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okay hi my name is Cindy I spend a lot
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of my time helping large companies try
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and figure out how to make the Lean
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Startup process work within their
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organizations and the moment you walk
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into a large organization you figure out
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straight away that Lean Startup training
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is not enough even though executives are
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always inviting you to do the business
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model canvas workshop or do the
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experiment workshop you actually find
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out that after you train the teams it's
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been harder for them to do that practice
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because of the way the companies run and
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I like to think of it in in these terms
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Jeffrey Moore says that the reason why
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large companies sometimes lose to
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startups is because startups have all
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their enemies outside the organization
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whereas startups within organizations
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have enemies within the organization and
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enemies outside the organization and so
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they're fighting their war on two fronts
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and the reason why this breaks is
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because the methodology for doing lean
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innovation is slightly different from
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the way that large companies work so all
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this whole week we've been talking about
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running experiments testing assumptions
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the fact that it's a nonlinear process
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the fact that you have to test for
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visibility desirability and viability
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before you scale this rhythm of build
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measure learn is slightly different from
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the way that large organizations operate
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and so I like to call this like one of
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the biggest challenges that large
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companies have which is what we call
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rhythm misalignment so large companies
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can do a lot of things you can even have
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idea competitions and you your team can
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get selected as their having won the
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hackathon or the idea competition but
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guess what you've won
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ding-ding-ding-ding-ding you've won the
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chance to write a 30-page business case
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because large companies will not invest
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in anything until they know what the ROI
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is and there's not enough revenue so you
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have innovators trying to run
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experiments to try and figure out what
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the true business model is and large
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companies want you to tell tell them or
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the business model is upfront before
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they release funding to you and so what
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we're thinking about is how do you
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actually build a
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of making investment decisions that is
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aligned to the rhythm of innovators and
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so I like to call this the build measure
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learn Luke for investing money we've
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been hearing about this all week it's
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like the build measure learn for making
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investment decisions so you invest a
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little bit you track progress you review
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what the team is making are they close
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to product market fit you double down if
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they are or you exit if they're not this
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is how you align investment
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decision-making to the rhythm of how
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innovators are supposed to work and the
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previous speaker was already telling you
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about the stages that you go through and
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you can make investment decisions based
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on those stages the next challenge which
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is what this talk is really about is
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what we call the problem of success so
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imagine that you're a start-up team in a
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large company and you've actually made
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something pretty cool you've got
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customers and now you're looking for
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resources to scale what you've done and
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then you take it to your company to get
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these resources and nobody wants to give
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you the resources right and this problem
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usually your cares because most things
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that innovators are working on and not
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on anybody strategic plan they're not on
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anybody's roadmap for the future
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nobody's thinking about what to do with
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those things right what large companies
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are doing when they set up innovation
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labs is give me a bunch of stuff and get
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me a bunch of people and then get them
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to work with some cool stuff over there
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let's hope something cool comes out from
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it but you know we don't really know
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what's gonna happen with it once it's
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actually successful because nobody
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thought that far and so a recent study
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by PricewaterhouseCoopers actually
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revealed that nearly nearly 70% of all
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companies kind of struggle with
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connecting their innovation strategy
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with their overall business strategy and
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then what's really interesting is that
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like 54% of companies that are spending
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quite a large chunk of their resources
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on innovation these are companies that
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supposedly get it right they're spending
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a large amount of money on doing
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innovation projects fifty-four percent
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of those I have no connection between
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the investments they are making and any
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thought about what the strategy that
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they're pursuing is with those
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innovation projects and so these random
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acts of innovation are much more likely
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to fail
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because if you come and go I have a
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validated business model and I'm ready
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to scale people don't know what to do
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with that because it's not aligned with
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anyone's innovation strategy and so
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right here we go so I would like to call
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this the build measure learn loop for
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strategy making right and so the first
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thing that we want to do is we want to
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make sure that before we invest a single
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dollar in innovation we take a point of
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view about where the world is going
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right we have to take a point of view
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about where the world is going what are
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the trends that are impacting our
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business and what are the things that
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are coming up in the future that we
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think we need to respond to what
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products in our portfolio are declining
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that we need to fix right we need to
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take a point of view about that and then
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after we take a point of view about
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these trends we then need to take a
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specific point of view about how we're
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going to use innovation to respond and I
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call this the innovation thesis it's
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actually based on the venture capital
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notion of investment thesis if you're a
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venture capitalists the whole time
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you're getting P startup ideas by a
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thousand people you can't invest in
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everything so you have to make a
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decision about the kind of things you
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invest in and the kind of things you
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don't invest in and large companies
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don't really do this they don't have an
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innovation thesis right but also the
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reason why we like to call it in
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innovation thesis versus the law is
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because an innovation thesis is a
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hypothesis about the future and how
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we're going to use innovation to respond
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to that future and so the investment
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decisions that we make in into these
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startup teams become experiments on our
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innovation strategy so the startup teams
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are running experiments on their
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business models but we as investors and
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leaders are using those expect those
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startups as experiments on our
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innovation strategy and so we make these
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investment decisions we review how
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successful these things are and then on
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a quarterly or biannual basis we get
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together and review our portfolio and I
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should what what's going on there and
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then iterate the thesis or just keep
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going and scaling that thesis and so I'd
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like to to give you an example of one of
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the organizations that I'm working with
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they called Pearson it's a food c100
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company a global education company and
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part of the process that we're building
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there is something that we call the
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product Council
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and the product council makes investment
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decisions on specific innovation
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projects as they move along their
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product lifecycle so do you have have
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you validated customer need have you
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validated a solution etc etc and they
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make those investment decisions but in
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addition to the product council we're
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also setting up a system called the
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portfolio console and the role of the
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portfolio console is to make decisions
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about strategy and to make allocations
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and investments to particular strategic
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initiatives based on an analysis of the
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portfolio which is that the first thing
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we do is analyze the portfolio map the
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portfolio see what products we have see
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what's happening see what struggling we
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also have a process for mapping the
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landscape right who are the competitors
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how are things changing what are the key
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trends that are impacting us right and
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then on the basis of that we can start
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to develop a general vision about what
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kind of things we want to invest in
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where do we want to take the company
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what kind of innovation projects should
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we be working on and in addition to that
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we want specific goals about business
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metrics that we want to accomplish what
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is the portfolio makeup going to look
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like what percent will be digital what
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percent will be analog what percent will
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be in what market what percent will
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target what market segment all of those
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things and things we want to be thinking
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about as we set up our vision and goals
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now once you've done that the next thing
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you need to do then do is stop for a
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minute and think ok we have seen what
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the world looks like and where the world
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is going we've taken a point of view
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about where we want to go now let's look
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back at our portfolio and see whether
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where we want to go and where we are
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what is the distance that we have to
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travel what are the gaps and
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opportunities right and then from there
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your investment team start to emerge
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we're going to invest in these things to
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plug these gaps we're going to invest in
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these things to explore these
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opportunities and then you can start to
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organize those in the hierarchy of
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decision-making and then only then do
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you then make the decision to allocate
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resources right you don't start with the
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really impressive startup guy who walks
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into your office and goes I have an idea
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let's build an Innovation Lab and in the
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lab we're gonna have two small tables
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and bean bags and post-it notes and
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we're gonna make some cool stuff that's
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gonna save your company you're like
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that's not
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good some other companies and Innovation
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Lab here's the money for that right
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because if you do your analysis in this
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way and then you identify the gap in
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opportunities you want to explore it is
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actually possible that an Innovation Lab
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is not the right solution for what
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you're trying to do from a strategic
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perspective and so if you actually make
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decisions based on your strategic
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opportunities you can make a different
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set of decisions and the fundamental
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philosophy the self that's underlying
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this budgeting and resource allocation
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is this not a single dollar moves from
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the company's bank account into some
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into some project except when it's a
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specific expression of our strategic
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intentions
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there's no let's see what happens dollar
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right every dollar moves is an
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expression of our strategic intentions
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and that's what we're trying to do and
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then the final process is the tracking
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and reporting so everything that you're
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investing in you didn't want to use
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innovation accounting metrics right to
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track whether or not the customer
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opportunity you thought was there the
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customer jobs to be done are real the
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solutions that you were thinking we're
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going to create to meet those jobs are
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real is the market opportunity real and
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on a quarterly basis you're then able to
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do these reviews based on these projects
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as ever as an analysis of whether or not
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the investment themes you developed and
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the innovation pieces you developed is
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actually correct and then over time you
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can start to land on the right things so
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this is just a picture of the portfolio
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console making decisions and the product
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console making decisions I just thought
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I'd give you that to make it look for
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real and then what I also want to show
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you and this is featured in our book the
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corporate startup is a bank called spawn
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Nord they're one of the large banks out
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of out of the Scandinavia region in in
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Denmark and this is their innovation
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thesis it's quite broad because that's
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what they willing to show the world but
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it's just I've never even been in a
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company where they even have an
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innovation pieces this broad like
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nobody's actually thought about it
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explicitly if they've thought about it
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at all they're talking about investing
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in blockchain in general terms they're
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talking about investing in Bitcoin in
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general terms they're just talking about
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general trends but not really thinking
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specifically about how they want to
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respond
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to those trends and so you can see there
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in the second row they are identifying
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the trends that are impacting the bank
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and then they're thinking about the
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must-win barrels that they have to win
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their investment themes that are
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connected to those trends right beyond
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just the general vision of being the
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most personal bank in a digital world
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and so this is key because then you can
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make your investment decisions based on
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this now what I want you to think about
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as I'm kind of wrapping up this talk is
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what I want to what I really want you to
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think about is the alignment that this
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drives at the most granular level is
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innovation practice right this is a team
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that is working on a specific innovation
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project they're running experiments
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they're testing their ideas and they're
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trying to figure out whether or not they
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have the right business model but this
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team is really comfortable because they
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know that the thing they're working on
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matters to their company at a strategic
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level they're not having to hustle or
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run a guerrilla movement and try and
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hide and protect their idea they
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actually understand that their idea is
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important to the people that are
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investing in those ideas because those
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people have already communicated to them
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that this is part of their innovation
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strategy so that's the build measure
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learn loop of the team working on a
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specific project
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the build measure learn loop of a board
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of decision makers that are releasing
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specific resources to those specific
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projects is exactly the same we invest a
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little bit we track your progress we
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review and then we double down this is
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what Eric Ries refers to as metered
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funding so the investment board is also
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using a build measure learn loop
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connected to the build measure learn
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loop that the team is using to work on
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their experiments and then those
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investment decisions that are being made
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by the board is making investment
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decisions are being reviewed at a
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portfolio level to see if they're
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delivering on our strategic intentions
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and so we take our innovation thesis we
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line up all the projects that are
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connected to that innovation thesis and
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then we track how well they're doing in
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terms of delivering success on the basis
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of our product life cycle or our
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innovation framework or whatever it is
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that we're using for innovation
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accounting we see that this one is
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failing this what are the lessons
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learned from this one do those lessons
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learn mean that we have to maybe adjust
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our thesis what are we learning from the
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start off they were launching out into
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the world and in that way you then
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innovation strategy to the investment
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decisions you're making to invest in
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specific projects to those specific
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projects that are then working to
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actually test that innovation thesis and
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then you have what we call an innovation
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ecosystem and end-to-end process for
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managing innovation within a large
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organization and so I have no more to
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share this is as far as I have to go I
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will be at the meet the author's
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lunchtime thing at the village swing by
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say hello and thank you very much for
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listening
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[Applause]
