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View from the Trenches: Lessons Learned in the Enterprise, Ken Durand, Atlanta Ideas Factory (Ericsson)

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Ken Durand, Head of Innovation at the Atlanta Ideas Factory (Ericsson) talks about hitting the ground running with a Lean Startup program only to find that the results were (shall we say) mediocre. In this honest talk, he’ll discuss what it took to get the necessary (continued) support, why it was imperative for the team to do an honest self-assessment of what was going right, and more importantly, what was going wrong. He’ll lead a participatory discussion with the audience on how to hire and lead for innovation.

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View from the Trenches: Lessons Learned in the Enterprise, Ken Durand, Atlanta Ideas Factory (Ericsson)

  1. 1. Enterprise Lean Startup Adjusting for Success
  2. 2. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 2 MOBILE INFRASTRUCTURE OSS&BSS SERVICES MEDIA DELIVERY & IPTV 35,000 25,000 $5B 64,000 2.5 billion 1 billion 180 50% 118,000 Subscribers managed by us Subscribers supported by us Services professionals LTE smartphone traffic handled by our networks Employees Countries with customers R&D Employees Patents In R&D Ericsson $30B Net Sales 2015
  3. 3. I expect this crowd to be much different than normal! Let’s take a test
  4. 4. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 4 A new long term business idea is presented to you. It sounds very promising and the team is certainly very enthusiastic. Additionally, they have a background/history that indicates that they might be right about this. Unfortunately, the outcome is uncertain. What do you do? A. The team should put together a business plan / business model canvas to determine if we could make enough money for this to work. B. Since the idea is interesting, we should commission a market research study to determine if this market is viable. C. Sometimes you just need to get started, so let’s get going. D. We need to understand if this is technically doable or not, so let’s do some R&D work to determine the feasibility. Question #1
  5. 5. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 5 Management Consultants have given us a set of potential new areas in which to develop business opportunities over the next 5 to 10 years. We should A. Decide which area can be developed with minimum expenditure of resources such as time, effort, and money. B. Analyze the market and choose target segments with the highest potential return on investment. C. Determine the segments that are most closely aligned with our current strategy. D. Develop Proof of Concept ideas for display at trade shows and solicit customer feedback. Question #2
  6. 6. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 6 From our competitive analysis research, we have determined that our current go to market approach (including sales, incentive plans, customers, and technology) will not be acceptable to reach a new and targeted area; even though the potential revenue is very promising. We should A. Step back and look for other alternatives to get to our targets that take advantage of current strengths. B. Press forward anyway knowing that we can influence this new market due to our history, expertise, and resources. C. Complete a proof of concept with one of our current customers to determine if we can move forward viably. D. Find a go to market partner(s) that can fill our sales, incentive, customer, and technology gaps. Question #3
  7. 7. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 7 A new business concept that we are working on with our customers has discovered an odd situation. In a focus group, the end users have determined that they do not like our product offering. In fact, they said they would not want it in their home. What should we do next A. It’s only one focus group, so let’s analyze the questions we asked. B. Pause the project. Obviously we missed the mark, so let’s broaden our research to include a better cross section of potential customers. C. Nothing. Surprises are expected. Learn from it and move on. D. Stop. If the end customer does not want this at all, we are wasting our time and money resources to continue working on this. Question #4
  8. 8. We’ll come back to this later Test results
  9. 9. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 9 Understanding the Situation Invention • Over 27K patents • Over 25K employees in R&D Execution • 118K employees doing business in 180+ countries • World class Services organization • High Customer Satisfaction Ratings
  10. 10. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 10 Understanding the Situation Invention • Over 27K patents • Over 25K employees in R&D Execution • 118K employees doing business in 190+ countries • World class Services organization • High Customer Satisfaction Ratings Which Ideas are worth executing??
  11. 11. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 11 Understanding the problem Organizational • Structure • Technology led • Communication • Politics & Bureaucracy Process • Built to Execute • Strategy alignment • Risk aversion • Incentive structure Are these the key issues blocking authentic transformation??
  12. 12. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 12 Real transformative Innovation?
  13. 13. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 13 Innovation language 1999 McKinsey Paper: The Alchemy of Growth Mehrdad Baghai, Stephen Coley, and David White, The Alchemy of Growth, New York: Perseus Publishing, 1999. HBR: The Innovation Ambition Matrix © May 2012 2012 Harvard Business Review Paper: The Innovation Ambition Matrix Bansi Nagji and Geoff Tuff, the Monitor Consulting Group. A Simple Tool You Need to Manage Innovation, Boston: HBR, 2012. H3: Unknowable H2: Risky H1: Predictable
  14. 14. Transformative innovation requires that we reassess Process AND People
  15. 15. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 15 The first KEY is all about how we think Horizon 3 must be different › 2008 University of Virginia – Darden School of Business, Saras Sarasvathy – 2014 Copenhagen Business School › Study of Entrepreneurs with >$250M › MBA Graduates control group – Ages 25 to 45
  16. 16. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 16 ›Entrepreneurs THINK differently than most everyone else! ›Their dominant thinking style is Effectual Reasoning The Outcome?
  17. 17. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 17 › Causal - We can predict the future, therefore we can control it. › Effectual - We can control the future, therefore we do not need to predict it. Causal vs. Effectual Reasoning Traditional Thinking (Causal) Distinguishing Characteristic Selecting between given means to achieve a pre-determined goal Entrepreneurial Thinking (Effectual) Distinguishing Characteristic Imagining a possible new end using a given set of means GIVEN MEANS GIVEN GOAL IMAGINED ENDS GIVEN MEANS M1 M2 M3 M4 M5 M1 M2 M3 M4 M5 › 81% of MBA Graduates were Causal Thinking dominant › 89% of Entrepreneurs were Effectual Thinking dominant © 2012 Society for Effectual Action
  18. 18. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 18 Best case - Illustrated Emotions Results Deliver the Goal Causal CAGR Results Emotions Change the World Effectual CAGR?
  19. 19. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 19 › I need a CAT to be successful › Where the picture of the cat is the goal and the puzzle box are the means to achieving that goal Causal Reasoning
  20. 20. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 20 › I need a CAT to be successful › The LEGO box is my means › The end is left up to my imagination Effectual Reasoning © 2015 The LEGO Group
  21. 21. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 21 › Causal Process – Idea – Market research – Financial projections – Form a Team – Business plan – Funding – Prototype – Product Management – Marketing & Business Development – Go to market › 81% of MBA Graduates were Causal Thinking dominant › 89% of Entrepreneurs were Effectual Thinking dominant Effectual Reasoning › Effectual Process – Personal competencies & dreams – Target customer within personal network – Idea – Form a Team – Value Proposition – Partner – Test guesses until you find one that works – Prototype – Funding – Go to market
  22. 22. Let’s score the test!
  23. 23. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 23 Principles of Effectual Thinking Bird in Hand Principle - Start with your means rather than wait for the perfect opportunity. Start taking action, based on what you know now. A new long term business idea is presented to you. It sounds very promising and the team is certainly very enthusiastic. Additionally, they have a background/history that indicates that they might be right about this. Unfortunately, the outcome is uncertain. What do you do? A. The team should put together a business plan / business model canvas to determine if we could make enough money for this to work. B. Since the idea is interesting, we should commission a market research study to determine if this market is viable. C. Sometimes you just need to get started, so let’s get going. D. We need to understand if this is technically doable or not, so let’s do some R&D work to determine the feasibility. +5 +2 -5 -2 © 2012 Society for Effectual Action
  24. 24. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 24 Principles of Effectual Thinking Affordable Loss Principle - Set affordable losses and evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside. McKinsey has given us a set of potential new areas in which to develop business opportunities over the next 5 to 10 years. We should A. Decide which area can be developed with minimum expenditure of resources such as time, effort, and money. B. Analyze the market and choose target segments with the highest potential return on investment. C. Determine the segments that are most closely aligned with our current strategy. D. Develop Proof of Concept ideas for display at trade shows and solicit customer feedback. +5 +2 -5 -2 © 2012 Society for Effectual Action
  25. 25. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 25 Quilt Principle - Form partnerships with people and organizations willing to make a real commitment to jointly creating the future with you. From our competitive analysis research, we have determined that our current go to market approach (including sales, incentive plans, customers, and technology) will not be acceptable to reach a new and targeted area; even though the potential revenue is very promising. We should A. Step back and look for other alternatives to get to our targets that take advantage of current strengths. B. Press forward anyway knowing that we can influence this new market due to our history, expertise, and resources. C. Complete a proof of concept with one of our current customers to determine if we can move forward viably. D. Find a go to market partner(s) that can fill our sales, incentive, customer, and technology gaps. +5 +2 -5 -2 Principles of Effectual Thinking © 2012 Society for Effectual Action
  26. 26. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 26 Lemonade Principle – Leverage contingencies Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals. A new business concept that we are working with our customers has discovered an odd situation. In a focus group, the end users have determined that they do not like our product offering. In fact, they said they would not want it in their home. What should we do next A. It’s only one focus group, so let’s analyze the questions we asked. B. Pause the project. Obviously we missed the mark, so let’s broaden our research to include a better cross section of potential customers. C. Nothing. Surprises are expected. Learn from it and move on. D. Stop. If the end customer does not want this at all, we are wasting our time and money resources to continue working on this. +5 +2 -5 -2 Principles of Effectual Thinking © 2012 Society for Effectual Action
  27. 27. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 27 -20 Effectual Causal +20 What is your dominant style › 81% of MBA Graduates were Causal Thinking dominant › 89% of Entrepreneurs were Effectual Thinking dominant
  28. 28. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 28 Is thinking style enough? Ecosystem › How we think – Critically important › How we behave – Bias toward action – Obvious actions that can be seen by peers and management › The ecosystem we create – More than just cool space, game machines, snacks, pizza and Red Bull – Different incentives and benefits – Freedom to fail – Potential for losses PEOPLE
  29. 29. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 29 Exploration vs. Administration Effectual thinkers are explorers › Exploration is a mindset imparted to the individual at birth, so explorers are discovered not created › Explorers are regularly marginalized and “drummed out” of the organization by administrators › Incredible willingness to be comfortable with the phrase “I don’t know” (loves ambiguity; life in the grey areas) › Embrace change every minute BUT, not stupidly sailing about without a plan › Willing to “burn the ships” exchange the knowable for the unknowable › A lifetime of uncertainty needs to be incentivized differently
  30. 30. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 30 Two years of Lean Projects and Workshops in the Idea Factory › Enterprise Culture is at the center of success 1. Most people have the wrong DNA 2. Failure is not accepted 3. Chaos is not embraced 4. Small victories are easily ignored Enterprise Key Learnings
  31. 31. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 31 › Horizon 3 objectives are BEST run by Explorers › If you have Explorers, the idea is LESS important than the team. › Not ONLY Explorers on the team What should we learn? HBR: The Innovation Ambition Matrix © May 2012

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