundamentally rethinks how entrepreneurship is researched and taught around the world, and its principles are learned and applied in several Darden entrepreneurship courses and programs.

Learn more: www.effectuation.org

Design@Darden provides resources for academicians interested in teaching design, and the Center for Entrepreneurial Leadership is applying a design-based methodology to help Darden’s students through the product conception and innovation stages of developing a new business.

Learn more: www.designatdarden.org

BATTEN INSTITUTE

transformative research | 13

FELLOWS The Batten Fellows Program brings prominent and high-potential thought leaders to the Darden School of Business for short and long-term visits. The aims of the program are as follows: • To develop intellectual capital that culminates in published articles, books and other high-impact publications • To provide thought leadership of importance to managers, policy makers and the public • To support work related to current Institute research initiatives • To stimulate the intellectual life of the Institute and the Darden School A complete list of fellows and descriptions of their research are available at www.batteninstitute.org.

2011-12 BATTEN FELLOWS Dr. Béatrice Boulu-Reshef is currently a visiting scholar at The Wharton School of Business at the University of Pennsylvania. She earned her Ph.D. in economics from University Lumière of Lyon where she developed research interests in behavioral, organizational and social economics. Dr. Boulu-Reshef will collaborate with the Batten Institute’s Sean Carr on experimental research exploring how entrepreneurs use affordable loss reasoning (in contrast to return on investment reasoning) to affect their decision to ‘take the plunge’ to start a new venture. She and Carr will conduct experiments in which they frame the approach subjects take as they make investment decisions. One group will be prompted to think in terms of affordable loss — that is, how much they are willing to risk in the investment. Another group will be led to think in terms of expected returns. A baseline group will be given no prompting. The new knowledge developed during Dr. Boulu-Reshef’s fellowship will generate scholarly articles, teaching materials, and a novel experimental scenario instrument.

Dr. Graciela Kuechle, a senior researcher at the Basque Institute of Competitiveness and a lecturer at the University of Deusto, both in San Sebastian, Spain, is working with Darden professor Saras Sarasvathy to develop mathematical models of effectuation — the decision-making approach that Sarasvathy has documented among expert entrepreneurs. The two also plan to review the past decade of economic research and synthesize entrepreneurshiprelated findings in a way that is appropriate for the business academy. Kuechle currently holds research positions at the University of Deusto and the Basque Institute of Competitiveness in San Sebastián, Spain. She is originally from Argentina and earned her Ph.D. from the University of California in Los Angeles.

Her research agenda with Professor Sarasvathy will culminate with the publication of three peer-reviewed journal articles and an in-depth book.

14 | ANNUAL REPORT 2011-2012

GRANTS Each spring, the Batten Institute solicits grant proposals from faculty members of the University of Virginia who are conducting rigorous and relevant research about

SELECT FELLOWS 2000-2012 JOEL BROCKNER The Implications of Crisis

entrepreneurship and innovation that results in high-

Management for Corporate

impact intellectual outputs consistent with the missions

Change

of the Darden School and the University.

CLAIR BROWN

For a complete list of the 2011-12 grant recipients and information about applying to the program, please visit www.batteninstitute.org

Innovation, Creativity, and

Innovation Dynamics in the Electronics Sector

JOHN SEELY BROWN Learning in the Innovation

PROFILE OF A 2011-12 RESEARCH GRANT PROGRAM PROJECT

Process

Project: Experimental Tests of Creativity and Incentives in Intellectual Property

GERD GIGERENZER

Principal: Christopher Sprigman, University of Virginia School of Law

Consumer Responses to

Co-applicant: Christopher J. Buccafusco, Chicago-Kent College of Law Christopher Sprigman and Christopher Buccafusco are gaining insights into the behaviors and motivations of buyers and sellers as they value, license,

Product Innovation

ROGER GORDON Corporate Taxation

and sell intellectual property. The fundamental issue is that buyers and

LUTZ HILDEBRANDT

sellers are not as aligned as rational choice theory — on which U.S. IP law

Driving Innovation Through

is based — suggests. Indeed, parties to IP transactions do not necessarily

Marketing and R&D Synergies

make wealth-maximizing decisions; they are not driven solely by the prospect of financial gain. The result is an inefficient market in which buyers and sellers are so far apart that negotiations between them are time-consuming, costly, and sometimes unsuccessful. Sprigman and Buccafusco began their

MICHAEL JENSEN The Agency Costs of Overvalued Equity

exploration of IP transactions in 2008 with experimental studies of the

HENRY MINTZBERG

“endowment effect”: the tendency of people to overvalue what they own. The

Designing Strategy, Designing

researchers were the first to test the effect for IP that people had created

Global Management Education

rather than property they merely owned. In the most recent phase of their work, Sprigman and Buccafusco tested whether nonfinancial incentives — publication and attribution — mitigate the creativity effect.

HOWARD STEVENSON Insights on Global Entrepreneurship: Education, Policy, and Practice

For more on their project, visit www.batteninstitute.org and use the search term “inefficient market.”

BATTEN INSTITUTE

transformative research | 15

PUBLICATIONS BOOKS AND CHAPTERS

SELECT ACADEMIC ARTICLES

“Environmental Entrepreneurship” in Oxford Handbook of Business and the Environment Michael Lenox and Jeffrey G. York.

Eds. Pratima Bansal and Andrew J. Hoffman (Oxford: Oxford University Press) November, 2011

Dew, N., Read, S., Sarasvathy, S.D., and Wiltbank, R. 2011. “On the Entrepreneurial Genesis of New Markets: Effectual Transformations Versus Causal Search and Selection.” Journal of Evolutionary Economics 21 (2): 231–253.

Grow to Greatness: Smart Growth for Entrepreneurial Businesses Edward D. Hess (Palo Alto: Stanford University Press) March, 2012

Harmeling, S. S., and S. D Sarasvathy. 2011. “When Contingency Is a Resource: Educating Entrepreneurs in the Balkans, the Bronx, and Beyond.” Entrepreneurship Theory and Practice.

The Physics of Business Growth: Mindsets, System and Processes Edward D. Hess and Jeanne M. Liedtka (Palo Alto: Stanford University Press) March, 2012 [e-Book for Kindle]

Sarasvathy, S. D. 2011. “Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency.” Academy of Management Review 26 (2): 243–263.

The DNA of Business Growth v. The Myths of Business Growth: A Case for Smart Growth Edward D. Hess (Charlottesville: Darden Business Publishing) January, 2012 [e-Book for Kindle]

BATTEN BRIEFINGS Batten Briefings is a series of research reports that address important and timely topics in entrepreneurship and innovation. The reports are offered free of charge online: www.darden.virginia.edu/batten/briefings Innovators’ Roundtable Series: Leading Global R&D Networks - Rewards, Risks and Realities Innovators’ Roundtable Series: Workforce Agility - An Executive Briefing Financing Innovation Series: VC 2.0 - Venture Capital Goes Retro Greentech Innovation Series: Winning the Green Innovation Economy - An Analysis of Worldwide Patenting

16 | ANNUAL REPORT 2011-2012

Sarasvathy, S. D., and S. Venkataraman. 2011.

“Entrepreneurship as Method: Open Questions for an Entrepreneurial Future.” Entrepreneurship Theory and Practice 35 (1): 113–135.

Venkataraman, S., Sarasvathy, S.D., Dew, N. and Forster, W. 2012. “Reflections on the 2010 AMR Decade Award: Whither the Promise? Moving Forward with Entrepreneurship as a Science of the Artificial,” The Academy of Management Review.

JOURNAL OF BUSINESS VENTURING The Institute has long served as the underwriter of the Journal of Business Venturing (JBV), the premier scholarly journal devoted to entrepreneurship and innovation.

JBV is ranked by the Social Science Citation Index as one of the most influential management journals. From 1995 to 2009, Darden Professor S. Venkataraman served as editor-in-chief. Darden faculty Michael Lenox and Saras Sarasvathy currently serve as field editors.

CONSEQUENTIAL VOICE

EVENTS Conferences, workshops and speaking events provide the Institute with a platform to foster critical conversations with key stakeholders throughout the year.

JEFFERSON INNOVATION SUMMIT :: 2011 Sixty leaders in innovation and entrepreneurship from business, government, academia, media, public service and the arts convened for the Jefferson Innovation Summit in October 2011 to grapple with how best to create and sustain a society of entrepreneurs and innovators. The two days of purposeful conversation yielded bold and original ideas that were integrated into a Declaration of Principles, a guiding framework to improve the nation’s innovative capacity and entrepreneurial ecosystem. To build on these principles and promote further actionoriented dialogue, the Batten Institute, the Summit Delegates, and other partner organizations have committed to undertaking a robust set of initiatives over the years to come.

LOOKING AHEAD: On 7 September 2012, the Jefferson Innovation Summit for the Commonwealth, hosted by the Batten Institute in partnership with the Office of the Governor of Virginia, will convene a diverse and influential group of 60 policymakers, entrepreneurs, executives and thought leaders to discuss how to create and sustain a society of entrepreneurs and innovators in Virginia.

FOR MORE INFO: www.jeffersoninnovationsummit.org

18 | ANNUAL REPORT 2011-2012

UVA ENTREPRENEURSHIP CUP

E-CONFERENCE: INNOVATE.EFFECTUATE

The Office of the Vice President for Research and

Approximately 250 Darden alumni and students, as

the Darden School sponsor the U.Va. Cup competi-

well as students from other U.Va. schools, gathered

tion which boasts entries from multiple schools and

for a concept competition followed by a full day of

awards $50,000 in non-dilutive funds. Generous sup-

alumni panels moderated by Darden faculty.

port is provided from Third Security LLC.

UNIVERSITY OF VIRGINIA VENTURE SUMMIT In the spirit of Thomas Jefferson, venture capitalists

DARDEN ENTREPRENEURSHIP AND INNOVATION CONFERENCE

and alumni from top investment firms across the

The third annual Darden Entrepreneurship and Innova-

nation gather annually with innovative researchers,

tion Research Conference was co-organized by the

academics and students at the Summit, sponsored

Batten Institute and the Academy of Management’s

by the Office of the Vice President for Research with

Entrepreneurship Division as part of the Entrepreneur-

assistance from the Batten Institute.

ship Research Exemplars Conference Series. Leading scholars in the fields of entrepreneurship and innovation gathered to highlight best practices for top-tier research that advances the evolution of these fields.

Consequential Voice | 19

EVENTS IDEAS TO ACTION TOUR 2011-2012

FRANKFURT

Peter Rodriguez

NEW YORK CITY

Philippe Sommer & Trip Davis

SAN FRANCISCO

Michael Lenox & Erika Herz

D.C.

Edward Hess

DENVER

ZURICH

Peter Rodriguez

RICHMOND

Edward Hess

Philippe Sommer

HONG KONG

HYDERABAD

DALLAS

Peter Rodriguez

S. Venkataraman

Edward Hess

Expanding the Institute’s reach and impact nationally and globally.

IDEAS TO ACTION Since 2009, Batten-affiliated faculty have traveled to major cities to discuss their research with alumni, prospective students, and community members.

LOCATIONS SAN FRANCISCO

WASHINGTON, D.C.

Professor Michael Lenox

Professor Edward Hess

Erika Herz, Manager of Sustainability Programs

UNIVERSITY OF RICHMOND: ENTREPRENEURS IN ACTION

DALLAS

Philippe Sommer, Director of the Center for Entrepre-

Professor Edward Hess

neurial Leadership

DENVER

FRANKFURT, GERMANY

Professor Edward Hess

Professor Peter Rodriguez

NEW YORK CITY: ENTREPRENEURS IN ACTION

HONG KONG

Philippe Sommer, Director of the Center for

Professor Peter Rodriguez

Entrepreneurial Leadership Trip Davis, President of the Darden School Foundation and Senior Associate Dean for External Relations

HYDERABAD, INDIA Professor S. Venkataraman ZURICH, SWITZERLAND Professor Peter Rodriguez

20 | ANNUAL REPORT 2011-2012

COMMUNICATIONS & MEDIA The Institute’s website, www.batteninstitute.org, provides an important connection to members of the Batten community and beyond. Site features include news, information about the Institute’s major initiatives, brief articles on supported projects, profiles of Battenaffiliated researchers and professionals, links to academic articles and teaching cases, and events listings.

e+i NEWSLETTER So You Want to Be an Entrepreneur?

“ENTREPRENEURS AREN’T JUST GUYS WORKING ON AN INVENTION IN A GARAGE. THEY’RE USUALLY PEOPLE WHO GET ANNOYED BY SOMETHING AND WANT TO FIX IT.”

As of June 2012,

@BattenInstitute had

620

followers The Inefficient Market for IP “INDEED, PARTIES TO IP TRANSACTIONS DO NOT NECESSARILY MAKE WEALTH-MAXIMIZING DECISIONS; THEY ARE NOT DRIVEN SOLELY BY THE PROSPECT OF FINANCIAL GAIN.”

(an increase of 38% from the previous year), and

@DardenEShip had more than

1,600

followers New Perspectives on Entrepreneurship Research “THIS EMPHASIS ON VALUE DISTRIBUTION, ON

(an increase of 45% from the previous year).

DELIVERING SOCIAL GOOD IN ANY WAY POSSIBLE, DOWNPLAYS THE DISTINCTIONS BETWEEN ENTREPRENEURIAL AND ESTABLISHED VENTURES.”

Sign up for the e+i Newsletter by emailing eplusi@virginia.edu.

BATTEN INSTITUTE

Consequential Voice | 21

MEDIA COVERAGE During the 2011-12 academic year, the Batten Institute’s programs and faculty affiliates appeared more than 100 times in national and international media.

RECENT TOP POSTS FROM DARDEN’S FORBES.COM BLOG The Batten Institute partnered with Forbes.com in the spring of 2012 to launch a new contributors’ channel featuring the insights of Darden faculty and research staff on the topics of entrepreneurship and innovation.

THE INS AND OUTS OF OPEN INNOVATION (OR EVEN VERY GOOD) IDEAS

CREATING AN INNOVATION CULTURE: ACCEPTING FAILURE IS NECESSARY

ARE ALL LOCATED IN ONE

POSTED BY EDWARD HESS

POSTED BY RAUL CHAO “IT IS UNLIKELY THAT THE BEST

ORGANIZATION AND, EVEN WITH

“INNOVATION IS THE RESULT

DESIGNING FOR GROWTH – APPLE DOES IT, SO CAN YOU POSTED BY JEANNE LIEDTKA “IN BUSINESS, WE LIKE THINGS THAT ARE HARD AND RATIONAL AND DEFINED … . BUT DESIGN

AN IDEA IN HAND, SHOULD ONE

OF ITERATIVE LEARNING

NEED NOT BE ALL ABOUT MAGIC

ORGANIZATION REALLY MANAGE

PROCESSES AS WELL AS

AND INTUITION – DESIGN

ALL OF THE TECHNICAL AND

ENVIRONMENTS THAT

THINKING, AS WE DEFINE IT, IS

MARKETS RISKS ASSOCIATED

ENCOURAGE EXPERIMENTATION,

A SYSTEMATIC APPROACH TO

WITH COMMERCIALIZING

CRITICAL INQUIRY, CRITICAL

PROBLEM-SOLVING THAT IS

TECHNOLOGIES? THAT’S WHERE

DEBATE, AND ACCEPT FAILURES

USER-DRIVEN, POSSIBILITY

OPEN INNOVATION COMES IN.”

AS A NECESSARY PART OF THE

FOCUSED, AND ITERATIVE.”

PROCESS.”

Read more:

blogs.forbes.com/darden 22 | ANNUAL REPORT 2011-2012

ENERGETIC COMMUNITY

PARTNERS The Batten Institute partners with many units and organizations of the University of Virginia. These partnerships are critical to delivering programs and events to enhance the scope of the Institute’s efforts. In 2011-12, the Institute partnered with CNBC and the Thomas Jefferson Foundation (Monticello) to host the Jefferson Innovation Summit; the University’s Office of the Vice President for Research (VPR) to host U.Va.’s third annual Venture Summit; and several other schools to host the U.Va. Entrepreneurship Cup. Institute-affiliated faculty members play a key role in shaping the continued evolution of the fields of entrepreneurship and innovation through both their teaching and research.

Finally, the Institute also works closely with various student organizations. In 2011-12, the Center for Entrepreneurial Leadership collaborated with Darden’s Entrepreneurship and Venture Capital (EVC) Club to host the fall E-Conference, and the Institute is a strong supporter of the University-wide E*Society, formed in 2009 by Darden students.

24 | ANNUAL REPORT 2011-2012

BATTEN AFFILIATES SAMUEL E. BODILY

ANDREA LARSON

SARAS D. SARASVATHY

John Tyler Professor of Business

Associate Professor of

Isadore Horween Research Associate

Administration

Business Administration

Professor of Business Administration

RAUL O. CHAO

DAVID LEBLANG

KATHRYN M. SHARPE

Assistant Professor of

J. Wilson Newman Professor of

Assistant Professor of Business

Business Administration

Governance; Chair, Department of Politics,

Administration

College of Arts and Sciences

SUSAN CHAPLINSKY

PAUL J. SIMKO

Tipton R. Snavely Professor of Business

MICHAEL J. LENOX

Associate Professor of Business

Administration and Associate Dean for

Samuel L. Slover Research Professor of

Administration and Associate Dean,

Faculty Scholarship

Business, Associate Dean and Executive

MBA for Executives

Director of the Batten Institute

MING-JER CHEN

THOMAS C. SKALAK

Leslie E. Grayson Professor of Business

JEANNE M. LIEDTKA

Vice President for Research and

Administration

United Technologies Corporation Professor

Professor of Biomedical Engineering

of Business Administration

ROBERT L. CROSS

CHRISTOPHER SPRIGMAN

Associate Professor of Commerce, and

ELENA LOUTSKINA

Director, Network Roundtable,

Assistant Professor of

McIntire School of Commerce

Business Administration

GREGORY B. FAIRCHILD

LUANN J. LYNCH

Bigelow Research Professor in

Professor of Business Administration

Professor of Law

ELIZABETH O. TEISBERG Associate Professor of Business Administration

SANKARAN VENKATARAMAN

Business Administration

ANTON S. OVCHINNIKOV

MasterCard Professor of

MARY MARGARET FRANK

Assistant Professor of

Business Administration

Associate Professor of

Business Administration

RAJKUMAR VENKATESAN

Business Administration

SONAL S. PANDYA

Bank of America Research

YAEL GRUSHKA-COCKAYNE

Assistant Professor, Department of Politics

Associate Professor of

Assistant Professor of Business

College of Arts and Sciences

Business Administration

BIDHAN L. PARMAR

FRANCIS E. WARNOCK

ANDREW M. HESS

Assistant Professor of Business

Paul M. Hammaker Associate Professor of

Assistant Professor of Commerce,

Administration

Business Administration

Administration

McIntire School of Commerce

GAL RAZ EDWARD D. HESS

Associate Professor of

Professor of Business Administration and

Business Administration

Batten Executive-in-Residence

BATTEN INSTITUTE

Energetic Community | 25

LEADERSHIP TEAM ADMINISTRATION Michael Lenox Executive Director and Associate Dean Samuel L. Slover Research Professor of Business Administration; B.S., M.S., University of Virginia; Ph.D., Massachusetts Institute of Technology

Debbie White Associate Director of Operations B.A., University of Virginia; M.A., George Washington University

Joyce Smaragdis Associate Director of Outreach B.A., University of Virginia; M.A., Virginia Polytechnic Institute and State University

Derry Wade Communications Manager A.B., Smith College; M.A., University of Virginia

Gayle Noble Office Manager Pan American Business School

CENTER FOR ENTREPRENEURIAL LEADERSHIP

RESEARCH DIVISION

Philippe Sommer

Sean Carr

Director, Center for Entrepreneurial Leadership

Director of Intellectual Capital

Director, Darden Incubator

B.A., Northwestern University; M.S., Columbia

B.A., Amherst College; M.B.A., Columbia University

University; M.B.A., University of Virginia

MJ Dougherty Toms Associate Director, Center for Entrepreneurial Leadership B.A., Williams College; M.B.A., Yale University

Molly McFarland Special Projects and Events Manager B.A., University of Virginia

Nancy Price Associate Director for Special Projects (Consultant) B.A., Lamar University

26 | ANNUAL REPORT 2011-2012

Daniel Bierenbaum Senior Research Associate B.S., Duke University; M.A., Columbia University

Malgorzata “Gosia” Glinska Senior Research Associate B.A., University of Gdansk, Poland; M.A., Boston University; M.F.A., University of Virginia

Andrew King Research Associate B.A., The University of the South; M.S., Oxford Brookes University

research division

center for entrepreneurial leader ship

EXPENSES

admin

FINANCIAL STATEMENTS FY 11 (Actual)

FY 12 (Estimated)

FY 13 (Budget)

Administrative Staff

$537,377

$455,110

$431,097

Outreach, PR & Marketing

$344,716

$368,145

$198,323

Subtotal

$882,093

$823,255

$629,420

CEL Staff

$319,305

$350,381

$486,256

Communications

$33,992

$52,725

$47,600

Incubator

$147,483

$223,100

$205,000

BVIP Interns

$68,678

$145,000

$145,000

Competitions

$38,935

$51,400

$46,000

Courses

$35,375

$44,367

$34,400

Batten Scholarships

$810,501

$676,900

$971,600

Subtotal

$1,454,269

$1,543,873

$1,935,856

Researchers

$351,848

$449,111

$472,005

Faculty Research Grants

$246,686

$190,000

$250,000

Batten Fellows

$5,056

$15,000

$20,000

Ph.D. Student Scholarships

$116,430

$119,790

$79,251

Faculty Salary Support

$1,026,196

$1,165,623

$1,250,000

Conferences

$111,330

$101,600

$114,865

Subtotal

$1,857,546

$2,041,124

$2,186,121

$4,408,252

$4,751,397

FY 11 (Actual)

FY 12 (Estimated)

FY 13 (Budget)

Spendable Balance

$2,369,224

$2,618,455

$2,337,496

Endowment Interest

$4,312,996

$4,517,880

$3,426,678

Craddock Fund

$42,000

$45,000

$45,000

20 Account Interest

---

$34,400

$30,505

Sponsorships & Fees 1

$1,989

$109,050

$115,000

iLab Expansion Project

---

---

$1,300,000

Scholarships 2

---

---

$971,600

Adjustments

$251,008

---

---

TOTAL INCOME

$4,607,993

$4,706,330

$5,888,783

Operating Expenses

$(4,193,908)

$(4,408,252)

$(4,751,397)

Extraordinary Expenses

$(164,854) 3

$(579,037) 4

$(25,000) 5

iLab Expansion Project

---

---

$(1,300,000)

TOTAL EXPENSES

$(4,358,762)

$(4,987,289)

$(6,076,397)

ENDING BALANCE

$2,618,455

$2,337,496

$2,149,882

TOTAL OPERATING BUDGET $4,193,908

CASH FLOW 1. Jefferson Innovation Summit, Innovators Roundtable, E*Conference, Roundtable, i.Lab 2.0

3. Extraordinary expenses in FY 11: $86,244 Summit; $78,610 i.Lab lobby furnishings 4. Extraordinary expenses in FY 12: $451,037 Summit; $20,000 post-Summit; $18,000 Innovation Timeline; $75,000 for Effectuation research; $15,000 i.Lab 2.0

income

2. Partitioned in FY 13

expenses

5. Extraordinary expenses in FY 13: $25,000 for the Jefferson Innovation Summit for the Commonwealth

28 | ANNUAL REPORT 2011-2012

BUDGET Income to support the Batten Institute is provided by an endowment created by Frank Batten Sr. and his family. As of June 2012, the market value of the endowment had reached approximately $105 million. The annual budget from this endowment is $4.75 million for FY 12-13.

9% Administrative Staff

ADM

INIS

26%

TR

AT IO

4% Public Relations

N

1% Marketing

Faculty Salaries

10% 2% Conferences

2%

BATTEN INSTITUTE

4%

BUDGET $4,751,397

Ph.D. Scholarships

<1%

Incubator

EN TR EP RE NE UR IAL LEAD ERSHIP

R E S E A R C H D I V IS IO

N

CEL Staff

FY 2012-13

Batten Fellows

5% Faculty Grants

ER NT CE

10% Researchers

1% Competitions

1% Courses

21% Scholarships

Percentages are rounded to the nearest whole number.

Administration

R FO

3% BVIP Interns

Center for Entrepreneurial Leadership

Research Division

Administrative Staff

$431,097

CEL Staff

$486,256

Researchers

$472,005

Public Relations

$200,948

Incubator

$205,000

Faculty Grants

$250,000

Marketing

$44,975

BVIP Interns

$145,000

Batten Fellows

$20,000

Competitions

$46,000

Ph.D. Scholarships

$79,251

Courses

$34,400

Conferences

$114,865

Scholarships

$971,600

Faculty Salaries

$1,250,000

TOTAL

$4,751,397 Financial Statement | 29

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