Dashboarding for Innovators

8/10/2019 Dashboarding for Innovators

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BUSINESS

ENTREPRENEURSHIPWHAT IT TAKES P17DALE MURRAYVOICE OF A BUSINESS ANGEL P24DOMINIC LAKETHE CANTEEN WAY P25

will only take you so far. You cannotcost-cut your way to greatness, as thesaying goes, though the likes of Ryanairand Wal-Mart call such a statementinto question.

The unfortunate result of all thisis what Bill Joy, a co-founder of SunMicrosystems and now a venturecapital investor, calls the innovationgap in large companies. But theres

MEASURING UP

DASHBOARDINGFOR INNOVATORSIf you cannot measure it, youcannot improve it, remarkedLord Kelvin in the 19th century.Organisations and managers havebeen heeding his advice ever since.But what does this mean for newventures? John Mullins and

Randy Komisar measure up.

Launching a radically new productor a new venture whether tuckedaway in a corner of a large companyor in the garage of a spanking newstart-up full of hope and enthusiasm

is never easy. But theres a pairof problems that makes this newventure challenge especially daunting,wherever it is found. First, everybodyknows what happens to mostnew ventures, their rosy forecastsand well-crafted business plansnotwithstanding. They fail. Second,for those that do eventually succeed,most of the time the business that isultimately successful bears modest

sometimes, little resemblance towhat was conceived at the outset. Forthe business we now know as PayPal,what ultimately worked was MaxLevchins seventh idea for howto apply his cryptography expertise.

Thus innovation is risky, andcompanies worried about their quarterto quarter stock market performancetoo often shy away from it. But withoutinnovating, companies are sooneror later left in the dust. Cost cutting,perhaps essential during a downturn

entrepreneurs, fully aware that Plan A,their initial idea, is unlikely to work outas planned, have borrowed a great toolfor better managing their innovationefforts from big companies and,counter intuitively but wisely, turnedit upside down.

That tool, the dashboard, as used inlarge companies, brings together a setof key performance indicators (KPIs)

For PayPal, what

ultimately workedwas Max Levchinsseventh idea.

01 A sign for Internet paymenttransaction portal PayPalstands outside the eBayGermany headquarters.

02 Max Levchin, co-founder ofPayPal and current chiefexecutive ofcer of Slide Inc.

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There are many explanations whybig companies dont innovate:culture, incentives, risk aversebehaviour, and more. Arguably,the recent infatuation with openinnovation is a reection ofthis fact and an admission thatthey might as well just give upat innovating internally and buytheir innovations outside, ascompanies like Cisco and, morerecently, Procter & Gamble, doso successfully. Our researchsuggests that big companiesfailure to innovate rests, at

least in part, on inappropriate ormisaligned expectations of theirnew ventures, as can be seen inthe following table:

WHY BIGCOMPANIESDONT INNOVATE

REALITYPlan A rarely worksManagements real jobis to nd a Plan B that

will actually workEffective use of a dashboardmeans empirically testing afew life-or-death assumptionsso that course correctionsare made quickly, before too

much time and money aresquanderedThe right kind of new ventureleader is one skilled atexperimentation and learning

EXPECTATIONPlan A will workManagements job isto faithfully implement

the plan they pitchedRigorous use of a dashboardwill make sure the plan getsimplemented and the shipremains on its intended course

The right kind of newventure leader is one skilledat implementation and atachieving the plan

01 Cisco Systems: The worldsbiggest start-up company,San Jose, California, U.S.

02 P&G: In innovation we trust.03 Everyday Low Price signs are

displayed at a Wal-Mart storein Secaucus, New Jersey, U.S.

veers ever-so-slightly off course. Anydeviations are quickly spotted so thatadjustments in people, processes,strategies and more can be made toget the ship back on course.

Dashboards in new venturesKeeping the ship on course, however,is probably the wrong thing to do in anascent venture, where what is likelyto work is not what was planned atthe outset (never mind the originalbusiness plan, which probably arguedit would!). Our research has shown usthat dashboards are, indeed, powerfultools for navigating the unchartedwaters in which new ventures sail.

But their purpose in such settingsisnt to keep the venture on course. Itsto capture data from the marketplaceand signal that mid-course correctionsare urgently needed, because PlanA is not working as expected! Is thissubtle but radical difference, togetherwith the expectations that underliebig-company dashboards, one reasonwhy most large companies dontinnovate well? (See Sidebar: Why BigCompanies Dont Innovate) And doesit also hold a key to understanding whyso many new ventures of any kind fail?Might it even hold a key to moving thenew venture failure rate needle down afew notches?

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Their efforts were deemed innovativeand successful. Yet the results weredisappointing and unsettling: Whittleand Kuraishi were not condent thatthe large amounts of money they wereinjecting into the country were havingthe impact they were seeking, northat it had reached the people on the

Lets consider an example. DennisWhittle was frustrated. He had justspent a year developing new processesthat would help the World Bank,where he was a senior executive, ghtpoverty. He had at his disposal a $5million budget and the services of atop consulting rm. He, his colleagueMari Kuraishi, and their team ofdevelopment professionals were runninga programme that had funneled billionsof dollars to the Russian Federation forEconomic Development.

GLOBALGIVING CASE STUDY

DASHBOARDSLIGHT THE WAY

A woman pushes a baby strollerthrough a run-down housingdevelopment in KamchatkaPeninsula, Russia.

Theirs was a familiar problem:funds targeted at urgent human needsdidnt always end up where they were

intended to go. All too often, too manyof the funds seemed to nd their wayinto the personal Swiss bank accountsof government ofcials. In Whittlesview, a radical new approach wasneeded. He asked Kuraishi to joinhim and help shake things up.

Kuraishi quickly pulled togetherstrategy staffers and personal friendsfrom other parts of the bank foran all-day brainstorming session.They divided a whiteboard into twosections. The left side was labeled

Existing World Bank Processes andthe right, What Is the Opposite?On the left, they wrote things liketop-down loans; $100 million grants;two-year processing time; 200 pagesof documentation; and on the right,bottoms-up grants; $100,000 loansor grants; two-day processing time;two pages of documentation. Theoutcome of this process looked nothinglike what constituted business as usualat the World Bank.

A development marketplacesparks an ideaIn February 2000, 700 peoplecrowded around 270 cramped boothsin the usually pristine atrium of theWorld Bank in Washington. Eachwas intent on pitching an idea foralleviating poverty in the rst-everDevelopment Marketplace. Thesenalists had been selected from1,130 applications from more than100 organisations based in morethan 80 countries. The proposalswere limited to four pages, and a15-minute presentation.

At the end of this two-daycarnival of ideas, James Wolfensohn,

Their efforts weredeemed innovative andsuccessful. Yet the result

were disappointingand unsettling.

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stood on the stage and made awards

totalling $5 million to 44 teams.The event was an overwhelmingsuccess. As Whittle explained, TheDevelopment Marketplace not onlysurfaced exceptionally innovativeideas and projects, but it enabledfunding decisions to get made in twodays, lightning speed by World Bankstandards. This was a radical and eye-opening innovation.

When the awards ended, a SouthAfrican woman approached Whittleand Kuraishi. In a strong voice,

she said, I did not win. Whittlereplied, Well I am sorry, but this isa competition, and not everyone canwin. She retorted, I am telling youthat my idea is a good one, and justbecause the World Bank did not nanceit does not mean that there are notothers out there who will nance it.

Whittle was haunted by thetruth of the womans words. Severalmonths later, he and Kuraishi walkedaway from successful careers in thedevelopment establishment. They werecommitted to building a marketplacefor development project fundingwhere there could be more winnersthan losers. It would prove to be achallenging journey.

Building a dashboard

With not very much effort, Whittleand Kuraishi identied more than1,000 compelling projects in developingcountries that could make a signicantimpact with a small to moderateinfusion of funding. It seemed logicalthat if projects like these could bemade visible to a large communityof potential funders, money wouldow. But their business was far fromproven, and it felt too early to establisha foundation to channel charitablecontributions to their favourite projects.So the pair established a partnershipwith the nonprot Calvert Foundation,which had the necessary apparatusfor accepting tax deductible donationsunder the U.S. tax system, an importantincentive for American donors.

But the crucial issue was whetherWhittle and Kuraishi could harness theinternet an eBay for developmentprojects, in a sense to match

development projects in an efcientand economically sustainable manner.In particular, there were three keyquestions, leaps of faith, as we call them:1 Will attractive, high quality,

legitimate projects participateover the internet?

2 Will sufcient numbers of donorscontribute directly over the internet?

3 How can we fund and structurethe marketplace to achieve nancialsustainability? In other words, is therea business model that will work?

Getting answers to thesequestions the fundamental life-

or-death issues that would determinewhether their idea had real potential

meant launching a pilot siteand experimentally testing somehypotheses. They built a dashboardto guide and track their experimentaljourney, as shown on the next page.

Disappointing data

Happily, there was an immediate andpositive response to the DevelopmentSpace concept. Donations began totrickle in. The news media gave the

venture positive coverage as well. Butthe challenges outweighed the goodnews. Development Spaces results

assurance as to the quality indeed,the legitimacy of the projectslisted on their website. Based on theeBay analogy, Whittle and Kuraishienvisioned the same kind of userrating system that was so powerful foreBay. Why couldnt donors rely on theratings of other donors to gain comfortabout project quality?

But two things made this clearlyunworkable. First, the recently enactedPatriot Act required signicantvetting of charitable contributionsto ensure that funds were not goingto organisations with terrorist ties.Second, before making a charitablecontribution, donors wanted assurancefrom a credible third party thatthe project was sound. As Whittleexplained, People were comfortablebuying things on the basis of theopinions of other consumers, but theywanted reliable expertise involved inhelping them nd legitimate projects tofund with their philanthropic dollars.The model would have to be adaptedto identify projects through crediblesponsor organisations who couldconduct due diligence on the ground.

Another problematic hypothesisinvolved donors. Based on the eBayexperience, the hypothesis was that

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contribute directly to internationaldevelopment projects. And even Heifermade no clear link between individualdonors and specic recipients, asDevelopment Space wanted to do.

Finally, the team found that relyingon the Calvert Foundation website toprocess donations created a disjointedcustomer experience. In fact, donorsfelt as if they didnt know where theircash was going once they were sent tothe Calvert website.

A funding drought

To make matters worse, the dot-combubble had long since burst. Financialinvestors werent lining up to putmoney into an internet marketplacefor global development. Andunfortunately, Whittle and Kuraishineeded a small infusion of cash to staytrue to the pleas of the South Africanwoman, as well as for many otherworthy projects. It had been more thantwo years since her words had kick-started their entrepreneurial journey.

Their difculties might havecaused them to give up. But Whittleand Kuraishi were determined to

keep going. As Whittle recalled, Eventhough the marketplace was not takingoff as quickly as we had expected, we

01 GlobalGiving project:Rehabilitating healthcare facilitiesand services in areas of Pakistanaffected by the severe oods.

02 Dennis Whittle, CEOof GlobalGiving.

03 Hewlett-Packard (HP) wasinterested in DevelopmentSpace from the start.

04 GlobalGiving project: Providingmicroloans, business trainingand technical support tostruggling South Sudanesewomen refugees in Uganda.

would come. But the marketplacefor used stuff that eBay broughtto the Web already existed in theform of classied ads and garagesales. The same wasnt true of themarketplace for global developmentprojects. Total spending on foreignaid programmes was running closeto $100 billion per year, with roughlyone-quarter to one-third of the fundscoming from private individuals,companies and foundations. But therewere few vehicles other than Heifer

We were learning at a rapid pace and

needed to adapt our approach basedon what we learned. The data, asreected in the initial dashboard, werespeaking loudly and clearly. While theirinitial dream remained alive, the initialidea simply was not panning out asoriginally conceived. It was time forPlan B.

Development Space becomesGlobalGiving

Whittle and Kuraishi created a Plan Bthat was markedly different from their

rst set of ideas. On the project side,new emphasis was placed on buildinga sponsor network and relying onsponsors to identify and help positionsuitable projects for the marketplace.Ashoka, a highly credible organisationthat identies and builds networksamong promising social entrepreneursin the developing world, signed up asthe rst project sponsor. With Ashokacame a chain of relationships, as well astrust, giving projects credibility.

But the venture was desperate for

new donors. What good was it to haveprojects if there were no funders?This was the area where the initialhypotheses were furthest from thereality that had unfolded to date.Fortunately, Hewlett-Packard (HP)had been interested in DevelopmentSpace from the start. As a technologycompany committed to innovation andsocial responsibility, HP was looking forways that technology could accelerateeconomic development beyond thebridging the digital divide concept ofgiving everyone access to the internet.

Excited by Whittles and Kuraishisidea to use the internet to transformglobal development funding, HPinvited Development Space to be a partof its employee giving campaign. Thiswas a big Aha, a way to aggregatedonors in a potentially much moreefcient fashion, without spendingscarce resources on donor acquisition.

In addition, the time was ripe forDevelopment Space to establish afoundation of its own, to clear up theconfusion created when donors weredirected to the Calvert Foundation. Atthe same time, the company changedits name from Development Space

HP was looking for

ways that technologycould accelerateeconomic development.

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foundation took as well. A separateboard was set up for the foundation

and appropriate mechanisms wereput in place to provide the level ofindependence needed to ensurelegal compliance.

GlobalGiving had evolved anancial model that depended onmany components, one of which wasphilanthropic support for the newfoundation. Thus, at about the sametime, Whittle and Kuraishi launched amajor fundraising campaign, targetingfoundations and high net worthindividuals, and attracted enoughmoney to take the next steps.

Last, the original, barebonestechnology platform needed work.Whittle and Kuraishi needed bettertools for tracking and analysing trafc

and user behaviour, and they needed anew-look website to improve usability

and the overall donor experience.With all of these changes, it wastime for a new dashboard to afrmor refute their new leaps of faith. Thethree initial leaps of faith remainedunchanged, as neither the companysability to attract enough good projects,enough donors, nor build a businessmodel that would work had beenproved in the rst iteration. Basedon the learning from the earlierdashboard, however, the hypotheseswere updated to reect the decisionsthat embodied GlobalGivings Plan B.

When the new site was launched,things started to pop. With Ashokaas a project sponsor, the oodgatesopened, in part due to the credibility

that Ashoka lent. Three hundredprojects came so fast and furiously

that the team temporarily stoppedadding projects to avoid an untenableimbalance between the numberof projects listed and the volumeof contributions coming in. OnceHPs employee giving campaign gotunder way, the almost immediateuptick in the number of donors anddollars provided an all-importantpsychological boost for the team.

HP also helped promote this ideato other companies. Partnerships withseveral other companies, includingVisa, Advanced Micro Devices, and theNorth Face soon followed, augmentingthe original open marketplace modelwith customised sites for specicorganisations.

Is GlobalGivings Plan B working?

As we write, GlobalGiving hasfunded thousands of projects and hasestablished a strong sponsor network,as well as robust mechanisms to ensureproject legitimacy. While these numbersare not entirely on track with earlyprojections, momentum continuesto accelerate and the team remainscommitted and optimistic. Whittle andKuraishi now laugh about some of theirearly hypotheses and how much theyhave learned. Plan A did not stand achance, but Plan B is working!

What lies ahead for GlobalGiving?Continuous learning to driveinnovation lies at the very heart ofthe GlobalGiving culture. As DennisWhittle says, What matters most isnot the quality of the initial businessplan, but instead the ability of the team

to iterate successive business plansas a means to nding what works.The trick is to experiment quickly butintelligently, and with discipline.

The trick is toexperiment quicklybut intelligently, andwith discipline.

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GlobalGiving project:Haiti earthquakerecovery programmehelping survivors rebuildcommunities and get

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Four themes stand out in theGlobalGiving story: 1 The founders laser-like focus on

the biggest risks on the table ateach point in time

2 The changing nature of thedashboards as the nature of theunanswered leaps of faith changedover time

3 A considerable emphasis onquantitative measures

4 An experimental mindset thatassumed from the get-go that PlanA probably was not quite right.

While dashboards nearly everywhereembody the third of these themes, itsthe others that set entrepreneurs use

of dashboards apart from that of theirbig-company brethren.New venture dashboards will differ,

of course, from venture to venture,reecting the prior experiences of themanagement team, the organisationsculture, the nature of the current leapsof faith on the table, and the stage ofthe business. But their essence endures:

Leap of faith questions arethe drivers

These generate hypotheses Which are tested with clear metrics At a particular point or period

in time Yielding insights for decision

making and, in all likelihood, formid-course corrections, too.

Using dashboards to drive yourinnovation process

Any dashboard is only as good as theunanswered questions or unveriedassumptions the leaps of faith that drive it. How can you come upwith the leaps of faith that really matterright now? Ask yourself any or all ofthe following questions:

What assumptions underlying yourventure make you feel uneasy, or

What would you like to know thatyou dont?

What information would lead youto a different conclusion than the oneunder which you are operating now?

What crucial question, if answeredafrmatively, would make you feel

vastly more comfortable that yourventure is on the right track? What crucial question, if answered

negatively, would cause you to alteryour course immediately?

What to tell your investors

Almost every new venture requires atleast some money from somewhere.Whether your backers are your largecompanys innovation unit or a start-ups three Fs (family, friends, or fools)or perhaps angel investors or VentureCapitalists, the reader might wonderhow these perhaps controversial ideas

that the Plan A in which they investedprobably isnt going to work will playout in the eyes of their investors.

The good news is this. The best ofsuch investors those who have beendown the entrepreneurial path manytimes before know that changing theplan is simply part of the landscape. Ifyou pitch properly up front enticinginvestors to join you and fund yourexperimental and carefully disciplined(thanks to your well thought outdashboard) journey to a better Plan B,with all of the risk (your leaps of faithand more) which that journey entails

DASHBOARD LESSONS

NEW VENTUREDASHBOARDS

GLOBALGIVING: PROBLEM SOLVING

LEAP OF FAITH QUEARE THE DRIVER

THESE GENERATHYPOTHESES

WHICH ARE TESTWITH CLEAR MET

AT A PARTICULAR POR PERIOD IN TIM

YIELDINGINSIGHT

Measures begin with questi

THE ESSENCE NEW VENTURDASHBOARDS

DASHBOARD LESSONS NEW VENTURE DASHBOARDS


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THE AUTHORS JOHN MULLINS [email protected] is Associate Professorof Management Practice inMarketing and Entrepreneurship

at London Business School.RANDY KOMISARKomisar is a partner at KleinerPerkins Caueld & Byers.They are co-authors ofGettingto Plan B: Breaking Throughto a Better Business Model .

come back and tell them the data havespoken, and that its time to change toPlan B or Plan C.

You may have to do a bit ofeducating of your investors ifthey are not very seasoned or are toocorporate in their thinking aboutthe realities of these journeys. Forthis purpose, it might help to remindthem about the story of PayPal. Even ajourney that gets to Plan G can have avery happy ending.

No panacea

Dashboards offer no panacea toinnovators, of course, whether incompanies large or small, old or new.The rampant uncertainties inherent inany real innovation effort will not go

away. But well-chosen dashboards offerseveral key benets that entrepreneursin any setting should not overlook:

They help management focuson resolving the most criticaluncertainties at the current pointin time.

They help management kill projectsquickly when killing is whats calledfor, given the evidence at hand.

Their output is, for the most part,numbers, not words. Numbersspeak volumes about what is reallyhappening in a new venture.Words, all too often, simplyobfuscate the truth.

Good dashboards redirect attentionfrom what are often pie-in-the-skyforecasts toward the factors thatactually determine whether, when,and at what cost revenues willactually ensue. Sadly, forecastingrevenues for truly innovative newventures is folly, despite the fact thatinvestors or top management wantto see such forecasts.

They align managers mindsets with

the reality that their job in leadingan entrepreneurial start-up oranother kind of innovation projectis not to awlessly implement theplan proposed at the outset. Rather,it is to learn as quickly andinexpensively as possible whichparts (if any at all) of that plan arepretty much on target and whichparts are wrong. And then changecourse to a better Plan B.

So take off those rose-colouredglasses. Ditch the straightjacket that isPlan A. And get started on a learningjourney that just might take you andyour backers to a much more viable

Effective dashboarding can createaccountability and metrics, based onexplicit leaps of faith, where the classicR&D process does not.

Intuit has a long track record ofinnovation with products likeQuickBooks, TurboTax and Quicken,but keeping its innovation vibranttakes vigilance.

Angus Thomson, the General

Manager of Intuits new Grow YourBusiness Divison at Intuit division,shared the ideas in this article with histeam. They embraced it, leading toquicker cycles and some surprisingoutcomes on innovation. Specically:

They created hypothesis statementsfor each of the divisions R&D projects

The project teams and leadershipjointly agreed up-front on specic,quantitative criteria and deadlinesfor the next funding round

Funding rounds were threemonths or shorter

User growth, funnel conversion andnet promoter data were prioritisedover revenue growth as criteria forearly stage projects

These criteria and progress againstthem were published company-wide in an Innovation Dashboard,reinforcing transparency

In two cases, teams advocatedthat they cease work on their ownprojects as the data came back

After six months, half of the projectswere still funded

Teams were energised by theclarity, challenge and ownershipin the process

User and revenue growth sharplyincreased as the teams have doubleddown on what is working best

An important learning was theheightened importance of careercoaching. What happens to me if myproject gets cut? was a commonly andunderstandably expressed fear. Thedivision signicantly increased careerguidance and coaching to ensure that

great contributors succeeded at Intuit,even if their particular project did notmake the hypothesis-based cut.

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