SlideShare a Scribd company logo
1 of 39
Download to read offline
Business Innovation


  Leading entrepreneurial ventures
     in established companies
                     October 1, 2002




© William J. Brown
• Managers of entrepreneurial ventures
  launched from within established companies
  face a special set of challenges.
• Key among these is that, as the corporate
  venture takes shape, the manager needs to
  assume leadership responsibilities to
  succeed - and this includes managing failure.
  – No one else can.
• Tonight’s presentation maps out the
  critical activities and the most important
  responsibilities for the venture manager.
A Tight Proposition
• The venture manager's first challenge is to
  convert each idea into a powerful, practical,
  business proposition that can be understood
  easily by the people responsible for executing
  it.
• The business proposition for a corporate
  venture needs to have three properties:
  – it must be simple;
  – it must be actionable;
  – it must resonate with people.
Keeping It Simple
• When it comes to simplicity, managers should
  ask themselves whether they can write it on a
  business card and still convey its purpose.
• This makes the business proposition easy to
  comprehend and communicate.
• The proposition for Canon's personal copier
  exemplifies this principle:
   – "Take to market a copier that is small, inexpensive and
     reliable enough for personal use on a secretary's desk."
• And the Japanese music equipment
  manufacturer Yamaha replaced the idea of
  being a company that only manufactured
  pianofortes with the terse proposition: "Sell
  keyboards".
• The phrasing of the business
  proposition is all-important.
• It is good to start by finding a direct link
  with the market and the customer and
  simpler propositions are more powerful.
• Consider this statement from Priceline.com:
  – "Customer: name your own price, any time, anywhere."
• Employees can mobilize around it, focus on it
  and talk about it.
• Such images can be phrases, like those of
  Yamaha and Priceline.com.
• They can be pictures or symbols, metaphors
  or analogies - anything that makes it easy for
  people to understand the basic challenges of
  execution.
Absorb Uncertainty
• It is important for managers to help those involved in
  the project cope with uncertainty or they will find it
  hard to be decisive.
• Unfortunately, it can be much more expensive for
  companies to be slow than it is for them to be wrong.
• The project leader's must make uncertainty less
  daunting and create among colleagues the self-
  confidence that allows them to act without seeking
  detailed managerial permission.
• In particular, the project manager should prevent
  employees from being overwhelmed by the
  complexities of the project.
• How?
   – By setting a clear framework in which they can take action.
• In other words, the venture manager might
  say to the team members:
  – "Assume X is going to happen. If you work on this
    assumption and I'm wrong, it's not your problem, but
    mine. I may come to you later and say I was wrong and
    we now have to assume Y is going to happen, but for
    now, you should assume I am right."
• The importance of this practice is that it
  liberates team members from the paralysis
  caused by uncertainty and frees their
  creativity.
• The manager is left to cope with the
  uncertainty, of course, but then the business
  of thinking as an entrepreneur is all about
  coping with uncertain situations.
• In fact, a manager seldom has to be right all
  the time, just right enough often enough.
• Further, a competent, confident and resilient
  team can usually cope with the differences
  between the framework set by a manager
  and events as they unfold.
• Crucially, leaders must recognize when
  there is a need to absorb uncertainty so
  that others can get on with
  implementation.
• Furthermore, they need to accept that
  the leader is the one who can most
  afford to be wrong!
• What does absorbing uncertainty mean?
• Leaders should ensure that team members
  have enough guidelines and latitude for
  setting their own priorities - what is important
  and what can wait.
• They should make sure people know what
  they are expected to prepare for - how soon,
  how big, with what level of aggressiveness.
• A manager's best-guess directions can help
  considerably until more information becomes
  available.
Frame the Challenge

• Managers must frame the venture in
  such a way that others can implement it.
• They must use their knowledge of the
  capabilities of their team members and
  know how far those capabilities can be
  stretched to make the venture happen.
• The Japanese company Canon provides a
  good illustration.
• In the early 1970s, one of Canon's
  executives, Dr Keizo Yamaji, noticed a set of
  needs for photocopying that were not being
  addressed by the incumbent Xerox - the
  market for just a few copies of short
  documents.
• Xerox offered machines designed to produce
  hundreds of copies of long documents.
• Carefully assessing the skills of his
  engineering staff, Dr Yamaji stacked up their
  talents against what he thought was required
  to produce a so-called “personal copier”.
• He was then able to give them this framework
  for action:
  –   “I want you to make me a copier.”
  –   “It can be no bigger than a large breadbox.”
  –   “It can't retail for more than $1,000 in the US.”
  –   “It must never need servicing and it must be ready in 18
      months.”
• Dr Yamaji framed the project, but he didn't
  micromanage it.
• He regarded his biggest challenge as setting
  a task for his technical people that would
  push them to the limits of their capabilities,
  without pushing them beyond their limits.
• His personal judgment was crucial in
  matching the difficulty of the project to the
  skills of the employees.
• Dr Yamaji described the results:
  – "At first the engineers did what engineers
    always do - they whined! But then, guess what
    happened - they went out and did it. It was a
    little bigger, it cost a little more. While it did
    need servicing, it very seldom needed servicing
    and it took just under two years instead of 18
    months. But I got my copier and the multi-
    billion dollar business that it represented."
• Dr Yamaji realized that his obligation as
  a manager launching an entrepreneurial
  venture was to frame the challenge to
  match his people's capabilities - and
  then get out of their way so they could
  get on with it.
Check Market Acceptance
• The lowest-cost route to successful
  implementation is to probe constantly for
  evidence that the market you have envisaged
  accepts the business case for the venture.
• One successful entrepreneur will not launch a
  new industrial effort until he has a preliminary
  order from at least one customer.
• He argues that if not even one potential
  customer wants it enough to risk a conditional
  order then there must be better opportunities
  elsewhere.
• This may be difficult to pull off, but if you can't
  get orders, can you get letters of intent?
• If you can't get letters of intent, can you get
  letters expressing interest?
• If you can't even get someone to write a letter
  expressing interest, then the business
  proposition should be viewed with suspicion.
Secure ‘Killer' Deals
• Success for most ventures depends on being
  able to make three to five deals with
  stakeholders whose commitment is crucial,
  such as suppliers, distributors, funding
  sources, employees, customers and
  sometimes key supporters in the corporation.
• Managers should ensure they have identified
  the deals that will make or break the venture
  and that they are progressing well with these
  deals ahead of major investment
  commitments.
• Failure to do so can threaten the
  survival of the enterprise.
• Iridium, for example, spent billions of
  dollars before finding out that major
  companies would not sign up for its
  expensive, bulky satellite phones.
• Importantly, managers should have a
  clear idea of when to walk away.
• If the right deal can't be found, why
  fatally burden the venture by being
  forced to underprice or overpay for
  supplies?
• Other ventures will surface in future.
Use Imagination, Not Money
• Entrepreneurial managers must recognize
  that they should minimize expenditure on
  assets and fixed costs until they have
  revenue streams to justify them.
• They should reduce initial investment as near
  to zero as possible.
• If possible, the initial assets should be bought
  second-hand, or better still leased.
• If the venture is launched and operated with
  parsimony, the project managers can afford
  to make some learning-rich mistakes as they
  figure out what the true opportunity is.
• They should also try to initiate revenues
  ahead of cost flows.
• For instance, one entrepreneur
  succeeded in persuading a consortium
  of future customers to fund the
  development of a prototype.
• Whenever possible, costs should be incurred
  depending on use, which avoids commitment
  to a fixed cost.
• Another entrepreneur, for example,
  remunerates her sales force with a big
  percentage of profits on orders once
  customers have paid - she gets money in
  before paying out.
• Such tactics reduce the initial investment
  burden on which the venture must eventually
  generate returns.
Identify Skill Deficiencies

• The success of the venture may rely
  heavily on new and unfamiliar skills and
  it is easy to underestimate the difficulty
  of securing and deploying them, or
  developing them.
• Witness the many dotcom start-ups that
  cannot find programmers to develop
  and operate their systems.
• If the first recruits are deficient in critical skills,
  the quality of the products launched will be
  inadequate and the first brave souls who
  order will be disappointed.
• Venture leaders cannot allow this to happen -
  they must ensure the right skills are
  developed and reliably in use before inflicting
  the offering on unsuspecting consumers.
Keep the focus on learning.
• Venture managers should carefully document
  and test assumptions ahead of investment
  and then systematically redirect the venture
  as these assumptions are tested against
  experience.
• The spirit of planning is to aim to learn by
  converting assumptions to knowledge ahead
  of investment.
• There is no point in trying to stick to a plan
  based on assumptions that prove invalid.
• Consider, for example, the prospects of the
  carbon-fiber products industry if the
  innovators had stuck to their original
  assumptions, applications in space satellite
  housings, instead of redeploying the
  technology to sports equipment.
• In particular, the first customers should be
  checked against those predicted in the
  business plan.
• This can reveal a lot about where the real
  market lies.
Early Warning Systems

• Small changes in key assumptions or
  market variables can presage large
  disruptions in performance.
• As venture managers get wrapped up in
  day-to-day issues, they need to give
  someone responsibility for monitoring
  the most sensitive variables for early
  warning signals.
Manage Disappointment
• Every venture runs a real risk of failure, so
  the greatest challenge for the manager lies in
  managing disappointments.
• When failure occurs, the entire workforce
  stops and waits to see what managers are
  going to do.
• This is a testing time and managers' reaction
  to disappointment will greatly influence the
  commitment of the workforce to future
  entrepreneurial developments.
• How can the venture be redirected to areas of
  greater opportunity?
• Two practices characterize the successful
  venture manager when dealing with failure.
  – The first is constructive postmortems.
  – No one should be rewarded for making bad decisions
    and entrepreneurial leaders of successful venture
    programs should not forgive foolish failure.
  – On the other hand, ventures in which the team has
    consistently made good decisions, but which failed as a
    result of circumstances beyond their control, deserve
    recognition and reward.
• Managers should hold constructive
  postmortems to distinguish between
  ventures that failed because of bad luck
  and those that failed because of bad
  decisions.
• They must publicly recognize good work
  concealed by overall failure.
• The second practice is recouping some value from
  the exercise.
• Failed ventures can be analyzed for information,
  which can be profitably deployed elsewhere.
• In a failed foray by a financial services company into
  capturing consumer data, the company had
  developed powerful data compression technology.
• This asset could have been used by the parent
  company, but the potential was lost in the
  recriminations that followed the shut-down.
• Recouping value helps convey to project workers that
  it was the venture that failed, not them.
Conclusion

• Let’s conclude tonight by suggesting
  some key questions that venture
  managers should ask themselves
  during the course of a project.
1. Has sufficient attention been paid to
   reducing uncertainty for the team?
2. Has the venture been framed adequately?
3. Is there a system to monitor market
   acceptance?
4. Is there a process to secure the deals that
   make or break the venture?
5. Are team members driving down fixed
   costs?
6. Have skill requirements been thoroughly
   assessed?
7. Is there a plan to keep the focus on
   learning?
8. How can postmortems be constructive?
9. What are the plans for recouping failure?
Further Reading
• Collins, J.C. and Pores, J.I. (1994) Built to
  Last, New York: HarperBusiness.
• McGrath, R.G. and MacMillan, I.C. (2000)
  The Entrepreneurial Mindset, Cambridge,
  MA: Harvard Business School Press.
• MacMillan, I.C. and McGrath, R.G. (1995)
  "Discovery Driven Planning" in Harvard
  Business Review, July-August, 44-54.
Next Class

• Guest speaker
• Lots more on entrepreneurship and
  managing innovation

More Related Content

What's hot

Radical Management slides Steve Denning
Radical Management slides Steve DenningRadical Management slides Steve Denning
Radical Management slides Steve DenningSteve Denning
 
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011Walter Schärer
 
Workshop Business Development
Workshop Business DevelopmentWorkshop Business Development
Workshop Business DevelopmentJacques Bazen
 
Radical management - Innovative practices at the workplace
Radical management - Innovative practices at the workplaceRadical management - Innovative practices at the workplace
Radical management - Innovative practices at the workplaceSrinath Ramakrishnan
 
20 Mistakes that Kill Startups (According to Experts)
20 Mistakes that Kill Startups (According to Experts)20 Mistakes that Kill Startups (According to Experts)
20 Mistakes that Kill Startups (According to Experts)Vitaliy Verbenko
 
CCR Mag Jul Aug 2014 GR articledownload
CCR Mag Jul Aug 2014 GR articledownloadCCR Mag Jul Aug 2014 GR articledownload
CCR Mag Jul Aug 2014 GR articledownloadGary Rissler
 
Bootstrap Business Seminar 4: Building a Business Model
Bootstrap Business Seminar 4: Building a Business ModelBootstrap Business Seminar 4: Building a Business Model
Bootstrap Business Seminar 4: Building a Business ModelCityStarters
 
Updated: You Have An Idea ... Do You Have A Business?
Updated: You Have An Idea ...  Do You Have A Business?Updated: You Have An Idea ...  Do You Have A Business?
Updated: You Have An Idea ... Do You Have A Business?Marty Kaszubowski
 
Entrepreneurship presentationforlibraryforapril16
Entrepreneurship presentationforlibraryforapril16Entrepreneurship presentationforlibraryforapril16
Entrepreneurship presentationforlibraryforapril16amysauers
 
Entrepreneurship Feasibility
Entrepreneurship FeasibilityEntrepreneurship Feasibility
Entrepreneurship Feasibilityamysauers
 
Vision, hypotheses and customer discovery
Vision, hypotheses and customer discoveryVision, hypotheses and customer discovery
Vision, hypotheses and customer discoveryBlaz Kos
 
Landing your next opportunity getting a job & thriving in it
Landing your next opportunity   getting a job & thriving in itLanding your next opportunity   getting a job & thriving in it
Landing your next opportunity getting a job & thriving in itNaeem Zafar
 
Successful Startup in Three Words
Successful Startup in Three WordsSuccessful Startup in Three Words
Successful Startup in Three WordsPatrick Henry
 
Growing a Technology Business 5-2005
Growing a Technology Business 5-2005Growing a Technology Business 5-2005
Growing a Technology Business 5-2005Bill Nussey
 
InnoVits - Aiesec 29 ottobre 2014
InnoVits - Aiesec 29 ottobre 2014InnoVits - Aiesec 29 ottobre 2014
InnoVits - Aiesec 29 ottobre 2014InnoVits
 
Reasons of Developing a Business Planc 4 writing business plan
Reasons of Developing a Business Planc 4 writing business planReasons of Developing a Business Planc 4 writing business plan
Reasons of Developing a Business Planc 4 writing business planUniversity of Balochistan
 

What's hot (19)

Radical Management slides Steve Denning
Radical Management slides Steve DenningRadical Management slides Steve Denning
Radical Management slides Steve Denning
 
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011
Steve Denning: Radical Management Vortrag am Internet-Briefing Sep13-2011
 
Workshop Business Development
Workshop Business DevelopmentWorkshop Business Development
Workshop Business Development
 
Radical management - Innovative practices at the workplace
Radical management - Innovative practices at the workplaceRadical management - Innovative practices at the workplace
Radical management - Innovative practices at the workplace
 
20 Mistakes that Kill Startups (According to Experts)
20 Mistakes that Kill Startups (According to Experts)20 Mistakes that Kill Startups (According to Experts)
20 Mistakes that Kill Startups (According to Experts)
 
CCR Mag Jul Aug 2014 GR articledownload
CCR Mag Jul Aug 2014 GR articledownloadCCR Mag Jul Aug 2014 GR articledownload
CCR Mag Jul Aug 2014 GR articledownload
 
Bootstrap Business Seminar 4: Building a Business Model
Bootstrap Business Seminar 4: Building a Business ModelBootstrap Business Seminar 4: Building a Business Model
Bootstrap Business Seminar 4: Building a Business Model
 
Pitching in Silicon Valley
Pitching in Silicon ValleyPitching in Silicon Valley
Pitching in Silicon Valley
 
Updated: You Have An Idea ... Do You Have A Business?
Updated: You Have An Idea ...  Do You Have A Business?Updated: You Have An Idea ...  Do You Have A Business?
Updated: You Have An Idea ... Do You Have A Business?
 
Entrepreneurship presentationforlibraryforapril16
Entrepreneurship presentationforlibraryforapril16Entrepreneurship presentationforlibraryforapril16
Entrepreneurship presentationforlibraryforapril16
 
Entrepreneurship Feasibility
Entrepreneurship FeasibilityEntrepreneurship Feasibility
Entrepreneurship Feasibility
 
Vision, hypotheses and customer discovery
Vision, hypotheses and customer discoveryVision, hypotheses and customer discovery
Vision, hypotheses and customer discovery
 
Landing your next opportunity getting a job & thriving in it
Landing your next opportunity   getting a job & thriving in itLanding your next opportunity   getting a job & thriving in it
Landing your next opportunity getting a job & thriving in it
 
Successful Startup in Three Words
Successful Startup in Three WordsSuccessful Startup in Three Words
Successful Startup in Three Words
 
Starting startups
Starting startupsStarting startups
Starting startups
 
Growing a Technology Business 5-2005
Growing a Technology Business 5-2005Growing a Technology Business 5-2005
Growing a Technology Business 5-2005
 
InnoVits - Aiesec 29 ottobre 2014
InnoVits - Aiesec 29 ottobre 2014InnoVits - Aiesec 29 ottobre 2014
InnoVits - Aiesec 29 ottobre 2014
 
CETS 2010, Mark Steiner, Starting Your Own Business
CETS 2010, Mark Steiner, Starting Your Own BusinessCETS 2010, Mark Steiner, Starting Your Own Business
CETS 2010, Mark Steiner, Starting Your Own Business
 
Reasons of Developing a Business Planc 4 writing business plan
Reasons of Developing a Business Planc 4 writing business planReasons of Developing a Business Planc 4 writing business plan
Reasons of Developing a Business Planc 4 writing business plan
 

Similar to In-House Entrepreneurship

Entrepreneur boot camp starting a business - november 1 2012 - dave litwiller
Entrepreneur boot camp   starting a business - november 1 2012 - dave litwillerEntrepreneur boot camp   starting a business - november 1 2012 - dave litwiller
Entrepreneur boot camp starting a business - november 1 2012 - dave litwillerDave Litwiller
 
Sfofr module 3 online
Sfofr module 3 onlineSfofr module 3 online
Sfofr module 3 onlinestreetfood
 
Scalable Startup Entrepreneurship
Scalable Startup EntrepreneurshipScalable Startup Entrepreneurship
Scalable Startup EntrepreneurshipTushar Khodankar
 
Non Traditional Product Financing
Non Traditional Product FinancingNon Traditional Product Financing
Non Traditional Product FinancingTom4820
 
Why start-ups fail
Why start-ups failWhy start-ups fail
Why start-ups failniinue123
 
Scope and Challenges of Entrepreneur
Scope and Challenges of EntrepreneurScope and Challenges of Entrepreneur
Scope and Challenges of EntrepreneurNeha Purohit
 
Lean Strategy | Startups and Strategy
Lean Strategy | Startups and StrategyLean Strategy | Startups and Strategy
Lean Strategy | Startups and StrategyMBA ASAP
 
Entrepreneurial pathway ppt (1).ppt
Entrepreneurial pathway ppt (1).pptEntrepreneurial pathway ppt (1).ppt
Entrepreneurial pathway ppt (1).pptMARTINGATHIRU1
 
Possible errors in projects and methods of avoiding and eliminating
Possible errors in projects and methods of avoiding and eliminatingPossible errors in projects and methods of avoiding and eliminating
Possible errors in projects and methods of avoiding and eliminatingSefaKOCAKALAY
 
Fail Conference 2012: Patrick polak
Fail Conference 2012: Patrick polakFail Conference 2012: Patrick polak
Fail Conference 2012: Patrick polakimec
 
What Investors Look For
What Investors Look ForWhat Investors Look For
What Investors Look Forniinue123
 
Non traditional product financing
Non traditional product financingNon traditional product financing
Non traditional product financingTom4820
 
A Beginner's Guide to Redesigning Your Firm's Website
A Beginner's Guide to Redesigning Your Firm's WebsiteA Beginner's Guide to Redesigning Your Firm's Website
A Beginner's Guide to Redesigning Your Firm's WebsiteOne North
 
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...Sachintha Gunasena
 

Similar to In-House Entrepreneurship (20)

Entrepreneur boot camp starting a business - november 1 2012 - dave litwiller
Entrepreneur boot camp   starting a business - november 1 2012 - dave litwillerEntrepreneur boot camp   starting a business - november 1 2012 - dave litwiller
Entrepreneur boot camp starting a business - november 1 2012 - dave litwiller
 
Sfofr module 3 online
Sfofr module 3 onlineSfofr module 3 online
Sfofr module 3 online
 
Scalable Startup Entrepreneurship
Scalable Startup EntrepreneurshipScalable Startup Entrepreneurship
Scalable Startup Entrepreneurship
 
Intrapreneur
IntrapreneurIntrapreneur
Intrapreneur
 
E myth revisited
E myth revisitedE myth revisited
E myth revisited
 
Module 3
Module 3Module 3
Module 3
 
Non Traditional Product Financing
Non Traditional Product FinancingNon Traditional Product Financing
Non Traditional Product Financing
 
3 .Business Plan.pptx
3 .Business Plan.pptx3 .Business Plan.pptx
3 .Business Plan.pptx
 
Why start-ups fail
Why start-ups failWhy start-ups fail
Why start-ups fail
 
Scope and Challenges of Entrepreneur
Scope and Challenges of EntrepreneurScope and Challenges of Entrepreneur
Scope and Challenges of Entrepreneur
 
Eric Ries's talk on "The Lean startup" at Google
Eric Ries's talk on "The Lean startup" at GoogleEric Ries's talk on "The Lean startup" at Google
Eric Ries's talk on "The Lean startup" at Google
 
Lean Strategy | Startups and Strategy
Lean Strategy | Startups and StrategyLean Strategy | Startups and Strategy
Lean Strategy | Startups and Strategy
 
Entrepreneurial pathway ppt (1).ppt
Entrepreneurial pathway ppt (1).pptEntrepreneurial pathway ppt (1).ppt
Entrepreneurial pathway ppt (1).ppt
 
Possible errors in projects and methods of avoiding and eliminating
Possible errors in projects and methods of avoiding and eliminatingPossible errors in projects and methods of avoiding and eliminating
Possible errors in projects and methods of avoiding and eliminating
 
Fail Conference 2012: Patrick polak
Fail Conference 2012: Patrick polakFail Conference 2012: Patrick polak
Fail Conference 2012: Patrick polak
 
What Investors Look For
What Investors Look ForWhat Investors Look For
What Investors Look For
 
Non traditional product financing
Non traditional product financingNon traditional product financing
Non traditional product financing
 
Management 3.0 Workout
Management 3.0 WorkoutManagement 3.0 Workout
Management 3.0 Workout
 
A Beginner's Guide to Redesigning Your Firm's Website
A Beginner's Guide to Redesigning Your Firm's WebsiteA Beginner's Guide to Redesigning Your Firm's Website
A Beginner's Guide to Redesigning Your Firm's Website
 
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...
Entrepreneurship and Commerce in IT - 06 - Funding, Expanding, and Exit Strat...
 

More from William J. Brown

Jonathan Saidel recommendation
Jonathan Saidel recommendationJonathan Saidel recommendation
Jonathan Saidel recommendationWilliam J. Brown
 
Email marketing a better alternative
Email marketing   a better alternativeEmail marketing   a better alternative
Email marketing a better alternativeWilliam J. Brown
 
Course exam from digital business strategy mba course (copyright william j br...
Course exam from digital business strategy mba course (copyright william j br...Course exam from digital business strategy mba course (copyright william j br...
Course exam from digital business strategy mba course (copyright william j br...William J. Brown
 
Protecting your brand on the internet
Protecting your brand on the internetProtecting your brand on the internet
Protecting your brand on the internetWilliam J. Brown
 
Larry chervenak's testimonial
Larry chervenak's testimonialLarry chervenak's testimonial
Larry chervenak's testimonialWilliam J. Brown
 
Reference from Joel Stutz, Ph.D., department chairman
Reference from Joel Stutz, Ph.D., department chairmanReference from Joel Stutz, Ph.D., department chairman
Reference from Joel Stutz, Ph.D., department chairmanWilliam J. Brown
 
Rolling stone myxer announcement
Rolling stone myxer announcementRolling stone myxer announcement
Rolling stone myxer announcementWilliam J. Brown
 
Business miami magazine profile
Business miami magazine profileBusiness miami magazine profile
Business miami magazine profileWilliam J. Brown
 
Power of Strategic Partnerships
Power of Strategic PartnershipsPower of Strategic Partnerships
Power of Strategic PartnershipsWilliam J. Brown
 
Delighting customers in the social media era
Delighting customers in the social media eraDelighting customers in the social media era
Delighting customers in the social media eraWilliam J. Brown
 
Do you Need an App Strategy? (jan 2010)
Do you Need an App Strategy?  (jan 2010)Do you Need an App Strategy?  (jan 2010)
Do you Need an App Strategy? (jan 2010)William J. Brown
 
How alienware drove higher conversion rates
How alienware drove higher conversion ratesHow alienware drove higher conversion rates
How alienware drove higher conversion ratesWilliam J. Brown
 
Net Travel 2000 presentation
Net Travel 2000 presentationNet Travel 2000 presentation
Net Travel 2000 presentationWilliam J. Brown
 

More from William J. Brown (20)

Scan0054
Scan0054Scan0054
Scan0054
 
Jonathan Saidel recommendation
Jonathan Saidel recommendationJonathan Saidel recommendation
Jonathan Saidel recommendation
 
Scan0078
Scan0078Scan0078
Scan0078
 
Email marketing a better alternative
Email marketing   a better alternativeEmail marketing   a better alternative
Email marketing a better alternative
 
Brown email marketing
Brown email marketingBrown email marketing
Brown email marketing
 
Joel stutz recommendation
Joel stutz recommendationJoel stutz recommendation
Joel stutz recommendation
 
Course exam from digital business strategy mba course (copyright william j br...
Course exam from digital business strategy mba course (copyright william j br...Course exam from digital business strategy mba course (copyright william j br...
Course exam from digital business strategy mba course (copyright william j br...
 
Protecting your brand on the internet
Protecting your brand on the internetProtecting your brand on the internet
Protecting your brand on the internet
 
Scan0091
Scan0091Scan0091
Scan0091
 
Larry chervenak's testimonial
Larry chervenak's testimonialLarry chervenak's testimonial
Larry chervenak's testimonial
 
Reference from Joel Stutz, Ph.D., department chairman
Reference from Joel Stutz, Ph.D., department chairmanReference from Joel Stutz, Ph.D., department chairman
Reference from Joel Stutz, Ph.D., department chairman
 
Rolling stone myxer announcement
Rolling stone myxer announcementRolling stone myxer announcement
Rolling stone myxer announcement
 
Best apps of 2011
Best apps of 2011Best apps of 2011
Best apps of 2011
 
Business miami magazine profile
Business miami magazine profileBusiness miami magazine profile
Business miami magazine profile
 
Power of Strategic Partnerships
Power of Strategic PartnershipsPower of Strategic Partnerships
Power of Strategic Partnerships
 
Delighting customers in the social media era
Delighting customers in the social media eraDelighting customers in the social media era
Delighting customers in the social media era
 
Do you Need an App Strategy? (jan 2010)
Do you Need an App Strategy?  (jan 2010)Do you Need an App Strategy?  (jan 2010)
Do you Need an App Strategy? (jan 2010)
 
How alienware drove higher conversion rates
How alienware drove higher conversion ratesHow alienware drove higher conversion rates
How alienware drove higher conversion rates
 
Session 2 1
Session 2 1Session 2 1
Session 2 1
 
Net Travel 2000 presentation
Net Travel 2000 presentationNet Travel 2000 presentation
Net Travel 2000 presentation
 

In-House Entrepreneurship

  • 1. Business Innovation Leading entrepreneurial ventures in established companies October 1, 2002 © William J. Brown
  • 2. • Managers of entrepreneurial ventures launched from within established companies face a special set of challenges. • Key among these is that, as the corporate venture takes shape, the manager needs to assume leadership responsibilities to succeed - and this includes managing failure. – No one else can.
  • 3. • Tonight’s presentation maps out the critical activities and the most important responsibilities for the venture manager.
  • 4. A Tight Proposition • The venture manager's first challenge is to convert each idea into a powerful, practical, business proposition that can be understood easily by the people responsible for executing it. • The business proposition for a corporate venture needs to have three properties: – it must be simple; – it must be actionable; – it must resonate with people.
  • 5. Keeping It Simple • When it comes to simplicity, managers should ask themselves whether they can write it on a business card and still convey its purpose. • This makes the business proposition easy to comprehend and communicate. • The proposition for Canon's personal copier exemplifies this principle: – "Take to market a copier that is small, inexpensive and reliable enough for personal use on a secretary's desk." • And the Japanese music equipment manufacturer Yamaha replaced the idea of being a company that only manufactured pianofortes with the terse proposition: "Sell keyboards".
  • 6. • The phrasing of the business proposition is all-important. • It is good to start by finding a direct link with the market and the customer and simpler propositions are more powerful.
  • 7. • Consider this statement from Priceline.com: – "Customer: name your own price, any time, anywhere." • Employees can mobilize around it, focus on it and talk about it. • Such images can be phrases, like those of Yamaha and Priceline.com. • They can be pictures or symbols, metaphors or analogies - anything that makes it easy for people to understand the basic challenges of execution.
  • 8. Absorb Uncertainty • It is important for managers to help those involved in the project cope with uncertainty or they will find it hard to be decisive. • Unfortunately, it can be much more expensive for companies to be slow than it is for them to be wrong. • The project leader's must make uncertainty less daunting and create among colleagues the self- confidence that allows them to act without seeking detailed managerial permission. • In particular, the project manager should prevent employees from being overwhelmed by the complexities of the project. • How? – By setting a clear framework in which they can take action.
  • 9. • In other words, the venture manager might say to the team members: – "Assume X is going to happen. If you work on this assumption and I'm wrong, it's not your problem, but mine. I may come to you later and say I was wrong and we now have to assume Y is going to happen, but for now, you should assume I am right." • The importance of this practice is that it liberates team members from the paralysis caused by uncertainty and frees their creativity.
  • 10. • The manager is left to cope with the uncertainty, of course, but then the business of thinking as an entrepreneur is all about coping with uncertain situations. • In fact, a manager seldom has to be right all the time, just right enough often enough. • Further, a competent, confident and resilient team can usually cope with the differences between the framework set by a manager and events as they unfold.
  • 11. • Crucially, leaders must recognize when there is a need to absorb uncertainty so that others can get on with implementation. • Furthermore, they need to accept that the leader is the one who can most afford to be wrong!
  • 12. • What does absorbing uncertainty mean? • Leaders should ensure that team members have enough guidelines and latitude for setting their own priorities - what is important and what can wait. • They should make sure people know what they are expected to prepare for - how soon, how big, with what level of aggressiveness. • A manager's best-guess directions can help considerably until more information becomes available.
  • 13. Frame the Challenge • Managers must frame the venture in such a way that others can implement it. • They must use their knowledge of the capabilities of their team members and know how far those capabilities can be stretched to make the venture happen.
  • 14. • The Japanese company Canon provides a good illustration. • In the early 1970s, one of Canon's executives, Dr Keizo Yamaji, noticed a set of needs for photocopying that were not being addressed by the incumbent Xerox - the market for just a few copies of short documents. • Xerox offered machines designed to produce hundreds of copies of long documents.
  • 15. • Carefully assessing the skills of his engineering staff, Dr Yamaji stacked up their talents against what he thought was required to produce a so-called “personal copier”. • He was then able to give them this framework for action: – “I want you to make me a copier.” – “It can be no bigger than a large breadbox.” – “It can't retail for more than $1,000 in the US.” – “It must never need servicing and it must be ready in 18 months.”
  • 16. • Dr Yamaji framed the project, but he didn't micromanage it. • He regarded his biggest challenge as setting a task for his technical people that would push them to the limits of their capabilities, without pushing them beyond their limits. • His personal judgment was crucial in matching the difficulty of the project to the skills of the employees.
  • 17. • Dr Yamaji described the results: – "At first the engineers did what engineers always do - they whined! But then, guess what happened - they went out and did it. It was a little bigger, it cost a little more. While it did need servicing, it very seldom needed servicing and it took just under two years instead of 18 months. But I got my copier and the multi- billion dollar business that it represented."
  • 18. • Dr Yamaji realized that his obligation as a manager launching an entrepreneurial venture was to frame the challenge to match his people's capabilities - and then get out of their way so they could get on with it.
  • 19. Check Market Acceptance • The lowest-cost route to successful implementation is to probe constantly for evidence that the market you have envisaged accepts the business case for the venture. • One successful entrepreneur will not launch a new industrial effort until he has a preliminary order from at least one customer. • He argues that if not even one potential customer wants it enough to risk a conditional order then there must be better opportunities elsewhere.
  • 20. • This may be difficult to pull off, but if you can't get orders, can you get letters of intent? • If you can't get letters of intent, can you get letters expressing interest? • If you can't even get someone to write a letter expressing interest, then the business proposition should be viewed with suspicion.
  • 21. Secure ‘Killer' Deals • Success for most ventures depends on being able to make three to five deals with stakeholders whose commitment is crucial, such as suppliers, distributors, funding sources, employees, customers and sometimes key supporters in the corporation. • Managers should ensure they have identified the deals that will make or break the venture and that they are progressing well with these deals ahead of major investment commitments.
  • 22. • Failure to do so can threaten the survival of the enterprise. • Iridium, for example, spent billions of dollars before finding out that major companies would not sign up for its expensive, bulky satellite phones.
  • 23. • Importantly, managers should have a clear idea of when to walk away. • If the right deal can't be found, why fatally burden the venture by being forced to underprice or overpay for supplies? • Other ventures will surface in future.
  • 24. Use Imagination, Not Money • Entrepreneurial managers must recognize that they should minimize expenditure on assets and fixed costs until they have revenue streams to justify them. • They should reduce initial investment as near to zero as possible. • If possible, the initial assets should be bought second-hand, or better still leased. • If the venture is launched and operated with parsimony, the project managers can afford to make some learning-rich mistakes as they figure out what the true opportunity is.
  • 25. • They should also try to initiate revenues ahead of cost flows. • For instance, one entrepreneur succeeded in persuading a consortium of future customers to fund the development of a prototype.
  • 26. • Whenever possible, costs should be incurred depending on use, which avoids commitment to a fixed cost. • Another entrepreneur, for example, remunerates her sales force with a big percentage of profits on orders once customers have paid - she gets money in before paying out. • Such tactics reduce the initial investment burden on which the venture must eventually generate returns.
  • 27. Identify Skill Deficiencies • The success of the venture may rely heavily on new and unfamiliar skills and it is easy to underestimate the difficulty of securing and deploying them, or developing them. • Witness the many dotcom start-ups that cannot find programmers to develop and operate their systems.
  • 28. • If the first recruits are deficient in critical skills, the quality of the products launched will be inadequate and the first brave souls who order will be disappointed. • Venture leaders cannot allow this to happen - they must ensure the right skills are developed and reliably in use before inflicting the offering on unsuspecting consumers.
  • 29. Keep the focus on learning. • Venture managers should carefully document and test assumptions ahead of investment and then systematically redirect the venture as these assumptions are tested against experience. • The spirit of planning is to aim to learn by converting assumptions to knowledge ahead of investment. • There is no point in trying to stick to a plan based on assumptions that prove invalid.
  • 30. • Consider, for example, the prospects of the carbon-fiber products industry if the innovators had stuck to their original assumptions, applications in space satellite housings, instead of redeploying the technology to sports equipment. • In particular, the first customers should be checked against those predicted in the business plan. • This can reveal a lot about where the real market lies.
  • 31. Early Warning Systems • Small changes in key assumptions or market variables can presage large disruptions in performance. • As venture managers get wrapped up in day-to-day issues, they need to give someone responsibility for monitoring the most sensitive variables for early warning signals.
  • 32. Manage Disappointment • Every venture runs a real risk of failure, so the greatest challenge for the manager lies in managing disappointments. • When failure occurs, the entire workforce stops and waits to see what managers are going to do. • This is a testing time and managers' reaction to disappointment will greatly influence the commitment of the workforce to future entrepreneurial developments.
  • 33. • How can the venture be redirected to areas of greater opportunity? • Two practices characterize the successful venture manager when dealing with failure. – The first is constructive postmortems. – No one should be rewarded for making bad decisions and entrepreneurial leaders of successful venture programs should not forgive foolish failure. – On the other hand, ventures in which the team has consistently made good decisions, but which failed as a result of circumstances beyond their control, deserve recognition and reward.
  • 34. • Managers should hold constructive postmortems to distinguish between ventures that failed because of bad luck and those that failed because of bad decisions. • They must publicly recognize good work concealed by overall failure.
  • 35. • The second practice is recouping some value from the exercise. • Failed ventures can be analyzed for information, which can be profitably deployed elsewhere. • In a failed foray by a financial services company into capturing consumer data, the company had developed powerful data compression technology. • This asset could have been used by the parent company, but the potential was lost in the recriminations that followed the shut-down. • Recouping value helps convey to project workers that it was the venture that failed, not them.
  • 36. Conclusion • Let’s conclude tonight by suggesting some key questions that venture managers should ask themselves during the course of a project.
  • 37. 1. Has sufficient attention been paid to reducing uncertainty for the team? 2. Has the venture been framed adequately? 3. Is there a system to monitor market acceptance? 4. Is there a process to secure the deals that make or break the venture? 5. Are team members driving down fixed costs? 6. Have skill requirements been thoroughly assessed? 7. Is there a plan to keep the focus on learning? 8. How can postmortems be constructive? 9. What are the plans for recouping failure?
  • 38. Further Reading • Collins, J.C. and Pores, J.I. (1994) Built to Last, New York: HarperBusiness. • McGrath, R.G. and MacMillan, I.C. (2000) The Entrepreneurial Mindset, Cambridge, MA: Harvard Business School Press. • MacMillan, I.C. and McGrath, R.G. (1995) "Discovery Driven Planning" in Harvard Business Review, July-August, 44-54.
  • 39. Next Class • Guest speaker • Lots more on entrepreneurship and managing innovation