100 Days to Disruption - Program Plan for Innovation in Tough Climate

Posted on November 19, 2008 
Filed Under Corporate Ventures, Incubation, Innovation | Leave a Comment

If you are planning to roll-out an Innovation program across your Enterprise, there are probably two top-of-mind concerns given the current economic climate:

  1. How do you show value to the Executive Team, while they are mostly thinking short term profitability and cash flow?
  2. How do you make the program sticks?  The worst thing is to launch a program and then nothing happens.  Amidst all the layoffs and bad news, employees might be feeling overworked and demoralized. They can get cynical really quick about “yet another” corporate initiative.

When I was designing the innovation program for my company’s innovation initiative, I looked at different best practices.  I must have read all the current books on the subject, and talked to many top practitioners in the field.  I know I want a program that has these attributes:

  1. Result Oriented - real results visible to both employees and Executives
  2. Persistent Regular Cadence - so as not to over hype or under market the initiative
  3. Quarterly Rallying Points - set a time boundary and plan quarterly events to serve as rallying points for innovation activities - IBM does this well with their Innovation Jams and we learn that innovation program works best if you put a time constraint on it
  4. Energize Even a Skeptical Employee Base - make them believe that they can make an actual difference and that you are not wasting their time and passion

While I was just finalizing our roll-out plan, I serendipitously bumped into this article on Forbes web site: One Hundred Days to Disruption.  In the article, Scott D. Anthony and Brad Gambill of Innosight, laid out a simple 5 step plan.  (By the way, Innosight is co-founded by Clayton Christensen.)  The “100 Days to Disruption” title is perfect for what I was looking to do.  It lets everybody knows that we are looking for disruptive and not incremental ideas, and it let the Executives see concrete results in regular quarterly (100 days) cadence.

Here are the 5 steps.  Please follow the link above to the article which has a lot of good detail suggestions for each of the step.  It is well worth a read.

There are a few more things I want to add to this:

  1. Executive Buy-in and participation is key. For example, work with a Business Unit leader and make her feels like a customer and intended beneficiary right from Step 1.
  2. Funding and Support System must be in place. Don’t do it if you do not have funding or support program to actually launch the winning idea(s) into venture projects. Employees would think you are a joke and wasting their time and passion. An Incubation Program should be setup well before launching thie 100 day plan, along with secured funding and support infrastructure.
  3. Mix in Cross Pollination and Crowd Souring Concepts. The article suggests forming a small team in Step 2 to generate a long list of ideas.  I personally am skeptical about limiting the ideation exercise to a small group.  The broader the background of people involved, and the more cross pollination from different disciplines, the higher the chance is of getting a disruptive idea.  I think there is an opportunity here to employ crowd sourcing concept, using Web 2.0 tool to solicit ideas from a broad base of employees, and letting them form birds-of-a-feather teams to further collaborate and develop proposals.
  4. Use NABC Exercise. For Step 4 (Build Business Plan), I highly recommend using the “NABC” exercise highlighted in Dr. Curtis Carlson’s book “Innovation: Five Disciplines of Creating What Customers Want”.  See my earlier blog post regarding NABC.  I think it is the most simple and effective process I have come across in helping teams articulate customer value propositions and develop business strategy.
  5. Publicize Your Decision Making Process. For Step 5 (Decision Making Workshop), it helps to have pre-determined selection criteria agreed among the decision makers.  Make the decision process as transparent as possible.  Consider making a blog post to document the decision making process and rationales, or even make an “Apprentice TV” style webisode of the decision process.  It is a great way to train the rest of the employees about what you are looking for, and that the company is serious about sponsoring innovation.  Make this an education opportunity to energize the employee base for your next 100 Day cycle.

Innovation in Hard Times - DOs and DONT’s (repost from INTRAP)

Posted on November 3, 2008 
Filed Under Incubation, Innovation | Leave a Comment

My friend, Stefan Lindegaard from Denmark, recently posted an interesting article on his INTRAP blog.  It’s actually a summary of an Innosight article about DO’s and DON’Ts during hard times.  You need to register on Innosight to see the full article, but a great summary is available on Stefan’s blog HERE.

The Intrapreneur’s Dilemma: Be a Trouble Maker or Strategic Irritant?

Posted on October 30, 2008 
Filed Under Incubation, Innovation, Intrapreneuring | 1 Comment

We all heard of Christensen’s Innovator’s Dilemma, but what is the Intrapreneur’s Dilemma?

I Stumbled onto this blog post at the Innovation Journalism blog by David Nordfors.  I felt so completely identified with this that I have to repost it here.  Here is what David says is the Intrapreneur’s Dilemma:

When someone tries to innovate within a traditional organization, few will understand what he/she is doing, but everybody will understand who is a trouble-maker.

After the innovation has been embraced by the organization, few will remember who started it,
but everybody will remember who was a trouble-maker.

This is the dilemma encountered by many intrapreneurs - they risk punishment for success.

In many cases, it is indeed more difficult to be an Intrapreneur than an Entrepreneur.  Being an Intrapreneur in a traditional organization often means that you are swimming against the current.  Not only you have to be mindful of the “Corporate Antibodies”, you have to deal with organizational rules and processes that are the opposite of agility.

To existing cash-cow businesses, you are doing things that might appear threatening to the “establishments”.  Yes, you work hard to get Top Down support for your programs, but the “Executives’ Memory” is often short.  At the first sign of trouble, you will feel like you are walking around with a target sign on your back.  If your team is successful, Business Units might fight to take over the project prematurely.  If you are not successful, then your team and/or budget get cut.  Another phenomenon is that in order to justify your projects, the sponsoring executives put such a high expectations on the teams, that it often forces the teams to make stupid mistakes - pushing things to far or too fast.  So, essentially, your incubation program have a high risk of becoming a perpetual failing machine.

So why on earth would someone want to be an Intrapreneur, or be responsible for an Corporate Incubator?  Why would the “good ones” not go out on his/her own and be an Entrepreneur instead?  The interesting dilemma for a company, is that if you do not setup the right environment, you ended up losing all your best ideas and people.  And what you do ended up funding might not be the top people or ideas that you would have gotten because the “really good ones” are already gone.  In other words, if you do not do this right, you might be better off NOT doing it.

On the positive side, in any company, there is no shortage of good loyal employees who want to help the company prospers.  They will work just as hard if they are properly motivated, and feel like they are having a material impact to the future of the company.  And no, I am not just talking about “lifers” employees who wear polyester ties.  You will be surprised how loyal and productive even the new younger employees can be.  I have argued with HR people before, about how loyal you can make the “Gen Y” employees.  My observation is that if you can cultivate a sense of mission, meaning, and belonging, you can get employees of ANY age group to be ultra loyal, productive, and creative.

Here are some specific suggestions I have for those who are responsible for creating and maintaining an environment for intrapreneurs to flourish:

1. Hire a Marketing Person

Raise internal and external visibility of your incubation program.  Constantly celebrate successes and more importantly the people behind them.  In a funny way, this is actually against my nature to trump my own horn.  But the right marketing person will be able to find the perfect balance, to help you get the visibility that you and your teams deserve without looking like a brown-noser.

2. Give Credit Where It’s Due

When an intrapreneur opportunity becomes a Hit, resist temptation to take credit.  Let the intrapreneur team gets the glory.  Give them the exposure for PR, Executives briefing activities, etc.  First, they deserve it.  Second, this is really the only real currency you have to motivate the team.  The good people, especially after they produce a “Hit”, can probably get a job anywhere in or out of the company.  They only way you can keep them motivated is to let them feel they are climbing the ladder and getting the exposure and the opportunity of a lifetime.  You the manager of the Incubator will get the credit, when you start producing multiple Hits.  Then people will realize that there is some magic behind this “madness” you are stirring…  Plus, you will get the loyalty and the love of the best people in your team.

3.  Be Vigilant in Constantly Educating the Executives

Executives’ memory can be short, especially when they are feeling the financial crunch or having a couple of bad quarters.   You have to constantly remind the Executives why they need an incubation program, show tangible results when you can, and talk their language.  (eg. You have a pipeline of X white space opportunities, that will produce $X billion in X number of years.  X% of your projects become cash flow positive in X number of months.  Chart your EBT impacts over time, etc.)

4. Get More Than One Executive Sponsors

You’ll need more than one Executive sponsors.  Frankly, you want the program to survive the C level “revolving door” syndrome.  Try to get more than one C level executives excited about the incubation program.  They have to feel like this is their “baby”.  Give them at least quarterly readouts.  Preferably, get them involved in some of the decision making so that they feel ownership of the projects.  C level executives are extremely time constrained though and thus their attention span is short.  You have to make things short and sweet and pre-digest the materials for them.  Don’t make them sit thru endless powerpoint slides.  Get right to the decision points and get their feedback.  Also, make your meeting with them very VALUABLE so that they want to come back for more.  Being the Incubator, you are running projects that are at the tip of the spear in terms of exploring new technologies, business models, etc.  You should be able to provide a lot of valuable market & customer intelligence that should be very interesting to the C level executives.

If you handle things correctly, you have an opportunity to brand yourself and your teams as Strategic Irritants, rather than Trouble Makers.  And this will give your incubation program and your intrapreneur teams a fighting chance to survive any potential short sightedness that you know is bound to pop up in trouble times…

P.S. I didn’t invent the term Strategic irritant.  I first heard of the term from Gary Bridges from SRI, and I loved it.  It’s always good to turn something negative (Trouble Makers) into positive!

Corporate America - Designed to Fail? (Part 1)

Posted on October 26, 2008 
Filed Under Innovation | 2 Comments

Recently, I was honored with the opportunity to give a talk to Chuck House’s class, The Secret Sauce of Innovation, at Stanford.  Although a small class, Chuck has a very dynamic class - I enjoyed the interaction very much.

Chuck talked about how the innovation model at HP has changed over the years.  The discussion turned to whether large industrial research labs are still relevant in today’s Corporate America where most companies do not have the patience to invest in long term research, but rather rely on acquisitions or the so called “Fast Follower” tactic.  Companies like Cisco and Apple succeeded not because of their abilities to invent, but their abilities to innovate - packaging existing technologies invented elsewhere into products that their customer wants - faster and better than their competitors.

The question then is: Is there something wrong with this?  Well, I think there is!    First, let’s look at some troubling signs…

Lifespan of Large Companies

In his book Innovation: Five Disciplines  for Creating What Customer Wants, Dr. Carlson presented interesting statistics about the lifespan of large companies.  In the beginning of the century, the average lifespan of a S&P 500 company was between 60-100 years.  Today, the average lifespan has dropped to less than 20!

The statistics is not more encouraging in the rest of the world.  In a recent study by Ellen de Rooij of the Stratix Group in Amesterdam, the avergae lifespan of companies in Japan and Europe is only 12.5 years!  (See this Business Week article: The Living Company)

Rate of Technology Adoptions

Just as the lifespan for large companies is shortening dramatically, so is the rate of technology adoption.  Is this a coincident?  Here is a chart I got form my friend Moses Ma of Next Gen Ventures:

rate_of_invention

This chart clearly shows that technologies introduced in the beginning of this century, such as automobile and telephone, took well over 75 years to gain 50% penetration.  But newer technologies such as PCs and Cellulars phones are reaching the same penetration point in 1/3 the time.

If you look at the “Digital Economy”, the statistics is even more startling.  Computing power is doubling about every 18 months, communications bandwidth  doubles every 9 months, and storage power doubles every 12 months.  This exponential growth of technology results in a 95-97% reduction of computing and networking cost every ten years!

Serendipitous Nature of Breakthrough Invention (And the decline of Corporate Research Labs)

One thing I noticed when studying various case studies of technology disruptions, is that breakthrough inventions tend to happen unexpectedly and is not something you can easily plan.  In fact, the more planning or more directed your research efforts are, the more incremental the results tend to be.  Directed Researches tend to be very good at solving specific problems, while the Autonomous Research tend to produce the big breakthroughs.

In the old days, say half a century ago, it was probably OK for a company to come up with one or two breakthrough inventions say every 10-20 years, and it should be enough to provide enough “cash cows” for a company to thrive in the long run.  Take a phone company as an example, just look at how long that industry transition from analog to digital, and from digital to IP.

Now with the technology change rate mentioned above, that would mean that a company now needs to have a breakthrough invention every 1-2 years in order to survive!

So, when the world become much more competitive and the pressure mounts for companies to keep producing disruptive technologies faster, what do the CEOs do?  The natural tendency is to put much more pressure to the research labs to produce more breakthroughs faster.  And what we already learned is that the more prescriptive you are to research efforts, the more incremental the results are.  In other words, the harder you push research teams to produce short term results, the less breakthroughs they are going to produce.  That’s logical, right?  And then the next logical cause-and-effect, is that CEOs become less and less patience with long term research, and begin to rely on acquisitions or use “Fast Follower” tactics.

The more competitive a market, the less incline are the CEOs to spend money on organic research.  This is evidence in the decline of classical research labs.  Just look at the continuous scaling down of Bell Labs, spinning off of Xerox’s PARC, etc.

What’s Wrong with being “Fast Followers”?

Let’s look at the US Telecom industry as an example.  The Telecom Act of 1996 was supposed to introduce competition in Local Exchange.  With disruptive technologies such as Internet Protocols, DSL, Fiber & Ethernet to the Permise, a new crop of Competitive Local Exchange Carriers (CLECs) emerged to compete with the Incubant Carriers (ILECs).  The CLECs were supposed to bring exciting broadband services to the mass, cheaper, faster, better, and with a whole slew of exciting value added services such as IP voice and TVs.  We all thought that the ILECs were going the way of dinosaurs.  Well, it turned out that the ILECs played the perfect “Follower” game.  In fact, in most cases, they didn’t even have to be Fast Followers.  The ILECs played the legal and political games perfectly.  Remembered that the CLECs had to hire army of lawyers to negotiate with the ILECs for CO access?  Remembered the ILECs lobbying federal and local governments, and even threatened to withhold fiber network upgrades if the government support the CLECs?  Anyone remember the Utah Utopia Fiber-To-The-Home project?In short, the ILECs got really good at making life difficult for the CLECs, and at the same time offering “look-alike” service to their customers.  And when the “Telecom Winter” set in and the CLECs started dropping like flies, many of the innovative broadband service deployments promied by the CLEC actually got slowed down or canceled, since the competitive pressure is not there anymore.

Long story short, what is the NET IMPACT of this to the USA?  Despite the USA inventing the Internet and most of its related technologies, we now rank 16th in the world in the latest Broadband Quality Score!

2008 Broadband Quality Scores by Country

Fast Follower strategy is a Cop Out!

In short, I think the “Fast Followers” strategy is a “cop out”.  It is about how large companies preserve themselves by stymieing innovation and competition, rather than creating genuine long term values to the world and to their customers.  And in the end, if you are not creating values for your customers, you might win the day, but it will always comeback and bite you in your ass.

And from a country perspective, if we do not think through the right policies to encourage Corporate America to engage in genuine, long term value creation, then what we will see is that key industry segments will evolve to oligopolies.   This is not only bad for the economy but ultimately severely decrease USA’s overall competitiveness in world standing.

I’d stop my “soap box” here.  I think I’ll continue in Part 2 to discuss what’s wrong with relying on acquisition for growth, and why the Wall Street system is causing systematic failure in America corporations (and not just due to the credit crunch).

Free Model Angel & Venture Round Equity Financing Documents

Posted on October 18, 2008 
Filed Under Innovation | 2 Comments

YCombinator Logo If you are an Angel investor or entrepreneur working on equity financing documents such as Term Sheets, Stock Purchase Agreements, etc. for the first time, things just got easier because you now have a free template to use as a starting point.

YCombinator just open sourced their Series AA round of financing documents, making them available for anyone to use. The open source documents can be found here: Series AA Equity Financing Documents

And before you start using it, this StartupCompanyLawyer.com article is a MUST READ.  It explains the difference between Angel and Venture financing terms, and the situations where the YCombinator’s open source documents are useful, and what’s missing.

The article also contains a link to the National Venture Capital Association’s (NVCA) model Venture financing documents, which are designed for venture phase financing.  By the way, the StartupCompanyLawyer article warned that these model docs are designed to be more favorable to the investors.

Silicon Valley, The Financial Crisis and the Call to Innovate!

Posted on October 14, 2008 
Filed Under Innovation | 1 Comment

Here is a radio show really worth listening to.  NPR’s Michale Krasny interviewed a panel of Silicon Valley people last week to discuss the impact of the credit crisis on Silicon Valley.  His guests on the panel were:

I highly recommend listening to the talk show ==> Click here

For those too busy, here are some of the more insightful comments below.  As someone who is part of the Silicon Valley ecosystem, and someone whose job is to drive Silicon Valley style innovation in a large 100 year old company, I do wholeheartedly agree with the panelist.  That those of us who are practitioners of Innovation should heed the calling… that it’s up to us to LEAD and help our companies INNOVATE OUT of this downturn.

Sarah:
- Downturn will hit VC and Public Companies hard
- Some say 80% of emerging business will go under, Sarah thinks, U of Maryland study which says 45% is closer to reality
- Biggest hit will be the public companies.. layoffs, etc., but smaller companies will feel it too
- Innovation always comes back in the Valley. Typical Valley cycle is 2 years

Carl:
- this is not a innovation or creativity crisis, we will weather this storm
- $2.6B in last year in Green and Clean tech.  40% of that went to Silicon Valley.
- Silicon Valley has culture of Green.
- Silicon Valley culture is unique in the world - motivated by Big Problems… Financial Crisis… Climate Change, etc….
- Tougher time for M&A… problem to finance and close deals
- Large tech companies have large cash reserve, but their customers do not
- Hopefully the Government plans work
- Dot.bomb: 212K jobs evaporated
- Call to VC: put money where our mouth is, keep investing…

Ion:
- Bullish, and broader than Green Tech
- Financial Crisis will almost certainly get under control
- Concern is more about the recession and the length of it
- Valley would certain feel the impact
- The Valley should feel the responsibility to power America out of trouble but innovating solutions for climate control, reliance on foreign oil, etc.
- Create more Green Jobs

Other interesting comments:

- Optimistic in the long run.  In the meanwhile, some babies would get thrown out with the bath water.
- Segment will be particularly hard hit:

1. Enterprise Software, including SAAS (especially those with Financials as customers)
2. Advertising (not as much Google, Yahoo as compared to others)
- Extraordinary opportunities for small agile startups that do not require tons of cash. i.e. Young startups with only a couple of millions, tens of employees, and have ideas and revenue models which can disrupt the industry.

- Barrier of entry for software business has gone WAY WAY down because of open source, and cloud computing platform like Amazon EC2.

- Companies with high cash burns and low revenue will be in trouble.

- Companies that invest in these downturns will be the strong ones coming out.

- More VCs will become angels.

- Great companies with great bus models will get funded.

- Bio-tech will be difficult because of capital intensive and long term

- Wallstreet is quarterly focus, as will Public Companies.  The Ventures and Private Capital will step in and keep driving innovation and big changes in the future.

Sequoia tells portfolio companies to prepare for “Doomsday”

Posted on October 14, 2008 
Filed Under Innovation | Leave a Comment

 Long Winter Ahead?

Here is a good read for the week:

GigaOm: What startups can learn from Sqauoia’s Doomsday Warning

What I got from it…

- Could be a loooong winter
- Raising capital tough for those not cash flow positive
- Cut deep
- Preserve capital (priority over grabbing market share)
- Be aggressive & bold
- And keep marching…

Oh My… I was voted the “Most Hyper” Employee

Posted on October 13, 2008 
Filed Under Innovation, Web Stuff | Leave a Comment

I do not know if I should be proud of it.  My company (Nortel) recently had a competition to see who is the most “Hyperconnected” among the 30,000 employees we have worldwide.  The judging panel included the CTO, CIO, Editor of the CIO Magazine, and MIT Media Lab’s Andy Lippman.  Yes, of course, I work with Andy and our CTO, but they didn’t know it was me when they voted since the entries were anonymoized.  :)

Here is my “winning” entry below.  Since the award was given, I have received two emails from friends who said I am weird, and numerous emails who “congratulate” me.  What I have to say though, is my “weirdness” and fondness to be on the forefront of the consumer experience actually helps me get to where I am today.  I work with worldclass researchers whose knowledge are normally way over my head.  But I usually am pretty good and bringing the best out of them, and helping them translates their “Hot Ideas” into something that’s actually valuable to the end users…

Anyway, here’s the entry.  Anyone who can beat me, please feel free to post a comment.  ;)


Here are my Top Ten reasons when you know you are (too) hyper-connected:

 

  1. Instead of a magazine stand, I have an Amazon Kindle in my bathroom.
  2. I tell people not to leave me voice mail, but send me email or IM instead.
  3. The number of network enabled devices is 7 times the number of bedrooms I have in my house.
  4. We have 2.5 3G/WiFi mobile web surfing devices for every individual household member.
  5. I have 17 devices in the house with a LCD display (not counting appliances)
  6. I panicked for a good 5 minutes when my GPS brokedown, forgetting that I can actually use the paper map sitting right next to me in the passenger seat.
  7. I freaked out my dog/house sitter when she found out I know exactly when/what she does even when I am thousands of miles away.  My mobile phone tells me all the activities in my house, and even allow me to turn things on and off.
  8. My ebay transaction exceeded $100K one year (admittedly with 3 auto transactions).  And I am an expert in “Sniping” ebay deals using my mobile PDA.
  9. Our mobile electronics outweighed our luggage during my last vacation.  (2 laptops, 1 ipod Touch, 1 PMP, 2 Blackberries, 1 GPS, 1 GPS photo geotagging device, 2 walkie talkies, 2 Digital SLRs, 1 compact digital camera, and 1 HD camcorder.)
  10. We need another vacation just to sort thru the 80+GB of digital contents we created from our last vacation.

Nice and Crisp Definition of “Innovation”

Posted on October 7, 2008 
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I was invited to present at a SRI Innovation Forum a few weeks ago. Dr. Curtis Carlson, SRI’s CEO, gave a talk on the disciplines of Innovation (see his book  Innovation: Five Disciplines of Creating What Customers Want )

I really liked his nice and crisp definition of Innovation:

“Innovation is the Creation & Delivery of New Customer Value to the marketplace.”

Add the word “rapid” in front of Creation & Delivery, and I can pretty much use that as the mantra for the Incubator that I’m running…

He then went on and explain the need for a company and all its employees to learn the discipline of Customer Value Creation. They came up with a simple formula for Value Proposition:

NABC = Need, Approach, Benefits per Cost, and Competition

Typically, people come to us (the incubator) with a hot idea and they mostly talk about the Approach. i.e. the formula looks like this ==> nAbc

And most of us Corporate Angels are look for the N & C parts of the formula, thus we focus on NabC. And of course, our customers care about naBc.

Thus, we ended up with what Curtis calls a “Tower of Babels” where everybody talk a different language.

That is so true in what I observe as the mind gap between the Intrapreneurs and the Corporate Angels. The Intrapreneurs get all hot on a solution or a technology, and just don’t get why those idiots running the Incubators just don’t “Get It”. And vice versa.

So, if a company learns the discipline to work thru the NABC formula for all the “hot ideas”, it would go a long long way to closing the mind gap, and getting those ideas toward real business opportunities.

After his presentation, I chatted with Dr. Carlson and he promised to give me some personal coaching on the Innovation Culture program that I’m launching in 2009.  I can’t wait!

DrunkenDucks is now CorpAngels

Posted on October 5, 2008 
Filed Under Web Stuff | Leave a Comment

I have not kept the DrunkenDucks blog updated for a while, but decided to give it another go.  I renamed the blog to CorpAngels, since at the moment I am spending all my energy on running an Incubator at a large company.  I met a lot of like minded people, and a few industry luminaries who are kind enough to teach me the trade.  I decided to document my learning and  my journey here in this blog.  I also setup a Discussion Group in Linked-In called “Corporate Angels”.

I just refreshed all the WordPress templates, fixed the domain name, etc…  May actually start posting soon… Definitely.  May be….

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