Ken Morse "Innovate or Die" - 22 of March 2012 - ESADECREAPOLIS


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Open Conference: "Innovate or Die" - 22 of March 2012

Never let a crisis go to waste: today, corporations feel the innovation imperative. But how best to act?
Come hear Ken Morse share his experience on how companies, large and small, can organize themselves to achieve both incremental and radical innovation.


• Founding Managing Director, MIT Entrepreneurship Center
• Chair in Entrepreneurship, Innovation and Competitiveness,
Delft University of Technology
• Visiting Professor, ESADE Business School
• Chairman, Entrepreneurship Ventures, Inc.
• Commercialization Advisor, Dynasil Corporation
• Serial Entrepreneur
• Bachelor of Science, MIT
• MBA, Harvard Business School

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Ken Morse "Innovate or Die" - 22 of March 2012 - ESADECREAPOLIS

  1. 1. Innovate or Die Outline of a Conversation ESADE CREAPOLIS, March 22nd Kenneth P. Morse Serial Entrepreneur & Visiting Professor ESADE Business School & Founding Managing Director (1996 – 2009) MIT Entrepreneurship Center US Mobile: +1-617-930-2340 Euro GSM: +32-475-258507© Email: 2012 Entrepreneurship Ventures, Inc. 1
  2. 2. Desired Outcomes of This Discussion 1. Review the critical role that Innovation can play in enabling your company to grow, create high value jobs, and survive the tsunami of global competition. 2. Review the Innovation and Corporate Venturing Practices at Selected Firms. 3. End on time… so we can enjoy the next speakers.© 2012 Entrepreneurship Ventures, Inc. 2 2
  3. 3. The Challenges of Implementing Innovation 1. Slow decision making often kills firms. 2. Here in Europe, most firms have only limited ability to outsource radical innovation to the venture industry: • Fewer ambitious entrepreneurs • Less well developed venture support systems and entrepreneurial ecosystem • Hard to buy from startups 3. Your firm must continuously innovate, or perhaps die. Where will the major new businesses come from, and how will they be created and built?© 2012 Entrepreneurship Ventures, Inc. 3 3
  4. 4. iPhone Killing Blackberry (& Nokia)© 2012 Entrepreneurship Ventures, Inc. 4 4
  5. 5. © 2012 Entrepreneurship Ventures, Inc. 5 5
  6. 6. © 2012 Entrepreneurship Ventures, Inc. 6 6
  7. 7. Do We Share Common Beliefs? Family Companies usually outperform the stock market MBAs and Q-to-Q pressures often destroy innovation and long term value. Source: John Preston Business Units can achieve only incremental innovation Radical innovation comes from the top, and outside. Source: Corporate Venturing Consortium Companies must choose how they will compete Price: Walmart, Toyota, Dell, SolidWorks Customer Intimacy: IBM, Amazon, Four Seasons, McKinsey Innovation: Apple, Danfoss, HP, Google, SONY, 3M The tsunami of global competition cannot be held back Grab a surfboard and get ahead of the wave. What about your firm?© 4 2012 Entrepreneurship Ventures, Inc. 7
  8. 8. Definition of Innovation Innovation = Invention + Commercialization Inventors need to team up with entrepreneurs and find early customers.© 2012 Entrepreneurship Ventures, Inc. 8 8
  9. 9. Examples of What CAN Be Taught (1) Teamwork creates value and success: Lone wolves build perpetually small companies. Appreciation and mutual respect for different types of people guarantees better company performance: Excellent sales people are essential (not lower life forms). Customers need to feel they have a relationship and trust before they will buy from you.© 2012 Entrepreneurship Ventures, Inc. 9 9
  10. 10. Examples of What CAN Be Taught (2) Business Basics: CFIMITYM Profit vs. cash flow Risk is higher when you’re growing fast How to Write a Business Plan Need to know how, but... Recognize that the best customers and investors don’t read them. Effective elevator pitches are essential to change the game.© 2012 Entrepreneurship Ventures, Inc. 10 10
  11. 11. Sales and the Selling Process We surveyed hundreds of CEOs, most of whom were engineers: “Achieving consistent sales results is the most difficult thing. Developing world class technology has always been easier for us.” “Marketing is something you imagine at home, alone, in the dark. Sales is something real, that you do with other people.” “Successful selling -- and building a customer-oriented, sales- driven culture -- is the single most important differentiator between highly successful start-up firms and those that go sideways.” “It all starts when somebody buys something from you… and gives you money.” “Good selling is like charm: without it, nothing else matters.”© 2012 Entrepreneurship Ventures, Inc. 11 11
  12. 12. Critical Success Factors in Innovation and Intrapreneurship 1. Believe that Startup Ventures can Succeed: Parent(s) who are entrepreneurs / intrapreneurs. Early contact with new ventures. Exposure to success stories and case studies. 2. Be willing to be Unusual/Unconventional. Agree to Embrace Risk, and possibly failure. 3. Live in a society that sees the above as normal, not a strange exception. 4. Focus on speed, execution, and results. Be willing to “break the harmony.” 5. Your Top Management will support change and protect the intrapreneurs from bureaucracy.© 2012 Entrepreneurship Ventures, Inc. 12 12
  13. 13. Implementing Radical Innovation 1. Implementing incremental innovation is usually best done in the business units, with their budgets. 2. Implementing radical innovation is usually best managed centrally, with strong support from the top (CEO, not CFO): CEO Sr. VP BU #1 BU #2 Innovation© 2012 Entrepreneurship Ventures, Inc. 13 13
  14. 14. Intrapreneurs: Building Your New Businesses Need an “A” Team – with real experience Serious Technology – sustainable advantage Solve an important, valuable problem… For clients who have money… Who want to pay well… With a short sales cycle… And will buy more, soon… ☺ YOUR VALUE PROPOSITION MUST BE COMPELLING, QUANTIFIABLE, PROVEABLE, REFERENCEABLE, AND EASILY EXPLAINABLE…© 2012 Entrepreneurship Ventures, Inc. 14 14
  15. 15. Some Case Examples of Corporate Venturing at Selected Firms© 2012 Entrepreneurship Ventures, Inc. 15 15
  16. 16. DANFOSS [Denmark] (1 of 3)• Danfoss Ventures was established / inspired by Jørgen Mads Clausen, Chairman & CEO (son of founder) to ensure continuous innovation in their mature businesses.• Annual Revenues: €3.5 billion (doubled in last 4-5 years)• Passionate Senior Executives: - CEO Clausen - Hanne Arildsen, Stig Poulsen Jørgen Mads Clausen• McKinsey recommended decentralized funding of R & D, and centralized funding for radical innovation, to protect from the vagaries of the Business Units.© 2012 Entrepreneurship Ventures, Inc. 16 16
  17. 17. DANFOSS [Denmark] (2 of 3) • Danfoss Universe: promotes entrepreneurial corporate culture • Since 2004 – “Man on the Moon” project: - Annual New Business Creation competition, started by Stig Poulsen (Danfoss) and Stefan Lindegaard (15inno) - Each January, winning teams attend 1-week MIT Entrepreneurship Development Program (EDP) • Examples: - Build a business based on $100/barrel oil - Chinese team: novel combination of existing products, specifically for the China market© 2012 Entrepreneurship Ventures, Inc. 17 17
  18. 18. DANFOSS [Denmark] (3 of 3) Our mission is to create new businesses for Danfoss through innovation, and to be leaders of innovation competence as the Group’s Innovation Hub. Will they survive now that Jørgen is retired?© 2012 Entrepreneurship Ventures, Inc. 18 18
  19. 19. Nestlé [Switzerland] (1 of 2)• Annual Revenues: €82 Billion• A few global brands, carefully controlled by HQs• ~ 3000 local brands• Nestlé España approach: - Each year, every employee must take a break and spend one full week visiting supermarkets and other players in Nestle’s distribution system - One result: repackaged, repositioned product increased sales by many million Euros. Special thanks to Prof. Jaume Llopis, former executive at Nestlé España.© 2012 Entrepreneurship Ventures, Inc. 19 19
  20. 20. Nestlé [Switzerland] (2 of 2) There are no mature markets, only mature managers. - Peter Brabeck-Letmathe CEO Nestle “Look at the eyes, not at the papers.” “Less paper, more pepper. “© 2012 Entrepreneurship Ventures, Inc. 20 20
  21. 21. Procter & Gamble [US] • Annual Revenues: €61 Billion • Passionate Senior Executive: - A. G. Lafley, CEO A.G. Lafley • Set clear goal: 50% of innovation from outside • “Not all the smart people work for us.” • House of Brands model: Tide, Swiffer, Ivory, Gillette, Puma • [Nike: Everything is the same brand.] • Laffley’s book: The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation • P & G has a website for Open Innovation:© 2012 Entrepreneurship Ventures, Inc. 21 21
  22. 22. There are lots of cool young companies out there who want to work with your firm: Is it easy for startups to work with you? • Quick decisions to evaluate / buy? • Fast POs? • Prompt (30 day) payment? • Resist the MOST annoying question: “How do we know you guys will be around in 3 years?”© 2012 Entrepreneurship Ventures, Inc. 22 22
  23. 23. Cool Innovators 1. Aura Biosciences 2. Cambrian Innovation 3. Indisys 4. Terrafugia© 2012 Entrepreneurship Ventures, Inc. 23 23
  24. 24. Aura Biosciences Founded by molecular biologist Elisabet de los Pinos (Madrid) to deliver cancer drugs using novel nanotechnology approach Attended a Global Sales Workshop at Barcelona Activa (2007) Then attended MIT Entrepreneurship Development Program (Jan 2008) Established Scientific and Business Advisory Boards One Scientific Advisor subsequently won Nobel Prize Business Advisors include Laura Morse, Larry Best Raised $3mm in angel capital; planning an institutional round soon Set up Business office in Boston/Kendall Square Awards and Recognition: Named one of Boston’s “40 under 40” “Tech Pioneer” at 2010 World Economic Forum: Of the 26 chosen, only four life sciences companies invited to Davos Press includes WSJ, Business Week© 2012 Entrepreneurship Ventures, Inc. 24 24
  25. 25. “ I had not realized the importance of networking as a critical success factor to start-up the company globally. Networking was not part of my University training or research work experience. I can now say with certainty that building professional relationships efficiently is something that you must learn and implement to achieve real success.” - Eli de los Pinos© 2012 Entrepreneurship Ventures, Inc. 25 25
  26. 26. Contact:Matthew Silver, 27 Drydock Avenue Floor 2 Boston, MA 
 02210 + 1.617.307.1755 Addresses critical resource problems at the Using a product platform built on advances in intersection of energy & water bio-electrochemical systems The US produces 38 billion gallons of wastewater a day Wastewater treatment consumes 3% of the Electricity in the US Energy Positive Water Treatment Fisheries are collapsing due to lack of treatment and monitoring Advanced de-nitrification Novel water sensing platform 50% + Savings in operating costs versus competing systems Company Summary Team Funding & Awards: NSF, EPA, NASA, USDA, MIT Enterprise Forum Dr. Matthew Silver, CEO – MIT PhD, Strategic Engineering and of Cambridge Ignite Clean Energy Prize, MIT 100K Runner-Up, Innovation Group, NASA Corporate Strategic Funding, Angel Investment. Mr. Justin Buck, CTO – MIT PhD candidate, 2011, Biological Engineering Seeking: Industrial scale-up partnerships Dr. Patrick Kiely, VP of R&D – Recognized MFC expert. Formerly at Logan Lab. Advisors Ken Morse, Entrepreneurship Ventures Dr. David Miller, Clean Energy Venture Group Dr. Peter Girguis, Harvard University Dr. Michael Chiu, formerly at Trophos Energy Five years of Cutting Edge R&D Significant Results 26
  27. 27. WHAT YOU SEEK…Excellent Customer Care: Communications: • 24x7 • Global • Low cost • Scalable • High-Quality • Manageable 27
  28. 28. 28
  29. 29. WHAT YOU GET…• Lower your cost & Increase your Quality of Service• Improve your corporate image & customer fidelization• Increase sales & productivityHOW YOU GET IT…• Intelligent Virtual Assistants & Telephone Operators• Human-like, top-quality customer care• Intelligent Dialogue on multiple channels & languages 29
  30. 30. Contact: Carl Dietrich, CEO/ Terrafugia Personal Aircraft Revolution – The Practical Flying Car Solving the Pilot’s Problems: Large and Growing Market: -Extreme weather sensitivity mitigated •$1 billion/yr new personal aircraft market -Land and drive without changing vehicles when weather gets bad •17% CAGR since congress limited liability (1994) -Only light aircraft that can be counted on for business travel -High ownership costs are reduced •New Light Sport Aircraft regulations: -Super unleaded fuel 36% less expensive than aviation gas •1/10th capital required to certify new products -Single car garage storage no hangar rental expense •½ the time and money to become a pilot -Lack of ground transport no longer a problem •Fastest growing segment of aviation industry -No need for rental cars, cabs, or borrowing a car -Street legal and ready for highway driving in 20 seconds •Chinese airspace opening to general aviation -Long door-to-door travel time shortened •Existing fleet of personal aircraft nearing end of life -75% of reduction in “ground time” at airport Patented and Proven Technology: Growing Order Backlog: •Over 100 aircraft reserved with $10K deposits •First 3 years of production sold out •More than sufficient to reach positive net income •Proven sales, distribution, and growth models •1st delivery Next Year! Investment Opportunities: +1-781-491-0812 Carl Dietrich, CEO/CTO 30
  31. 31. Discussion and Next Steps 1. Do you feel the need to change? 2. Is your firm easy to do business with? 3. Are your managers capable of pitching their breakthrough ideas compellingly in just 55 seconds?© 2012 Entrepreneurship Ventures, Inc. 31 31
  32. 32. FAQ’s FAQ’s Thank you very much!© 2012 Entrepreneurship Ventures, Inc. 32 32