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Companies can think like a startup too
This document discusses how companies can take on an innovative, startup mindset. It emphasizes that innovation is an iterative process of reducing risk through validated learning. Companies are encouraged to identify their top assumptions and systematically test them by creating minimum viable products and getting customer feedback. Examples are provided of how a company tested assumptions about a fitness coaching app by building low-cost websites and apps and getting customer feedback, helping them learn and improve their idea over multiple iterations.
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Companies can think like a startup too
- 1. Companies can thinklike a startup too! Franki Chamaki - Cofounders - Red Garage Ventures Page 1
- 2. Source: Bloomberg, McAlindenResearch Tobacco's New Fix: Pot & E-cigs, July 28, 2014 Page 2
- 3. The W.D. &H.O. Wills Warehouse Page 3
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- 5. Mid 1900 Late 1900 Early 1900 Est 1904 From commodity tovalue ….to experience? CCA always looked for ways to grow and always looked for ways to challenged the status quo Page 5
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- 12. What is innovation? innovation Creativity Invention Ifvalued, it’s priced. If priced, there is a business opportunity. New growth. An enabler of new value Creativity Invention Innovation Thought Idea Creation Value Page 12
- 13. 2007 Kindle (e-book readers) ? Lets consider…. Source: “BooksellerBorders Begins a New Chapter 11”, Wall Street Journal, 7/2/11, By Joseph Checker and Jeffrey Trachtenberg 1994 Amazon (online store) 1971 Founde d (USA) 2005 Stores Est.1300 2010 Stores Est. 600 2011 “Chapter 11” 18 Sept 11 Original Borders bookstore, Michigan, "Books & Music" 2003 Apple iTunes (April 28) Page 13
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- 15. We asked thequestion Will the way your company operates in the future be different to the way it operates today? If so, how different? Page 15
- 16. Trends & constraintsto growth… Customer preferences Competitors pressure New HorizonsRegulation push/uncertainty Page 16
- 17. These trends areplacing constraints to growth 0% 50% 100% Lack of access to capital Excessive regulation Substitution/innovation… Increasingly sophisticated… Cost/availability of talent Competitor environment 37% 52% 60% 64% 73% 77% When asked executives their thoughts on top constraints to growth… Source: Mar 2005, McKinsey Quarterly survey, n =9345 …and so what are capabilities is most valued to overcome these? 0% 10% 20% 30% 40% 50% Ability to manage costs Ability to allocate capital Ability to manage globally Ability to find best talent Ability to innovate 4% 10% 17% 25% 43% Page 17
- 18. Associating Networking Questioning Observing Experimenting Coca-Cola How do youfind innovative people within Coca-Cola Amatil? And how can you become a more innovative leader yourself? Clayton Christensen Page 19
- 19. 1. Incremental innovation: Sometimes called continuous improvement. 2. Radical innovation: Sometimes called revolutionary,typically leveraging the same business model. 3. Transformational innovation: Sometimes called disruptive innovation - this changes strategy. Creates a new business model. Return Risk 70% 20% 10% Page 20
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- 22. Is an iterativeprocess to reduce risk in searching for a right business model based on validated learning. Page 23
- 23. Its about convertingan assumption (guess) into a fact Page 24
- 24. We use threekey things Create a Minimum Viable Product (MVP) Test with Customers Page 25 Identify the top (i.e. “riskiest”) Assumption
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- 26. Say we havean idea, how can we quickly test it? Page 27
- 27. $25 domain +$140 webhosting = $165 (via strikingly.com) created in 45mins Experiment #1 - Riskiest assumption (i.e. top guess) Page 28 1st assumption: People want to receive “text” coaching from their mobile Minimum Viable Product (site explains the value proposition) Customer (Staff wanting to get fit) People want to receive “text” coaching from their mobile
- 28. $0 WhatsApp +$2,200 personal trainer = $2,200 (via WhatsApp) created in 2mins, ran for 6 weeks Page 29 2nd assumption: People stay motivated and able to reach their goals Minimum Viable Product (WhatsApp + Trainer) Customer (People training f or Sydney ½ marathon) Experiment #2 - 2nd riskiest assumption People stay motivated and able to reach their goals
- 29. $0 Website +$2,650 (so far) app + $2,200 p/t = $4,850 Created in 60mins, running over 6 weeks Experimenting with Sydney Harbour Runners Page 30 3rd assumption: People will pay $39 per month for NudgeFX Minimal Viable Product (Sign up site and app) Customer (Sydney Harbour R unners) Experiment #3 - 3rd riskiest assumption People will pay $39 per month for NudgeFX
- 30. So, how toyou actually do this today? Page 31
- 31. 1. Document yourassumptions 2. Identify the riskiest 3. Systematically test Page 32
- 32. 33 So you havea great idea?
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Editor's Notes
- #2 Todays session is about innovation. The objective is to learn the what, WHY and how of innovation When you leave these doors you will have gone through a paradigm shift. So where do we start… let me ask you this.. ….when is it a good time to challenge the status quo? …. When is good time to look at things differently?
- #3 This is a graph of cigarette consumption from 1900 to 2006. You seen in the early 1920, the market was increase dramatically until around late 70’s when started to flatten And in the late 80’s things just started to dramatically decrease.
- #4 This is a picture of a warehouse. More specifically it's a cigarette warehouse in Perth built in the early nineteen fifties to take advantage of the lucrative and growing cigarette market. Lets go inside and check out what is happening at the loading dock http://www.abc.net.au/news/2014-05-12/wd-26-ho-wills-warehouse/5443256
- #5 In the next picture we are taken to the loading dock - sales rep in suites holding printed marketing poster and down here you have samples of product to encourage distribution by retailers, at the background you see the truck driver loading his stock with the superior endure to run smoothly Why am I showing this? Well you could say what your seeing is an early stages of a startup business - CCA. Back than the British tobacco Company was created to take advantage of the growing market. Cool thing is since than you remain same just the context of what is being distributed changed to take advantage of market trends. CCA always looked for new ways to grown. You always challenge the status quo. And this is why we are here. To celebrate your passion for that change.
- #6 1904 British Tobacco Company (Australia) Limited formed to take over a group of small tobacco companies, including WD & HO Wills (Australia) Limited. 1909 Entry into the printing industry with the purchase of S T Leigh & Co Limited. 1960 S T Leigh & Co Pty Ltd embarked on a programme of further expansion in the printing and packaging industry. 1963 Associated Products and Distribution Pty Limited (APD) set up to acquire and consolidate companies in the food and beverage industries. 1964 The establishment of separate divisions for Soft Drinks, Snack Foods and Frozen Food within APD and the first acquisitions within these industries. 1965 APD purchases a controlling interest in Coca-Cola Bottlers (Perth) Pty Ltd. 1968 APD acquires 100% of Coca-Cola Bottlers (Geelong) Pty Ltd. 1972 APD acquires 100% of Coca-Cola Bottlers (Brisbane) Pty Ltd. 1973 British Tobacco Company (Australia) Limited changes its name to Allied Manufacturing and Trade Industries Limited to better reflect the Group’s diversified operations 1977 Soft drinks and snack foods gradually became the primary focus of the company. Allied Manufacturing and Trade Industries Limited changes its name to AMATIL Limited. 1982 W D & H O Wills (Australia) Limited announces that the existing cigarette manufacturing 1988 AMATIL Beverages acquires Coca-Cola franchises in North Queensland, Fiji, and Wellington (NZ). 1989 Shareholders approve the change of the Company’s name to Coca-Cola Amatil Limited (CCA) where the company continued to expand its beverage (i.e. coffee,beer) and food
- #10 At the end of today you’ll
- #13 Before we answer that, what do you think innovation is? Let me ask you this. What is the difference between innovation vs. invention vs. idea vs. creativity? We often use these terms interchangeable. Its start with a thought! In order arrive to an idea, we use creativity (which why we dedicated 2 hrs next workshop) - its the process whereby a thought is converted into a novel idea - which may have some kind of value. Now, the process converting an idea into a creation is invention and the process of taking the creation and adding value is innovation. Innovation therefore the process of converting novel ideas into something of real value. Value to the end user - typically a customer. Goods and services that are created but sustainability, which ultimately leads to a higher standard of living. If something is valued, it can be priced and allow businesses to growth. So innovation is an enabler. Its tool or way to ensure ideas create value to customers (internal or external) and help growth a business. Just a side note, a thought is ones opinion or consideration on something. While an idea is an actionable insight Example: Thought: People need a way to rehydrate after sweating faster Idea: Drink to help with hydrate me quickly Creativity: Powerade Value: Billon brand
- #14 Founded in 1971, Two brothers, Tom and Louis Borders, opened a small used bookstore in Ann Arbor, Mich., near the University of Michigan campus. By 2005 Borders had 1329 stores, but continued decline in sales forced the company to close a number of store gradually. By 2010 Borders had only 642. One year later on 18 September 2011) 2011 the remaining stores shut down and and the company filed for Chapter 11, as it "cannot afford to keep.” When is the best time for Boarders to Innovate? Should they started 1994? Or maybe 2007? Amazon started an online store, should Borders do the same quickly? But the executives would say “yeah, but this will disrupt our physical stores and impact some 17,000 staff” LET ME ASK YOU THIS: What would be better - disrupt yourself OR be disrupt by an competitor? The fact is there is NO better time to “innovate” than TODAY we need to constantly “Challenge the status quo” and “Look for better way”. Jeffery Phillips (another innovation guru) talks about innovation being “Relentless” and actually has a books called “Relentless Innovation” Phillips argues that today’s typical business models actually impede innovation because they place so much focus on efficiency, cost cutting = short-term gain and for incremental improvement, it only takes another competitor to come in an change game within years. It needs a balance of 70% incremental, 20% Radical and 10% transformation. http://www.wsj.com/articles/SB10001424052748703373404576147922340434998
- #15 This is Innovation Paradox…. When times are good, and you have ability to do things differently, the urgency (or desire) is not there When times are bad, and you urgently need to do things differently, your ability to change is hard What do you do? Review the growth constraints - the early warning signs of the need to change (next slide) Run through few scenario. Look at when will happen if you didn't change Write an premortem1 to yourself and asks what did go wrong (i.e. plausible reasons for failure) There is NO “Good” time to “innovate” than TODAY. Sooner rather later.
- #16 There are two drives forcing us to think different, to innovate Something is happening : Trends are being seen Something is stoping us: Constrains on business growth
- #17 Our world is changing at a rate never seen before. Every change generates new opportunities but, equally new threats Customer preferences - Customer behaviour - i.e. healthy and socially conscious With access to overwhelming amounts of information and advances in mobile technology; costumers are now more connected, educated and determined than ever before Further, technology is impacting how people purchase today (eg Boarders vs. Amazon) Customers are becoming increasingly cost conscious, driving cost pressures across the value chain Competitors pressure The barriers to entry of new company is very low. You can set up a online ecommerce site within weeks (using Big Commerces) and start selling frozen dough to the world – you instantly become a competitor. Regulation push/uncertainty David Gillespie believes sugar is to blame for our obesity epidemic, it's addictive and it makes you fat without making you full. In the space of 150 years, we have gone from eating no added sugar to more than a kilogram a week. In the United States, the Government is currently considering a soda tax that would raise the price of a can of fizzy drink by around 10-12 US cents, bringing in some 14 billion dollars a year of revenue. New horizons New technology get educates about how to be more health and active – we have thousands of health and fitness apps, new devices to helps us keep track of biometrics (eg calories, steps, sleep, heart rate etc) and we have gyms that open 24/7 These trends are placing constraints to the way WE traditionally grow our business. We need to look for NEW growth way and only way can we can do this is to THINK DIFFERENTLY, challenge the status quo and look for new ways.
- #18 These trends are placing on constraints to growth. In fact over 9000 executives where asked the same question, AND guess what? The answer is consistent to our trend and strategic belief So the same executives what are the most important capability companies need to have? Innovation is enable to get us out of these constraints
- #19 Put simply, to grow our business. We innovate to: create value and discover unmet needs while do things smarter Provide sustainable business grow provide shareholder return (and maximize their retirement wealth) Develop a “creatively restless” culture so we can stay employed Innovation is growth enabler. Its a process to help creative value and grow our business - leading to ultimately higher standard of living. Innovation, because its an enabler, it also builds capability within company. The capability is a pathway to cultural change. This helps us do things smarter, increasing our productivity and delivery of products and services in sustainable way.
- #20 Clayton Christensen explored this same question in this best seller book: The Innovator's DNA: Mastering the Five Skills of Disruptive Innovators He did something interesting he went out and observed , questioned, associated things and network with the world’s best innovators—from leaders at Amazon and Apple to those at Google, Skype, and Virgin to identifying any patterns. You know what he found out? He came across 5 simply behaviours that each had. Question is what of this list should you be doing more? What are you not doing but should be doing.
- #21 Its important to understand innovation is not 1 thing. It can be small right to through to big innovation There are three board types Incremental innovation - something times called continuous improvement or small ideas – extract value existing business (limited growth) 70% (Googe Search: Google Adwords, Google Gmail, Google Images, Google Analytics) Radical innovation- something times called revolutionary or big ideas – grow value even more 20% (Google Maps, Google YouTube) Transformational innovation - something called disruptive innovation - this changes strategy and business models (experiment, testing) 10% (Google glasses, Google Car)
- #22 At the end of today you’ll
- #23 OK, if we are dealing with “new to the world” innovation. Something unseem or undeveloped, something totally new, how on earth can you tell if this is going to working with spending a lot of TIME and MONEY and wasting peoples time? Can get it be more successful? Well, what can we learn from startup, they keep developing ideas that add value to our ideas but solving specific problems but they do it LEAN. Enter Lean Startup - started in 2011, just few years ago!
- #24 The formal definition is..
- #25 HOW LEGO BECAME THE APPLE OF TOYS
- #26 The minimal set of features that solves the problem and provides value
- #29 Say we have an idea, how can we quickly test it We emailed to people at work to see any interest. There was a “form” to express if they want to take on the offer with “discount code”
- #30 Not only did we validated this assumptions, we started to develop “best practice” text techniques (i.e. External triggers, Personal events (i.e. going on holidays - where most fail to meet their goals), Positive reinforcement, links and articles sharing) and tools (i.e. onboarding guide)
- #34 Positive results means we can go forward, else we need to quickly refine (pivot) or abandon the test.
- #35 Positive results means we can go forward, else we need to quickly refine (pivot) or abandon the test.