ISSIP Service Innovation Weekly Speaker Series

1. A Whole Systems Approach to Intrapreneurship
Services Innovation Excellence Center
Craig Wirkus – Innovation Program Manager
June 2016

2. About Cisco
$50 Billion
in Revenue
For 30 years we’ve been focused on changing the way the world works, lives, plays and learns.
30 Years in
Business
75,000
Employees
380 Offices
Worldwide
19,000
Patents
We create solutions built on intelligent networks that solve our customers’ challenges.

3. Cisco’s five pillar strategy for innovation
Build Buy Partner Invest
Co-
develop
Capabilities and
culture drive
innovation
Acquisitions to
gain innovation
momentum
Create innovative
solutions through key
partnerships
Invest in large and small
companies to help grow
innovation ideas
Co-develop with startups
to create innovative,
disruptive ideas

4. What will be covered
1. About Services Innovation Excellence
Center
2. Incubation team support
3. Innovation Funding Boards

5. Embed innovation in
our ‘people strategy’
and create a dedicated
team to drive
innovation capability…
1. About Services Innovation
Excellence Center
2. Incubation team support
3. Innovation Funding Boards

6. To help teams to
drive business
impact through
innovation
The Services Innovation Excellence Center
Strategy and Leadership
People and Culture
Process and Tools
Ecosystems
Our Mission:
Integrated
and
Systematic
Approach

7. SIEC builds ‘innovation muscle’ within our businesses:
• Innovation Challenges
• Innovation Platform & Process
• Hackathons & Workshops
• Innovation Community Building
• Innovation Maturity Framework
• Innovation Maturity Assessments
• Employee Innovation Training
• Innovation Toolkits
• Innovation Funding Boards
• Incubation Methodologies & Tools
• Coaching/Mentoring Support
• Pipeline/Business Value Realization
Build
Capability
Support Cisco’s goal of being the world’s #1 IT company by “Innovating Everywhere”
Driving business outcomes for Cisco and our customers.
Developing our people to be world-class innovators.
Enable
Ideas
Accelerate
Results

8. Create intrapreneurial
mindset through
playbooks, coaching
and acceleration
cycles…
1. About Services Innovation Excellence
Center
2. Create intrapreneurs and
provide incubation team
support
3. Innovation Funding Boards
Build
Capability

9. What we think an intrapreneurial mindset looks like
We need mindsets
that embrace both
discipline and
flexibility
Like the board game
‘Chutes and Ladders’
we have to be willing
to take setbacks
“I'm a founder and my product sucks. There, I
said it. My product sucks. Your product sucks.
Don't feel bad, the first iPhone sucked too.
Customers don't care about our products -
they care about themselves. Just lead with
your vision. Start with customers’ goals and
do whatever it takes to help them get there.”
- Kevin Dewalt,
Serial Entrepreneur and Lean Startup Expert

10. Incubation Framework
Incubation Playbook
Self learning playbook that
articulates incubation best
practice
Incubation Workbook
Lean start-up, discovery driven
planning templates to guide
incubation teams from concept to
implementation
Managing Innovation
Projects
Self learning innovation project
playbook that articulates
innovation project management
best practices

11. Innovation Coaching/Mentoring
Technical ExpertiseBusiness Expertise Incubation Expertise
• Technologies
• Engineering
• Coding
• Business Models
• Customer Insights
• Business acumen
• Human Centered
Design
• Lean Start-up
• Discovery Driven
Planning

12. Startup//Cisco Acceleration Cycle
Invitations Pre-launch call Launch day Acceleration
Cycle 1 through N
6-8 weeks before
workshop
• Participant Selection
• Define cohorts
• Define team set up
• Ideation Tools
10 days before
workshop
• Teams are formed
• Pre-work starts
• Define Roles, set
expectations
• Suggested reading
• Venture kick off
• 3-4 days, Off site
• 4-8 teams, multi-
disciplinary teams, 3-
5 people each
• Coaches & Mentors
• Toolbox
6-8 weeks
• Coaching/Mentoring
• Support culture change
• Habits stickiness
• Startup Go/No Go
• Coaches & Mentors
• Toolbox
Timeline
Milestone
Resources
Visionaries +
Ventures
15 days before
workshop
• Visionaries’ survey
• Ventures’ selection

13. • Instilling intrapreneurial behaviors can’t
be accomplished without change
management and a whole systems
approach – provide playbooks,
coaching and incubation cycle
programs
• Overcoming incubation teams love of
their ideas can be facilitated through
mindset and rigorous customer centric
processes
What we’ve learned about…
creating intrapreneurs and supporting
incubation teams

14. Select and fund H2/H3
big bet ideas, change the
culture from top down,
retract support if not
playing by your rules
1. How do we engage our global
workforce in innovation?
2. Create intrapreneurs and provide
incubation team support
3. Innovation Funding Boards
Accelerate
Results

15. Innovation funding
boards defined
Definition: A governance process, decision-
making group and forum for selecting, funding
reviewing and guiding early-stage innovation
opportunities.
Innovation funding boards are often a
mechanism to nurture and support higher-risk
opportunities that otherwise would be less
likely to obtain funding through core business
processes.

16. Innovation funding boards are used as a
mechanism to accelerate bigger bets
Horizon 3
(Transformative)
Exploration into new markets
New
tech/
solutions
Horizon 2
(Adjacent)
Adjacent growth
Tech/
product
extensions
Horizon 1
(Core)
Technology/Solution
Market
Today’s
business
Today’s
solutions
• It is easy to SAY that you will invest in H2/H3 but
difficult to actually do it without cordoning off
money for it
• H2/H3 represent a smaller part of the portfolio
but require extra attention
• Organizational antibodies will try to reject high
risk H2/H3 an innovation funding board can
prevent that
• Use seed funding and customer validated
learnings to quickly evolve or kill to free up
resources
Innovation Horizons Model

17. Innovation Strategy
In Support of Business Strategy
Pipeline Governance &
Resource Planning
Innovation Process
& Team Structure
Portfolio Management:
Prioritization and Optimization
Innovation Funding
Innovation funding links portfolio strategy/management with
the pipeline and project implementation. An innovation
funding board is one of multiple governance models for
allocating funding to innovation projects.
The organization will need to decide if the innovation funding
board will be stand-alone as a separate decision-making
forum, or potentially as a meeting and process as part of a
larger portfolio management and funding governance group.
Innovation Funding:
• Are existing funding mechanisms
in place?
• Are H2/H3 innovations being
effectively supported?
If no…
• Consider an Innovation Funding
Board
Concep
t
Desig
n
Devel
op
Launc
h
Innovation funding links strategy and execution

18. Several key themes emerged from this research:
1. Developing disciplined process (w/ detailed
frameworks and coaching) and guidance for both
leadership and team behaviors is key.
2. The use and structure of innovation funding boards
evolves over time, driven both by strategic needs and
the maturity of the organization..
3. Innovation funding boards and investment boards are
related, but not the same.
Lessons from other companies

19. Venture capital firms, and corporate venture capital groups, including our
own at Cisco, use a funding and governance model for their portfolios that
share these attributes:
• Investment is diversified among a select variety of approaches, given
the dynamic nature of these markets and technologies
• Funding is provided via tranches, with milestones developed for
assessing progress toward goals
• Especially for earlier stage, higher-risk investments, valuations are more
directional (vs. detailed NPV analyses)
• Selecting opportunities is based on the team and the market potential
(the problem, the addressable market) vs. the specific solution
proposed; almost always, there are significant ‘pivots’ in that journey
Lessons from venture capital
Innovation funding boards can be effective in promoting more entrepreneurial behaviors within our organizations,
driving early-stage experimentation and learning in support of big ideas. Like venture capitalists, investments can
be diversified through smaller bets on a wider number of ideas that are more quickly de-risked (or killed).

20. Innovation Funding Board (IFB) process introduction
Rapid
Evaluation Incubation
Build
Learn Test
Ideas Implementation
This process is uniquely designed to fund and govern early stage
innovation projects within Cisco. Key characteristics include:
Board provides ‘tranches’ of funding as concept progresses
• Intentionally not a linear, prescriptive process –
it is aimed at balancing the creative tension of
discipline and agility
• Encourages rapid iterations of designed
experiments by teams, using ‘build/test/learn’
cycles adapted from lean startup methods
• The process drives accountability and
empowerment for exploration through limited
tranches of funding
• Unlike phase-gates, the IFB process does
not pre-define milestones – teams return
based on funding status & learning progress
• Ensures early and ongoing focus on customer
needs and engagement (avoids the natural bias to
build solutions prematurely)
Innovation Funding Board Process
Pivot, Persevere or Kill at any point.

21. IMPLEMENTIncubationRapid Evaluation
Iterative
funding and
experiments
De-risked
and ready
to
implement
Customer
insights
Strategic
priorities
Idea
generation
Co-creation
opportunities
H2/H3 ideas and
opportunities from
a variety of
sources
Teams conduct iterative experiments to define
and validate opportunities. Return to IFB when:
• Funding tranche expended, objectives
achieved and/or decision point reached
• Recommend: Pivot, Persevere, or Kill
IFB screens
initial idea
submissions
Rapid turnaround ‘stress
test’ by teams to strive
for early kill (“Stop work
on good ideas to make
room for great ideas”)
IFB approves
project for full
implementation
IFB provides
funding tranches
as warranted
DEVELOPMENT
Via standard
processes
Transition to
standard
governance
processes
Pivot, Persevere or Kill
at any point.
Innovation Funding Board (IFB) process overview
Initial
funding
and ‘stress
test’

22. Opportunities are evaluated on a recurring basis to
measure the quality of both the idea and the process
IncubationRapid Evaluation
0 1073
0 1073
Implementation Readiness:
• Customer/Problem
• Market Assessment
• Business Model
(9 measures in total)
Innovation Process Health:
• # Customer interviews
• # Experiments
• # Pivots
(8 predictive metrics)
Opportunity Scoring:
• Strategy Alignment
• Customer/Market
• Financial Opportunity
• Risk (Market/Tech)
0 1073
0 1073
IFB scores opportunity at each
review using consistent criteria
0 1073
0 1073
(Further
defined on
following
pages)
Iterative
funding and
experiments
De-risked
and ready
to
implement
Pivot, Persevere or Kill
at any point.
Initial funding
and ‘stress
test’
Teams report on process metrics
& living into behaviors
Teams report on validation progress
and de-risking of the opportunity

23. Implementation readiness* should be tracked by teams
as a progress measure against key milestones
* Adapted from Steve Blank Investment Readiness (IRL) Index
which itself is derived from NASA Technical Readiness Index
IncubationRapid EvaluationImplementation readiness (IR) is a
key metric that provides a
consistent and fact-based approach
for measuring progress against pre-
defined milestones. These
milestones track important
deliverables that move the team
toward a validated business
opportunity – one that has been
sufficiently de-risked and should be
ready for full development.
Recommended status to exit
Rapid Evaluation Phase:
Recommended status to exit
Incubation Phase:
For each IFB review, team
updates IR Index to provide:
 visible progress for teams
 consistent deliverables while
enabling flexibility in approach
 IFB to compare readiness
across projects
IR2 – Discovery-driven
business plan (initial)
IR1 – Opportunity charter
accepted
IR9 – Product/market
fit validated (optional)
IR8 – Business plan accepted
IR7 – Business model defined
IR6 – Problem/solution validated
IR5 – Solution concept defined
(w/ assumptions)
IR4 – Customer/problem
validated
IR3 – Market assessment
(initial)
Iterative
funding and
experiments
De-risked
and ready to
implement
Pivot, Persevere or Kill
at any point.
Initial
funding and
‘stress test’

24. Innovation process health should be tracked by teams
as a measure of the quality of the work process
Compare two scenarios:
Team ‘A’: This team proposes a
compelling business plan with highly
attractive financials for a very
creative solution. Over multiple
funding tranches, they’ve deviated
little from their initial vision and their
customer interactions have been
limited.
Team ‘B’: This team has a solid
business plan and financials (while
not as attractive as Team ‘A’). Team
‘B’ has changed direction multiple
times, not only with their proposed
solution, also their target customer.
There are still key unknowns, but
their new direction appears solid and
based on frequent customer input.
Team “B” 2/3-3/4 3/5-5/1 5/2-7/7 Remarks
Customer engagements
12 7 8
First tests with MVP conducted
this period
Mentor/stakeholder
engagements
4 6 5
Added 2 internal marketing
mentors
Hypotheses
developed
6 4 6
Solution assumptions
validated (of total identified)
3/12 3/13 10/21
Solution validated via MVP
Experiments conducted 12 12 21
MVP’s
created
0 1 3
MVP’s included ‘concierge’ of
service
Pivots
1 2 2
Pivoted to more focused offering
Which one sounds more investable? If we only looked at the financials, it would
be Team ‘A’. But Team ‘B’ demonstrates more robust customer and market
engagement and iterations. That’s why we should consider not only financials, but
innovation process health as well. It’s important for teams to track for their own
benefit, and provides the IFB with a measure of the quality of the work process.

25. The business plan is created and refined over time
(with increasing fidelity) as the opportunity is developed
Overview: Innovation venture
teams create and refine the
business opportunity definition,
beginning with a simple charter
document and progressing to a
detailed business plan for full
implementation commitment.
Opportunity
Charter
Brief proposal by team for IFB
Rapid Evaluation funding:
• Description of opportunity
• Target customer and
problem being solved
• Brief description of solution
• “Size of prize” rough estimate of
market (or savings)
• ‘Ask’: Rapid evaluation funding
IncubationRapid Evaluation
Iterative
funding and
experiments
De-risked
and ready
to
implement
Pivot, Persevere or Kill at
any point.
Initial
funding and
‘stress test’
Initial Discovery-driven
Business Plan
Completed
Business Plan
Interim Discovery-driven
Business Plans
Initial high-level plan sufficient
for Incubation funding tranche:
• Business opportunity
• Potential customer/problem
• Brief description of solution
• Financial estimate using
‘reverse-income statement’
• Experimental plan
• ‘Ask’: Funding/resources
At each review cycle and
request for next funding tranche:
• Updated business opportunity
• Customer/problem (validated)
• Solution concept refined
• Increasing fidelity of financials
and business case
• Experimental plan, IR index and
health metrics updates
• ‘Ask’: Funding/resources
Complete business plan for
implementation commitment:
• Detailed business opportunity
• Customer/problem (validated)
• Solution concept (validated)
• Detailed financials
• Business model defined
• ‘Ask’: Funding/resources for
detailed development
Outputs:

26. Opportunity scoring is conducted by IFB members in
conjunction with venture team reviews
CRITERIA WG
T
SCORE COMMENTS
Strategic Alignment: 25% 6.5
Supports business and innovation priorities 7
Fit with core competencies 6
Customer/Market Attractiveness: 25% 6.3
Large addressable market with unmet needs 8 Key market for Cisco
Provides unique value to customers 6
Provides sustainable competitive advantage 5
Financial Attractiveness: 25% 6
Attractive revenue potential 8
Attractive time to revenue 4 Slow market build
Risk: 25% 5.6
Low market risk 6
Low technical risk 4 No proof of concept?
Low execution risk (resources et al) 7
Total Weighted Score: 100% 6.1
Overview: IFB members use a scoring
sheet similar to this to evaluate new
innovation opportunities and re-score
opportunities at each formal review.
Scoring helps IFB members to assess and
prioritize across opportunities, as well as to
highlight differences among the IFB; these
differences should then be discussed.
How it Works: Scoring is done during and
immediately after innovation venture team
presentations. Each IFB member scores
separately, results are tabulated real-time,
and summarized results are discussed:
Scoring should be based on:
 Business plan (pre-read)
 Innovation venture team’s presentation
and Q&A session
 Implementation readiness metrics/update
 Process health metrics/update
(1-10)

27. Below are some design principles that were considered in developing the overall
framework. Keep them in mind as your organization’s innovation leadership group
customizes and implements this framework within your business:
Remove guesswork: Remove as much guesswork as possible for both
decision makers and innovation teams, while recognizing we are dealing with
imperfect information.
Overcome organizational biases: Use the process and forums to protect
against the natural bias toward short term, lowest risk choices. Simply being
conscious and aware of this tendency will help in managing it.
Instill entrepreneurial rigor: This process will help to instill rigor around
managing a diverse set of small bets, and help to de-risk ideas as they progress
toward larger funding requests. And teams learn the discipline of validating
customer needs and problem definition, before jumping into solutions.
Variety of projects: Design for robust, disciplined governance of variety of
project types. The focus is on innovation funding, but H2/H3 projects might be
very diverse and difficult to compare.
Process considerations
“Learn to be ‘passionately
detached.’ Be passionate
about your idea, but objective
in assessing direction and
viability – and not simply in
love with your own idea.”
Patti Streeper, VP Innovation
Hallmark Cards

28. The Innovation Funding Board process isn’t just a forum to govern innovation investments. It’s an
opportunity for executive leadership and innovation teams to practice new behaviors which can
instill a stronger entrepreneurial culture within Cisco – one that embraces experimentation and
encourages smart risk-taking:
Business focused: Use the process to encourage teams to build ‘fundable business
opportunities’ vs. simply pitching innovative products or solutions. In early stage concepts,
the initial solution concept will be wrong, but should be aimed at large, attractive markets.
OK to fail: Demonstrate to the organization that smart risk-taking is encouraged, and that
killing projects can be celebrated because it demonstrates learning and frees up resources
to work on even better opportunities.
OK to pivot: A major pivot by a startup is heralded as brilliant. A pivot in direction by a
corporate innovation team is too often viewed as unfocused. This process encourages
pivots through rapid experiments and learning cycles.
Challenge assumptions: Breakthroughs often come from challenging long-held
assumptions about the business and market; be open to these and don’t allow your own
assumptions to stand in the way – let the experiments prove or disprove them.
Accountability: Encourage teams to be accountable to self-assess opportunities at early
stages (before even proposing to the board) – The board is not simply a ‘pitch panel’, but
rather a forum for funding, guiding and empowering teams to learn and grow.
Culture/mindset considerations
“We need to pay attention
to our culture. I want Cisco
to be viewed as having the
most innovative workforce
experience in tech and in
the corporate world.”
Chuck Robbins, CEO
Cisco

29. What we’ve learned about…
innovation funding boards
• Don’t attempt to have H2/H3 funding
compete with RTB
• Starting with incubation team
processes, behaviors and what they
communicate to the IFB’s can move
boards in the right direction
• After boards get used to the vernacular
and customer validation focus they can
adopt opportunity scoring that reflects
the new approaches – you won’t need
to convince them!

30. Summary
Use a whole systems approach to intrapreneurship
• Instilling intrapreneurial behaviors can’t be
accomplished without change management and a
whole systems approach – provide playbooks,
coaching and incubation cycle programs
• Overcoming incubation teams love of their ideas can
be facilitated through mindset coaching and rigorous
customer centric processes
• Use Innovation Funding Boards to create the top
down pressure for incubation teams to make the
intrapreneurial changes – or they lose support and
funding!
Remember, it’s a journey…