Open Innovation & Corporate Venturing - Corporate meet Startups as a source of Innovation
Systematic Business Innovation for Startups
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Transcript of Systematic Business Innovation for Startups
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Systematic Business
Innovation
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Start-up Grow-upStay-up
10/12 30/35
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Start-up Stay-up
10/12 30/35
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Start-up Stay-up
•You’re drowning in paperwork -
especially financial
•Quality of work is starting to slip
•Cash flow is bumpy
•Gaps appear in communications
•Team morale is not so great
•You feel overworked & stressed
10/12
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Is Money the Answer?
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“The unfortunate truth is only one percent of (tech start-up) business proposals receive funding from
angel investors or venture capitalists or private equity” – Startup Addict Blog
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So think what the percentage is for entrepreneurial companies that are NOT start-ups: agencies, content
producers, service companies etc.Businesses that don’t scale.
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If money isn’t the answer – what is?
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In 35 years I’ve not seen a
single early-stage company
that couldn’t be more efficient
as a business
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Founders Focus Obsessively
on The New Thing They Do
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While the business vehicle they’re building to make & market
The New Thing They Do just isn’t up to the job
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It’s flimsy, home-grown, unstable, and an inefficient way to get from A to B
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Product/Service
Process/ Workflow
Leadership/ Management
Business Model
People/ Skills
Marketing
Turnover/ Sales
Net Profits
Structure
By ‘Business’ I don’t mean finance. I mean all the things that – together - enable you to generate revenue &
profits from your product or service.
I assume that you can deliver your product or service .
‘Business’ is everything else you need to do to create a profitable enterprise.
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Home-grown business ‘vehicle’
Business inefficiencies
‘Leak’ profits from producing
& selling product
Not enough profit to reinvest
in growth
Business stays stuck in Start-Up
a home-grown business vehicle
stops you motoring
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Poor project management so
jobs overrun
No ongoing job profitability
analysis
They’re ‘busy’ , have revenues, so think it’s OK
No money to invest in s@#t-
hot PM
End of year accounts show 5% Net Profits
agency that builds websites for retail clients
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Flat structure: 2 founders + very
young team
Founders get jobs in & look after clients
No-one managing team so poor quality control
Lowers job profits, reduces their biz dev effort, slows growth
Founders have to step in to sort
jobs out
social media marketing/PR
agency
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All early-stage businesses have – under the hood - these‘invisible inefficiencies’.
If you can identify these and reduce them, you can ‘find’ the profit to fuel
growth organically.
(what ‘funding’ often does is allow these inefficiencies to remain invisible)
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JosephSchumpeter
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“Creative Destruction”
Creative Destruction
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“Creative Destruction…
incessantly revolutionizes the
economic structure from
within, incessantly destroying
the old one, incessantly
creating a new one.”
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INVENTION
INNOVATION
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They haven’t taken on board his distinction between Invention and InnovationINVENTION INNOVATION
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They haven’t taken on board his distinction between Invention and Innovation
INVENTION + INNOVATION= ENTREPRENEUR
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“This should be as demanding and exciting as inventing the thing you do”
Every aspect of it
An entrepreneur also innovates the entire business that creates &
delivers the new thing they do
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When you
Invent and Innovate
it can produce
extraordinary success
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But that’s not what most early-stage
entrepreneurs do
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Systematic
Business
Innovation
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A Business is a System
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“A set of interacting or
interdependent components forming an
integrated whole”
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“A set of interacting or
interdependent components forming an
integrated whole”
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Product/Service
Process/ Workflow
Leadership/ Management
Business Model
People/ Skills
Marketing
Turnover/ Sales
Net Profits
Structure
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Product/Service
Process/ Workflow
Structure
Leadership/ Management
Business Model
People/ Skills
Marketing
Turnover/ Sales
Net Profits
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How do you grow a
business in a Systematic
way?
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every detail, every element
must be building towards your
ultimate Vision
It’s like directing a film:
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it’s a way of seeing and understanding your
business.
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it’s about how you use your
own creativity to innovate
your whole business
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Let’s get closer to the real world of running a business.
Let’s start by talking about burgers.
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THE NEW THING THAT YOU DO
BUSINESS ENGINE
BUSINESS STRATEGY
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BUSINESS ENGINE
BUSINESS STRATEGY
THE NEW THING THAT YOU DO
Deciding where you want to go as a business and planning how to get there
The mechanics of the business; how it functions efficiently day-to-day
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THE NEW THING THAT YOU DO
BUSINESS ENGINE
BUSINESS STRATEGY
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OPERATIONAL COMPETENCE
= the skills to execute on
The New Thing That You Do (The Invention)
Business Strategy isn’t developed
Business Engine is neglected
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THE NEW THING THAT
YOU DO (Product/Service)
Process/ Workflow
Structure
Leadership/ Management
Business Model
People/ Skills
Marketing
Turnover/ Sales
Net Profits
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Product/Service
Process/ Workflow
Structure
Leadership/ Management
Business Model
People/ Skills
Marketing
Turnover/ Sales
Net Profits
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Start-up Stay-up
10/12
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Benchmark where you are – with total honesty.
This is point A.
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Draw your Vision.
This is point B.
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Build an integrated Road Map
This is how you’re going to get from A to B.
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Identify the true value in your business.
Build your pricing around it.
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Bake innovation skills into the team leading the business.
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Innovate your business model.
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Innovate & build your business engine.
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Get management information flowing.
Use it to make better decisions.
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Separate operational from strategic decision-making.
With separate management and board meetings.
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Develop the entrepreneur/s business skills & perspective
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Develop a senior management team.
Empower them.
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Let’s look at one in more detail.
I’ve chosen this one because it’s at the heart of the whole process.
Build an integrated Road Map
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Q1 Q1Q4 Q4Q2 Q3Q3Q2
Example: an early-stage online jewellery business that is growing fast
& sees opportunities for it’s own e-commerce operation, partnering with the big online retailers and opening
operations in China
Build an integrated Road Map
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Q1 Q1Q4 Q4Q2 Q3Q3Q2
People/ Skills
Product/ Service
Process/ Workflow
Structure
Business Model
Leadership/ Management
Marketing
Turnover/ Sales
Net Profits
YEAR
1
YEAR
2
750K
Team: 6
3rd party sites
(too?) flat
E-commerce range
94K
Basic Website
2 Founders (designers)
UK outworkers
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Q1 Q1Q4 Q4Q2 Q3Q3Q2
People/ Skills
Product/ Service
Process/ Workflow
Structure
Business Model
Leadership/ Management
Marketing
Turnover/ Sales 1.5m
Net Profits 150K
Full-time MD
Free up MD 50%
Shanghai Warehouse
Bespoke Service
Multiple rev streams
Team = 15 people
Open in China
YEAR
1
YEAR
2
Team: 6
3rd party sites
(too?) flat
E-commerce range
94K
2 Founders (designers)
UK outworkers
750K
Basic Website
750K
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Q1 Q1Q4 Q4Q2 Q3Q3Q2
People/ Skills
Product/ Service
Process/ Workflow
Structure
Business Model
Leadership/ Management
Open in China
Turnover/ Sales 1.5m
Mgmt team
Net Profits 150K
Full-time MD
750K 1m 1.35m1.25m1.1m800K 900K
Shanghai Warehouse
Bespoke Service
Multiple rev streams
Team: 6 Hire studio assistant
Hire designer
Hire sales/account mgr
Hire Shanghai head
Team = 15 people
Promote Ben to MD
Mgmt training Ben
Ben: build mgmt team
Ben: build mgmt team
Marketing
3rd party sites
(too?) flat
E-commerce range
94K
Basic Website
2 Founders (designers)
UK outworkers
Limit of flat structure
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1. Benchmark where you are: A2. Draw your Vision: B3. Build a Road Map4. Identify real value & price accordingly5. Equip leaders with innovation skills6. Innovate your business model7. Innovate & build your business engine8. Get Management Information flowing9. Operational/Strategic decision-making10. Develop leaders’ business expertise11. Develop/empower management team
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Don’t derail your business by thinking anyone can run one…
Invent and Innovate!
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