FEED YOUR MIND GETTING BACK TO INNOVATION WHAT CAN ORGANISATIONS LEARN FROM START-UPS? INTRO

Transcription

1 FEED YOUR MIND GETTING BACK TO INNOVATION WHAT CAN ORGANISATIONS LEARN FROM START-UPS? PROF. MIGUEL INTRO 1

2 The average lifespan of a company listed in the S&P 500 index of leading US companies has decreased by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today. (R. Foster, Yale University, 2011) START-UPS ARE EVERYWHERE 4 2

3 Every generation needs a new revolution, Thomas Jefferson wrote towards the end of his illustrious life. The revolution for the current generation is the entrepreneurial one. 5 ENTREPRENEURSHIP VERSUS MANAGEMENT ENTREPRENEURSHIP MANAGEMENT Initial discovery Opportunity refinement Discovery process Market making Resource acquisition (New) coordination of (new) resources Co-ordination of old resources/ongoing activity Exploitation process 3

4 EXPLOITATION MINDSET Refine existing knowledge Analysis Data from past Administer business Minimal risk Smaller reward Risk of obsolescence 8 (Martin, R., The Design of Business, 2009) TRADITIONAL NEW PRODUCT INTRO Know customer Problems Waterfall development Know product features 9 Blank,

5 EXPLORATION MINDSET Invent Intuition New knowledge Long term Hypothesis about future High risk Potentially high reward (Martin, R., The Design of Business, 2009) 10 What Happens When Most Plans have First Contact With Customers? 5

6 ? 6

7 THE ENTREPRENEURIAL PROCESS 16 Eric Ries, the Lean Start-up and the Essence of Entrepreneurship 17 7

8 INDUSTRIES AND MARKET/TECHNOLOGICAL UNCERTAINTY 19 Source: Furr & Dyer,

9 OUTLINE SESSION Act like a start-up from the inside Customer development and experimentation Prototyping and MVP Critical ingredients to support a start-up culture 22 REFERENCES 23 9

10 A CAVEAT ON THE LEAN START-UP 24 CUSTOMER DEVELOPMENT AND EXPERIMENTATION 25 10

11 EXAMPLE RENT A RUNWAY Launched by Jennifer Hyman and Jennifer Fleiss in November

12 PITCH RENT A RUNWAY 28 Imperial College Business School WHAT ARE KEY UNDERLYING HYPOTHESES FOR THIS IDEA TO WORK? HOW WOULD YOU TEST THEM? 29 12

13 EXAMPLE NORDSTROM INNOVATION LAB EXPERIMENTATION AT NORDSTROM INNOVATION LAB 47 13

14 CUSTOMER DEVELOPMENT AND EXPERIMENTATION 14

15 GET OUT OF THE BUILDING Can t see any customers in here 50 CUSTOMER DEVELOPMENT 51 15

16 THE HYPOTHESIS > DESIGN > TEST > INSIGHT LOOP. Blank, 2013 HOW TO RUN SMART EXPERIMENTS Know what you need to test Affordable loss Feedback loops 55 16

17 IDENTIFY KEY ASSUMPTIONS AND TEST EARLY ON 56 KNOW WHAT YOU NEED TO TEST AND HOW TO TEST IT Make sure to have clear hypotheses and metrics Test most important assumption early on Don t rely on focus groups. Go into the field. Make sure to talk to a relevant group of customers 57 17

18 WHAT ARE KEY HYPOTHESES? We are solving a significant problem or need We need X features to solve the problem Customer are willing to pay X Demographics of the customer We can set up an efficient sales model Channel partners are willing to cooperate Customers are willing to switch to a new supplier Customers will act as references 58 ODDS OF SUCCESS FAIRLY LOW MAKE SURE YOUR DOWNSIDE RISK IS AFFORDABLE TO ALLOW FOR YOUR PLAN B, PLAN C, PLAN D, 59 18

19 AFFORDABLE LOSS Traditional investment approaches use NPV or other tools that require prediction Affordable loss No prediction required Limit downside risk and iterate Run multiple, short experiments Odds of success will increase Fail fast (if you have to fail) Make sure, there is room for failure and you can learn from it 60 CREATING OPTIONS USING AFFORDABLE LOSS 62 Source: McGrath,

20 63 RELY ON FEEDBACK LOOPS BASED ON BEHAVIOR Feedback based on actual behavior much more reliable than perception 64 20

21 TOOLS/SOFTWARE TO TRACK EXPERIMENTS Validation board / experimentation board

22 PROTOTYPING AND MVP 67 22

23 PROTOTYPING AND MVP Visualize ideas early on by building prototypes to get relevant customer feedback No need to build the perfect product from day 1 => Focus on MVP 69 DOUGHNUT AND MVP 70 23

24 FROM SOLUTION TO PROTOTYPE / MVP/MAP 71 (Furr & Dyer, 2014) OVERENGINEERING INCREASES THE COST OF FAILURE 24

25 MINIMUM VIABLE PRODUCT 74 MINIMUM VIABLE PRODUCT 75 25

26 PROTOTYPING / MVP TOOLS LOW FIDELITY PAPER PROTOTYPING 26

27 APPS/SOFTWARE TO PRODUCE APP/WEBSITE / DIGITAL PROTOTYPES 78 3D PRINTING AND PROTOTYPING 80 27

28 PHYSICAL PROTOTYPES HELP! Handing dentists a crude clay mockup got us better, more actionable feedback A great way of gauging whether new functionality satisfies a need SERVICE PROTOTYPING USING NARRATIVE 82 28

29 WIZARD OF OZ / CONCIERGE MVP 84 PROTOTYPING / MVP TOOLS AND TESTING 29

30 MVP AND THE SMOKE TEST Mostly used to test whether problems are worth solving and whether solution seems attractive Create a website, landing page, advertisement, phone number, or other channel to describe the problem, solution Provide option to learn more, buy now, reserve now or other call to action Get your website, ad, in front of customers and run campaign Look at response and follow-up 86 DROPBOX STARTED WITH A SMOKE TEST 87 30

31 MVP AND THE PROMOTOR TEST Net promotor score (NPS) How likely are you, on a scale of 1 (not at all likely) to 10 (extremely likely), to recommend this product or service to a colleague or friend? Promotors answer 9 or 10 Passives answer 7 or 8 Detractors answer from 1 to 6 NPS should be > 60% 88 MVP AND THE PAYMENT TEST Are people willing to (pre) pay for your product? Ask for credible commitment 89 31

32 Whenever you test market acceptance, make sure future customers need to make some kind of commitment 90 CRITICAL INGREDIENTS TO SUPPORT A START-UP CULTURE 91 32

33 SUPPORTING A START-UP CULTURE Management support Work autonomy Reinforcement Time availability Collaboration across organizational boundaries 1 MANAGEMENT SUPPORT 33

34 MANAGEMENT SUPPORT A culture that supports the idea that anyone can contribute to new ideas Structured process in place to develop new products/services outside daily working routine Fast decision making without elaborate justification and approval procedures Availability of financial support for new projects Small and experimental projects are encouraged even if some of them fail Physical work environment encourages creative thinking 94 MANAGEMENT SUPPORT NO MONOPOLIES ON CREATIVE THINKING: THE PIXAR BRAINTRUST Put smart, passionate people in a room together, charge them with identifying and solving problems, and encourage them to be candid 95 MANAGEMENT SUPPORT 34

35 STRUCTURED PROCESSES TO SUPPORT IDEA GENERATION / PROMOTION / IMPLEMENTATION 96 MANAGEMENT SUPPORT STRUCTURED PROCESSES TO SUPPORT IDEA GENERATION / PROMOTION / IMPLEMENTATION A-B-C model MANAGEMENT SUPPORT 97 MANAGEMENT SUPPORT 35

36 PROVIDING FINANCIAL SUPPORT: CROWDFUNDING 99 MANAGEMENT SUPPORT PROVIDING FINANCIAL SUPPORT: TALENT ACADEMY 100 MANAGEMENT SUPPORT 36

37 STEVE JOBS ON FAST DECISION MAKING 101 MANAGEMENT SUPPORT PHYSICAL WORK ENVIRONMENT 102 MANAGEMENT SUPPORT 37

38 2 WORK AUTONOMY WORK AUTONOMY Providing employees the chance to be creative and try their own methods of doing the job. Giving the freedom to employees to use their own judgment WORK AUTONOMY 38

39 MANAGERIAL AUTONOMY AND INNOVATION 105 WORK AUTONOMY 3 TIME AVAILABILITY 39

40 TIME AVAILABILITY To what extent does the work load enable people to develop new ideas? To what extent do people receive time for long term problem solving? TIME AVAILABILITY TIME AVAILABILITY Give people paid time to work on own projects. TIME AVAILABILITY 40

41 A CAVEAT ON TIME AVAILABILITY TIME AVAILABILITY TOP MANAGEMENT NEEDS TO SET BOUNDARIES TO ENTREPRENEURAL INITIATIVE 110 TIME AVAILABILITY 41

42 Hacketon for employees - 48 hours to work on something innovative - It has to contribute to the company 111 TIME AVAILABILITY 4 REINFORCEMENT 42

43 REINFORCEMENT Senior managers help to get the work done by removing obstacles Senior managers or supervisors will give special recognition if one succeeds The development of new and innovative ideas is taken into account for promotions Employees who come up with innovative ideas on their own receive management encouragement for their activities REINFORCEMENT INTRAPRENEURS NEED SPONSOR SUPPORT REINFORCEMENT 43

44 CELEBRATING PRODUCTIVE FAILURE AT TATA REINFORCEMENT I have to remind my brothers how vital it is to have one, possibly two fiascos each year. This shows that we are dancing on the borderline between success and disaster. Because that is where our next big breakthrough will come from. Alberto Alessi 44

45 HIGHLIGHT EFFORTS OF INTRAPENEURS Vodafone Innovation Champion Program REINFORCEMENT 5 ORGANIZATIONAL BOUNDARIES 45

46 ORGANIZATIONAL BOUNDARIES We have a culture of sharing ideas within and across different organizational departments/divisions Employees are encouraged to attend industry conferences, technology events, start-up events to get inspired We collaborate with other organizations (e.g. universities, start-ups, research institutes, customers, suppliers) to source and share ideas We stimulate idea networking across the globe ORGANIZATIONAL BOUNDARIES IDEA SHARING TOOLS 120 ORGANIZATIONAL BOUNDARIES 46

47 SHARING /SOURCING IDEAS FROM CUSTOMERS 121 ORGANIZATIONAL BOUNDARIES FOOD FOR THOUGHT When did your employees ( = everyone) spend time observing and listening to their customers and non-customers? 47

48 SWAP JOBS WITHIN AND ACROSS ORGANIZATIONS 123 ORGANIZATIONAL BOUNDARIES VISIT (START-UP) EVENTS TO GET INSPIRED 124 ORGANIZATIONAL BOUNDARIES 48

49 ALLOW EMPLOYEES TO WORK FROM COWORKING SPACES 125 ORGANIZATIONAL BOUNDARIES BRING IN SEASONED ENTREPRENEURS OR INVESTORS TO MENTOR EMPLOYEES 126 ORGANIZATIONAL BOUNDARIES 49

50 WRAP UP Every morning in Africa, a Gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a Lion wakes up. It knows it must outrun the slowest Gazelle or it will starve to death. It doesn't matter whether you are a Lion or a Gazelle... when the sun comes up, you'd better be running. Thomas Friedman, The World is Flat 50

51 EXPLORATION EXPLOITATION START-UPS CORPORATES THEY HAVE DIFFERENT SKILL-SETS THAT ARE HIGLY COMPLEMENTARY 131 LESSONS LEARNED (1) Bureaucratic decisions processes do not work In today s environment you need speed Act like a start-up from the inside Learning and experimentation is key Create a culture of experimentation Go out and test the market through well-defined experiments Work across organizational boundaries Use prototyping and focus on MVP Manage you downside risk 51

52 LESSONS LEARNED (2) Creating an entrepreneurial culture is something that to a certain extent can be managed Top management is key Walk the talk No magic tricks Get inspired Intrapreneurship is fostered when individuals have the freedom and autonomy on their work, but this freedom must be balanced to make sure individuals creative efforts stay aligned with company objectives. REFERENCES 52

53 WHAT BIG COMPANIES CAN LEARN FROM START-UPS 135 EXCELLENT BLOGS THAT SERVED AS INSPIRATION Steve Blank: David Skok: Start-up marketing by Sean Ellis: Eric Ries: 53