Friday, May 22, 2015

How To Be A Successful Corporate Startup

By Brian Moelich
Business Designer
Innovation Enablement, CX


Organizations have the ability to generate innovative ideas, but are failing to integrate them back into the enterprise.


Innovation practices like design-thinking and lean startup are being adopted by organizations as the path to new growth. The challenge though is that as great as these practices are for generating and prototyping creative customer-centric ideas, rigorously testing them to gather evidence and make decisions based on that evidence, they fall short on how to incorporate those ideas into an enterprise.

From my experience incubating new ideas within an enterprise, I’ve found a few methods, when paired with innovation practices, increase the likelihood of those new ideas being pursued and accepted into the fold of the organization.

Understand who your stakeholders are and get their buy-in throughout the innovation process

Just as you use design-thinking to interview and understand who your customer is and what their underlying needs are, do the same with your executive and business unit stakeholders. Put yourself in their shoes. What is top of mind for them? What keeps them up at night? What are their needs?
As you generate new ideas, tailor your ideas to your stakeholders and create gains or solve their pains for them. Do this throughout the process and not just at the beginning. Take prototypes to your stakeholders and co-create with them like you would your customer.

Have all your strategy ducks in a row

Strategy in its purest form is about making choices and tradeoffs. You can’t be everything to everybody or you will be mediocre at best. Design-thinking and lean startup may not make strategy explicit, but successful corporate startups do.

As you learn who your customer is through interviews, prototyping & testing ideas and gathering evidence on what resonates, clearly articulate who that customer is. Go beyond just a persona and use language from the Business Model Canvas, because this is what corporations understand and want to hear.

Is your idea B2B or B2C? Is it a two-sided market? Where will you play geographically? How will your idea get into the hands of your customer? How will customers become aware of your idea and what will you do so that the idea is sticky with them? At what part of the production line will you play and do you need to partner with someone? What is the customer willing to pay for?

One last thing on strategy, explain why your customer will choose you every time over the competition. Your idea will be truly compelling to your organization if you can articulate, and preferably, visualize why you standout from the competition.

For example, Steve Jobs showing the iPhone back in 2007

Image credit: Earnest Kim

Model the financial metrics that matter

For a startup seeking funding, it’s a no-brainer to come prepared with a market size and capital expense estimate, revenue forecast, customer acquisition cost (CAC), average revenue per user (ARPU), lifetime value, churn, etc. Just as an investor loves to see these numbers, so to do organizational stakeholders. 

You will learn about possible revenue models and how much people are willing to pay for your idea through your innovation process and modeling these out will give you more information on the way forward. For each option, do quick back-of-the-napkin estimates for market size and expenses necessary to get to market. Think about customer awareness and activation, what will that cost and how much of your target market could you feasibly reach?

Understand what capabilities you will need and how they fit into your organization's existing capabilities

Organizations are great at understanding what their core capabilities are and what the necessary activities are that produce those capabilities. Your goal then becomes, knowing what the core capabilities and supporting activities are that your idea will need. I like to think in terms of an activity system, pictured below.

Example of Nespresso below, Credit: Heather Fraser

Use this then to compare to your organizations core capabilities and supporting activities. What can you leverage? What needs to be built out? What should be done in-house or should certain activities be outsourced to a partner?

Tell it all with a great story

When you’re ready to pitch the idea, sum all of this up, alongside everything you learnt along the innovation process, and help your corporate stakeholders understand the relevance of all of it with a heartfelt story.

Take the story of someone you interviewed. Explain who they are and emphasize their pains to allow the listener to empathize with your customer. Then get into what the future holds for your customer with your new idea in hand and how it delivers on their needs and solves their problems.

Now with your stakeholders primed, explain your idea with a clear value proposition, why it is better than the competition, how your organization is uniquely positioned to develop it and why they should care, i.e. the value it will create.

The success of corporate startups depends on more than innovation practices alone

Innovation practices like design-thinking and lean startup are great for generating new ideas, and I hope you’ve learnt a few ways to increase the likelihood of those new ideas being pursued by your organization.

Testing, Testing, 1, 2, 3: How Evite Turned Content Marketing Into Millions

By Victor Cho

Chief Executive Officer


From Evite's Ice Cream Sundae Bar guide, sponsored by Reddi-wip

Help users solve problems, deliver real value and make them smile, and they'll reward you with positive word of mouth and remember you when they're ready to buy: This is the promise, at least, of content marketing. But could it work for your company?  Here's how Evite tackled that question for itself.  

Pitch Perfect

Long known as the leader in online invitations, Evite set out in 2013 to expand on its mission with sponsored content about how to host a party. The hypothesis: This content would be compelling for both our users and our advertisers -- and could, in turn, deliver a significant additional revenue stream.

In the beginning, we experimented with content marketing with a team of just two employees who were originally hired to create content for SEO. We put together packages and pricing based on early competitive research and our sales team began pitching it along with more traditional forms of digital advertising. And within only a couple of months of launching content on Evite, we brought in our first content marketing deal.

Watch & Learn

We quickly developed internal guidelines for how we would showcase brands, both in text and images, which were challenged by a few sponsors eager to push a harder sell. And we learned some great lessons in those early stages. For one content deal, for example, we used promotional photos from the advertiser rather than shooting new images ourselves. Did it save us money and make the client happy? Sure. But users didn't like it. It felt too much like an advertisement, so our audience didn't share it, and meeting impression goals was tough. Based on that experience, we now shoot all original photos so the content feels like an organic, natural fit with our site as a whole; ultimately, that's best for the user -- and in turn, for the client.

Scaling the Mountain

Next, we developed a network of blogger experts to distribute our sponsored content, offering tremendous (and scalable) reach. For example, a Coke content marketing campaign that ran for two weeks in January racked up 12 million page views from blogger content distribution on top of the 200,000 from Evite alone. At the same time, we also encouraged these bloggers to contribute content of their own, allowing us to scale up to approximately a thousand articles and videos in 18 months. Translation? More page views, more profits.

What's Next

Recently we've begun exploring how to weave content more deeply into our product so the content becomes part of the user journey rather than a side trip; for example, we might promote tropical drink recipes brought to you by Dole Pineapple Juice right on a pool party invitation. In addition, we've expanded the model from sponsored advice for hosts to sponsored guest-focused content to take advantage of the dozens of guests we have for every one host.  

Evite has gained a significant new revenue stream and very rapid growth in our content scale via content marketing. For us, as for any company, the success of new consumer or advertising-facing products alike is built on testing and iteration.

Monday, May 18, 2015

Execution is 95% of What Matters: Delivering Great New Product Outcomes

Phil Swisher
Senior Vice President & Head of Innovation,
Brown Brothers Harriman

Guest speaker Phil Swisher shared his company's approach to innovation as he elaborated on two of the company's long-term goals: generating meaningful revenue from new businesses and building a stronger culture of innovation. BBH's approach to innovation is a strategy of what you do and do not do. An innovation does something different than the core business. The same mindset and processes of the core business will not lead to different outcomes. He also articulated some things his company will not do when it comes to innovation, which included ROI analysis, creating detailed business cases, allocating costs to other business units, and attending boring corporate meetings.

Six primary activities practiced by BBH involving solution building and infrastructure building:

  1. Pursue ideas using team and firm resources for direct idea advancement
  2. Utilize an internal venture capital fund for funding the commercial ideas of others
  3. Seeks external wisdom, engages with the rest of the world for insight
  4. Innovation, used as a catalyst
  5. Innovation, used inside the firm
  6. Metrics and advocacy

Use a different measurement methodology to determine how innovative your new product or service really is. It can be best described as a cumulative test asking questions such as, “Who else currently offers this product or service?” Points are awarded based on the multiple choice answer picked. The higher the score, the better.

When building innovative new products, alignment across four populations is critical: the innovation team, business unit management team, IT department and one of BBH's 38 owners. Approval is required only from the partner who oversees innovation and the partner who oversees the business unit in which Innovation is investing.

Swisher suggests that management ask the following questions of top performing management teams in order to make innovation a strategic priority:

  • What commercial projects is your team working on, where outcomes are uncertain?
  • How are you building innovation into the lives of your team members?
  • For each member of the management team:
  • How are you participating directly in the creative process?
  • In the past month, how many clients have you spoken with, excluding sales situations and service problems?
  • Who has made the most significant positive impact on your innovation efforts?

Deployment Values for best practices:

  • The standalone revenue generated by Innovation’s new product
  • The revenue benefit of the new product retaining clients of the core who would otherwise have left
  • The revenue benefit of the new product helping the core business win new clients, or new business from existing clients
  • The technologies, people and methods used by Innovation set new benchmarks and precedents, which increases the knowledge, permitted toolkit, and capabilities of the core, and creates productivity improvements and cost savings in the core
  • Portions of Innovation’s work, both product development work and product’s code, can be reused or adapted for projects in the core, which increases speed and quality while reducing costs

Career advice from Mr. Swisher: The world is small, life is cumulative, always look for ways to help others. Optimize for great mentors and maximum learning, especially earlier in your career. Be passionate about the major areas where you invest your time. Have a runway – you can’t negotiate unless you can walk away. 

"If It Ain’t Broke – Fix It!" Innovate Your Business Model with the Internet of Everything

Rachael McBrearty
Chief Creative

Cisco Consulting Services

In business today, industry disruption is a given and it’s only getting faster.  Companies can’t afford to just manage the balance sheet and assume because the numbers look good, that everything is ok.  I believe, the expression, “if it ain’t broke, don’t fix it” needs to be banned from today’s business vernacular. We should no longer assume that if something’s working adequately well, we should leave it alone. We need to think about what this pace of innovation means for tomorrow, and we need to start planning today.

The ability to ensure the success of your business’ future is dependent on successfully
designing new business models – innovating before disruption hits. If you are not prepared, when it does hit, the knee jerk reaction will be to rationalize operations, to buckle down on the model that made you successful, even in the undeniable face of market transitions and new business dynamics.

We’ve already been to this movie.
Borders Books was at the top of Forester’s Customer Experience Index the year it went bankrupt – failing to grasp the significance of the Internet as a way to deliver their product, not just sell it. A Kodak engineer invented the first digital camera in 1977. Knowing that the market was changing, Kodak; conducted an accurate assessment of the market shift and was able to produce a real technology breakthrough. But without the right business model, they still failed.

What’s fascinating about these examples is that both companies seemed to understand what was coming, but they didn’t change their operating model to be flexible to quickly adapt.
  When the game changed they kept playing by the old rules, failing to innovate on how they delivered their goods and services and instead only focused on what and who.

A large part of what’s driving today’s disruption is the ability to connect the physical world to the Internet – and by doing so fundamentally change the way we are able to interact with it.
  At Cisco we call this the Internet of Everything (IoE).  IoE is the smart connection of people, process, data and things that enables a new level of digitization of processes.  “Things” get smarter and more responsive to our needs, communicating between themselves, and acting on our behalf.

Disney has Magic Bands, Apple beams content to you based on where you are standing in the store. The German postal service is using drones to deliver mail while the City of Barcelona’s Smart Parking enables finding and paying for parking from a phone. We are connecting people in entirely new ways.
 The ability for companies to succeed in this new IoE world will depend upon their ability to put the tools in place to quickly execute ideas at scale.

The Internet of Everything Digital Methodology
If hyperconnectivity is driving the need for new business models, then companies must also re-think their process for developing and implementing new ideas quickly.  Any base process must include rapid prototyping to simulate the new processes and capabilities and modeling the impacts over time and scale.  Prototyping enables the flexible and agile design necessary, while also providing a first hand experience of the desired future state that everyone can move toward.  

Here are some other things to consider when developing new ideas and business models to ensure success the first time:

  1. “To Be” Process Simulations: By focusing on the customer’s ultimate need, and using process simulation tools to imagine various implementation scenarios. We can digitize the As-Is and To-Be Customer Experience for how to deliver those goods and services in new ways.  For example, Uber was focused on “how do we better help people get from point A to B,” when they came up with the idea of the taxi coming to you rather than having to find one, imagine them quickly mapping out this process and now they continue to innovate as new technology becomes available 
  2. Design the Target Operating Model: Sometimes a seemingly simple change in the way things are done can have a significant impact on an organization. So it’s also critical to prototype different organizational capabilities and employee functions to deliver on the new processes. To complicate matters, IoE solutions often require an ecosystem of partners (some of them very new from the ones of the past). Bringing together all parties with a stake in the decision to explore implementation options is critical. Managing this ecosystem is no easy task as Disney found out when implementing their Magic Bands. 
  3. Build a Business Case Modeling tool: No project will move forward to scale without a solid business case. You need to make sure that the results of all the process modeling and operating prototyping are integrated to identify the optimal ROI – and that the inputs are flexible enough to adjust for changes in market conditions. Create a business case tool that enables the entry of different variables to enable the identification of profitable outcomes.
The IoE era is accelerating the pace of change and innovation.  Things that seemed fantastic only a few years ago are actually happening today. So don’t be in an “ain’t broke” mindset. Competitive advantage today is defined by the relative speed and ability of a company to change a business model – a model that adjusts faster when an enterprise is digital. As the world moves faster, it is even more important to ensure managing your “job to be done” is not just to meet those quarterly numbers.  Lead with new tools that enable you to envision your future possibilities from tapping into the power of the Internet of Everything.