ken morse "innovate or die" - 22 of march 2012 - esadecreapolis

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Innovate or DieOutline of a Conversation

ESADE CREAPOLIS, March 22nd

Kenneth P. MorseSerial Entrepreneur

© 2012 Entrepreneurship Ventures, Inc.

US Mobile: +1-617-930-2340Euro GSM: +32-475-258507Email: [email protected]

Serial Entrepreneur

&

Visiting ProfessorESADE Business School

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Founding Managing Director (1996 – 2009)MIT Entrepreneurship Center

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Desired Outcomes of This Discussion

1. Review the critical role that Innovationcan play in enabling your company to grow, create high value jobs, and survive the tsunami of global competition.

© 2012 Entrepreneurship Ventures, Inc. 2

2. Review the Innovation and Corporate Venturing Practices at Selected Firms.

3. End on time… so we can enjoy the next speakers.

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The Challenges of Implementing Innovation

1. Slow decision making often kills firms.

2. Here in Europe, most firms have only limited ability to outsource radical innovation to the venture industry:

• Fewer ambitious entrepreneurs


• Fewer ambitious entrepreneurs

• Less well developed venture support systems and entrepreneurial ecosystem

• Hard to buy from startups

3. Your firm must continuously innovate, or perhaps die. Where will the major new businesses come from, and how will they be created and built?

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iPhone Killing Blackberry (& Nokia)


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Do We Share Common Beliefs?

� Family Companies usually outperform the stock marketMBAs and Q-to-Q pressures often destroy innovation and long term value.Source: John Preston

� Business Units can achieve only incremental innovationRadical innovation comes from the top, and outside.Source: Corporate Venturing Consortium


Source: Corporate Venturing Consortium

� Companies must choose how they will competePrice: Walmart, Toyota, Dell, SolidWorksCustomer Intimacy: IBM, Amazon, Four Seasons, McKinsey Innovation: Apple, Danfoss, HP, Google, SONY, 3M

� The tsunami of global competition cannot be held back Grab a surfboard and get ahead of the wave.

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What about your firm?

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Definition of Innovation

Innovation = Invention + Commercialization

Inventors need to team up with


Inventors need to team up with entrepreneurs and find early customers.

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Examples of What CAN Be Taught (1)

�Teamwork creates value and success:

Lone wolves build perpetually small companies.

�Appreciation and mutual respect for different types of people guarantees better company performance:


of people guarantees better company performance:

� Excellent sales people are essential

(not lower life forms).

�Customers need to feel they have a relationship and trust before they will buy from you.

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Examples of What CAN Be Taught (2)

�Business Basics: CFIMITYM

� Profit vs. cash flow

� Risk is higher when you’re growing fast

�How to Write a Business Plan


�How to Write a Business Plan

� Need to know how, but...

� Recognize that the best customers and investors don’t read them.

�Effective elevator pitches are essential to change the game.

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Sales and the Selling Process

We surveyed hundreds of CEOs, most of whom were engineers:

� “Achieving consistent sales results is the most difficult thing. Developing world class technology has always been easier for us.”

� “Marketing is something you imagine at home, alone, in the dark. Sales is something real, that you do with other people.”


dark. Sales is something real, that you do with other people.”

� “Successful selling -- and building a customer-oriented, sales-driven culture -- is the single most important differentiator between highly successful start-up firms and those that go sideways.”

� “It all starts when somebody buys something from you… and gives you money.”

� “Good selling is like charm: without it, nothing else matters.”

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Critical Success Factors in Innovation and Intrapreneurship

1. Believe that Startup Ventures can Succeed:

� Parent(s) who are entrepreneurs / intrapreneurs.

� Early contact with new ventures.

� Exposure to success stories and case studies.

2. Be willing to be Unusual/Unconventional.


2. Be willing to be Unusual/Unconventional. Agree to Embrace Risk, and possibly failure.

3. Live in a society that sees the above as normal, not a strange exception.

4. Focus on speed, execution, and results. Be willing to “break the harmony.”

5. Your Top Management will support change and protect the intrapreneurs from bureaucracy.

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1. Implementing incremental innovation is usually best done in the business units, with their budgets.

2. Implementing radical innovation is usually best managed centrally, with strong

Implementing Radical Innovation


best managed centrally, with strong support from the top (CEO, not CFO):

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CEO

Sr. VPInnovation

BU #1 BU #2

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Intrapreneurs:Building Your New Businesses

�Need an “A” Team – with real experience

�Serious Technology – sustainable advantage

� Solve an important, valuable problem…

� For clients who have money…


� Who want to pay well…

� With a short sales cycle…

� And will buy more, soon… ☺

YOUR VALUE PROPOSITION MUST BE COMPELLING, QUANTIFIABLE, PROVEABLE, REFERENCEABLE, AND EASILY EXPLAINABLE…

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Some Case Examples of Corporate Venturing at Selected Firms


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DANFOSS [Denmark] (1 of 3)

• Danfoss Ventures was established / inspired by JørgenMads Clausen, Chairman & CEO (son of founder) to ensure continuous innovation in their mature businesses.

• Annual Revenues: €3.5 billion (doubled in last 4-5 years)


• Passionate Senior Executives:

- CEO Clausen

- Hanne Arildsen, Stig Poulsen

• McKinsey recommended decentralized funding of R & D, and centralized funding for radical innovation, to protect from the vagaries of the Business Units.

Jørgen Mads Clausen

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• Danfoss Universe: promotes entrepreneurial corporate culture

• Since 2004 – “Man on the Moon” project:

- Annual New Business Creation competition, started by Stig Poulsen (Danfoss) and Stefan Lindegaard (15inno)


Stig Poulsen (Danfoss) and Stefan Lindegaard (15inno)

- Each January, winning teams attend 1-week MIT Entrepreneurship Development Program (EDP)

• Examples:

- Build a business based on $100/barrel oil

- Chinese team: novel combination of existing products, specifically for the China market

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Our mission is to create new businesses for Danfoss through innovation, and to be leaders of innovation competence as the Group’s Innovation Hub.


the Group’s Innovation Hub.

Will they survive now that Jørgen is retired?

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Nestlé [Switzerland] (1 of 2)

• Annual Revenues: €82 Billion

• A few global brands, carefully controlled by HQs

• ~ 3000 local brands

• Nestlé España approach:


• Nestlé España approach:

- Each year, every employee must take a break and spend one full week visiting supermarkets and other players in Nestle’s distribution system

- One result: repackaged, repositioned product increased sales by many million Euros.

Special thanks to Prof. Jaume Llopis, former executive at Nestlé España.

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Nestlé [Switzerland] (2 of 2)

There are no mature markets, only mature managers.

- Peter Brabeck-Letmathe

CEO Nestle


“Look at the eyes, not at the papers.”

“Less paper, more pepper. “

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Procter & Gamble [US]

• Annual Revenues: €61 Billion

• Passionate Senior Executive:

- A. G. Lafley, CEO

• Set clear goal: 50% of innovation from outside

• “Not all the smart people work for us.”

A.G. Lafley


• “Not all the smart people work for us.”

• House of Brands model: Tide, Swiffer, Ivory, Gillette, Puma

• [Nike: Everything is the same brand.]

• Laffley’s book: The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation

• P & G has a website for Open Innovation:

www.pgconnectdevelop.com

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There are lots of cool young companies out there who want to work with your firm:

Is it easy for startups to work with you?

• Quick decisions to evaluate / buy?

• Fast POs?


• Fast POs?

• Prompt (30 day) payment?

• Resist the MOST annoying question:

“How do we know you guys will be

around in 3 years?”

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Cool Innovators

1. Aura Biosciences

2. Cambrian Innovation

3. Indisys


3. Indisys

4. Terrafugia

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Aura Biosciences

� Founded by molecular biologist Elisabet de los Pinos (Madrid)to deliver cancer drugs using novel nanotechnology approach

� Attended a Global Sales Workshop at Barcelona Activa (2007)

� Then attended MIT Entrepreneurship Development Program(Jan 2008)

� Established Scientific and Business Advisory Boards

� One Scientific Advisor subsequently won Nobel Prize

� Business Advisors include Laura Morse, Larry Best


� Business Advisors include Laura Morse, Larry Best

� Raised $3mm in angel capital; planning an institutional round soon

� Set up Business office in Boston/Kendall Square

� Awards and Recognition:

� Named one of Boston’s “40 under 40”

� “Tech Pioneer” at 2010 World Economic Forum: Of the 26 chosen, only four life sciences companies invited to Davos

� Press includes WSJ, Business Week

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“ I had not realized the importance

of networking as a critical

success factor to start-up the

company globally. Networking was

not part of my University training

or research work experience.


I can now say with certainty that

building professional relationships

efficiently is something that you

must learn and implement to

achieve real success.”

- Eli de los Pinos

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Addresses critical resource problems at the

intersection of energy & water

The US produces 38 billion gallons of wastewater a day

Wastewater treatment consumes 3% of the Electricity in the US

Fisheries are collapsing due to lack of treatment and monitoring

Using a product platform built on advances in

bio-electrochemical systems

Energy Positive Water Treatment

Advanced de-nitrification

Novel water sensing platform

27 Drydock Avenue Floor 2Boston, MA 02210

+ 1.617.307.1755

Contact:

Matthew Silver, CEO

[email protected]

50% + Savings in operating costs versus competing systems

Company Summary Team

Dr. Matthew Silver, CEO – MIT PhD, Strategic Engineering and

Innovation Group, NASA

Mr. Justin Buck, CTO – MIT PhD candidate, 2011, Biological

Engineering

Dr. Patrick Kiely, VP of R&D – Recognized MFC expert. Formerly

at Logan Lab.

Advisors

Ken Morse, Entrepreneurship Ventures

Dr. David Miller, Clean Energy Venture Group

Dr. Peter Girguis, Harvard University

Dr. Michael Chiu, formerly at Trophos Energy

Funding & Awards: NSF, EPA, NASA, USDA, MIT Enterprise Forum

of Cambridge Ignite Clean Energy Prize, MIT 100K Runner-Up,

Corporate Strategic Funding, Angel Investment.

Seeking: Industrial scale-up partnerships

Five years of Cutting Edge R&D Significant Results

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Excellent Customer Care:• 24x7

• Low cost

• High-Quality

WHAT YOU SEEK…

Communications:• Global

• Scalable

• Manageable• High-Quality • Manageable

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• Lower your cost & Increase your Quality of Service

• Improve your corporate image & customer fidelization

• Increase sales & productivity

WHAT YOU GET…

• Intelligent Virtual Assistants & Telephone Operators

• Human-like, top-quality customer care

• Intelligent Dialogue on multiple channels & languages

HOW YOU GET IT…

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Contact: Carl Dietrich, CEO/CTO

[email protected]

Personal Aircraft Revolution – The Practical Flying Car

www.terrafugia.com

Solving the Pilot’s Problems:

-Extreme weather sensitivity mitigated-Land and drive without changing vehicles when weather gets bad

-Only light aircraft that can be counted on for business travel

-High ownership costs are reduced-Super unleaded fuel 36% less expensive than aviation gas

-Single car garage storage � no hangar rental expense

-Lack of ground transport no longer a problem-No need for rental cars, cabs, or borrowing a car

-Street legal and ready for highway driving in 20 seconds

-Long door-to-door travel time shortened-75% of reduction in “ground time” at airport

Large and Growing Market:

•$1 billion/yr new personal aircraft market

•17% CAGR since congress limited liability (1994)

•New Light Sport Aircraft regulations:

•1/10th capital required to certify new products

•½ the time and money to become a pilot

•Fastest growing segment of aviation industry

•Chinese airspace opening to general aviation

•Existing fleet of personal aircraft nearing end of life-75% of reduction in “ground time” at airport

Patented and Proven Technology: Growing Order Backlog:

•Over 100 aircraft reserved with $10K deposits

•First 3 years of production sold out

•More than sufficient to reach positive net income

•Proven sales, distribution, and growth models

•1st delivery Next Year!

Investment Opportunities:

[email protected]

+1-781-491-0812

Carl Dietrich, CEO/CTO

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Discussion and Next Steps

1. Do you feel the need to change?

2. Is your firm easy to do business with?

3. Are your managers capable of pitching their breakthrough ideas compellingly in


their breakthrough ideas compellingly in just 55 seconds?

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FAQ’s

FAQ’s


Thank you very much!

ken morse "innovate or die" - 22 of march 2012 - esadecreapolis

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