Steve Taylor

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  • I’m going to talk to you today about what I call Systematic Business Innovation. It’s an approach to starting and growing a business which I believe could benefit every entrepreneurYet it is something few entrepreneurs actually do.I’m going to explain what it is and why it is so important to an early-stage business.Then I’ll show you a couple of simple tools that help you think about a business systematically and design it that way.Systematic Business Innovation came about through the intersection of my own experience and some radical thinking about economics from 60 years ago.
  • Do you know who this is?
  • Couple of key facts about JS
  • In other words, it’s a reality for everyone who is in business or plans on going into businessBtw – Blockbuster went bust in the UK last week, as you may know
  • But those entrepreneurs & VCs who were fans of Creative Destruction in the first dotcom boom & bust had missed a crucial part of his thinking.Invention is innovating the thing you do. But Schumpeter says that doesn’t make you an entrepreneur.
  • Schumpeter says that this should be as radical and dynamic as inventing your new product or serviceOf course this is what Steve Jobs did with…And yet we all know what the rewards can be when an entire business is subject to the glaring spotlight of innovation and the entrepreneur refuses to leave any stone unturned.Apple and digital music – that’s all I’ll say
  • That’s how powerful it can be when you innovate what I call the Business Engine and the new thing you do.When you innovate them together - seamlessly.
  • They run their business the same way that small businesses have been run for the last 200 years.They focus all their energies on developing the new thing they do; meanwhile, they run their business like its a corner shop.
  • I’ve put ‘flat’ in inverted commas because people make it sound like it’s a cool modern business choice – it often isn’t!Flat structure =unclear roles & responsibilitiesPoor MIS and short-termism make it difficult to plan Founders get stressed trying to do everything
  • So how DO you Invent AND Innovate?
  • Why do I call it SYSTEMATIC Business Innovation?Because businesses are systemsThe point about a system is that all the elements are interdependent: so you cannot evolve or transform a system by just changing one aspect.You need to innovate every element in a coordinated integrated way that is designed to realise your vision of where you want to get to.
  • The point about a system is that all the elements are interdependent: so you cannot evolve or transform a system by just changing one aspect.You need to innovate every element in a coordinated integrated way that is designed to realise your vision of where you want to get to.
  • These are the key words for me
  • Put your hand up if you’ve seen this before.Can you tell us what it is?1957 – this kind of integrated thinking about business is not new
  • In other words, apply the same level of invention, entrepreneurial thinking & creativity to your business as you did to your original invention – the new thing that you do.But HOW do you do this?
  • But what do you actually DO?
  • You need some practical tools to help you: think about your business as a system design it accordingly
  • OK, let’s move on to some simple practical tools to help you:think about your business as a system design it accordingly
  • I often draw a burger when I’m working with entrepreneurs on Systematic Business Innovation – not because I’m always thinking about food (although I AM always thinking about food) but because it’s a useful way of starting to think about an early-stage business Systematically.This, obviously is a regular burger. There’s a nice balance between the bun, the meat, the cheese, the lettuce and the tomato, with just the right amount of mayonnaise & ketchup. There’s probably a sliced gherkin in there somewhere.
  • If you mapped the elements in your ecosystem onto the burger, they might look a bit like this…
  • In my experience, most early-stage businesses look more like this.And that’s because almost all the creative energy goes into the Invention – The New Thing That You Do -examples
  • What happens to the entrepreneur or entrepreneurs – their skills develop in an unbalanced way.They become good at executing on their Invention (Operational Management skills), but they don’t develop the skills (Strategic Management skills) to innovate their business
  • How a lot of entrepreneurs try to fill these skills gapsThere are plenty of people who will try to tell you what to do…
  • You need a major re-design of your system BEFORE each transition.It is crucial to have the system design in place for the next stage, NOT the one you are in.Otherwise, there is a danger of getting caught out by a growth spurt, a major new client win, a sudden spike in sales – and making a leap into the next stage of growth while you still have the system design for the previous stage.
  • Your business system will probably look something like this: poorly integrated, uneven & weak. With missing links, disconnects and some elements that are just allowed to find their own way or are ignored altogether.
  • So how DO you get it to look more like this?
  • What’s our vision of where we want to get to in – say – 2 years?Talk through these – brieflyOf course, we already have some interdependencies here – talk through the red arrows
  • What’s our vision of where we want to get to in – say – 2 years?Talk through these – brieflyOf course, we already have some interdependencies here – talk through the red arrows
  • Based on our growth so far, how do we think we can grow the top line – our revenues?
  • What sort of team would we need to support those levels of revenues and to achieve our other goals, such as opening in China?First of all we know there are gaps in the existing team, sow we need to fill them with an in-house designer and a studio assistantWe also know that, as the team grows, we are going to need a more formal management structure – so we decide that at the beginning of year 2 we need to appoint an MD and one of their first jobs will be to create a small management team from 2 or 3 of out most experienced team membersOne of our founders, Ben, is already acting, informally as the business leader and he’s pretty good at it, so we see him as the future MD, but he would need some training to upskill him to do the MDs role
  • How will our business model need to evolve over the next 2 years?At the beginning of year 2 we want to broker some big accounts with general, rather than specialist online retailers, so we think we will need to hire a sales/account manager at that point.We will continue to handle
  • Keep working through the elements of the business as you see it evolving SYSTEMATICALLY and it will start to look like this…
  • Here’s my last little model.What do you think this line is? That’s the ceiling. The ceiling of possible growth.An entrepreneurial business can only grow along with the business leader’s ability to Systematically Innovate.So, sometimes, the entrepreneur themselvescan be the biggest barrier to growth.Which is why some self-aware entrepreneurs can see when they are reaching their ceiling as a business leader and bring in help to run the business more strategically, more systematically.
  • Steve Taylor

    1. 1. Systematic BusinessInnovation
    2. 2. ?
    3. 3. JosephSchumpeter
    4. 4. “Creative Destruction…incessantly revolutionizes the economic structure fromwithin, incessantly destroying the old one, incessantly creating a new one.”
    5. 5. Creative Destructionis the essential fact about capitalism It is what every capitalist concern has got to live in
    6. 6. Creative Destruction generates amazing opportunitiesThat’s why it’s so powerful and why it’s so relevant
    7. 7. They haven’t taken on board his distinction between Invention and InnovationINVENTION INNOVATION
    8. 8. An entrepreneur also innovatesthe entire business that creates & delivers the new thing they do Every aspect of it This should be as demanding and exciting as inventing the thing you do.
    9. 9. When youInvent and Innovate it can produceextraordinary success
    10. 10. But that’s not what most people do
    11. 11. ‘Flat’ Structure Poor Management Information Short-Term Outlook Unstructured CommunicationsOverworked & stressed founder/s
    12. 12. Systematic BusinessInnovation
    13. 13. A Business is a System
    14. 14. “A set of interacting or interdependent components forming an integrated whole”
    15. 15. “A set of interacting or interdependent components forming an integrated whole”
    16. 16. Product/ Business Service Model Process/ Net Workflow Profits StructureMarketing Leadership/ Turnover/ Management Sales People/ Skills
    17. 17. Product/ Business Service Model Process/ Net Workflow Profits StructureMarketing Leadership/ Turnover/ Management Sales People/ Skills
    18. 18. How do you grow abusiness in a Systematic way?
    19. 19. It’s like directing a film: every detail, every element must be building towards your ultimate Vision
    20. 20. Invent your product + You Innovate need your two business‘heads’
    21. 21. But what doyou actually DO?
    22. 22. You need some simple practical tools to help you: a) think about your business as a system b) design it systematically
    23. 23. BUSINESS STRATEGYTHE NEW THING THAT YOU DO BUSINESS ENGINE
    24. 24. Leadership/ Marketing Business Management Structure Model BUSINESS STRATEGY Product/THE NEW THING THAT YOU DO Service People/ Turnover/ Skills Process/ Net Sales Workflow Profits BUSINESS ENGINE
    25. 25. BUSINESS STRATEGYTHE NEW THING THAT YOU DO BUSINESS ENGINE
    26. 26. Business Strategy isn’t developed OPERATIONAL COMPETENCE = the skills to execute on The New Thing That You Do (The Invention)Business Engine is neglected
    27. 27. Filling The Gap •‘Consultants’ •Your Accountant•Generic Business Coaches •Making It Up As You Go
    28. 28. •You’re drowning in paperwork - especially financial •Quality of work is starting to slip •Cash flow is bumpy •Gaps appear in communications •Team morale is not so great •You feel overworked & stressedStart-up Stay-up Grow-up 10/12 30/35
    29. 29. Lessons:•Understand which stage you are in•Look out for ‘transition symptoms’ •Design/re-design your business system for the next stage DO THIS CONTINUOUSLY
    30. 30. Business Model THE NEW Net Profits THING THAT YOU DO (Product/Service) Turnover/Structure Sales Leadership/ People/ Management Skills Marketing Process/ Workflow
    31. 31. Product/ Business Service Model Process/ Net Workflow Profits StructureMarketing Leadership/ Turnover/ Management Sales People/ Skills
    32. 32. How you can use a bookcase to help turn yourSystematic Business Innovation into an Action Plan Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Example: an early-stage onlinejewellery business that is growing fast & sees opportunities for it’s own e-commerce operation, partnering with the big online retailers and opening operations in China
    33. 33. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Turnover/ Sales 1.5m Net Profits 150K Team = 15People/ Skills peopleLeadership/ Full-timeManagement MD YEAR 1 YEAR 2 Product/ Bespoke Service Service Process/ Shanghai Workflow Warehouse Marketing Open in China Free up Structure MD 50% Business Multiple rev Model streams
    34. 34. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Turnover/ Sales 750K 800K 900K 1m 1.1m 1.25m 1.35m 1.5m Net Profits 150K Team = 15People/ Skills peopleLeadership/ Full-timeManagement MD Product/ Bespoke Service Service Process/ Shanghai Workflow Warehouse Marketing Open in China Structure Mgmt team Business Multiple rev Model streams
    35. 35. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Turnover/ Sales 750K 800K 900K 1m 1.1m 1.25m 1.35m 1.5m Net Profits 150K Team: 6 Hire Hire studio Hire sales/ Hire Shanghai Team = 15People/ Skills designer assistant account mgr people headLeadership/ Mgmt Promote Full-timeManagement training Ben Ben to MD MD Product/ Bespoke Service Service Process/ Shanghai Workflow Warehouse Marketing Open in China Ben: build Ben: build Structure Mgmt team mgmt team mgmt team Business Multiple rev Model streams
    36. 36. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Turnover/ Sales 750K 800K 900K 1m 1.1m 1.25m 1.35m 1.5m Net Profits 150K Team: 6 Hire Hire studio Hire sales/ Hire Shanghai Team = 15People/ Skills designer assistant account mgr people headLeadership/ Mgmt Promote Full-timeManagement training Ben Ben to MD MD Product/ Bespoke Service Service Process/ Shanghai Workflow Warehouse Marketing Open in China Ben: build Ben: build Structure Mgmt team mgmt team mgmt team Business 3rd party Own e- Open key Amazon, Multiple rev Model sites commerce accounts: Net-a-Porter streams
    37. 37. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Turnover/ Sales 750K 800K 900K 1m 1.1m 1.25m 1.35m 1.5m Net Profits 94K 100K 126K 150K 165K 188K 169K 150K Hire Hire studio Hire sales/ Hire Shanghai Team = 15People/ Skills Team: 6 people designer assistant account mgr headLeadership/ Mgmt Promote 3 x Board Full-timeManagement training Ben Ben to MD meetings MD Product/ E-commerce Shanghai Shanghai Bespoke Service range products products Service Process/ Shanghai Workflow Warehouse Marketing Revamp Shanghai Prep Open Website research Shanghai Shanghai (too?) Promote Ben: build Ben: build Free up Free up Structure flat Ben to MD mgmt team mgmt team MD 25% MD 50% Business 3 rd party Own e- Open key Amazon, Multiple rev Model sites commerce accounts: Net-a-Porter streams
    38. 38. Don’t crash your businessbecause you think any foolcan run one… Invent and Innovate!

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