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Nurturing Intrapreneurial Mindset


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I conducted a workshop at SAP Labs on Nurturing Intrapreneurial Mindset in Bangalore, Nov 20

Published in: Leadership & Management

Nurturing Intrapreneurial Mindset

  1. 1. NURTURING INTRAPRENEURIAL MINDSET Tathagat Varma @tathagatvarma Image:
  2. 2. CONTEXT SETTING • Purpose: Why this workshop? • Vision: What should change? • Strategy: How will this happen?
  3. 3. ENTREPRENEURSHIP • “Entrepreneurship is the pursuit of opportunity beyond resources controlled” - Prof Howard Stevenson, godfather of entrepreneurship studies at HBS • Entrepreneurship is the willingness to take risks and develop, organize and manage a business venture in a competitive global marketplace that is constantly evolving. Entrepreneurs are pioneers, innovators, leaders and inventors. They are at the forefront of technological and social movements – in their fields, in their forward thinking, in their desire to push the envelope. They are dreamers and most importantly – doers. - Presidio Graduate School
  5. 5. WHO ARE THEY?
  6. 6. THE ONE TRAIT ALL SUCCESSFUL PEOPLE HAVE! “Successful people are 100% confident that, whatever the challenge, they will be able to figure it out--and at the same time, they are 100% willing to forgo everything they think they know and admit to knowing nothing.”
  8. 8. THE IDEA
  9. 9. THE GRIT! • Giving up was so easy! • “By the time I made my 15th prototype, my third child was born” • “By 2,627, my wife and I were really counting our pennies” • “By 3,727, my wife was giving art lessons for some extra cash” • Failed 5,126 times over the next 5 years!
  10. 10. THE LONG MARCH! Dyson spent the next three years traveling the world and trying, unsuccessfully, to sell his dang vacuum.“These vacuum makers had built a razor-and-blade business model reliant on the profits from bags and filters. No one would license my idea,” he explained.“Not because it was a bad one, but because it was bad for business.” The companies turned him down because it was a very good idea!
  11. 11. NO TAKERS! “When the vacuum was ready, the first thing I did was to show it to the makers of domestic appliances.They didn't want it. I licensed it to Amway in the U.S., which was a disaster.“ They seemed determined to continue selling bags, worth $500 million every year. Later, Hoover’sVice President for Europe, Mike Rutter, said on UK nationalTV:“I do regret that Hoover as a company did not take the product technology off Dyson; it would have lain on the shelf and not been used”. “So I decided to become a manufacturer myself. I borrowed $900,000, with my house on the line.”
  12. 12. G-FORCE • Launched in Japan for $2,000! • It impressed the Japanese with its performance and quickly became a status symbol • Won the 1991 International Design Fair in Japan
  13. 13. DC01 FINALLY!
  14. 14. WINNER! In less than 2 years, Dyson was the UK’s best-selling vacuum. Miele, Bosch, Siemens, Electrolux and Philips tried to stop Dyson showing how their models clogged and lost suction. Later, manufacturers started to admit that bags reduced suction, and then tried to jump on the bandwagon to produce `bagless’ vacuums, but these also clogged just like a bag vacuum. Meanwhile 60% of people were buying a Dyson because it was recommended to them.
  15. 15. MORE CHALLENGES! James Dyson’s vacuum was nearly never made due to patent fees and legal costs incurred defending his invention against patent infringement by a giant corporation. During the development years when James had no income, this nearly bankrupted him. He risked everything, and fortunately the risk paid off.Then in 1999, Hoover UK tried to imitate a Dyson and James was forced back to court to protect his invention again.After 18 months Dyson finally won a victory against Hoover UK for patent infringement.
  16. 16. JAMES DYSON
  17. 17. REFLECTION TIME • Form groups of 4-5 per table • Each table discuss and list out ideas under • Why did he pursue the idea? • How did he get the idea? • What challenges did he face? • How did he circumvent them? • What, in your view, made him succeed?
  18. 18. WHAT IS MINDSET? • Oxford Dictionary: the established set of attitudes held by someone • Cambridge Dictionary: a person's way of thinking and their opinions • Merriam-Webster Dictionary: a mental attitude or inclination, a fixed state of mind
  19. 19. MINDSET • A broad set of beliefs about the world which forms the backdrop for the decisions we make and how we behave in life • Mindset affects what we believe in, how we act, and what we ultimately achieve!
  20. 20. MELIORISM • Oxford Dictionary: the belief that the world can be made better by human effort. • Merriam-Webster Dictionary: the belief that the world tends to improve and that humans can aid its betterment.
  22. 22. ENTREPRENEURIAL MINDSET FinancialTimes: Entrepreneurial mindset refers to a specific state of mind which orientates human conduct towards entrepreneurial activities and outcomes. Individuals with entrepreneurial mindsets are often drawn to opportunities, innovation and new value creation. Characteristics include the ability to take calculated risks and accept the realities of change and uncertainty.
  23. 23. 3M Post It Notes Dr. Spencer Silver, a 3M scientist, discovered the formula for the sticky stuff back in 1968. But it was Silver's colleague, Art Fry, who finally came up with a practical use for it. The idea for repositionable notes struck Fry while singing in the church choir. His bookmark kept falling out of his hymnal, causing him to lose his page. So, taking advantage of a 3M policy known as the "bootlegging" policy, Fry used a portion of his working hours to develop a solution to his problem. After years of product development, 3M introduced the concept of Post-it® Notes in four major markets in 1977. But, without actual samples in hand to try, consumers didn't catch on. A year later, 3M blanketed the Boise, Idaho, market with samples upon samples of Post-it® Notes. After trying the notes, more than 90 percent of users said they'd buy the product themselves. The test was a success! By 1980, Post-it® Notes were being sold nationally.
  24. 24. 3M In 1983, 3M’s chairman, Lew Lehr, said: “For many years the corporate structure [at 3M] has been designed specifically to encourage young entrepreneurs to take an idea and run with it. If they succeed, they can and do find themselves running their own business under the 3M umbrella. The entrepreneurial approach is not a sideline at 3M. It is the heart of our design for growth.”
  25. 25. 3M Bootlegging Policy To foster creativity, 3M encourages technical staff members to spend up to 15 percent of their time on projects of their own choosing. Also known as the "bootlegging" policy, the 15 percent rule has been the catalyst for some of 3M's most famous products, such as Scotch Tape and — of course — Post-it® Notes.。
  26. 26. Intra-Corporate Entrepreneurship - Gifford and Elizabeth Pinchot, 1978 “Today's large corporations are suffering from size. They are so large that the managers making decisions are often isolated from a personal knowledge of the problems to be solved. The traditional answer for this situation is decentralization. Unfortunately, decentralization alone is not enough. In a hierarchical organization, promotions can be won by social graces, loyalty to one's boss, and in general, political skills. Courage, original thought, and ability to observe the obvious but overlooked fact, do not necessarily lead to success. If we are to get really good problem-solving in our decentralized corporation,- we must introduce a system that gives the decision to those who get successful results., not to the inoffensive. Such people will be willing to take moderate risks and will be more concerned with achieving results than with gaining influence. These are among the characteristics of the successful entrepreneur. What is needed in the large corporation is not more semi-independent departments run by hard-driving yes men'. but something akin to free market entrepreneurship within the corporate organization. Such a new way of doing business would be a social invention of considerable importance, both for the individuals in it, and for the productivity and responsivity of the corporation.”
  27. 27. Intrapreneurship… • “Intrapreneurship refers to employee initiatives in organizations to undertake something new, without being asked to do so.” • “A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation”, - American Heritage Dictionary, 1992 • “Intrapreneurship is the act of behaving like an entrepreneur while working within a large organization. Intrapreneurship is known as the practice of a corporate management style that integrates risk- taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship." - Wikipedia
  28. 28. Intrapreneurship “Intrapreneurship involves creating or discovering new ideas or opportunities for the purpose of creating value, where this activity involves creating a new and self-financing organisation within or under the auspices of an existing company. An intrapreneur is a person who practises intrapreneurship. According to this definition, a corporate manager who starts a new initiative for their company which entails setting up a new distinct business unit and board of directors can be regarded as an intrapreneur. In contrast, a corporate manager who starts a new initiative using pre-existing corporate structures is not an intrapreneur. Nor is a leader of an R&D unit within an organisation, whose innovations are managed by the organisation. Were this R&D leader to create a new stand-alone organisation, which performs its own functions and sells its own products – albeit with strong continued links to the parent firm, organisation – it would count as intrapreneurship.” -
  29. 29. Memo to the CEO… Almost every industry is being or will soon be disrupted. Acquisition has proved to be no substitute for internal innovation. The world is unstable. Big companies now innovate in partnership with startups.
  30. 30. Why Intrapreneurship? “Although addressed to you, this memo will be read by your employees, who will begin implementing intrapreneuring with or without your support. It will go better for you and your shareholders if you get involved in building the environment for intrapreneuring. The young talent you need to drive innovation is not buying the old social contract between corporation and employee. They are demanding work that is personally meaningful, work that is aligned with their environmental values and/or concern for social justice. They expect substantial freedom to make decisions and the opportunity to make major contributions early in their careers. In essence, they are demanding an intrapreneurial career. If you don't meet their needs, they will stay with you only long enough to get trained and put your company on their résumé. Many of the best of your older employees have similar attitudes and needs. If their needs are not met they may retire on the job or leave to start their own firm. Though these independent attitudes do cause problems, if you understand how to manage them, these intrapreneurial attitudes can work strongly in your favor. Your intrapreneurial employees, young and old, can deliver the radical increases in the volume, quality and cost effectiveness of innovation that you need to deal with today’s disruptive economy.”
  31. 31. How serious is the need? Dr. William Souder spent ten years studying 289 innovations in 53 different companies hoping to discover a process that could drive innovation success. He could not find one. Instead his primary conclusion was, “The intrapreneur is an essential ingredient in every innovation.” The system inevitably resists innovations that take resources from or threaten to replace the existing ways of delivering value to customers. Significant innovation only happens when a committed team of intrapreneurs drives the innovation though all the barriers, failures, mistakes and seizing of emerging opportunities that mark the intrapreneurial journey. It is not the right process that makes an organization innovative. It’s the close and trusting relationships between self-motivated intrapreneurs and their management sponsors that moves innovations forward through the inevitable resistance of any corporate system. Sponsors coach the intrapreneurial teams, protect them and help them access resources. Good sponsors can recognize the real intrapreneurs from the “promoters,” who look and sound good, but don’t get the job done. Creating an intrapreneurial organization will not only give you a major competitive advantage and profitable growth, it will also create the legacy of happy, deeply engaged employees, suppliers and partners committed to your company’s well being. As a side benefit it will also make a large positive impact on society’s major problems. In total, this is a legacy that Wall Street will celebrate and, at the same time one you can be proud to explain to your grandchildren.
  32. 32. So, who is an Intrapreneur? Intrapreneurs are employees who do for corporate innovation what an entrepreneur does for his or her start- up. Intrapreneurs are the dreamers that do. Intrapreneurs are self-appointed general managers of a new idea. Intrapreneurs are drivers of change to make business a force for good.
  33. 33. 1. Ask for advice before asking for resources. 2. Express gratitude. 3. Build your team; intrapreneuring is not a solo activity. 4. Share credit widely. 5. Keep the best interests of the company and its customers in mind, especially when you have to bend the rules or circumvent the bureaucracy. 6. Don't ask to be fired; even as you bend the rules and act without permission, use all the political skill you and your sponsors can muster to move the project forward without making waves.
  34. 34. NEVER EASY!
  35. 35. KODAK Kodak had a long history of cultivating and embracing risky innovations. George Eastman, the company’s founder, recognised this when he pivoted Kodak’s core business from dry-plates to film, and from black and white to colour, despite hitting profitable product lines in the short-term.
  36. 36. KODAK, 1974 In 1974, Sasson was a junior engineer at Kodak's Applied Electronics Research Centre in Rochester, NewYork, when his supervisor gave him an assignment. It loosely involved devising an all-electronic still camera. "It was a 15-second conversation. It was just a small, open-ended project. I turned it into a project to come up with a self-contained camera." Sasson wanted to build a camera with no moving parts and one that didn't consume anything, not even film. "I decided to do it digitally because my training was biased that way and because this was a very small project and if I were to do it magnetically like aVCR does, I would've required a much bigger and expensive team." With one technician and lots of borrowed equipment including Kodak XL movie camera lenses, Sasson cobbled together a camera roughly the size of a shoe box (pictured), weighing 3.9kg and powered by 16 AA batteries. It included a cassette tape to store the images.
  37. 37. THE FIRST DIGITAL CAMERA, 1975 • 1975: Steve Sasoon invents digital camera. • His device had a resolution of 0.01 megapixels, weighed 8 pounds, and took 23 seconds to record a single image to a cassette tape.  • “It was filmless photography, so management’s reaction was,‘that’s cute — but don’t tell anyone about it.” • They did file for the patent in 1977, though!
  38. 38. THE FIRST DSLR, 1989 In 1989 Sasson and Robert Hills made the first DSLR camera, which wasn't a jury- rigged prototype, but one similar to the ones on the market today. It used memory cards and compressed the image. Kodak's marketing department, however, resisted it, according to theTimes. Sasson was told they "could" sell the camera, but that they wouldn't, for fear it would cannibalize film sales.At the time, Kodak made money off of every step of the photography business.Why give that up? "When we built that camera, the argument was over," Sasson toldThe NewYorkTimes. "It was just a matter of time, and yet Kodak didn't really embrace any of it.That camera never saw the light of day." Kodak did make money off of the digital camera patent - billions in fact - until it ran out in 2007. But by the time the company embraced digital, it was too late.
  39. 39. THEY DIDN’T JUST KILL THE IDEA…THEY KILLED THEMSELVES! Kodak’s management also focused on the flaws of early digital cameras, with their great weight, slow processing times and low resolutions.They could not see the utility to millions of potential consumers of “good enough” digital camera technology. Kodak’s rivals seized the opportunity, leaving the incumbent flailing in pursuit of patent royalties. Sasson’s Kodak digital camera patent expired in 2007. Kodak filed for bankruptcy in 2012.
  40. 40. KODAK’S STEEP DECLINE! • 1975: Steven Sasoon invents digital camera! Toaster-size prototype captures B/W images at .01 megapixels! • 1976: Commanded 90% of film sales and 85% of camera sales in the US • 1988: Employed 145,000 workers worldwide • 1996: The peak year! It held more than 2/3rds of global film and camera market, and company was worth $31 Billion. Kodak brand was the 5th most valuable global brand. • 2012: Declared bankruptcy! Workforce shrunk to 13,000 • Kodak had “Systems Concept Center” to develop new businesses reporting into CTO
  41. 41. CHALLENGES FOR INTRAPRENEURS • “Corporate Immune System” • Fear of failure / risk averse / penalize failure • Fear of Ridicule • Bureaucracy • Lack of rewards for risk-takers • Constant criticism • Frequent setbacks • Operational constraints (resources, day job) • Unlike entrepreneurs, no incubators / accelerators • Often not the traditional “HiPo /Talent” • Can be seen as bit “rough” • No dedicated team / function for innovation, or too siloed (if at all) • …
  42. 42. 8 Primary Elements of Company- wide Innovation System It starts at the top with 1. leadership and an innovation culture willing to commit 2. system-wide resources and 3. a governance process that can deliver on a clearly articulated 4. mandate and scope for breakthrough innovation.An inclusive 5. organizational structure with interfaces between different parts of the company incorporates the 6. processes and tools and 7. metrics and rewards required for an innovation cycles that takes longer than incremental product innovation. Lastly, companies need 8. skills and talent that are differentiated from traditional R&D or new product development roles.
  43. 43. Deloitte’s 5 Insights • Intrapreneurship describes a people-centric, bottom-up approach to developing radical innovations in-house. • Intrapreneurship pays off many times over in terms of company growth, culture and talent. • It’s not about creating entrepreneurs, it’s about finding and recognizing them. • Intrapreneurs know the rules and break them effectively. • Intrapreneurship requires a different management approach.
  44. 44. REFLECTION TIME • Individual:Think of the challenges faced by intrapreneurs in your team / org (5min) • Table: Discuss org support required to foster intraprenership in your team / org (10min)
  45. 45. What is Creativity? • the state or quality of being creative. • the ability to transcend traditional ideas,  rules, patterns, relationships,  or the like,  and to create meaningful new ideas, forms, methods, interpretations, etc. • originality,  progressiveness, or imagination • the process by which one utilizes creative  ability
  46. 46. Steve Jobs “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while. That's because they were able to connect experiences they've had and synthesize new things.”
  47. 47. Edward do Bono “Creativity involves breaking out of established patterns in order to look at things in a different way.”
  48. 48. Ken Robinson “Creativity is putting your imagination to work, and it's produced the most extraordinary results in human culture.”
  49. 49. Edwin Land “An essential aspect of creativity is not being afraid to fail.”
  50. 50. Wikipedia “Creativity is a phenomenon whereby something new and somehow valuable is formed.”
  51. 51. We are all creative!
  52. 52. Creative or not?
  53. 53. Creative or not?
  54. 54. Creative or not?
  55. 55. Creative or not?
  56. 56. Creative or not?
  57. 57. Creative or not?
  58. 58. Creative or not?
  59. 59. Creative or not?
  60. 60. Creative or not?
  61. 61. Creative or not?
  62. 62. Creative or not?
  63. 63. Creative or not?
  64. 64. So, when is something creative?
  65. 65. What Creativity is NOT! Creativity is NOT offensive Creativity is NOT abrasive Creativity is NOT complicated Creativity is NOT easy Creativity is NOT meaningless
  66. 66. Creative Process? 1940: A Technique for Producing Ideas: the simple five-step formula anyone can use to be more creative in business and in life! – James Webb Young
  67. 67. Young “An idea, I thought, has some of that mysterious quality which romance lends to tales of the sudden appearance of islands in the South Seas. There, according to ancient mariners, in spots where the charts showed only blue-deep sea – there would suddenly appear a lovely atoll above the surface of the waters. The air of magic hung about it. And so it is, I thought, with ideas. They appear just as suddenly above the surface of the mind; and with that same air of magic and unaccountability.”
  68. 68. Young But the scientist knows that the South Sea atoll is the work of countless, unseen coral builders, working below the surface of the sea. And so I asked myself: “Is an idea, too, like this? Is it only, the final result of a long series of unseen idea-building processes which go on beneath the surface of the conscious mind?
  69. 69. Young This has brought me to the conclusion that the production of ideas is as definite process as the production of Fords; that the production of ideas, too, runs on an assembly line; that in this production the mind follows an operative technique which can be learned and controlled; and that its effective use is just as much a matter of practice in the technique as is the effective use of any tool.
  70. 70. Young In learning any art, the important things to learn are, first, Principles; and second, Method. This is true for the art of producing ideas. So with the art of producing ideas. What is most valuable know is not where to look for a particular idea, but how to train the mind in the method by which the ideas are produced; and how to grasp the principles which are source of all ideas.
  71. 71. A Creative Process • Gather raw materials • Two kinds: specific and general • In advertising, an idea result from a new combination of specific knowledge about the products and people, and with general knowledge about life and events. • Masticating the raw materials • Bring facts together and see how they fit • Mental digestive process  • Take a break! • Put the problem away, sleep over it, do something else… • Let your unconscious kind work on it • Idea emerges out of nowhere! • Just when or where you least expect it • Shaping and polishing into a practical idea • Share it with the world, submit to criticism • Work like inventor to go through with applying this adapting path of the process.
  72. 72. But, how to streamline “creativity”? • Hire creative people? • Define a creative process? • Establish a culture of creativity?
  73. 73. Fostering a Culture of Creativity • Recognise your responsibilities as a cultural leader • Take the bureaucracy off the people at the sharp end of the creative process • Cheer the creative process not just the results • Not punish failure and remember that carrot works better than stick • Use intrinsic reward for creative people • Celebrate and foster diversity in all its forms • Encourage autonomy through setting output expectations for performance whilst allowing creative people to decide the means of delivery • Encourage free flow of information both within and into the organisation • Ensure that healthy competitive rivalry is harnessed into collaborative endeavour that delivers better creative solutions quicker • Remember that your competitors are working away to be more creative than you; thus a culture of creativity is a ‘must do’ not a ‘nice-to-have’.
  74. 74. What is Innovation? • Merriam-Webster: the introduction of something new, a new idea, method, or device • Cambridge: (the use of) a new idea or method • OECD: Innovation is: production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and establishment of new management systems. It is both a process and an outcome.
  75. 75. From Creativity to Innovation…
  76. 76. Diffusion of Innovation
  77. 77. Innovation Spectrum
  78. 78. Sustaining Innovation Most innovation happens here, because most of the time we are seeking to get better at what we’re already doing. We want to improve existing capabilities in existing markets, and we have a pretty clear idea of what problems need to be solved and what skill domains are required to solve them. For these types of problems, conventional strategies like strategic roadmapping, traditional R&D labs, and using acquisitions to bring new resources and skill sets into the organization are usually effective. Design thinking methods, such as those championed by David Kelley, founder of the design firm IDEO and Stanford’s, can also be enormously helpful if both the problem and the skills needed to solve it are well understood.
  79. 79. Breakthrough Innovation Sometimes, as was the case with the example of detecting pollutants underwater, we run into a well-defined problem that’s just devilishly hard to solve. In cases like these, we need to explore unconventional skill domains, such as adding a marine biologist to a team of chip designers. Open innovation strategies can be highly effective in this regard, because they help to expose the problem to diverse skill domains. As Thomas Kuhn explained in the The Structure of Scientific Revolutions, we advance in specific fields by creating paradigms, which sometimes can make it very difficult to solve a problem within the domain in which it arose — but the problem may be resolved fairly easily within the paradigm of an adjacent domain.
  80. 80. Disruptive Innovation When HBS professor Clayton Christensen introduced the concept of disruptive innovation in his book The Innovator’s Dilemma, it was a revelation. In his study of why good firms fail, he found that what is normally considered best practice — listening to customers, investing in continuous improvement, and focusing on the bottom line — can be lethal in some situations. In a nutshell, what he discovered is that when the basis of competition changes, because of technological shifts or other changes in the marketplace, companies can find themselves getting better and better at things people want less and less. When that happens, innovating your products won’t help — you have to innovate your business model. More recently, Steve Blank has developed lean startup methods and Alex Osterwalder has created tools like the business model canvas and value proposition canvas. These are all essential assets for anyone who finds themselves in the situation Christensen described, and they are proving to be effective in a wide variety of contexts.
  81. 81. Basic Research Pathbreaking innovations never arrive fully formed. They always begin with the discovery of some new phenomenon. No one could guess how Einstein’s discoveries would shape the world, or that Alan Turing’s universal computer would someday become a real thing. As Neil deGrasse Tyson said when asked about the impact of a major discovery, “I don’t know, but we’ll probably tax it.” To his point, Einstein’s discoveries now play essential roles in technologies ranging from nuclear energy to computer technologies and GPS satellites. Some large enterprises, like IBM and Procter & Gamble, have the resources to invest in labs to pursue basic research. Others, like Experian’s DataLabs, encourage researchers and engineers to go to conferences and hold internal seminars on what they learn. Google invites about 30 top researchers to spend a sabbatical year at the company and funds 250 academic projects annually.
  82. 82. Is Innovation… • A concept…? • A formula…? • A process…? • A method…? • A culture…? • A state of mind…?
  83. 83. Innovation as a Concept?
  84. 84. Innovation as a Formula?
  85. 85. Innovation as a Process?
  86. 86. Innovation as a Method?
  87. 87. Innovation as a Culture?
  88. 88. Innovation as a Mindset?
  89. 89. Or…a bit of everything?
  90. 90. Evolution of Corporate Innovation
  91. 91. Why corporate innovation fails to deliver? • Why some corporate innovation programs succeed, while many (most?) other fail? • Why individual innovators are frustrated, and why entrepreneurial success requires heroics? • Why innovation activities have generated “innovation theater”, but few deliverables? • Why innovation in large organizations looks nothing like startups?
  92. 92. Innovation Stack • It starts by understanding the “Innovation Stack” – the hierarchy of innovation efforts that have emerged in large organizations. • The stack consists of: • Individual Innovation, • Innovation Tools and Activities, • Team-based Innovation and • Operational Innovation.
  93. 93. Individual Innovation
  94. 94. Individual Innovation • Process: Heroic • We describe their efforts as “heroic” because all the established procedures and processes in a large company are primarily designed to execute and support the current business model. From the point of view of someone managing an engineering, manufacturing or operations organization, new, unplanned and unscheduled innovations are a distraction and a drag on existing resources. (The best description I’ve heard is that, “Unfettered innovation is a denial of service attack on core capabilities.”) That’s because until now, we hadn’t levied any requirements, rigor or evidence on the innovator to understand what it would take to integrate, scale and deploy products/services. • Examples: Innovators Alliance • In some companies and government agencies, innovators even have informal groups, i.e. an Innovators Alliance, where they can exchange best practices and workarounds to the system. (Think of this as the innovator’s support group.) But these innovation activities are ad hoc, and the innovators lack authority, resources and formal process to make innovation programs an integral part of their departments or agencies. • Deliverables: One-off successes, Frustration with systems • most corporate/agency innovation processes funnel “innovations” into “demo days” or “shark tanks” where they face an approval/funding committee that decides which innovation ideas are worth pursuing. However, without any measurable milestones to show evidence of the evolution of what the team has learned about validity of the problem, customer needs, pivots, etc., the best presenter and flashiest demo usually win.
  95. 95. Innovators vs. Entrepreneurs There are two types of people who engage in large company/agency innovation:  • Innovators – those who invent new technology, product, service or processes; and  • Entrepreneurs – those who’ve figured out how to get innovation adopted and delivered through the existing company/agency procedures and processes. Although some individuals operate as both innovator and entrepreneur, any successful innovation program requires an individual or a team with at least these two skill sets.
  96. 96. Innovation Tools and Activities
  97. 97. Innovation Tools and Activities • Some examples of innovation tools are Customer Development, Design Thinking, User- Centric Design, Business Model Canvas, Storytelling, etc. Companies/agencies have also co-opted innovation activities developed for startups such as Hackathons, Incubators, internal Kickstarters, as well as Open Innovation programs and Maker Spaces that give individual innovators a physical space and dedicated time to build prototypes and demos. In addition, companies and agencies have set up Innovation Outposts (most often located in Silicon Valley) to be closer to relevant technology and then to invest, partner or buy. • These activities make sense in a startup ecosystem (where 100% of the company is focused on innovation,) however they generate disappointing results inside companies/ agencies (when 98% of the organization is focused on executing the existing business/ mission model.) While these tools and activities educated innovators and generated demos and prototypes, they lacked an end-to-end process that focused on delivery/ deployment. So it should be no surprise that very few contributed to the company’s top or bottom line (or an agency’s mission). • One of the ironies of the tools/activities groups is rather than talking about the results of using the tools – i.e. the ability to rapidly deliver new products/services that are wanted and needed – their passion has them evangelizing the features of the tools and activities. This means that senior leadership has pigeonholed most of these groups as extensions of corporate training departments and skeptics view this as the “latest fad.”
  98. 98. Team-based Innovation
  99. 99. Team-based Innovation Rather than just teaching innovators how to use new tools or having them build demos, we recognized that there was a need for a process that taught all the components of a business/mission model (who are the customers, what product/ service solves their problem, how do we get it to them, support it, etc.) The next step in entrepreneurial education was to teach teams a formal innovation process for how to gather evidence that lets them test if their idea is feasible, desirable and viable. Examples of team-based innovation programs are the National Science Foundation Innovation Corps (I-Corps @ NSF), for the Intelligence Community I‑Corps@ NSA, and for the Department of Defense, Hacking for Defense (H4D). In contrast to single-purpose activities like Incubators, Hackathons, Kickstarters, etc., these curricula teach what it takes to turn an idea into a deliverable product/ service by using the scientific method of hypothesis testing and experimentation outside the building. This process emphasizes rapid learning cycles with speed, urgency, accepting failure as learning, and innovation metrics.
  100. 100. Limitations of Team-based Innovation The good news – I-Corps, Hacking for Defense and other innovation programs that focus on training single teams have raised the innovation bar. These programs have taught thousands of teams of federally funded scientists as well as innovators in corporations, the Department of Defense and intelligence community. However, over time we’ve seen teams that completed these programs run into scaling challenges. Even with great evidence-based minimal viable products (prototypes), teams struggled to get these innovations deployed at scale and in the field. Or a team that achieved product-market fit building a non-standard architecture could find no way to maintain it at scale within the parent organization. Upon reflection we identified two root causes. The first is a lack of connection between innovation teams and their parent organization. Teams form/and are taught outside of their parent organization because innovation is disconnected from other activities. This meant that when teams went back to their home organization, they found that execution of existing priorities took precedence. They returned speaking a foreign language (What’s a pivot? Minimum viable what?) to their colleagues and bosses who are rewarded on execution-based metrics. Further, as budgets are planned out years in advance, their organization had no slack for “good ideas.” As a result, there was no way to finish and deploy whatever innovative prototypes the innovators had developed – even ones that have been validated. The second root cause emerged because neither the innovator’s teams nor their organizations had the mandate, budget or people to build an end-to-end innovation pipeline process, one that started with innovation sourcing funnel (both internal and external sources) all the way to integrating their prototypes into mainstream engineering production. (see below and this HBR article on the innovation pipeline.)
  101. 101. Operational Innovation
  102. 102. Operational Innovation Having skills/tools and activities are critical building blocks but by themselves are insufficient to build a program that delivers results that matter to leadership.  It’s only when senior leaders see how an innovation process can deliver stuff that matters – at speed— that they take action to change the processes and procedures that get in the way. We believe that the next big step is to get teams and leaders to think about the innovation process from end-to-end – that is to visualize the entire flow of how and from where an idea is generated (the source) all the way to deployment (how it gets into users’ hands). Second, we’ve realized that while individual initiatives won “awards,” and Incubators and Hackathons got coffee cups and posters, senior leadership sat up and took notice when operating groups transformed how they work in the service of a critical product or mission. When teams in operating groups adopted the innovation pipeline, it made an immediate impact on delivering products/services at speed. An operating group can be a corporate profit and loss center or anything that affects revenue, profit, users, market share, etc. In a government agency it can be something that allows a group to execute mission more effectively or in a new disruptive way. Operating groups have visibility, credibility and most importantly direct relevance to mission.
  103. 103. An Innovation Pipeline
  104. 104. ALIGNMENT WITH BUSINESS GOALS • Three Horizons Model • BCG Matrix
  105. 105. Three Horizons Model • Horizon one represents those core businesses most readily identified with the company name and those that provide the greatest profits and cash flow. Here the focus is on improving performance to maximize the remaining value. • Horizon two encompasses emerging opportunities, including rising entrepreneurial ventures likely to generate substantial profits in the future but that could require considerable investment. • Horizon three contains ideas for profitable growth down the road—for instance, small ventures such as research projects, pilot programs, or minority stakes in new businesses.
  106. 106.
  107. 107. The BCG Growth-Share Matrix
  108. 108. Balancing the Portfolio
  109. 109. IDENTIFY & CREATE OPPORTUNITIES • SCAMPER:Applying creativity to innovation! • Customer Chains • …
  110. 110.
  111. 111. CUSTOMER CHAIN • Not just users, but focus on entire “Customer Chain” • Users: E.g. by shifting focus from purchasers (IT managers) to users (traders and analysts), Bloomberg developed better systems that made the overall product more efficient and user-friendly, and became one of the largest providers of financial information in just 15 years. • Purchasers: might be parents (B2C games for children) or a CIO / CFO (B2B software). • Influencers: E.g. by shifting focus from users to influencers (collaborations, micro-communities), makers of multi-player game World of Warcraft, the gaming company Blizzard developed over 7.5M active players that pay $15 monthly!
  112. 112. RECAP • Individual level: hire, groom and support individuals with growth / entrepreneurial / beginner mindset • Organization level: develop innovation systems to foster intrapreneurial culture and guardrail the process • Business level: strategic innovation to ensure alignment
  113. 113. REFERENCES • • • • • • education • • • The Entrepreneurial Mindset - Rita Gunther McGrath and Ian MacMillan, 2000 • • • • • let-it-see-the-light-of-day/articleshow/48520882.cms