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Innovation Studio
A New Method for Disruptive Innovation
Giff Constable, CEO of Neo Innovation
May 28, 2015
Portfolio
Team
Autonomy
Structure
@giffco
Who am I?
• CEO of Neo (neo.com)
• 20 years in startup ecosystem as founder,
builder or advisor
• Author used in entrepren...
Analog > Digital
Image: https://www.flickr.com/photos/guysie/6095265888 @giffco
Image: https://www.flickr.com/photos/62693815@N03/6277209256
@giffco
Image: https://www.flickr.com/photos/downhilldom1984/6089311342
@giffco
Image: https://www.flickr.com/photos/aturkus/255736904
@giffco
Image: http://www.yhbm.com/
@giffco
Sustaining Disruptive
@giffco
Previous Attempts
Image: The Alto personal computer in 1973. (PARC/Xerox) @giffco
R&D labs
Incubators
Startup accelerators
Crowdsourcing
Shark tanks
IP Licensing
@giffco
Find lessons in the
startup ecosystem
Image: https://www.flickr.com/photos/sadsnaps/3731785398 @giffco
Portfolio
Team
Autonomy
Structure
@giffco
VC Results (’04-’13)
42.0%&
22.8%&
25.3%&
5.9%&
2.5%&
1.1%& 0.4%&
0.0%&
5.0%&
10.0%&
15.0%&
20.0%&
25.0%&
30.0%&
35.0%&
40...
5 Shots on Goal
2"
1" 1"
0" 0" 0" 0"
Fail" <=1x" 1,5x" 5,10x" 10,20x" 20,50x" 50x+"
@giffco
Source: Seth Levine, Correlati...
20 Shots on Goal
8"
5" 5"
1" 1"
0" 0"
Fail" <=1x" 1-5x" 5-10x" 10-20x" 20-50x" 50x+"
@giffco
Source: Seth Levine, Correlat...
50 Shots on Goal
21#
11#
13#
3#
1# 1#
0#
Fail# <=1x# 1-5x# 5-10x# 10-20x# 20-50x# 50x+#
@giffco
Source: Seth Levine, Corre...
innovation
team
everything
else in the
world
Image: https://www.flickr.com/photos/wwworks/8026343276
This used to be
prohibitively
expensive
@giffco
Open source software
Cloud infrastructure
Cheaper prototyping
Cheaper initial distribution
Lean startup methods
@giffco
Done right, enterprise
can be more capital
efficient than VC
Example: Aprizi and
7 business models
@giffco
Portfolio
Team
Autonomy
Structure
@giffco
What do they look
like?
Image: https://www.flickr.com/photos/kwl/4700247712 @giffco
• Risk Tolerance
• Resilience
• Chaos
• Generalist
• Creative
• Action
• Experience
@giffco
Business
Design Engineering
@giffco
Execution, not just
ideation
@giffco
Can you get them?
(hint, it’s not about equity)
@giffco
Mission
Mastery
Autonomy
tip: read Drive, by Dan Pink
@giffco
Portfolio
Team
Autonomy
Structure
@giffco
Product ownership
is essential
(this does not have to mean equity)
@giffco
Autonomy comes
with accountability
@giffco
You need a team
captain
Image: Star Trek, Paramount @giffco
What does a “startup CEO”
do?
• Whatever it takes to make it successful
• They own vision, hiring, funding
• They are ofte...
What do they look like in an
enterprise context?
• Product and strategic vision
• Founder-market fit
• Has been through th...
Good startups also
have a board
@giffco
Ideally not this
Image: The Hudsucker Proxy, Warner Bros. Pictures @giffco
What does a “startup board”
do?
• Represents the shareholders’ interests
• Hires/fires the CEO
• Approve major investments...
Autonomy is not
isolation
@giffcoImage: https://www.flickr.com/photos/scragz/2715873958
Portfolio
Team
Autonomy
Structure
@giffco
Big companies have
unique challenges
Image: Monsters Inc, Pixar
@giffco
This requires the
right structure
@giffco
Image: Pixar
Parent
Company
Studio
@giffco
Parent
Company
Studio
@giffco
Parent
Company
Studio
IDEA
IDEA
IDEA
@giffco
Parent
Company
Studio
IDEA
IDEA
IDEA
Point 1: execution, not just ideation!
@giffco
Point 2: some of the team must stay wi...
Parent
Company
Studio
Team 1
CEO
Designer
Developer
(tbd)
Team 2
CEO
Designer
Developer
(tbd)
Board
GM
Product Lead
Shared...
Parent
Company
Studio
Team 1
CEO
Designer
Developer
(tbd)
Team 2
CEO
Designer
Developer
(tbd)
Board
GM
Product Lead
Shared...
Sandboxing
• In most cases, reporting to CEO is
imperative
• Can structure it inside the organization
(but no matrix repor...
Sandbox doesn’t
mean secrecy
(use transparency to build bridges)
@giffco
Strategic
Constraints
(company vision)
(strategic thesis)
@giffco
Two Levels of
Metrics
@giffco
Studio Level
External Headlines by 10 years Out
Better Medicine Through Better Learning
Target: 50% of practitioners using...
Dangerous Metrics
• Number of ideas
• Time / resources per idea
• Near-term Revenue
• Near-term Profit
@giffco
Idea Level Metrics
@giffco
What does success
look like?
Image: Back to The Future, Universal Pictures
@giffco
5 Years Out
• Across the portfolio, have 1 or 2 ideas that show
signs of making a material difference to market
cap
• Anot...
Failure Points to Solve
• Growth capital for the ideas that deserve it
• Hand-offs
• Quarterly EPS pressures
• Success the...
Portfolio
Team
Autonomy
Structure
@giffco
Questions?
@giffco
giff@neo.com
neo.com
giffconstable.com
Innovation Studio talk (for Communitech conference May 2015)
Innovation Studio talk (for Communitech conference May 2015)
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Innovation Studio talk (for Communitech conference May 2015)

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Innovation Studio: A New Method for Disruptive Innovation
R&D labs. Incubators. Crowdsourcing. Startup partnerships. Large companies have tried many different attempts to spur innovation inside their companies, with a fairly dismal track record. In this talk, Giff Constable will present a new approach to embracing disruptive innovation. The Innovation Studio builds on lessons from the startup ecosystem and Neo's direct experience working with large companies. Giff will walk through specifics on structure, team, hiring, governance, metrics, incentives, and more.

Published in: Business
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Innovation Studio talk (for Communitech conference May 2015)

  1. 1. Innovation Studio A New Method for Disruptive Innovation Giff Constable, CEO of Neo Innovation May 28, 2015
  2. 2. Portfolio Team Autonomy Structure @giffco
  3. 3. Who am I? • CEO of Neo (neo.com) • 20 years in startup ecosystem as founder, builder or advisor • Author used in entrepreneur programs at Harvard, MIT, Berkeley, NIH/NSF, etc • Spent the last 3 years focused on enterprise innovation @giffco
  4. 4. Analog > Digital Image: https://www.flickr.com/photos/guysie/6095265888 @giffco
  5. 5. Image: https://www.flickr.com/photos/62693815@N03/6277209256 @giffco
  6. 6. Image: https://www.flickr.com/photos/downhilldom1984/6089311342 @giffco
  7. 7. Image: https://www.flickr.com/photos/aturkus/255736904 @giffco
  8. 8. Image: http://www.yhbm.com/ @giffco
  9. 9. Sustaining Disruptive @giffco
  10. 10. Previous Attempts Image: The Alto personal computer in 1973. (PARC/Xerox) @giffco
  11. 11. R&D labs Incubators Startup accelerators Crowdsourcing Shark tanks IP Licensing @giffco
  12. 12. Find lessons in the startup ecosystem Image: https://www.flickr.com/photos/sadsnaps/3731785398 @giffco
  13. 13. Portfolio Team Autonomy Structure @giffco
  14. 14. VC Results (’04-’13) 42.0%& 22.8%& 25.3%& 5.9%& 2.5%& 1.1%& 0.4%& 0.0%& 5.0%& 10.0%& 15.0%& 20.0%& 25.0%& 30.0%& 35.0%& 40.0%& 45.0%& Fail& <=1x& 135x& 5310x& 10320x& 20350x& 50x+& Source: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think 21,640 financings @giffco
  15. 15. 5 Shots on Goal 2" 1" 1" 0" 0" 0" 0" Fail" <=1x" 1,5x" 5,10x" 10,20x" 20,50x" 50x+" @giffco Source: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think
  16. 16. 20 Shots on Goal 8" 5" 5" 1" 1" 0" 0" Fail" <=1x" 1-5x" 5-10x" 10-20x" 20-50x" 50x+" @giffco Source: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think
  17. 17. 50 Shots on Goal 21# 11# 13# 3# 1# 1# 0# Fail# <=1x# 1-5x# 5-10x# 10-20x# 20-50x# 50x+# @giffco Source: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think
  18. 18. innovation team everything else in the world Image: https://www.flickr.com/photos/wwworks/8026343276
  19. 19. This used to be prohibitively expensive @giffco
  20. 20. Open source software Cloud infrastructure Cheaper prototyping Cheaper initial distribution Lean startup methods @giffco
  21. 21. Done right, enterprise can be more capital efficient than VC
  22. 22. Example: Aprizi and 7 business models @giffco
  23. 23. Portfolio Team Autonomy Structure @giffco
  24. 24. What do they look like? Image: https://www.flickr.com/photos/kwl/4700247712 @giffco
  25. 25. • Risk Tolerance • Resilience • Chaos • Generalist • Creative • Action • Experience @giffco
  26. 26. Business Design Engineering @giffco
  27. 27. Execution, not just ideation @giffco
  28. 28. Can you get them? (hint, it’s not about equity) @giffco
  29. 29. Mission Mastery Autonomy tip: read Drive, by Dan Pink @giffco
  30. 30. Portfolio Team Autonomy Structure @giffco
  31. 31. Product ownership is essential (this does not have to mean equity) @giffco
  32. 32. Autonomy comes with accountability @giffco
  33. 33. You need a team captain Image: Star Trek, Paramount @giffco
  34. 34. What does a “startup CEO” do? • Whatever it takes to make it successful • They own vision, hiring, funding • They are often product manager #1 and sales person #1 • They keep the pace up, and make the hard calls @giffco
  35. 35. What do they look like in an enterprise context? • Product and strategic vision • Founder-market fit • Has been through the fire ideally as a founder (even if startup didn’t succeed) • Forceful enough to overcome big challenges • Charismatic enough to keep a team motivated and focused even through tough times • Humble enough to build bridges to other parts of the business @giffco
  36. 36. Good startups also have a board @giffco
  37. 37. Ideally not this Image: The Hudsucker Proxy, Warner Bros. Pictures @giffco
  38. 38. What does a “startup board” do? • Represents the shareholders’ interests • Hires/fires the CEO • Approve major investments, financings, or the sale of the business • Advise on strategy and assist the team • NOT manage the business the key point for enterprise @giffco
  39. 39. Autonomy is not isolation @giffcoImage: https://www.flickr.com/photos/scragz/2715873958
  40. 40. Portfolio Team Autonomy Structure @giffco
  41. 41. Big companies have unique challenges Image: Monsters Inc, Pixar @giffco
  42. 42. This requires the right structure @giffco
  43. 43. Image: Pixar
  44. 44. Parent Company Studio @giffco
  45. 45. Parent Company Studio @giffco
  46. 46. Parent Company Studio IDEA IDEA IDEA @giffco
  47. 47. Parent Company Studio IDEA IDEA IDEA Point 1: execution, not just ideation! @giffco Point 2: some of the team must stay with the idea!
  48. 48. Parent Company Studio Team 1 CEO Designer Developer (tbd) Team 2 CEO Designer Developer (tbd) Board GM Product Lead Shared Branding Content Strategy BD SME CEO Entrepreneurial Expert Domain Expert GM Advisory Board @giffco
  49. 49. Parent Company Studio Team 1 CEO Designer Developer (tbd) Team 2 CEO Designer Developer (tbd) Board GM Product Lead Shared Branding Content Strategy BD SME Advisory Board How far to sandbox? @giffco
  50. 50. Sandboxing • In most cases, reporting to CEO is imperative • Can structure it inside the organization (but no matrix reporting) • Can create a wholly-owned subsidiary (equity flexibility and external capital resources) @giffco
  51. 51. Sandbox doesn’t mean secrecy (use transparency to build bridges) @giffco
  52. 52. Strategic Constraints (company vision) (strategic thesis) @giffco
  53. 53. Two Levels of Metrics @giffco
  54. 54. Studio Level External Headlines by 10 years Out Better Medicine Through Better Learning Target: 50% of practitioners using our products see better patient outcomes because of the service ("you've made me better at my job"). We Create the Go-To Learning System for Medicine Target: 25% of healthcare professionals in the USA are using our new products and services. Speeding Adoption of Medical Advances Target: We noticeably speed not just dissemination of information but adoption of important new breakthroughs. Internal Headline Innovation Studio Pays Its Own Way Target: Products from the studio all have the potential to be break- even by year 3. @giffco
  55. 55. Dangerous Metrics • Number of ideas • Time / resources per idea • Near-term Revenue • Near-term Profit @giffco
  56. 56. Idea Level Metrics @giffco
  57. 57. What does success look like? Image: Back to The Future, Universal Pictures @giffco
  58. 58. 5 Years Out • Across the portfolio, have 1 or 2 ideas that show signs of making a material difference to market cap • Another 2-4 ideas are financially strong • Healthy bridges with the rest of the company • Recurring capability to push the envelope and translate that into real business • Inspiration on speed, transparency, and fresh thinking @giffco
  59. 59. Failure Points to Solve • Growth capital for the ideas that deserve it • Hand-offs • Quarterly EPS pressures • Success theater • and… @giffco
  60. 60. Portfolio Team Autonomy Structure @giffco
  61. 61. Questions? @giffco giff@neo.com neo.com giffconstable.com

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