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Why Corporations Are Turning to Digital Accelerators For Leadership & Innovation

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JFDI.Asia was SE Asia's first startup accelerator but, since 2012, corporations have been knocking on the door asking how they can innovate alongside startups too. Their needs are both chronic and complex, and there are potential benefits to both sides. But finding the right way to engage will require leaders to 'take the red pill' of risk and uncertainty, JFDI CEO Hugh Mason explained at the NUS Digital Leadership and Innovation Conference.

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Why Corporations Are Turning to Digital Accelerators For Leadership & Innovation

  1. 1. Why Corporations Are Turning to Digital Accelerators For Leadership & Innovation NUS-ISS Digital Leadership & Innovation Conference 20 November 2015 Hugh Mason, CEO, JFDI.Asia Pte Ltd hugh@jfdi.asia http://jfdi.asia
  2. 2. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Coming Up Introducing JFDI 1. The Startups Are Coming 2. Making Sense of The New Reality 3. So How?
  3. 3. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Introducing JFDI ● Founded in 2010 by Hugh Mason (49, PR) and Wong Meng Weng (39, Citizen) ● First ASEAN startup accelerator, backed by IIPL, Fenox VC, Family Offices, HNWI’s ● Attracted over 2,000 startup teams from 80+ countries. Supported 250 teams via MOOC at pre-accelerator stage, ● USD2m pre-seed capital deployed into 69 startups, >50% raised median USD550k ● Over 300 jobs created, >50% of which are in Singapore and >50% filled by SCPRs. JFDI’s own staff of 16 split Singapore-Philippines. ● No exits yet but 48% IRR (unrealized). However initial equity-only model limits value capture and time to realize value is too long for operational sustainability. ● Now raising capital to a) build on learning, b) pivot to new model yielding fees + equity + options through co-creation with industry partners and c) reduce costs by offshoring.
  4. 4. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 JFDI Clients, Investors & Partners
  5. 5. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 1 The Startups Are Coming
  6. 6. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 OMG Startups Can!!!!
  7. 7. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 All Hype?
  8. 8. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Leaders Grieving for a Golden Age?
  9. 9. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Heroes to Zeroes?
  10. 10. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Schadenfreude
  11. 11. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Something Has Broken Short Term: How to keep telling an innovative story to the analysts when the numbers are flatlining? Mid Term: How to start shaping, acquiring or getting in on innovation at a reasonable price? Long Term: How to avoid getting disrupted, change culture to a future orientation and stay relevant?
  12. 12. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Corporations Are Fading, Faster Than Ever Average lifespan has decreased from 61 years in 1958 to 18 years today
  13. 13. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Financial Services are Unbundling
  14. 14. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Healthcare Too
  15. 15. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Healthcare Too
  16. 16. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 The Startups Are Coming
  17. 17. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Unbundling Hits Products Too
  18. 18. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 The New Reality Founded: 1916 Market Cap Today: $99.37B Culture: Minimise Risk Innovation Style: Incremental Founded: 2003 Market Cap Today: $28.95B Culture: Maximise Opportunity Innovation Style: Disruptive
  19. 19. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 “After This, There is no Turning Back” "You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in wonderland, and I show you how deep the rabbit hole goes."
  20. 20. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 2 Making Sense of The New Reality
  21. 21. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 “A startup is a temporary organization designed to search for a repeatable and scalable business model” - Steve Blank “A fixed-term, cohort-based program, including mentorship and educational components, that culminates in a public pitch event or demo-day” - Susan Cohen Some Definitions
  22. 22. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 1: It’s Cheap to Try Out Tech Ideas Cost to launch a Tech Startup Source: Upfront Ventures
  23. 23. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 2: There’s a New “Science of Startups”
  24. 24. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 JFDI Discover JFDI Validate JFDI Accelerate Individuals Teams Problem Statement Minimum Viable Prototype Traction Seed Stage Startup Series A Stage SME Startup Weekends, Hackathons Product Development Customer Discovery Growth Hacking Demo Day Trend 2: There’s a New “Science of Startups”
  25. 25. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 1. Discover 2. Validate 3. Accelerate Trend 2: There’s a New “Science of Startups”
  26. 26. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 3: We Can Accelerate Success & Failure
  27. 27. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 4: New Mindset ● Design Thinking ● Lean Startup ● Agile Methods ● Launch and Learn v Plan and Perfect
  28. 28. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 5: Tech2Market or Market2Tech?MarketRisk-Shoulditbedone? Technology Risk - Could it be done?LOW HIGH HIGH
  29. 29. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 5: Tech2Market or Market2Tech?MarketRisk-Shoulditbedone? Technology Risk - Could it be done?LOW HIGH HIGH
  30. 30. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Trend 5: Tech2Market or Market2Tech?MarketRisk-Shoulditbedone? Technology Risk - Could it be done?LOW HIGH HIGH “Teams that … took the Lean Launchpad class ... had a 60% success rate” (Blank 2013)
  31. 31. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 3 So How?
  32. 32. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 In Five Years It Will Probably Seem Obvious Conceptualization Iteration Implementation Startups Agile, Nimble, Fail Fast Corporations Scale, Leverage, Distribution, Can’t Fail
  33. 33. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 1. Denial 2. Arousal 3. Infatuation 4. Over - Confidence 6. Acceptance “What’s a startup?” “My CEO read about startups in Forbes.” “We should set up a fund.” “People will give us valuable IP for nothing!” “Let’s sponsor a hackathon!” “This is so much more fun than work.” “Look, analysts ... shiny things!” “This looks easy. Let’s do it in-house.” “Our middle managers can all be mentors.” “Order more post-its and disruptive T-shirts!” “You can be an ‘intrapreneur’ too!” “Until it makes $50m it doesn’t move my needle.” “The operating units aren’t interested.” “This all needs tightening up. Bring in PwC.” “We have a role and startups have theirs.” “We need a mature engagement model.” “Maybe we don’t need to dominate this process.” 5. Disappointment Six Stages of Innovation Awakening
  34. 34. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Corporate Innovation Starting Points JFDI Delivers ● New Product & Service Startup Businesses ● Capital growth ● Pre-emptive investment rights ● Early access to a diverse portfolio ● A more innovative company culture ● Brand affiliation with innovation ● Innovative talent identified / acquired ● Deeper staff, client channel engagement JFDI Solutions ● Themed accelerators ● Venture building ● Venture scouting ● Fast follower labs ● Mentoring ● Sponsorship ● Innovation events ● Innovation showcase ● Co-locating staff & startups ● Collaborative Innovation events ● Innovative client experiences Problem: How to ... ● Get Access to Digital Investment options? ● Outsource innovation to generate new kinds of value? ● Inspire internal innovation? ● Do Professional Staff Development? ● Demonstrate an innovative culture? ● Farm speculative investments? ● Expand scope of products & services? ● Pay it forward?
  35. 35. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Execution is All
  36. 36. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 “Start with the end in mind” - Steven Covey ● Customer - Supplier Corporate sources products or services from a startup to enable efficiency or to extend functionality of its own processes, products and services ● Distribution Partnership Corporate leverages its partners and networks to offer distribution to a startup for its products and services ● Development Partnership Corporate and the startup co-operate to execute R&D ● Joint Venture Corporate and the startup develop a new project together based on the expertise and interests of both parties ● Direct Investment Corporate takes shares in a startup still under development Many Possible Ways To Co-Create Value
  37. 37. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Model 1: The Skunkworks ● Lockheed Martin, 3M, Intel, AWS ● Waterfall style- slow to market ● Not conducive to disruptive innovation ● Insufficient for unpredictable market shifts and competition
  38. 38. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Model 2: Inspiring Intrapreneurship ● Aims to commercialize employee ideas ● Widely publicized to boost employee morale and promote innovation ● Waterfall style- slow to market ● Tend to be driven by existing business units rather than disruptive innovation ● Internal politics may be an issue ● Qualcomm Venture Fest ● Employees didn’t know how to move projects forward
  39. 39. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Model 3: Internal Innovation Labs ● “Start-up style” for salaried employees ● Not equipped to scale their successes ● Mercy at the quarterly budgets ● Budgetary and political pressure for promising projects ● Xero PARC
  40. 40. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Model 4: Hackathons ● Events ● Morale-booster ● Short term ● No real products
  41. 41. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Model 5: Innovation Colonies ● Corporate accelerators ● Separate locations ● Lean (small) budgets ● Fast to ship ● Market Valuation ● Skin in the game (equity) Source: Lean Enterprise by Trevor Owen
  42. 42. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 Model 6: Co-Creation Theme Selection Session Discovering Problem Statements Ideation Workshop with Partners Acceleration Definition of targets Technological domains aligned with Sponsor focus areas Validation 1 day 1 month 2 months2 x Workshops 3 months or more Identification of 25 problem / market needs statements by JFDI Problem statements are field of ideation and will be agreed with Sponsor Ideation between Sponsor, JFDI and further partners Workshop is facilitated by JFDI Partners to participate are agreed with Sponsor Sponsor represents about 20% of participants Participants will sign in with resources for market validation Validation focuses on market and technical hypothesis critical for success Participants to sign in with resources for the acceleration phase Validated ideas will be selected for acceleration Lead IP N/A N/A Held in Escrow by JFDI Held in Escrow by JFDI Assigned by JFDI to Participants
  43. 43. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 JFDI’s Response JFDI doesn’t just deliver PowerPoints and concept prototypes. In two quarters we source or create, validate and accelerate new businesses, complete with paying customers. As investors ourselves, we aim to create companies that will generate value repeatably, profitably and scalably. Time to market Hands-on execution Shared financial and market risks In Asia for Asia JFDI was created in Asia for Asia. We and our partners understand the culture, challenges and opportunities unique to our region. JFDI shares risk and reward and aligns with clients’ long-term interests through co- investment. The aim: Asia scale USD250m+ exits
  44. 44. JFDI.Asia URL: jfdi.asia Blk71 Ayer Rajah Crescent #05-16 @hughmason hugh@jfdi.asia “I didn't say it would be easy, Neo. I just said it would be the truth”

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