Five Principles forBuilding Innovation

Capabilities

Tendayi VikiPhD MBA

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Situations emerge in the process of creative destruction in which many

firms may have to perish that nevertheless would be able to live on vigorously and usefully if they

weather a particular storm...

Joseph Schumpeter1883-1950

Author – Capitalism, Socialism and Democracy

The basic problem confronting an organization is to engage in

sufficient exploitation to ensure its current viability and, at the same

time, devote enough energy to exploration to ensure its future

viability...

James G. MarchStanford Professor

Author – Explorations in Organizations

The fear of cannibalizing sales of existing products is often cited as a

reason why established firms delay the introduction of

new disruptive technologies...

Clayton ChristensenHarvard Professor

Author – Innovator’s Dilemma

Meanwhile At An MBA Near You...

Disrupting Education

Searching While Executing

Innovation = +

An Innovation Ecosystem

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Principle 1 - Innovation Thesis

We invest in large networks of engaged users,

differentiated by user experience, and defensible through network effects.

Fred WilsonVenture Capitalist

Union Square Ventures

Principle 2 - Innovation Portfolio

A Balanced Portfolio

A Couple of Years Back...

We now have several internal global initiatives

aimed at redressing this imbalance...

Principle 3 - Innovation Framework

Idea

Explore

Validate

Grow

Sustain

Retire

Practice

Jobs to Be DoneBusiness Model Design Customer Development

Minimum Viable Products

Growth EnginesSales Forces

OptimizationsFeature Building

Focus Early Adopters, Early Majority Late Majority, Laggards

Duration Days Weeks Months Years

Metrics Lean Analytics, Pirate Metrics Revenues, Profit-Margins, ROI, IRR, NPV

Idea Explore Validate Grow Sustain Retire

The Lean Product Lifecycle

A Nonlinear Process

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An accountable, focused group making clear data driven decisions

The ProductCouncil

Principle 4 - Innovation Accounting

Product Council Investment Approval Thresholds*

RIGHT SIDE: Product-Market fit with a working business model

Increase transparency of mature investments to ensure alignment to strategy

LEFT SIDE: Validate assumptions and hypotheses

Reduces the risk of wasted investment and allows teams to pivot to new and better ideas

*Amounts need to be validated, by Business Model, and are subject to the thresholds established by the Schedule of Authority

Explore

Grow

Quarterly

Quarterly

Validate

Sustain

RetireIdea <£50kto Explore

<£250kTo Validate

Financial validation template required to secure

ongoing investment

Investment Governance

Product Council

ProductCouncil

Explore

✓

Can you identify a core user problem in

a target market?

Have you validated

customer and learner needs

in context?

Can you demonstrate

Product/Market Fit or validated

business model?

ValidateIdea

✗

ProductCouncil

✓

✗

<£50k <£250k

Sustain

Quarterly Performance

Review

Quarterly Performance

Review

ProductCouncil

GrowProductCouncil Retire

Quarterly

ProductCouncil

Quarterly

Investment Governance

Reducing Investment Risk

Funding & Evidence

Risk

Time

Idea Explore Validate Grow

Moneyball for Innovation reworked on slide 11

£0

£<50k

£<250k

£ P&L

✓✗✗

✗

✓ ✓ ✓

✓

✓

✓

✗

✗

✓ ✓

✓

✓ ✓✓

✗✗

✗

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Principle 5 - Innovation Best Practice

The PLC EcosystemPlaybook to support adoption of best practice

Training to establish cohorts of embedded coaches across each area of the company

Communities to help share best practices and deepen cultural impact

Product Councils to manage investments using PLC criteria

Templates, Reports and Portfolio tools for Product Teams and Investment Councils

http://learn.leanplc.com/

http://thecorporatestartupbook.com/

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