Download - TLC 2015 Breakout “Disruptive Innovation”
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Innovation StudioA New Method for Disruptive Innovation
Giff Constable, CEO of Neo Innovation May 28, 2015
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Portfolio Team
Autonomy Structure
@giffco
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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
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Analog > Digital
Image: https://www.flickr.com/photos/guysie/6095265888 @giffco
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Image: https://www.flickr.com/photos/62693815@N03/6277209256
@giffco
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Image: https://www.flickr.com/photos/downhilldom1984/6089311342
@giffco
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Image: https://www.flickr.com/photos/aturkus/255736904
@giffco
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Sustaining Disruptive
@giffco
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Previous Attempts
Image: The Alto personal computer in 1973. (PARC/Xerox) @giffco
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R&D labs
Incubators
Startup accelerators
Crowdsourcing
Shark tanks
IP Licensing
@giffco
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Find lessons in the startup ecosystem
Image: https://www.flickr.com/photos/sadsnaps/3731785398 @giffco
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Portfolio Team
Autonomy Structure
@giffco
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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
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5 Shots on Goal
2"
1" 1"
0" 0" 0" 0"
Fail" <=1x" 1,5x" 5,10x" 10,20x" 20,50x" 50x+"
@giffcoSource: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think
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20 Shots on Goal
8"
5" 5"
1" 1"
0" 0"
Fail" <=1x" 1-5x" 5-10x" 10-20x" 20-50x" 50x+"
@giffcoSource: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think
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50 Shots on Goal
21#
11#
13#
3#
1# 1#0#
Fail# <=1x# 1-5x# 5-10x# 10-20x# 20-50x# 50x+#
@giffcoSource: Seth Levine, Correlation Ventures data, “Fail” category estimated http://www.sethlevine.com/wp/2014/08/venture-outcomes-are-even-more-skewed-than-you-think
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innovation team
everything else in the
world
Image: https://www.flickr.com/photos/wwworks/8026343276
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This used to be prohibitively
expensive
@giffco
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Open source software
Cloud infrastructure
Cheaper prototyping
Cheaper initial distribution
Lean startup methods
@giffco
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Done right, enterprise can be more capital
efficient than VC
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Example: Aprizi and 7 business models
@giffco
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Portfolio Team
Autonomy Structure
@giffco
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What do they look like?
Image: https://www.flickr.com/photos/kwl/4700247712 @giffco
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• Risk Tolerance
• Resilience
• Chaos
• Generalist
• Creative
• Action
• Experience
@giffco
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Business
Design Engineering
@giffco
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Execution, not just ideation
@giffco
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Can you get them?
(hint, it’s not about equity)
@giffco
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Mission Mastery
Autonomy
tip: read Drive, by Dan Pink @giffco
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Portfolio Team
Autonomy Structure
@giffco
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Product ownership is essential
(this does not have to mean equity)
@giffco
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Autonomy comes with accountability
@giffco
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You need a team captain
Image: Star Trek, Paramount @giffco
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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
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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
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Good startups also have a board
@giffco
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Ideally not this
Image: The Hudsucker Proxy, Warner Bros. Pictures @giffco
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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
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Autonomy is not isolation
@giffcoImage: https://www.flickr.com/photos/scragz/2715873958
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Portfolio Team
Autonomy Structure
@giffco
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Big companies have unique challenges
Image: Monsters Inc, Pixar
@giffco
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This requires the right structure
@giffco
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Image: Pixar
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Parent Company
Studio
@giffco
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Parent Company
Studio
@giffco
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Parent Company
Studio
IDEA
IDEA
IDEA
@giffco
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Parent Company
Studio
IDEA
IDEA
IDEA
Point 1: execution, not just ideation!
@giffco
Point 2: some of the team must stay with the idea!
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Parent Company
Studio
Team 1CEO
DesignerDeveloper
(tbd)
Team 2CEO
DesignerDeveloper
(tbd)
Board
GMProduct Lead
SharedBranding
Content StrategyBD
SME
CEO Entrepreneurial Expert Domain Expert GM
Advisory Board @giffco
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Parent Company
Studio
Team 1CEO
DesignerDeveloper
(tbd)
Team 2CEO
DesignerDeveloper
(tbd)
Board
GMProduct Lead
SharedBranding
Content StrategyBD
SME
Advisory Board
How far to sandbox?
@giffco
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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
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Sandbox doesn’t mean secrecy
(use transparency to build bridges)
@giffco
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Strategic Constraints
(company vision) (strategic thesis)
@giffco
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Two Levels of Metrics
@giffco
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Studio LevelExternal 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
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Dangerous Metrics
• Number of ideas
• Time / resources per idea
• Near-term Revenue
• Near-term Profit
@giffco
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Idea Level Metrics
@giffco
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What does success look like?
Image: Back to The Future, Universal Pictures
@giffco
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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
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Failure Points to Solve
• Growth capital for the ideas that deserve it
• Hand-offs
• Quarterly EPS pressures
• Success theater
• and…
@giffco
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Portfolio Team
Autonomy Structure
@giffco