Tag Archives: innovation

Entrepreneurs Have Not Because They Ask Not

The world of entrepreneurship is becoming more divided almost daily between the “haves” and the “have nots.” In this context, we would be referring to technology. Whether a start-up is seen as a technology company or not is determining not only valuations, but access to resources. One of the more common resources available to tech companies that “have” what others presume it takes to cash out somewhere in their trajectory for a very favorable multiple is an incubator, increasingly referred to synonymously as an accelerator.

Until very recently, these accelerators extract an equity position in the start-up company’s cap table in order to justify the risk of helping them for very little compensation up front. Most tech entrepreneurs learn to play the game this way and progress through the angel–Series A–Series B–etc process if they hit their milestones. But…the “have nots” bristle at the model and try to create worthwhile businesses without giving up equity. Unfortunately, they also try to go without mentoring and systematic instruction–to their detriment.

There is an emerging trend toward fee-based offerings that is on the horizon. Organizations like EntreDot, with a fashion innovation center and an industry agnostic innovation center in downtown Cary, NC, prefer the fee-based “pay to play” model. The premise is that a Main Street entrepreneur (otherwise known as “have not”) needs access to resources just like a tech start-up. In order for the innovation centers to provide services like instruction, mentoring, and space, they charge the entrepreneur on a “pay-as-you-go” basis. While this may be an affront to the typical “have” start-up mentality, it meets with less resistance among “have nots.”

Leaders of accelerators around the country who are trying to convert to more of the fee-based services model point to the fact that competition is stiffer than ever to get into the top  accelerators and too many entrepreneurs are being left by the wayside, just as the “have nots” have been for a longer period of time. What the newly disenfranchised and ignored sectors of entrepreneurship have in common is that they are trying to figure out how to commercialize an idea.  They each need help to do so!

Alexander Taub, the director of business development at the Des Moines, Iowa-based mobile-payment network Dwolla, spoke recently with Lauren Cannon for an article on the topic for Young Entrepreneur. Really young companies that aren’t necessarily ready for the big time may not benefit from accelerators, he says. Still, Taub does use General Assembly’s offices, which serve as Dwolla’s NYC home base. The value from using the co-working space stems from connecting with other companies that are also being incubated there, he says. “That’s definitely worth it… We’re part of the community.”

Plus, the experience might be worth paying a little extra for. At the Cary Innovation Center, less than six months of involvement has lead to strong growth for its initial two residents, Shelten Media and the CaryCitizen. Shelten saw an increase in billings of over 60% in her first 60 days and is now looking for larger space at the Center. CaryCitizen has seen their staff grow from two to five people as advertising revenues have increased. Both companies appreciate the value of the mentoring, but are committed to the program due to the cross pollination occurring among the residents. While it is definitely a significant and personal choice to decide to become a part of an accelerator (or innovation center as EntreDot calls theirs), the proof is in the results. As long as those serving the participants help them achieve desirable results, they will enjoy helping both the “have nots” and some who would otherwise be in the “have” category.

 

Local Client-Focused Innovation Fertile For Consultants

When companies look to innovate, they have a choice of using internal or external resources. One of the chief sources of external assistance is the category of consulting firms (“consultancies”). A study by the Management Consultancies Association (Czerniawska 2006) suggested the top reason consultancies were recruited was because client staff did not possess the relevant skills (66 per cent). While original and creative work took second place (45 per cent), getting access to proprietary methods and tools prompted a response from only 17 per cent of respondents. What does this mean? That  consultancies themselves may need to become more innovative in the way they interact with clients.

Globalization and the ensuing stiff market competition suggests consultancies need to identify and respond to these factors, and then modify their responses to fit their clients’ changing needs and expectations. Improving thought leadership within the consulting industry is critical. Yet, formal innovation processes alone can hinder innovation itself and contribute to loss of market position. One-person shops as well as national firms will benefit from becoming “more innovative and adaptive in their proposals, methods and solutions, while traditional client/consultant boundaries need to be challenged, stretched and even broken. Consultancies may also need to be more open to partnership working with other agencies, such as academia or even competitors, if they are to respond effectively to the pressures of the current high-cost, low-resource business environment.” (Institute of Consulting, 2011)

Clients need to learn how to work with consultants in this new environment. We should be cautious, however, to say that consulting has ceased to be innovative; the creative processes have simply shifted. Rather than looking at the bellwethers of old, BPR or TQM programs, local, client-focused innovations are the new frontier. Such projects are driven by a more discerning client who is often wary of being sold a ‘one-size fits all’ product, and are frequently undertaken as joint initiatives between clients and consultancies. Such arrangements provide clients with more control and consultancies with reduced overheads.

 The Institute of Consulting Report recommends the following to improve innovation inside consulting firms so that the organizations they advise can, in turn, become more competitive: 

For Consultancies:

Think small: clients are more sophisticated and demanding, requiring ideas that are tailored for their local needs.

Share costs and expertise: there is little that can be done about diminishing margins or higher utilization rates, but universities, research institutes, clients and other consultancies will often jump at the chance to share resources on interesting innovative activity if the case is made well enough.

Explore new frontiers: innovation is to be found in bringing fresh ideas in and listening to them. Develop boundary-spanning roles, recruit graduates that are not from business schools, interview new recruits about what could be changed in your company, seek out different sources of research and knowledge and organize cross-silo spaces for discussion.

Enable talent: providing bright, motivated consultants with autonomy and the ear of senior management is more likely to generate useful innovations than trying to formalize the process through bureaucracy. Innovation involves risk so loosening controls is no bad thing.

Be proactive: innovative activity depends greatly upon clients and procurers leading the way in taking risks, having conversations and enabling creativity. This can be supported though communication, education and persuasion.

Develop your people: over half of all respondents reported that training, conference attendance and professional, accredited staff were important enablers of innovation. Continuous professional development, it seems, is crucial for developing innovation as a strategic capacity for consultancies.

For Client Organizations:

Work with consultants: research shows that companies which invest in innovation during a recession are more likely to come out of it faster than their competitors. Co-working with consultancies on management innovation generates a number of benefits: a closer match of solutions with your needs, more motivated and skilled employees, a potential sharing of intellectual property and association with ground-breaking ideas.

Take risks: examine and prioritize the areas of your business where new ideas could put you ahead of the competition. Put aside some of your budget to work with consultancies on new ideas, if possible using a risk-reward form of payment so that risks are shared with the supplier.

Improve procurement: sourcing consultants solely on the basis of cost is risky to both the delivery of the project and the innovation that it might bring. Good procurement practice will acknowledge this and purchasers should have both the expertise and the freedom to select the best consultant for the best price. An over-specified solution may mean you are not getting the best out of your consultants and minimal consultant interaction with the business owner during the tendering process can sometimes mean the project requirements get miscommunicated.

Enable expertise: your consultants will have witnessed the challenges you face dozens, if not hundreds of times, in similar companies. Making the most of this not only involves conversation with the consultancy when defining solutions but also ensuring as much of their skill and knowledge is passed on to your staff before they leave. Clients must enable consultant expertise as much as consultants enable that of clients.

Social Media – the Village Approach to Innovation

It’s interesting how social media has subtly made the migration from a peripheral domain for adolescents to share extraneous to a mainstream business tool. Even within the business arena, social media (SM) used to be relegated to a branding or marketing activity rather than the comprehensive resource many now realize it to be. In a recent blog post, Braden Kelly points out, for instance, how innovation can be fueled by social media:

‘What is the role of social media in innovation? (Either inside or outside the organization)’ Social media serves an incredibly important role in innovation. Social media functions as the glue to stick together incomplete knowledge, incomplete ideas, incomplete teams, and incomplete skillsets. Social media is not some mysterious magic box. Ultimately it is a tool that serves to connect people and information.

How can SM be like glue in your organization? Is there a way to use blogs, wikis, and online videos to enhance learning, information sharing, and collaboration within your daily practice? For instance, posting questions for which your team has no answers to elicit knowledge possessed by others can be a very good use of social media. Or, learning a skill foreign to your core team through an online video can be a means to spur growth or learn how to more effectively manage a contractor/consultant. 

(Kelly:) Social media can help ideas grow and thrive that would otherwise wither and die under the boot of the perfectionist in all of us. Do you remember the saying “it takes a village to raise a child”? Well, it takes a village to create an innovation from an idea as well, and social media helps to aggregate and mobilize the people and knowledge necessary to do just that. But, that is social media working in the positive. We must remember that social media tools are just that – tools.

Village innovation – Hillary Clinton should have thought of that! How does the collaboration effect pertain to SM? Quite simply, there is no substitute for building knowledge systems. For non-proprietary information, you and your peers can start an online conversation thread that others build upon and you are able to glean insights non-resident to your group.  When you do wish to protect methods, processes and intellectual property, it is still preferable to find an internal means to capture group best practices, lessons learned, and puzzles to be solved. How could one or more forms of SM enable you to do this better? Kelly suggests that SM tools are seen in a positive light when they do the following:

  1. To make innovative ideas visible and accessible
  2. To allow people to have conversations
  3. To build community
  4. To facilitate information exchange
  5. To enable knowledge sharing
  6. To assist with expert location
  7. To power collaboration on idea evolution
  8. To help people educate themselves
  9. To connect people to others who share their passion
  10. To surface the insights and strategy that people should be building ideas from

The better you become at the above, the stronger your organization’s innovation capability will become, the more engaged your employees will become, and the more ready you will become to engage successfully in open innovation…Please consider the ways in which social media in your organization might be able to strengthen inter-disciplinary cooperation, make the organization itself more adaptable, and how it could help to create an organization with the power to transform more ideas into innovations.

From Think to Execute

“The ability to convert ideas to things is the secret of outward success.”
– Henry Ward Beecher

It is not enough to simply have a good–or even great–idea. Ideas are plentiful. I have them. You have them. The bum on the downtown street corner has them. People whose faces grace the covers of business magazines have them. Why are they on the cover and not us? Quite simply, they have become very proficient at executing their idea(s).

Brad Feld, of The Foundry Group and TechStars says that he gets emails all the time from would-be entrepreneurs with the latest software and internet ideas:

Often these entrepreneurs think their idea is brand new – that no one has ever thought of it before. Other times they ask me to sign a non-disclosure agreement to protect their idea. Occasionally the emails mysteriously allude to the idea without really saying what it is. These entrepreneurs think their idea is special and magic. And they are wrong.

The great entrepreneurs are already focused on the implementation of their idea. They send me links to their website or software. They describe the business they are in the process of creating (or have already created). They point me to what they’ve done to implement their idea and show real users who validate that the idea is important. And they quickly move past the idea to the execution of the idea.

Google? Not the first search engine. Facebook? Not the first social network. Groupon? Not the first deal site. Pandora? Not the first music site. The list goes on. Even when you go back in time to the origins of the software industry: MS-DOS – not the first operating system. Lotus 1-2-3 – not the first spreadsheet.

The products and their subsequent companies became great because of execution. First, they had to execute on building a great product. Next, they had to execute on building a great business. Finally, they had to execute on scaling, sustaining, and evolving a great business.

Notice what Feld says…

  1. Execute on building a great product. As you move from Ideation to Conceptualization, it is important to vet the commercial and market value of the idea. Determine whether the “back of the napkin” math shows that the idea has promise to anyone other than yourself.
  2. Execute on building a great business. Creation is the process of doing one’s initial research and development, followed by producing a prototype or beta version of the product or service. The work done here will reveal what not to do and what to do as you go about determining what you plan to take to market.
  3. Execute on scaling a great business. Evaluation of your strategic plan and markets, validating them and building a strong team around you will allow you to grow with less problems down the road.
  4. Execute on sustaining a great business. Preparation for the launch and Commercialization of your product or service require thinking through what you plan to do with a systems and process mentality so that procedures can be developed that help the business to run itself.
  5. Execute on evolving a great business. Commercialization looks differently at later stages of business growth. Sales organizations and operations must change and  as market data is analyzed and new opportunities for competitiveness emerge.

Be someone known for execution rather than ideas–even if you are not trying to impress a venture capitalist, you will meet with greater success in all that you undertake!

 

Innovation vs Distraction: Got a System?

Last night, I attended an IdeaSlam at the Cary Innovation Center. Several different entrepreneurs–some with companies already and others with only ideas so far–each gave their two to three minute spiel before receiving feedback from the crowd and EntreDot staff. The variety of thoughts was impressive. So, too, was the passionate advocacy of what the presenters felt inspired to do. I wondered, though, what happens when passion wanes due to setbacks…

It’s not enough to have a good (or even great) initial idea…the best predictor of success is how the idea is nurtured, problems solved, and opportunities explored.  In order to become successful, the entrepreneur must continue to be curious. Reading extensively, attending events where nuggets of wisdom can be received, and simply taking time to think are all ways to keep the idea alive.

While a commitment to pursue a free flow of learned information is admirable, what is most desirable is learning how to discern between them and hone in on the best ones. Best practice is to develop a process to vet new ideas (not a totally new business idea mind you, but rather a “how to,” “when to,” why to” pursue your original one. With a process in place, distinctions can be made between new opportunities and new tactics or ways of doing what you do. A value judgment must be placed on whether giving the new thought earnest heed and an investment of time and effort will move the organization closer to accomplishing its mission or become a diversion.

In addition to evaluating new thoughts on the diversion–>mission scale, it can be helpful to analyze them based on internal and external impact. Does pursuit of the thought give the company a chance to accentuate something it’s good at? Or, overcome something at which it is weak? Does the thought have the potential to help the company thwart a market move by a competitor, or pioneer a new “blue ocean?” 

Thirdly, what other ideas have to be set aside to pursue the new one(s)? Resources are in high demand in a start-up company. If talent and time and “treasure” are invested in something new, what might suffer by comparison? Perhaps your “back of the napkin” cost vs. benefit analysis indicates that the new thought is worthy. Then what?

The new thought must “grow legs!” In order for it to have its intended effect, planning must occur. Figuring out what steps need to be pursued includes breaking a big idea down into smaller ones and devising a custom approach for each one. Within approaches, strategies and tactics, with actionable due dates, become the blueprint to build a better mousetrap.