autumn 2020
israel’s corporate innovation magazine
12 OPEN INNOVATION IS GREAT. WHAT ABOUT INTERNAL READINESS?
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16 Jaguar Land Rover Corporate Startup Studio 28 Formalizing the Informal: Creating Change through Informal Networks
Special Edition
Open Innovation
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04 08 12 16 20 24 28
Alpha Strauss and the creation of Israel’s food-tech industry
SISYPHEAN INNOVATION AND THE THREE KEYS TO AVOIDING IT
OPEN INNOVATION IS GREAT. WHAT ABOUT INTERNAL READINESS?
Jaguar Land Rover Corporate Startup Studio
INNOVATION BOOK CLUB SCALING LEAN ASH MAURYA
Customer oriented innovation at Amdocs
Formalizing the Informal: Creating Change through Informal Networks
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EDITOR’S NOTES Dear reader, To say that 2020 has been a year to remember would be quite an understatement. As nations around the world grapple with a health crisis of biblical proportions, corporations are scrambling to keep their revenues flowing and their various critical functions running smoothly. In the Chinese language, the word “Crisis” is actually composed of the words “Danger” and “Opportunity”. Smart executives across the globe realize that these perilous times are actually a great opportunity to dominate the market if the right moves are made. As research shows, companies that invested in innovation during the last big crisis of 2007 actually came out of that period with significantly better business performance than their industry benchmark. In this issue, we decided to pause and look back at some of our best articles about open innovation because we believe that established organizations can benefit greatly from working with external actors. This injection of fresh technology can be done based on various models some of which are reviewed through our fascinating subjects of interviews. Organizations that seek to incorporate external technology for the benefit of their efficiency, effectiveness and revenue generation find that results can be achieved relatively quickly. That is providing the organization has what we named “Internal readiness” which is described in a dedicated article in this issue. Working with clients on open innovation is very educational as we learn many things that work and some that don’t. In this issue we tried to summarize some of the more impressive cases we encountered and in it you will find some of the keys to open innovation success. I wish you that this crisis will turn into your capitalized business opportunity. We have tried to contribute our small part to that happening. Regards, Ahi Gvirtsman
Chief Editor & Spyre Global Partner
An interview with Dagan Eshel, VP innovation at Strauss Group
Alpha Strauss
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and the creation of Israel's food-tech industry
STRAUSS HAS BEEN INNOVATING FOR MANY YEARS BUT STARTED DOING SO IN A SYSTEMATIC FASHION AROUND THE YEAR 2000. IT HAS TRADITIONALLY BEEN INCREMENTAL INNOVATION OR PRODUCT INNOVATION THAT COULD INTRODUCE ENHANCEMENTS TO THE PRODUCTS AND PORTFOLIO. WHEN WE STARTED LOOKING FOR WAYS OF INNOVATING IN A MORE SIGNIFICANT WAY WE REALIZED THAT WE HAD TO HAVE A NOVEL AND MORE AMBITIOUS APPROACH.
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TELL US ABOUT ALPHA STRAUSS AND THE WORK THAT YOU DO
Our challenge
was that it had to be a lean approach since the budgets available to us weren’t close to what international conglomerates like Nestle could afford to spend. We decided to leverage our location at the heart of the startup nation and thus, establish a new local market that is labelled foodTech but our unique approach was that we defined it as any technology that could introduce innovation in productivity, quality, product edge and sustainability from field to plate. The uniqueness here was that we determined that regardless of the field the startup considers itself to be in whether it is a technology originally developed for medical devices or defense, if it could potentially contribute anything to the food industry through one of those four pillars in the process from the field to the home of the consumer then we considered it to be foodTech. When we started looking at the Israeli market through this lens i.e. entrepreneurs, scientists, startups, patents and so on and researched it we discovered numerous opportunities in the market. In addition, we realized that many of those who had potential to innovate in foodTech weren’t even aware of this fact. Also, if these people did have an idea of how to get funding, support and mentoring in other industries there was no such knowledge and experience with regards to foodTech.
And so,
the next question was how can we make a move that will cause all of those actors to want to connect and start working with us. In traditional open innovation, companies formulate some sort of a brief about what they’re looking for, publish this brief in various channels and invite relevant actors to connect and work together on their ideas. What we said was that since we were making a long-term move to create a new industry and that since it did not exist at the time and we couldn’t really define something specific we were looking for we simply invited the various actors to come talk to us so we could create this market together.
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We asked startups to not just tell us what they could potentially do for us but also to let us know what we could do for them. There are various ways in which a corporation can help startups in ways that do not incur direct costs and at the same time are very valuable to the startup. For example, an entrepreneur can be a technical wizard with zero marketing talent. In such a case, we can get this person some time with a marketing expert from Strauss and that creates real value for the startup. We can give them access to our factories in order to understand manufacturing processes. We can give them access to our international partners. You might ask me at this point whether my team and I are philanthropists. The unequivocal answer is “No” since we simply wanted to make it clear to the ecosystem that if you had an idea or a technology that could benefit the foodTech industry then Strauss is the company you should reach out to.
So in essence, you created value for startups and made it broadly known so that you would attract actors in this nascent foodTech industry who could benefit you as a corporation long term. Exactly. This was our first move. The second move we did was to work on the organization itself in order to make it more receptive to these potential innovations. We knew that it would serve no real purpose to do all this work if nothing substantial could come out of these opportunities involving Strauss itself. This involved persuading various stakeholders in the organization that it would benefit them to work with us so that we get higher interest levels and better cooperation. We also had to make certain procedural adjustments with regards to working with startups. One example would be the NDA (Non-Disclosure Agreement) that we had to sign with a startup that in most organizations is very long and with fine print. When entrepreneurs with no resources see such a document they realize that this will require a lawyer which they cannot afford. We were able to reduce that into a page and a half and using a large font. Another example would be payment schedule which can get to 90 days from the date of issuing the request. For entrepreneurs we were able to bring this to almost an immediate payment schedule. And so initially, we were a sort of a matching service, getting exposure to ideas and technologies and turning them into structured proposals to the various companies of Strauss. We were not looking to invest in startups at the time. We had hundreds of meetings and generated dozens of projects so this was a successful beginning. After about three years of doing this, we realized that a lot of potential was still not being capitalized since many of the opportunities we were seeing were based on early stage startups and at the time, we didn’t have ways of dealing with technologies that were at such early stages. What we did was to found “The Kitchen” our FoodTech incubator which is part of the same vision of turning Israel into a FoodTech valley. The Kitchen brief is to work with early stage startups with funding that is received from Israel’s chief scientist office. Since the funding involves public sources, the purpose of “The Kitchen” is to nurture foodTech startups regardless of whether they’re creating something that Strauss can use. It also invests in startups in return for equity. A more recent development is that we began to look for solutions worldwide to broad issues that Strauss is looking to solve. For example, we know that lowering the sugar content of our products is a long term issue and so our CTO scans the globe for early stage solutions that can be brought into Strauss through working with us. In addition, what I do personally is to look for business
development opportunities that can be nurtured and then connected to Strauss’s business units. What would you say were the top 3 things that you didn’t know about startups and had to learn on the go besides what you already mentioned? The first thing is to realize that entrepreneurs are “free spirits” oftentimes and that when someone from a corporation meets them this person has to have a tolerance level to such communication style and behavior. It also demands a certain level of humility. Our CTO is a professor of food engineering and at times he can step out of a meeting and tell me “This is different from what I have learned but what this person says makes sense”. This holds for the innovation manager but also for other stakeholders that might be involved. It is very difficult, close to impossible actually, to hold the following two questions in our minds at the same time: - Will this really work? - If it works will anyone actually care? And so we decided to assume that for the first few meetings, everything the startup is telling us is true and that the presented technology is going to work. We focus our attention on the second question, assuming that the technical aspects will be clarified and tested later on. Otherwise, it is very difficult to make an educated decision about the second question because doubts about the first one keep getting in the way. Our second learning is that when startups meet a corporation they usually mix between the technology they have and its application. Our answer right from the outset is: “You created a technology and that is your expertise. Our expertise is the familiarity with the market so focus on presenting your technology and let’s brainstorm together on what its most promising application should be”. Lastly, as in most entrepreneurial projects, the nurturing and execution of such joint opportunities with startups usually take more time and require more budget than planned. The corporation should realize this and understand that it is part of how these activities go. For innovation managers this also means that the way they’re measured should be adjusted according to the stage they are in. In the beginning, they should be measured on input i.e. the number of startups that were interviewed and the number that were pursued. This can be sufficient for a year and maybe even two. Then, you should add the number of projects that were generated out of these startups i.e. projects where business units actually dedicated time, funding and attention. Only after that, should you start measuring the impact on business KPI’s.
AHI GVIRTSMAN IS THE FORMER VICE PRESIDENT AND GLOBAL HEAD OF INNOVATION OF HP’S SOFTWARE DIVISION, THE AUTHOR OF THE BOOK “THE PEAK INNOVATION PRINCIPLES” AND CHIEF KNOWLEDGE OFFICER AT SPYRE. HE IS CONSIDERED A GURU OF ORGANIZATIONAL INNOVATION AND HIS METHODS ARE BEING APPLIED IN VARIOUS ORGANIZATIONS INCLUDING VODAFONE GERMANY, ORBIA, AND THE MUNICIPALITIES OF TEL-AVIV AND JERUSALEM
SISYPHEAN INNOVATION 8 THE FUNNEL
AND THE THREE KEYS TO AVOIDING IT
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As I travel and meet innovation executives at various organizations, one of the patterns that emerges repeatedly is that of ventures struggling to get on the organization’s official work plans. In other words, there is space for experimentation and ideation but when the rubber meets the road i.e. decision makers are expected to take a potential venture and dedicate focus and resources to it - it simply doesn’t happen. I call this the Sisyphean innovation pattern.
SISYPHUS WAS A KING WHO WAS PUNISHED BY THE GREEK GODS TO ETERNALLY ROLL A HEAVY BOULDER UP A TALL HILL ONLY TO SEE IT ROLLING DOWN TO THE BOTTOM EVERY TIME IT ALMOST REACHES THE TOP. HAVING TO GO THROUGH THIS ENDLESS CYCLE OF EFFORT AND FAILURE IS CALLED A SISYPHEAN TASK. Why do organizations with good intentions find it so difficult to make that next level of commitment to promising ventures? The truth of the matter is that while most executives tell me that innovation is extremely important to them and is actually the lifeblood of their organizations, truly innovative ideas make decision makers very uncomfortable. The combination of unusually high levels of risk and lack of clarity in ROI (Return On Investment) which characterize innovative ideas goes against everything that is taught in business schools. You either de-risk the project, thereby devoiding it from making a potential impact or simply block it from existence outright. It is very human to prefer safe projects that have much clearer ROI ratios and that existing customers are clamoring for, over the lack of clarity and high risk of innovation when push comes to shove.
The result is that we see a lot of activity around innovation. Be it open innovation with startups or internal processes that foster innovation from within. But whatever the process and method, these activities do not generate progress because everything that is generated never makes it into official work plans of the business units. Oh, and making it into work plans isn’t enough unless it is above the cut line because being in the plans but below the cut line is practically not being in at all. Having said that, organizations that wish to thrive in the long term must put in place mechanisms that make it easier for executives to make such decisions. Those mechanisms will allow certain innovative projects to get the opportunity to demonstrate success in the real world so that related decisions can be based on facts rather than opinion and even force to a certain extent long term investments of uncertain outcomes to coexist in parallel to the mainline business.
THERE ARE THREE KEYS TO SUCH MECHANISMS THAT IF ADHERED TO WILL SET THE STAGE FOR SUCCESSFUL LONG TERM INNOVATION:
01 DELAY OF DECISION POINT
02 CONSIDER LEARNING AS PROGRESS
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MAINTAIN A PORTFOLIO
Usually, when facing innovative opportunities, executives consider the potential next step as building a PoC (Proof of Concept) or even an Alpha version of the solution. This means that the cost of the so-called experiment in this case will be expensive and that failure (which by definition is probable here) will be painful. By changing decision making about innovative ventures from high stakes big bets into a rolling sequence of merit-based guesses then the final decision about whether to build and then scale or not, is practically delayed over time. In order for this to be sustainable there must be a limit on the spending velocity for innovative ventures at every stage and just like startups with investors, so will ventures have to present findings and proof to executives in order to receive an additional round of internal resourcing.
One of the main messages of the lean startup movement was that action doesn’t mean progress and that building new stuff which is the natural tendency of corporations is a waste of time and resources when it isn’t preceded by rigorous validation and fact finding. And so the second key for us is to adhere to this principle. And yet, there’s a caveat that’s unique to established organizations. Even the most advanced systems of innovation have to hand over ventures to the execution functions within the business units. At that point in time, the organization’s project management practices kick into gear and such principles as validation, flexibility and merit-based decision making are thrown out the window. Therefore, it is essential that this key of continuing to invest in learning and making decisions based on this learning must be continued even when the venture is handed over for building and releasing.
For a complete body of work, organizations should have, at any given moment, a collection of such innovation opportunities. It can be described as a portfolio of educated guesses kept on low flame i.e. capped spending velocity until a decision to scale is made for some of them based on merit. Once again, discipline is a must here since a human tendency would be to “scale creep” and bring a venture to scale simply due to momentum and set project milestones rather than actual results and merit.
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IN ORDER FOR INNOVATION TO THRIVE IN THE LONG TERM, ORGANIZATIONS MUST PUT IN PLACE THE MECHANISMS THAT WILL ALLOW EXECUTIVES TO MAKE DECISIONS THAT BALANCE THE SHORT TERM NEEDS WITH AN ABILITY TO MAINTAIN A PORTFOLIO OF EDUCATED GUESSES ABOUT THE LONG TERM. IF WE DON’T KEEP SUCH OPPORTUNITIES ALIVE, WE WILL NEVER HAVE THE CHANCE OF SEEING THEM MATERIALIZE. KEEPING THEM ALIVE REQUIRES INHERENT PRACTICES OVER TIME RATHER THAN THE HEROICS OF INDIVIDUALS WHICH IS ALWAYS LIMITED IN SCOPE AND SHORT LIVED. APPLYING THE KEYS TO SUCCESS DESCRIBED IN THIS ARTICLE AT SCALE IN YOUR ORGANIZATION WILL BRING YOU SIGNIFICANTLY CLOSER TO A STATE OF INNOVATION PROFICIENCY.
BY ELENA DONETS, CO-FOUNDER AND COO AT SPYRE. ELENA IS A LEADER IN ISRAEL’S ENTREPRENEURSHIP ECO-SYSTEM AND A MEMBER OF THE G7 FORUM FOR DIALOGUE WITH WOMEN LED BY DR. ANGELA MERKEL.
OPEN INNOVATION
IS GREAT.
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WHAT ABOUT INTERNAL READINESS?
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WHAT IS OPEN INNOVATION INTERNAL READINESS? LET’S TAKE A HYPOTHETICAL EXAMPLE AND IMAGINE A STARTUP THAT DEVELOPED A TECHNOLOGY WHICH ALLOWS A DEVICE WHICH IS THE SIZE OF A FEW MILLIMETERS AND DOESN’T REQUIRE A POWER SOURCE TO REPORT ITS POSITION FROM ANYWHERE IN THE WORLD WITHIN A 20 METER RADIUS. NOW, THIS STARTUP PARTICIPATES IN AN OPEN INNOVATION EVENT OF A LARGE TRANSPORT AND LOGISTICS CORPORATION, WHICH IDENTIFIES AN OPPORTUNITY TO ATTACH SUCH A DEVICE TO ANY OF ITS MILLIONS OF PARCELS AND CONTAINERS BEING TRANSPORTED WORLDWIDE AND THUS, HAVE MUCH BETTER CONTROL AND DATA COLLECTION OVER ITS ACTIVITIES. ANOTHER CORPORATION IS AN AGRICULTURAL WHOLESALER WHICH WISHES TO HAVE BETTER CONTROL OVER THE TIME IT TAKES PRODUCE TO GET FROM FIELD TO PLATE. THE STARTUP IN QUESTION CONSISTS OF MANY TALENTED PEOPLE, HOWEVER, THESE PEOPLE PROBABLY DO NOT HAVE ANY BACKGROUND IN AGRICULTURE, TRANSPORT OR LOGISTICS. MOREOVER, CHANCES ARE VERY HIGH THAT NO ONE IN THOSE STARTUPS HAS ANY FORMER FAMILIARITY WITH THE TWO MENTIONED CORPORATIONS AND THEIR INTERNAL WORKINGS.
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THIS MEANS THAT WITH EVERY GOOD INTENTION IN PLACE, THESE STARTUPS ARE CONSTANTLY IN A POSITION OF BEING OUTSIDE AND LOOKING IN AS THEY TRY TO DEAL WITH AN ESTABLISHED CORPORATION WITH ALL OF ITS INHERENT RESISTANCE TO INNOVATION ON WHICH WE HAVE WRITTEN EXTENSIVELY IN PREVIOUS ISSUES OF THE MAGAZINE. ORGANIZATIONS RESPOND TO INNOVATIVE OPPORTUNITIES SIMILARLY TO HOW THE HUMAN BODY DOES TO POTENTIALLY LIFE-SAVING ORGAN TRANSPLANTS. IT’S AS IF A CORPORATE IMMUNE SYSTEM KICKS IN AND DESTROYS THE OPPORTUNITY AS A MEANS OF PROTECTING THE ORGANIZATION FROM ATTEMPTING SOMETHING NEW AND UNFAMILIAR.
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For open innovation there are certain specific scenarios we encounter frequently that cause any such opportunity to stop dead in its tracks. Here are some of the most common: THE DAY AFTER THE PILOT - This is a classic case of
corporations focusing on the front end of the process and dedicating attention to the exposure stage, selection of most promising startups and a few weeks of attention until a pilot is created. The problem is that pilots are usually just scratching the surface of a corporation and the really hard part begins the day after the pilot. Most corporations simply aren’t ready for this effort in terms of the required skill set and a lack of motivation that its employees have to take on such challenging and risky endeavors.
SENIOR PERSONNEL LACK OF AVAILABILITY - Corporations are filled with very busy people. The more senior the people the more busy they are. Startups on the other hand have a very limited runway for takeoff and every passing day brings them closer to the end of that runway. When a startup related opportunity requires the assistance of a senior executive and the meeting is scheduled for two months later, this is just one of the many early signs that the opportunity is going to end on a sour note. LEGAL OVERLOAD - The legal aspects of cooperating
with established corporations usually involve thick “standard” contracts or lengthy NDAs (Non-Disclosure Agreements) that have been formulated over the years to cover every possible base for corporations that simply wish to protect themselves from potential litigation. Once again, this is not okay when dealing with startups that do not have the manpower nor the access to legal resources for such purposes.
PROCUREMENT SETBACKS - When a corporation decides to pay the startup for its time investment in the pilot (a common practice), it is not uncommon to see a lengthy procurement process that exhausts what is usually a very small and young company. As stated above, startups live on borrowed time and delaying the start of activities until a standard procurement process is completed is another major mistake that
corporations with good intentions make. This is simply how things are done over there. However, this practice is detrimental to open innovation efforts.
SO WHAT SHOULD CORPORATIONS DO IN ORDER TO DEVELOP INTERNAL READINESS FOR OPEN INNOVATION? THE ANSWER CONSISTS OF THREE ASPECTS: AN ORDERLY PROCESS - When a corporate employee
identifies a startup that could become an opportunity within the context of this corporation (for example, the tiny tracking device serving to follow individual fruits and vegetables from field to plate) then this becomes an innovation project that goes through a well-defined process with clear decision gates. This cannot be left to improvisational efforts that simply believe in the good will of corporate citizens. It has to be a controlled, measurable and manageable process.
A SUPPORTING INTERNAL COMMUNITY - We tend to use the
term ecosystem to describe the external environment of startups, corporations, academia and the relationships between them. For open innovation to thrive in an organization, it must have an internal innovation ecosystem as well with a supporting cast consisting of innovation coaches, champions and mentors. This eliminates the need from any single central figure to be at the center of every opportunity and creates a distributed network that allows open innovation to take place at scale.
INVOLVEMENT OF KEY EXECUTIVES - For open innovation to
generate clear, valuable outcomes, every organization has certain key executives that must be involved in the innovation process. We must always remember that when an executive makes the decision to take a startup-related opportunity and create a first version of a product or service as part of a unit’s work plans this has to come at the expense of something else that is of a much lower risk level and whose impact is much clearer in the outset. In order to get executives to make such a decision, there are very specific ways in which they must be involved in the process. This involvement has to generate maximum effect while requiring as little of their time and attention as possible.
IN SUMMARY, OPEN INNOVATION HAS MANY SIMILARITIES WITH INTERNAL INNOVATION SIMPLY SINCE INTERNALIZING A STARTUP TECHNOLOGY INTO A CORPORATION AND GENERATING PRODUCTS AND SERVICES BASED ON THAT STARTUP, IS ESSENTIALLY LIKE TAKING AN INTERNAL IDEA THROUGH AN INNOVATION PROCESS. THE TECHNOLOGY THE IDEA IS BASED ON IS SIMPLY BASED ON A STARTUP TECHNOLOGY AND THE OPPORUNITY’S SUCCESS DEPENDS ON HOW WELL THE ORGANIZATION HANDLES ITS INTERACTIONS WITH THAT STARTUP ON ONE HAND AND ITS INTERNAL ABILITY TO HANDLE THE OPPORTUNITY ON THE OTHER.
WHAT ABOUT YOUR ORGANIZATION? ARE YOU INTERNALLY READY FOR OPEN INNOVATION?
An interview with Tom Fawcett, Head of Product & Portfolio, Studio 107 at InMotion Ventures
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Jaguar Land Rover Corporate Startup Studio
race. We are in the business of creating ventures that can compete at the highest levels.
I joined InMotion from the in-house Jaguar Land Rover (JLR) strategy team, where I helped to shift the focus towards mobility, connectivity and electrification. Prior to this I held senior strategy, marketing and new business roles in consumer technology and FMCG. I started out as a management consultant working with Private Equity and Venture Capital clients in the consumer, tech and media sectors.
Corporate Startup Studio is a new model for innovation development in large organizations. How did you get to this model? What are its benefits over the regular corporate incubator model?
Can you share with us more about Inmotion’s vision and approach? What is the role of the 107 Studio in Inmotion’s structure? InMotion is here to execute JLR’s strategy to be a leading premium mobility player, dedicated to delivering experiences people love for life. We help JLR answer two questions: what should our role be in the future and how do we engage with new and emerging customer segments. Given our parent company, we prioritise new products and services in the urban mobility and outdoor adventure space – this can be anything from an underlying data platform through to a customer facing service. We use VC investment, seed to series B, to understand the “innovation frontier” 5-10 years out. I work in Studio 107, our corporate startup studio. We explore the “industry frontier” 1-3 years out. We aim to pilot and then scale up revenue generating businesses that can deliver a differentiated solution that can command a price premium because it does something special. Studio 107 is a reference to our racing heritage. The 107% rule in Formula One means that you have to be within 107% of the fastest driver to qualify for the
Our approach allows us to test and scale ventures from the ground up and be very receptive to their needs. We do a lot of the early stage conceptual work internally, usually coming up with the idea and then bringing a product owner in to lead the business as we gain confidence in the idea. I’d also say that we are more proactive on finding synergies with Jaguar Land Rover as well as between our portfolio businesses, whether that’s bringing data analytics expertise from Synaptiv, our connected CA data platform, into the fleet of rental vehicles in THE OUT, our on-demand rental business, or joining forces on business development. And our long term ambitions mean that we see ourselves as the launchpad for real businesses rather than being a research function. Launching a business within an established corporation is a challenging task. Do you find that identifying product owners after the idea is ready and making them essentially into “entrepreneurs-in-residence” is an effective approach? We find that our product owners are passionate and committed when they fully buy into the opportunity and it’s clear that they are the decision makers and can actually shape the business. It comes down to how we find the product owners and how we empower them.
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How did you join the Inmotion Team? What was your path and background?
Can you elaborate more about the innovation process you have at 107 Studio? We have a multi-disciplinary team with experience from inside and outside the automotive and mobility sectors. It’s important to have different perspectives but we pride ourselves in taking a design led approach, using the double diamond model to get to the right customer experience. We have a core team of experts in customer insight, strategy, service design, product, UX/UI, data science, finance and operations all contributing. But most importantly we need the product owners to really take the lead. Finding and supporting these leaders is one of our most important jobs. What decision making criteria do you apply when deciding whether to integrate developments into the car firm or look for strategic partners and external investments?
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Our ventures are solving new problems that often require a broad mix of skills and infrastructure. We need to think hard about whether can we solve everything ourselves. Generally, that’s not possible and so we need to partner. For example, we are about to launch the initial trial phase for Havn, an allelectric chauffeur business in London. It’s far better to partner to bring in capabilities in EV charging, supply-demand management and hospitality. And external investment means that we all have skin in the game and so the solutions are much more pragmatic than in a typical corporate project.
It is known that the most challenging part is to take a startup to scale. How do you help your ventures scale? We help our ventures scale in three ways: first, we work hard to use Jaguar Land Rover’s scale, products, capabilities and relationships to provide growth opportunities. Second, we have a talented team that can step in and help at any stage. And thirdly we help the business access capital, where we can. How does the investment process work at Inmotion Ventures? What are the parameters for the investment decision in 107 Studio projects? Each venture has to meet a clear customer pain point and command a price premium for doing this. We also look for synergy with the rest of the portfolio or with Jaguar Land Rover. As we progress, we have three key criteria that we put analytics behind. First, is this an investable business? Have we created something that would attract interest from third parties? Second, is it operationally excellent? Are customers more than happy and willing to pay a price premium for the service? And third, is it showing signs that it will be profitable in the mid-long term? How do you manage your partnership with Jaguar, your parent company? Do you have direct involvement of the executives in the development process? Are they able to influence your decisions and if so, then in what way? We are 100% owned by Jaguar Land Rover but we are able to operate independently, giving us the freedom to work creatively to grow our businesses. That said, we are fully in line with Jaguar Land Rover’s strategy and we have three Jaguar Land Rover board members on our board. They’re involved in setting our strategy, inputting to and signing off on key decisions and unlocking opportunities
around Jaguar Land Rover. While we make sure that everything lines up with Jaguar Land Rover’s plans, we do avoid having to have a corporate sponsor for every venture – we don’t want our startups totally dependent on the corporate, though we do want them to benefit from it. What would you say are the biggest challenges that 107 Studio faces today? Awareness and understanding. Corporate start up studios are relatively new and the world of mobility is changing every month. We need to make sure it’s clear that our ventures are serious businesses aiming to get to £100m+ turnover and to make a transformational impact on Jaguar Land Rover. We also need the recognition that not every egg will be a bird, but that our failures can be as informative as our successes! For all our community members - innovation managers - please suggest under what circumstances they need to turn to the corporate startup's studio approach and how they can convince their executives that this is the best model to adopt. Can you share your top innovation management tip with our community? A studio approach is right if you operate in a rapidly changing industry like ours, but you are frustrated when you look out at all the innovation and still see many unmet customer needs and you have confidence that you can keep developing a pipeline of concepts. It’s especially good if you think that your corporate’s business and brands can help you launch ventures that have their own special angle. My top innovation tip is it’s all about the people. Success comes from getting your studio team and the product owners to click and to all be bought into the same vision and the same roadmap.
About InMotion InMotion Ventures is Jaguar Land Rover’s venture capital fund. We invest in earlystage technology companies that change the face of urban mobility, support an active outdoor lifestyle and deliver unique travel experiences. We are based in London and invest globally. At InMotion, we are investing in the future of transport, mobility and travel. Powered by Jaguar Land Rover, we are supporting entrepreneurs and innovators who change the way we move. InMotion’s mobility services arm, Studio 107, works closely with our parent company Jaguar Land Rover to build new services in the urban mobility sector. The name Studio 107 is a nod to the 107% rule in motorsport. In qualifying, drivers who fail to set a lap within 107% of the fastest qualifying time are not allowed to start. Our goal is to select the ideas that play to our strengths and develop them into winning businesses.
To find out more about InMotion, please see: www.inmotionventures.com
INNOVATION BOOK CLUB BY: AHI GVIRTSMAN
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SCALING LEAN ASH MAURYA
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CARL VON CLAUSEWITZ WAS A PRUSSIAN GENERAL AND MILITARY THEORIST IN THE EARLY 19TH CENTURY. ONE OF HIS APPROACHES WAS THAT YOU MUST IDENTIFY WHERE YOUR ENEMY’S HEART OF OPERATIONS IS, WHERE HIS MAIN STRENGTH LIES - SUCH AS THE HIGH COMMAND POST - AND THEN CONCENTRATE YOUR FORCES ON ATTACKING IT. IF WE CAN NEUTRALIZE THE ENEMY’S CENTER, THE REST WILL CRUMBLE AND SUCCUMB TO OUR FORCES LIKE THE ARMS OF AN OCTOPUS ONCE WE ATTACK ITS HEAD.
For those of us who move in the circles of the startup ecosystem, the name Ash Maurya needs no introduction. He is a serial entrepreneur and the mind behind The Lean Canvas tool, which has become one of the leading techniques for entrepreneurs to formulate abstract and complicated ideas in their nascent stage into clearly articulated concepts that can then be validated with The Lean Startup methodology. Ash’s more recent book, published in 2016, takes on the daunting task of actually dealing with reality as the rubber meets the road and budding startups attempt to scale their ideas which they assume have achieved product/market fit. For those of you unfamiliar with the lean startup terminology, achieving problem/solution fit means that we have been able to ascertain that the problem we are trying to solve actually exists for the customer segment that we are targeting and that it is painful enough for that segment to invest time/effort/money in adopting it. When we reach product/market fit, that means we believe that the solution we created for the validated problem is indeed what potential customers will buy. Usually, when young ventures reach this point, a decision has to be made regarding the point at which they should scale. Once such a decision is reached, however, too many, even today count on “launch and hope for the best,” which is not a good strategy. Ash’s brilliant approach to the topic borrows a page from Elyahu Goldratt’s brilliant work.
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Goldratt, whose seminal works were published in the 80’s and 90’s (“The Goal”, “Critical chains” to name a couple), focused his attention on manufacturing processes and his theory posited that in every manufacturing process there’s always a single point which is the bottleneck.
Ash’s observation was that ventures that are in the scaling stage are essentially equivalent to a manufacturing floor, only instead of converting raw materials into finished goods, what these so-called “manufacturing lines” are doing is converting a target audience into happy, repeat customers. Think about the conversion pipeline as starting with people who reach a company’s website and see an offered product. A certain percentage of these click to learn more. A certain portion of those actually try the product for 30 days. Out of those, a certain portion pays to continue using the product and so on until we reach those who return for more products and recommend them to their friends and colleagues. The main idea in the book is that when scaling, our job is to constantly survey the pipeline for the bottleneck and focus our full attention on eliminating it before searching for the next one. For example, if only 5% of those who reach a product page are actually choosing to try it but out of those that do, 80% continue beyond 30 days and pay for it then this is where our bottleneck is. If we have $100 then we should spend $80 on checking whether this is due to marketing aimed at the wrong crowd, a badly formulated product page or some other technical issue in the signup page. Too often, you will see startups and corporate ventures spending time on more features or on customer care instead of on the bottleneck which is stifling the venture’s ability to scale. The significance of this is that scaling ventures are on a very limited runway. Be it a startup or a venture being funded by corporations, there’s an expectation for results and this means that time is of the essence. The key here is that instead of running full speed just to show action, Ash’s clearly articulated approach teaches you where your attention should be focused. Without revealing all the details, I will mention that his perception of the conversion pipeline isn’t as simplistic as described above and so the book is highly recommended. In addition, once this approach is in place, it opens up the opportunity to actually make a much better decision on whether to scale and when.
How do we know whether to scale? The question now isn’t about whether the market will receive our product because achieving product market fit is supposed to answer that. The question now becomes whether we, as a startup, can turn this product into repeatable, profitable, scalable business. The simplicity and elegance of this approach is very refreshing. Instead of endless slides and reports, Ash guides the reader through a few straightforward questions and, similarly to the documented assumptions of the lean canvas, we now have a set of assumptions about how we expect our new business to function. For every stage of the pipeline, we assume a certain throughput and a certain conversion rate to the next stage. For example, if we assume that out of every 100 customers who reach our website, only a single customer will pay us an average sum of $50, that means that in order to make $50K in revenues, we need to generate 100,000 relevant visitors to our site. Now, there’s no right or wrong answer here. It is simply what we expect. In order to test such hypotheses, we can send a marketing email to 2,000 people, see how many reach the product page and measure the actual conversion. The complex problem of scaling has now become an almost scientific challenge very similarly to the way lean startup handles a newly formulated idea’s underlying assumptions as a set of experiments. Adding my years of experience running the innovation program of HP Software, I can attest to the fact that almost everything discussed in this book applies to corporations trying to scale new products and services. There’s a lot that corporate innovators can learn from the startup world and a single message that I’d like to convey is that you must never assume that the value delivery chain function of an established organization will know how to scale a new product or service. It is your responsibility, as an innovation manager or someone championing the new venture, to make sure that learnings such as the ones shared in this excellent book are applied within an established organization as well. To summarize, this book is highly recommended for innovation managers, innovation practitioners and in particular, executives who are involved in the challenging task of scaling a new venture. Just like the Von Clausewitz doctrine, Ash Maurya’s approach advises us to constantly attack the bottleneck in the process of customer acquisition. Eliminating the bottleneck and focusing our efforts in such a concerted way is the most effective way for achieving rapid progress and making higher quality decisions.
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The job of a manufacturing floor manager, according to Goldratt, is essentially to constantly identify where the current bottleneck is, eliminate it and then look for the new bottleneck which inevitably will appear somewhere else in the process. This iterative and constant improvement of the process efficiency has made Goldratt’s work one of the most significant in the world of management over the last 40 years.
Edo Segal Open innovation lead at Amdocs Israel
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innovation at Amdocs
By embracing open innovation, we connect customers’ business aspirations with startups’ technologies, delivering value to all, faster. Everyone wins.
We reached out to Edo to learn more about open innovation at Amdocs, a leading software and services provider to communications and media companies When companies establish open innovation programs, they usually involve multiple external players such as startups, partners, customers and so on. How is open innovation pursued at Amdocs? At Amdocs, we leverage best-in-class open innovation practices and methodologies to drive full innovation cycles, from ideation, validation and experimentation to commercialization of solutions, taking a two-pronged approach: On the one hand, we regularly search for partner technologies that can enhance our portfolio to deliver more value to customers of the Amdocs group. On the other hand, we work with group customers to address their company-specific challenges. We look to open innovation as one of the ways to address these challenges. Together we define them and then identify startups that can assist in addressing them. As part of this, we have several programs that help us identify relevant startup technologies:
Startup fast-pitching events We have numerous sessions with customers throughout the year, typically with CxO and VP level executives. During these sessions, we discuss how we can collaborate to drive innovation and expose them to startups that may interest them. Before meeting the customer, we help startups fine-tune their pitch based on our familiarity with the people they are going to meet.
Executive challenges An executive business challenge is defined together with customer executives to address one of their key challenges. It is then crowd-sourced to all Amdocs employees, as well as to our ecosystems of partners and startup communities. We tailor the challenge to the customer’s business need in terms of target audiences, duration, judging committee and prizes. The final solution may contain ideas from employees, partners and startups.
Ad-hoc business challenges “Inbound” requests received by the Open Innovation team from the Sales may help address specific customer challenges. Solutions can then be further leveraged to help other customers and to enhance our portfolio.
Joint innovation centers with customers Joint innovation centers with customers is a more strategic and structured way to bring innovative technologies and solutions to specific customers. Business stakeholders at the customer provide business challenges. For each challenge, we look at a few alternative solutions to identify the right startup that can either solve or mitigate the issue. The business stakeholder will then select the solution that will continue to the Proof of Concept stage.
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This process is built to allow for short time-to-value. In all these programs, our mission is to bridge the gap between leading communications and media companies, and startups. We assist startups in communicating more effectively with these large organizations and speak to the right business stakeholders directly about their specific business needs. We actively assist them in defining and formulating the PoCs, KPIs, and go/nogo criteria.
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So far we’ve discussed activities that are usually initiated by customer needs and challenges. Do you also reach out to customers with innovation opportunities? Yes. We have several such programs. Amdocs has been at the forefront of innovation in the communications industry for more than three decades. Our ability and determination to look ahead and come up with the solutions that customers of the Amdocs group will need tomorrow is key to our ongoing business success and strong customer relationships.
Launchpads We analyze long-term future trends and opportunities. We start by researching and exploring a selected domain and the relevant ecosystem of startups, partners, experts, thought leaders, VCs, academia and professionals. We then bring them all together to take the stage in an event we call “Launchpad” in which they share their vision with a crowd of around 100 professionals, most of them being relevant Amdocs employees which we “cherry-pick” in advance. This event kicks off the ideation and incubation of innovative solutions in collaboration with customers and partners. The processes you describe have great potential value for Amdocs. Very true. They help us further strengthen our position as a trusted partner to customers, allowing us deep insight into their challenges and creating the solutions that can offer them the most value. Can you share any data regarding the outcomes of open innovation at Amdocs? We see hundreds of startups a year and maintain a working catalog of about 200 which we share with Amdocs group customers. We create hundreds of opportunities every year for startups to pitch their offerings to business stakeholders in the communications and media industries. We have patents and products that were created as a result of our open innovation programs.
How is someone in your role measured at Amdocs? What does success look like? Among the metrics that are easier to measure are the number of customer engagements we lead as part of our various open innovation programs and the number of PoCs generated. The number of solutions we propose as add-ons to our portfolio of products and solutions is an additional metric we measure. Clearly, there is value that is harder to measure; for instance, the knowledge we continually feed into the company and into customers around new technologies and solutions, helping to elevate our positioning as an innovation leader and a trusted advisor and thought leader.
Daniel Seewald Founder & CEO of Deliberate Innovation, Former Head of World Wide Innovation at Pfizer
Formalizing the Informal:
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Creating Change through Informal Networks
Informal networks need not be political nor religious insurgencies. In most large corporations’, informal networks are widespread. They often go by the name peer groups, communities of practice, or have no name at all. In fact, at a large healthcare company, employees formed a secret whiskey tasting society that doubled as a group that met to share organizational gossip and share insider tips on internal opportunities. Informal networks often fill a void in knowledge or practices. Although informal networks usually lack structure and leadership, they endure because they share a common purpose and trust amongst the members. In leading historian, Niall Ferguson’s, The Square and the Tower, he argues that the “real power has long resided in the networks in the town square” rather than the formal structure in the tower. The formation of informal networks in an organization does not have to be left to chance. Having architected one of the largest innovation movements in the Fortune 100, there are deliberate steps that can be taken to launch an innovation movement that is based on informal networks.
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On a rainy April day in 1978, a stranger walked into a small, non-descript laboratory and cautiously whispered into a young man’s ear. The young man immediately collected his belongings and walked out the door. That evening, the young man, after surreptitiously connecting with other young men like him, returned home and brought with him a forbidden item. Matzo. Unleavened bread for the Jewish holidays. That man, my fatherin-law, lived under the oppressive Soviet regime, the epitome of an inflexible hierarchy. The Soviet system systematically stamped out parallel networks. Informal networks posed a threat to the communist regime’s propaganda machine. Yet somehow my father in-law’s informal network not only survived, it successfully spread its cultural values, beliefs, and practices.
Creating an Innovation Movement at Pfizer In 2013, Pfizer faced an uncertain future. With several blockbuster brands approaching their patent expiration, then CEO, Ian Read, recognized that Pfizer had to signal to investors and employees that innovation went beyond its pipeline of products and extended to its pipeline of people. The CEO was eager to spread an innovation mindset and culture across the 90,000+ employees. But there was also a recognition that change cannot be easily accomplished through leadership decree. Leaders can demand that their employees follow rules and regulations, but they cannot readily shift the hearts and minds of their employees. To realize the CEO’s vision, my team decided to build a very different change management model. Rather than build a traditional, top-down program, we modeled it on a decentralized, social movement. The Dare to Try initiative at Pfizer began with centralized support but quickly pivoted to a decentralized approach. Employees from across the various geographic regions and divisions were initially recruited based on skill as well as passion for innovation. The role of these champions centered on three objectives: (1) to evangelize the Dare to Try mindset and practices, (2) to apply these practices to solve local challenges with local teams and (3) to recruit and mentor members of the local network. Although these champions operated with considerable autonomy, my headquarters-based team complemented their
efforts by pulsing periodic promotion, training and resources to help support the efforts of these local clusters of champions. Within a couple of years, these clusters began to form into self-sustaining networks with unique identities, personalized communication channels and strategic plans. These networks proved to be an effective means of reaching employees in an authentic way. With only 600 active champions in the network, we estimated that they reached a majority of the 90,000+ employees on multiple occasions. And after three years from the program launching, the impact of Dare to Try was evident. Performance data showed a steady increase in both the volume of innovation sessions, and more importantly, a sharp increase in new creative concepts entering teams’ strategic plans. Equally as important as performance, an ongoing attitudinal survey showed a remarkable change in the collective belief in the organization’s ability to innovate as well as individual’s ability to act more innovatively. But perhaps most telling were the fingerprints left all around the organization. Emails and thank-you notes were regularly sent to champions in the informal networks. Employees proudly emblazoned Dare to Try stickers on laptops and office doors. Employees were acting more entrepreneurial as could be seen by the spin-out of a novel healthcare start-up, known as Springworks Therapeutics. Even leaders routinely inserted “Daring to Try” as a new action-verb in their communications, including in the Pfizer annual report.
Host a Haven. Changemakers also need physical spaces where they can plant their flag. Across the globe, Dare to Try spaces began to emerge. It started with my team creating a space in our New York Headquarters and then socializing a simple manifesto on how to build your own. Within a short amount of time there were similarly inspired spaces popping up all around the world, from Groton, Connecticut to Zurich, Switzerland. These spaces signal that the network and movement are legitimate and that a haven has been created where the usual rules and behaviors are different from the traditional corporate culture. They also become a capsule of the change that you want to see across the entire organization.
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Know thy Network. One of the lynchpins in jumpstarting your informal networks is deeply understanding the existing network structures first. Many networks already existed within Pfizer and these networks likely exist within every organization. At the outset, our team conducted a network analysis of the key influencers, central connectors and innovation evangelists. Initially, our method was qualitative in nature but, over time, we used more quantitative methods through employee surveys and an organizational network analysis (ONA). By bringing together a heterogenous team and conducting interviews across the organization, many of these hidden networks and influencers were characterized and mapped. From this research, we were able to recruit our first groups of champions, many of whom remained actively involved more than five years later and would later lead their local networks.
Build the Blockchain.
There is a very delicate balance between galvanizing a grassroots-like movement with decentralized networks and maintaining executive support. While my team tracked and reported a battery of performance and attitudinal metrics to demonstrate the ongoing change, we also tried to avoid the formalization that would undermine the grassroots nature of the movement. While it remained important that the champions receive manager support, we eschewed the traditional sanctioning of the roles within the Human Resources system. And while we worked with the champion network to set-up goals and objectives, we intentionally did not measure or report on them and allowed for it to be a individually-driven process. Treating these professionals as adults went a long way to keeping them engaged. Perhaps most interesting, we ignored the traditional change management approach of creating “train the trainers” and leveraged the insights from the Montessori Method, which emphasizes guided choice, encouraging freedom within limits, and building a reliance on networks of experienced peers, to reinforce learned concepts.
Quality and trust within the network are of high importance. As the informal network evolves and grows, there is an increased risk that current and future members may fail to meet the desired standards of the network. This can undermine the credibility and value of the network. It is essential that the network become increasingly rigorous and self-policed in its membership. We saw this practice in action within an informal network in Canada. Network members wanted to expand their membership and undertook the responsibility of recruiting, designing training and coaching the new members. Similar to the way a blockchain works, they took recommendations on new network members, but it was up to the network to validate. When multiple members on the network chain validated a person, a new network member was added to and trusted by the “blockchain.”
Change does not happen in a day and change is rarely led by a single person. Creating real and lasting change requires a thoughtful and deliberate approach that should be led by the very people who you want to be the change in the company. While it is certainly much easier to build an internal public relations campaign and issue an edict, as many companies will do, these programs inevitably fail the moment your leadership team stops promoting it. Instead, by tapping into the existing structure and nature of informal networks in your organization, you can turn your organizational decree into a movement that transforms the DNA of your organization.
Provide a Pulpit. While my head-quarters team stayed involved in teaching, coaching and supporting the various champion networks, the most meaningful action we took was to facilitate communication within and amongst the various champion networks. Storytelling and conversation must happen without intermediation in order for the networks to stand on their own. To do that, my team provided multiple platforms for connecting the networks. A regular “talk show” series was held in which my team would blend late night TV entertainment together with corporate information sharing. We also designed and normalized the regular use of an internal social media platform that enabled network members around the world to connect and share ideas and practices. By building out the infrastructure and normalizing it, over time the networks independently operated and communicated with one another, which built familiarity and trust. Even smaller micro-networks would form, as we found in Latin America, where a WhatsApp group formed to request immediate help or input from the local network of champions.
Harnessing the Power of Informal Networks The staying power of the Dare to Try movement was more than good fortune. It was a function of deliberate experimentation and learning. Over time, several principles emerged that were major contributors to its success. Here are a few of the insights that I gleaned over those years that can help an organization create a more authentic cultural movement.
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Forgo the Formalization.
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