Jan Kennedy & Oliver Thum - Closing the gap between innovation and market
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Jan Kennedy (Academy for Corporate Entrepreneurs) & Oliver Thum (MAntro.net) Title: Closing the gap between innovation and market Intrapreneurship Conference 2014 www.intrapreneurshipconference.com #Intracnf14
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Jan Kennedy & Oliver Thum - Closing the gap between innovation and market
- 1. We build & execute tailor made intrapreneurship programs… FROM IDEA TO COMMERCIALISATION www.afce.co I Jan Kennedy & Oliver Thum
- 2. About Us + Global network of mentors & partners
- 3. Founder Institute – www.fi.co • Training & Mentoring • 1,300 Startups • 89% survival rate • 45% seed funded • Goal: 1 Million Jobs • 1,000 startups per year
- 4. About Oliver / mantro.net – Excubator for innovation Areas of cooperation with
- 5. Transforming Employees into Corporate Entrepreneurs
- 6. 10 Rules for a Successful Intrapreneurship Program • Transforming employees into corporate entrepreneurs • & in collaboration with startups
- 7. Workshop 1. Rate your company (or a company you are involved with) from 1 to 10 for each rule (10 = best)
- 8. #1 Sponsorship “Every plane needs a runway” – time first, money second – extend the (structured) runway as “earned”
- 9. #2 Team www.fi.co/dna What do Richard Branson, Elon Musk and Bill Gates have in common? • Common Personality Traits – Social science testing with over 30,000 entrepreneurs and calibrated against their real world performance
- 10. #2 Team – irrelevant DNA • IQ • Conscientiousness (efficient/organized vs. easy-going/careless)
- 11. #2 Team – bad DNA
- 12. #2 Team – good DNA ✔ • High Fluid Intelligence (adapt, solve problems, patterns) • High Openness (curiosity, change, challenge norms) • Moderate Agreeableness (flexible, considerate but harsh) • Professional Experience (30-50 years old)
- 13. #3 Metrics & Motivators Wired for risk • Need a piece of the pie • Long-term reward system
- 14. #4 Mentoring “Been There, Done That” – Mix Internal with external mentors
- 15. #5 Structure Disruptive Ideas Problem Solution Fit Product Market Fit Sales Traction Optimise SEARCH EXECUTE Academy for Corporate Entrepreneurship Ideation Incubation Growth
- 16. #5 Structure Disruptive Ideas Problem Solution Fit Product Market Fit Sales Traction Optimise SEARCH EXECUTE • Search V Execute • Skip Discovery • Iterative / Experimental Ideation Incubation Growth
- 17. #6 Experiment “Leaner is not faster, but safer” – Restrict Resources – Validate Assumptions
- 18. #7 Environment • It’s NOT about where your desk is… or the number of white boards • Adapt to the innovation stages
- 19. #8 Ecosystem “It takes a city to raise a startup” – Support mechanism – Startup mindset
- 20. #9 Coach Scale & Transform from within – Coaches must be expert
- 21. #10 Funding “Let’s try one first and double down if that works” – Invest in “discovery” before you build – VC approach: 80% return from 20% investment
- 22. Apply the 10 rules & go from idea to commercialisation
- 23. Workshop 1. Rate your company (or a company you are involved with) from 1 to 10 for each rule (10 = best) ✔ 2. Rate your main competitor 1 to 10, for each rule 3. Find and discuss the largest differences and closest similarities with your peers 4. Debrief: What would you change for your organisation? Jan Kennedy / Oliver Thum info@afce.co
Editor's Notes
- So I have the great pleasure to speak about going from idea to commercialisation and how the gap can be closed along this very, very squiggly line!
- Mention Oliver and Mantro.net
- We’ve learned form many angles of both worlds and found 10 rules that seem to determine success when applying startup strategies to corporates i.e. corporate entrepreneurship.
- Try to give context based on what we have learned.
- To get moving with a new idea, you need to give yourself some “runway”. Runway essentially means time and money. So as an entrepreneur, you are always asking yourself how much time and money can I allow, before I’ve ran out, and the plane grinds to a halt. But in the very beginning, you need some commitment of runway just so you can get going, and this normally means a lot more time, than money. The money is really just to pay the rent and buy food. Participants entering the founder institute are investing a very small amount of money but they are investing over 400 hours of structured learning time over 4 months to give themselves an initial runway. This is smart, as not only have they set aside time and money, but it is a very structured runway designed to use the time wisely. Successful corporate examples include “unstructured time” of 20% (Google, 3M, intuit) to come up with initial ideas. Don’t be fooled, that a lot of money is needed in the very early stages. Employees at intuit saved up their unstructured time so they could attend courses on how to develop their ideas. Runways can then be extended as the idea shows more promise. So the sponsor should find ways to allow employees to come up with ideas within certain innovation areas and then build a structured runway to support the development of that idea, extending it, as the idea shows promise.
- So now you have a runway, you need a team to build the plane. Often, startup teams seem to be made up of a bunch of people who just like the idea. Although passion for an idea is extremely important, not everyone is cut out to be an entrepreneur. Successful entrepreneurs share common personality traits, which makes it possible for us to predict performance (with a large degree of accuracy) when undertaking entrepreneurial endeavors.
- Our results show that anyone scoring above a certain benchmark on any of these traits, are extremely unlikely to launch a successful new venture. Probably about half of the people we test, who think they want to launch a startup, possess one or more of these traits, above the benchmarked level.
- These are the traits you do want your team members to have when embarking on entrepreneurial ventures.
- Now, what’s going to keep me coming back to that runway every day? My salary? My nice team mates? Early stage entrepreneurs don’t have salaries or bonuses! They are risking it all for the end goal, which is definitely worth it when you eventually succeed. Meet Biz Stone – a PM from Google. He also expresses the characteristic traits I’ve just highlighted. Biz stone left a great salary and 2 million dollars of stock options on the table to pursue his ideas for more upside. He actually failed with his first attempt, but then succeeded with his second try – Twitter. This is not uncommon. The Lean Startup Machine highlighted research showing that 80% of successful entrepreneurs came from corporates. So If corporates are to keep and engage these people, they need to find ways to offer a “piece of the pie”. Standard incentives don’t apply to these people. Would an Olympic athlete train as hard as they do for 4 years if after their winning performance, they were not given a gold medal or an entry into the record books? A gold medal is an Olympian’s piece of the pie. Something worth fighting for, even if they fail at first. A company I know recently suffered poor results because even 250% of salary was not incentive enough and it was time-boxed to achieving ROI within 1 year. Let these guys go after the gold medal and be rewarded once they got it! – and it will take longer than what you planned for.
- Even with entrepreneurial DNA, sponsorship and a great team, you still can’t do it alone. Even successful serial entrepreneurs need help. At FI, we leverage startup CEO’s who have “been there, done that” and can help you avoid mistakes and find shortcuts to lesson the pain. They also evaluate your progress so far, holding you accountable. They are also a hugely important source of motivation. People like Elon Musk (Tesla), Phil Libin (Evernote), Aaron Patzer (mint.com) and Robin Chase (Zipcar) have contributed to the program. We’ve found that many corporate programs rely on mentoring from a few chosen members of management only. But most of these guys have never launched a new venture and can’t say “been there, done that”. They also don’t add value in escaping corporate think or group think or the “we tried it before and it didn’t work” syndrome. Internal specialists can be combined with external startup mentors for best results. The AfCE leverages different mentors at different stages of the process.
- Corporate Entrepreneurship is a capability which runs along the innovation process. It’s not just about coming up with an idea, but the journey of evolving that idea so that it can be commercialised. We’ve identified 3 key findings that refer to structure: 1) The innovation process is split between “search” activities and “execute” activities – clearly the first 3 are search and more natural to how startups operate. 2) Many corporates seemed to JUMP from ideation to incubation, leaving out Discovery, which gives rise to the valley of death. 3) Successful Entrepreneurs are expert at the iterative process of experimenting at all stages. It’s not just a straight line, but an iterative circle as you move along.
- This is of course what is behind the Lean Startup movement and making startups much more efficient. Inherently, entrepreneurs are forced to experiment because they don’t have the resources to take gambles that something new is going to work, regardless of how passionate and capable they are. One wrong gamble will see your entire runway slip off into the ocean. So when faced with uncertainty, entrepreneurs test their hypotheses, which is what we do in science all the time! We set up experiments so that we can learn and minimise risk. In science, when we want to speed things up, we reduce the number of experiments. Think of Ebola. We need a cure. So more resources have been granted, legislation has been changed. I recently spoke to a researcher who is working on finding a cure and she told me they are now “going faster”. I asked how do you speed up finding a cure? “oh, we just skip the testing on mice and go straight to the monkeys”. Faster, but higher risk. Lean startup is not a faster way of doing things, because you keep setting up these experiments which makes it actually quite slow. But you do manage to avoid making fatal mistakes and you learn in which direction you should be going – hopefully you don’t kill any monkeys.
- 20% time, results only (edmunds.com), avoid distractions, isolate the startup teams. Many corporates open up a nice shiny incubator with cool desk space and hope that’s the answer. At FI we provide a different kind of environment because our model is part time and mostly virtual. We apply structure to keep the founder focused. We are almost military like in moving ideas along towards commercialisation. If you miss sessions, you are out. If your assignments are missing or incomplete, you get more work to do. If you miss group meetings, you are out. Each week you pitch and receive feedback. If you perform badly during reviews, you have to leave or you are awarded more challenging work. This works well for a discovery stage. A full on 3 day physical workshop might be better for the ideation stage or a kick off event to learn how to apply lean startups and design thinking. You may use ideation software to collaborate over time. For incubation, often a full time requirement, you may consider being mostly outside of the organisation submerged with startups in a co-working space so you can develop faster.
- Why do so many entrepreneurs move to Silicon Valley, New York, London or Berlin? Why is their so much activity in Telaviv? On a flight coming back from SF, I was sitting next to someone from Telaviv. I said, “oh, you must be doing a startup”. He said yes, I’m on my fourth one. So we got chatting and the interesting point he made was that “almost everyone he knows, is doing a startup – it’s just become normal”. Founder Institute has a saying: “it takes a city to raise a startup” – as an entrepreneur you are often fighting an uphill battle and its easy to become discouraged, no matter what personality you are. So in order to remain efficient, you need to start building a support mechanism. The ecosystem, made up of universities, networking events, pitch competitions, investor meet and greets, conferences etc can become a support mechanism. Inside this ecosystem, it’s considered completely normal to do a startup and you will make new contacts, find potential partners, find people who will test your idea or product giving you valuable feedback, and you will adopt the startup mindset. Within FI, you are pushed to spend a lot of time with other entrepreneurs. Finding startup groups within meetup.com is a great starting point and I’m beginning to see more corporates get involved with these community events.
- Does it make sense to have a lawyer running an incubator? That’s one example I saw recently. Besides mentoring, teams need to be held accountable and should report to someone who can help push them along the innovation process. At the founder institute, it’s the 100 or so local directors who take on this role. We offer surgery hours, pitch practice, check assignments and help founders find contacts etc. in order to do this, the coach needs to be familiar with startup practices! I’ve seen it many times, that a member of the management team is put in charge of startup initiatives with out really knowing what to do. Detecon Consulting cited this as one of the main reasons why incubation efforts fail. If a coach knows how to manage startup teams, like how Aaron Eden did at Intuit, training over 100 teams that went on to produce millions of dollars in new revenue, they can help scale the company’s innovation efforts by training more coaches. The AfCE offers startup training for coaches with certification as well as a coaches membership for extra resources and an annual conference.
- I think people feel that investing in innovation can be expensive. But we’ve seen that is often because the money goes straight into building prototypes for products where no market has been proven and then that product fails, making it a bad investment. So we should invest first in learning how to find problem solution fit ie the discovery phase, which is minimal, compared to building products. Entrepreneurs invest time in finding problem solution fit, before investing money in building product. By this stage it’s possible to find a seed investor (45% of FI grads get seed). Professional investors then use a VC approach expecting 80% of the returns to come from 20% of their investments – so a try one first and then double down if that works attitude is useless. You need many eggs to get that big return, which could be 100X.
- Every journey is different, but we believe that by working within the 10 rules, will help you get from idea to commercialisation in an efficient way.