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Summaries of all talks from our online event 12-13 May 2020 PLAYBOOK Innov8rs Connect Business Design & Venture Building

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Page 1: PLAYBOOK Innov8rs Connect Business Design & Venture …...The term, Business Model Canvas, was quite new at the start of the decade. Since 2010, our understanding of business models

Summaries of all talksfrom our online event 12-13 May 2020

PLAYBOOK

Innov8rs Connect Business Design& Venture Building

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Our PartnersTHANKS FOR SUPPORTING THIS EVENT

Board of Innovationhttps://www.boardofinnovation.comContact: Nick [email protected]

mantrohttps://mantro.netContact: Manfred [email protected]

Ming Labshttps://minglabs.comContact: Sebastian Mü[email protected]

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Page 1 | PAUL CAMPBELL - CHIEF INNOVATION OFFICER AT W.L. GORE The Innovation Leadership Journey – Has Anything Really Changed in the Past Decade? Page 7 | TONY SALDANHA – AUTHOR OF “WHY DIGITAL TRANSFORMATIONS FAIL” How To Scale Innovation Successfully Page 11 | MISHA DE STERKE – AUTHOR OF “10x GROWTH MACHINE” & SENIOR PARTNER AT INNOLEAPS Lessons Learned In The Trenches of Corporate Venture Building Page 17 | ED ESSEY – DIRECTOR OF INCUBATION AND INTRAPRENEURSHIP AT MICROSOFT GARAGE Innovating and Incubating in Large Organziations Page 27 | INNOVATORS INSIGHTS TRACK 1 Ford vs. Itself: The Art of Self-Disruption Safir Jamal – Head of Strategy & Operations at Ford X Build Your Own Startup – The Story of Tide Spin David VanHimbergen – Principal at Sun Spin Advisors The Story of MOBIKO, an AUDI Business Innovation Spin-off With a Realistic Chance Nicola Büsse – Head of Sales at Mobiko Page 33 | INNOVATORS INSIGHTS TRACK 2 Lessons Learned After 2 years Incubation at Chemovator Markus Bold – Managing Director at Chemovator A New Model for building New Energy Businesses Miriam Eaves – Head of Origination BP Launchpad at BP Building Ventures With Impact in Times of High Uncertainty Steffen Knodt – Director Digital Ventures at Wärtsilä The Challenging Step from Corporate Start-up to Corporate Scale-Up Christopher McLachlan – Head of Company Builder at EnBW Energie Page 42 | INNOVATORS INSIGHTS TRACK 3 Theories That Will Keep Your Innovation Practical Kristian Luoma – Head of OP Lab at OP Financial Intrapreneurship & Incubation at Indeed.com Theories That Will Keep Your Innovation Practical Lisa Besserman – Head of Program, Global Incubator at Indeed.com Corporate Incubation – What Works and What Doesn’t? Salman Taj – VP, Innovation/ Head of Ericsson ONE, Americas at Ericsson Intrapreneurship growing up at Fraunhofer: From Research to Europe’s Most Entrepreneurial Tech Transfer program Thorsten Lambertus – AHEAD Team Captain for Company Building & Venture Incubation at Fraunhofer Venture

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Page 49 | NICK BOGAERT – CO-FOUNDER BOARD OF INNOVATION NEW YORK Validation of Go-to-market Tactics in Life Sciences Page 55 | PATRICK VAN DER PIJL – CEO AT BUSINESS MODELS INC Digital Business Model Shift: From Analogue to Digital Page 60 | MANFRED TROPPER – CEO AT MANTRO Last Exit: Trust – How to Build New Companies in Eye-to-eye Partnerships Page 65 | FRANK MATTES – CO-FOUNDER AT INNOVATION-3 Selecting Your Corporate Startups for Post-Crisis Bounce-Back Page 69 | EMILIE SYDNEY-SMITH – CEO AT EXO.WORKS Pivoting Companies During the Downturn Page 75 | ERIC SILLIES – INNOVATION DIRECTOR AT LPK Running Business Experiments: The Why, What, & How Page 79 | SEBASTIEN MÜLLER - COO AT MING LABS ANTONIO USAMA DELORENZO - INITIATIVE LEAD, TRADE TECH LAB AT ING Sailing Against The Wind – What We Learned From Trying To Change Shipping Page 85 | DAVID J. BLAND – CEO AT PRECOIL AND AUTHOR OF “TESTING BUSINESS IDEAS” Testing Business Ideas Page 89 | SCOTT SNYDER - PARTNER, DIGITAL AND INNOVATION AT HEIDRICK CONSULTING. CO-AUTHOR OF “GOLIATH’S REVENGE” Raising the Profile of Innovation Leaders and Teams in a Post-COVID-19 World

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PAUL CAMPBELL - CHIEF INNOVATION OFFICER AT W.L. GORE

The Innovation Leadership Journey – Has Anything Really Changed in the Past Decade? Paul Campbell has been a name in corporate innovation for more than two decades. He has experience working with a broad range of business models, technologies, and products around the world, which lends him a unique perspective of the changes in business innovation and leadership over the past 10 years. In his talk, Paul provides an overview of innovation developments over the past decade, where they have led us, and what we can expect in the future. WATCH THIS TALK

The Birth of Innovation Innovation thrives in times of economic crisis, and the 2000s were no exception. Venturing emerged after the Dot-Com Bust in 2000 and again after 9/11 and the Great Financial Crisis (GFC) of 2009-2010. We began the decade after the dot.com bubble burst with influential works from the such as Gary Hamel’s “Busting Bureaucracy”, “The Art of Innovation” by Tom Kelley, which outlined the challenges faced by traditional, inflexible corporate structures and ways to break out of the status quo. The 2010’s saw the expansion of venturing and innovation with more in-depth analyses and strategic guidance in such works as “Innovation Killers” by Clayton Christensen, Stephen P. Kaufman, and Willy C. Shih, and Eric Ries’ ” The Lean Startup”. These and other influential works helped to shape the world of innovation over the course of the 2000s and into the 2010s.

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With these tools, innovators were empowered to conceptualize, develop, and expand their ventures successfully using a three-step process:

• Ideate: Concept development and planning. • Incubate: Creation, application, testing, and adjustments to the venture. • Scale: Expanding the perfected venture to reach a broader market.

While the 2000s and part of the 2010s saw progress in the methodology for Ideation and Incubation, the Scale of innovation was severely underserved, According to Paul, we can expect the next wave of innovation to address how big companies approach this aspect of corporate ventures. Startups Emerge From Crisis Although an economic crisis is difficult for everyone, it often results in a wave of innovation and new businesses. As unemployment rises, individuals begin looking for alternative sources of income, and many entrepreneurs take it as an opportunity to forge a new path. This pattern is evident in the economic downturns of the last two decades. The Dot-Com crisis saw the rise of Facebook, Tesla, GrubHub, and Wayfair, while the Great Financial Crisis prompted the creation of Uber, Okta, 4Square, and Airbnb. The upsurge in startups after the global financial crisis was too great for larger corporations to ignore, and they began to see the necessity of increasing their investment in innovation originating with startups in order to remain relevant in a changing world. This means that there is an exciting future in store for ventures and startups as we enter the next decade in the midst of another crisis. Companies that previously disregarded small startups are beginning to take notice and invest. In fact, 2018 saw large corporation investment in 1,591 startups, compared with only 369 in 2011. As the competitive landscape continues to change rapidly, more and more companies are pursuing innovation and investment in ventures and startups. Changes Since 2010 After the rapid expansion of innovation in 2000, the early part of the 2010s showed economic growth and steady unemployment rates. Without the catalyst of an economic crisis, innovation stalled and there were fewer ventures and startups. However, as the current crisis continues to result in increasing levels of unemployment, we can expect to see an increase in innovation.

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Paul identified three specific areas of innovation growth in the past decade: • From Open Innovation 1.0 to 2.5 • Business Model Innovation (BMI) to Specialized BMX • CInO to CInX – Diversification multiple hats, roles, skills in order to achieve

successful innovation Open Innovation 2.5 Open Innovation has made astounding progress in the past decade with the buildup of expertise and infrastructure on numerous fronts. Startups over the past decade have benefited from an increase in infrastructure support through technology-enabled end-to-end business models and increased collaboration with corporations, universities and government entities. More tools and assets are available to assist startups, such as Accelerators, funding websites, SAFE notes, etc., and after ten years, there is more knowledge and experience available to help entrepreneurs navigate large funding partners like corporations, who now have over a decade of funding experience. In addition, as corporations have embraced startups as a key to their growth strategy, they have begun to embed open innovation as a critical function in their own organizations.

BMI to BMX The term, Business Model Canvas, was quite new at the start of the decade. Since 2010, our understanding of business models has evolved to reflect the complexities introduced by ongoing technological advancements. So much so, that Business Model Innovation is too generic. In order to remain competitive, businesses have changed from using a simple Business Model Canvas with 9 components to more intricate, highly specialized BMX models with up to 180 components. Moreover, BMX applies radically different approaches across a company’s three primary business areas:

• Core: Optimization of existing products and services for current customers. This is the traditional way of looking at business models where not much change occurs from year to year

• Adjacent: Expansion of existing business into areas that are new to the company. Changes to the business model in this area is referred to as Business Model Reconfiguration (BMR), as it makes significant changes to

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existing infrastructure to expand the customer base.

• Transformational: Development of breakthroughs and inventions for new markets that do not yet exist. For this area of potential growth, companies must design entirely new business models from a blank page. Known as Business Model Design (BMD), the development of this area involves starting from scratch with a completely new understanding of customers, competition, go-to-market, supply chain, technology and much more.

With these examples, one can see that BMI is not enough to describe the complexities of the challenges faced by executives searching for growth. Hence, the term, BMX, has emerged to take its place as a more accurate way to capture the seemingly infinite number of scenarios to explore on the path to finding growth.

CInO to CInX During the past 10 years, innovation has moved from an innovation department directed by the Chief Innovation Officer (CInO) to a company-wide transformation. Innovation has become too important to relegate to just one department, and all company leadership, from the Chief Technology Officer (CTO) to the Chief Financial Officer (CFO) and Chief Operations Officer (COO) are now involved in the development and implementation of innovation. No longer is innovation treated as an idea factory, it has become a fundamental process that is incorporated into the very fabric of the organization in order to spur company growth. Innovation leaders find themselves working deeply with critical functions, Finance, Supply Chain, Marketing, Legal, HR and business units, to organize and execute growth plans. As such the CInO is no longer an accurate description because innovation leadership requires this broad expertise across the entire company. Innovation Canvas All of these changes over the past decade have significantly redefined the role of leadership in innovation. Leaders are no longer simply directors of a particular siloed department, they have become planners, developers, strategists, and enablers. The innovation leader must take into account a variety of evolving concepts and ideas and help their teams to apply and adapt these concepts as needed.

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Innovation Leaders now see the need to organize the tools they can access for their growth strategies. Paul has provided a framework of valuable and well-known innovation concepts for today’s innovation leaders in what he calls the Innovation Canvas. The purpose of the Innovation Canvas is to help craft a comprehensive approach to innovation and growth strategies that recognizes the interplay between six key concepts, e.g. an Open Innovation program without a Venturing function to fund the startup collaboration, or an independent in-house Accelerator to protect the project during the exploration phase is likely to struggle. Or a corporate digital transformation strategy without Business Model Innovation + Accelerator + Design Thinking will also struggle. Innovation Canvas: 6 Key Concepts

• Design Thinking: Design thinking helps innovators to create human- and customer-centric business models and products.

• Lean Innovation: The concept of lean innovation centers around the development of ideas in short cycles to rapidly create and deploy new concepts and business models.

• Open Innovation: Open innovation is geared toward crossing boundaries within the organization in order to facilitate the free flow of knowledge and ideas between the innovation team and the core business.

• Business Model Innovation: BMI/BMX involves the creation and modification of the development, delivery, and value capture of products and services.

• Venturing: Venturing is the means by which companies invest financially and collaborate with external ventures.

• Accelerator: An independent organization or department that is dedicated to providing fixed-term cohort-based startup programs with financial investment, education, and support.

Innovation Canvas: Context Items

• Strategy/Leadership: The strategic direction of the firm is set by the Board and C-suite. As such, innovation leaders must tie their efforts to the strategies of the company while applying the innovation tools they directly control.

• Culture: The norms, systems, symbols, language, assumptions, environment, habits, interactions, and creation and sharing of knowledge are important to consider when developing and integrating innovative ideas and concepts into an organization. A company’s culture often unwittingly hinders its attempts at innovation and growth, so Innovation Leaders spend a large portion of their time and energy reconfiguring those aspects of culture that can be changed.

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Implications for Innovation Leaders For the third decade in a row, we’re starting a new decade in a crisis. Those earlier two crises showed us that a crisis is a terrible thing to waste, said Paul. Although the economic outlook may be dark, it is likely to be one of the best times for startups and ventures. Take the opportunity to expand your exploration of growth opportunities by collaborating with startups who can help accelerate your efforts at a fraction of the cost. Create networks with other innovators to discuss challenges with others with similar innovation maturity. Look to the future, and consider what changes you can make now to facilitate future growth for your company. This includes analyzing your innovation program to identify potential gaps and incorporating new tools while understanding the interplay between new and existing approaches. Pay special attention to your internal organization and business modeling, and try to move away from the traditional BMI model toward BMX approach. Use the CInX role to maintain open collaboration between your innovators and high level leadership, so you can work together to build a shared vision for the future of your company. WATCH THIS TALK

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TONY SALDANHA – AUTHOR OF “WHY DIGITAL TRANSFORMATIONS FAIL”

How To Scale Innovation Successfully Although it is no surprise to boards and CEOs that digital technology is transforming the business world as we know it, the transition is fraught with difficulty. In fact, up to 70% of companies’ digital transformations do not succeed. According to Saldanha, these failures are largely due to incorrect transition scaling. He has developed a comprehensive five-step method to help businesses scale innovation successfully and harness the digital power of the 4th Industrial Revolution. WATCH THIS TALK

The Fourth Industrial Revolution In the late 1700s, the introduction of the steam engine significantly changed the way business was conducted, from manufacturing and material sourcing to transportation and logistics. The effects of the First Industrial Revolution lasted from 1760 through 1820, when electricity and automobiles took the stage. This Second Industrial revolution further altered the business landscape by allowing for faster and easier production and transportation. With the introduction of computers and later the internet in the 1900s, the Third Industrial Revolution added the speed of computation and instantaneous communication. Technology has continued to evolve by leaps and bounds, and today we have reached the Fourth Industrial Revolution, which includes automation, autonomy, and artificial intelligence. The latest industrial revolution differs from its older counterparts in that it incorporates not only the physical technology like the Internet of Things (IoT), but

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also biological technology such as genome sequencing, and social technology like Facebook and Twitter. In short, it is the culmination of the evolution of all forms of technology into one digital body, and it is extremely disruptive. This digital disruption can be leveraged to create successful transformation. It isn’t simply an upgrade to a new form of software- it’s a complete rewiring of companies in order to help them succeed in a digital world. Why Digital Transformations Fail Digital transformations require innovation on a level that is not commonly accounted for in most companies. While some companies follow some version of Google’s 70-20-10 model of 70% Operation, 20% Process Improvement, 10% Innovation, most companies allocate little or nothing for innovation. Typically, a company will come up with a new idea for digital change, and the project will start with enthusiasm. It may even make it through the testing period successfully, but eventually the enthusiasm decreases, and there is insufficient support or structure to continue the transformation. How to Succeed With Digital Transformation Fortunately, with the proper approach, digital transformation is possible for any organization. Tony has created a comprehensive 5-Stage Definition of Digital Transformation to help businesses navigate the complexities of the 4th Industrial Revolution. Stage 1: Foundation Stage 1 of the Digital Transformation entails the creation of a physical framework, including technology, procedures, and work processes that will be used to transform the organization. It requires committed and dedicated leadership that can not only enable innovation but provide the momentum for change from the top of the organization down. Stage 2: Siloed In Stage 2, an individual internal business unit or function within the organization will begin to apply the new technology separate from other parts of the company. The focus here is on digital leverage factors – where can digital technology best be used within the company. In order for this stage to be successful, leadership must not only provide motivation and commitment to the transition, they must also empower other parts of the organization to innovate and experiment.

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This is the stage in which the 70-20-10 model proves most effective. Although the percentages may differ between organizations, the important factor is to have some portion of the company’s capacity allocated specifically to innovation. This seems to be particularly difficult with current corporate structures in which you often see capacity allocated to operations and continuous improvement. Without innovation, the organization cannot move forward with digital transformation. Stage 3: Partially Synchronized In Stage 3, other parts of the organization have begun to use the new technology in their own operations. For this stage to be successful, leaders must create a clear change management strategy, and that strategy must be sufficiently disruptive to transform the organization in its entirety. Since 90% of the challenges of digital transformation are organizational, it is important to focus on the operational transition rather than the technology. This is the stage where most companies fail. They are capable of successfully piloting new digital strategies in siloed departments, but fail to provide sufficient strategy to complete the transformation of the organization. The entire organization must be disrupted in order to effectively complete digital transformation. Organize your strategy by creating an inclusive ecosystem of IT experts, middle managers in affected departments, and venture capital experts. With them, you can define comprehensive project and portfolio management methodologies that will help you organize your strategy for a successful transition.

Stage 4: Fully Synchronized By Stage 4, the entire company has incorporated the changes into overall organization processes. This step takes the information learned from the partial integration in Stage 3 and applies it to the organization on a larger scale. In this stage of digital reorganization, the IT department must go from being the fixer and doer to enabling the whole company to become digital. With the well-planned and executed strategy developed from Stage 3, you can complete the physical transition in your digital transformation. Stage 5: Living DNA In the final stage of digital transformation, the organization has been rebuilt and restructured to incorporate the changes, making the transformation a part of the

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living DNA of the organization. This requires an agile culture, which can be the most difficult aspect of the digital transition. Similar to Step 3, the change must be managed strategically, but this change is to the cultural side of the business, rather than the operational. As Martec’s Law states, “technology changes exponentially, yet organizations change logarithmically”. It is important that management strategically chooses which technological changes to embrace, but keep in mind that the longer you wait, the harder it will be to upgrade your organization to meet technological challenges. Organizations often fail at digital reorganization simply because they believe that the change must happen to the people, but in reality it is the people who must bring the change.

Checklist to Move up the 5-Stage Transformation Model Once you have a thorough understanding of the 5 stages of digital transformation, Tony has created an easy 10-step checklist to help you ensure that your organization has met the requirements of each stage before moving to the next.

1. Committed Ownership: Ensure that the strategy is owned and committed to by the highest levels of leadership. (Stage 1)

2. Iterative Execution: Allow iteration through numerous ideas and expand on those that work. (Stage 1)

3. Disruption Empowerment: Provide change leaders in siloed divisions sufficient mandate to enact the strategy. (Stage 2)

4. Leverage Points: Strategically choose areas that digital transformation will uniquely affect. (Stage 2)

5. Effective Change Model: Select the most effective change strategy and begin to apply for transformation across the whole organization (Stage 3)

6. Strategy Sufficiency: Test for digital strategy sufficiency to ensure effective systemic transformation. (Stage 3)

7. Digital Reorganization: Redesign the organization’s structure to allow digital capabilities to become a horizontal skill set. (Stage 4)

8. Staying Current: Facilitate and encourage leaders to stay abreast of evolving digital developments. (Stage 4)

9. Agile Culture: Create a culture that is receptive to constant change. (Stage 5)

10. Sensing Risk: Ensure continuous assessment and action against potential digital disruption threats. (Stage 5)

WATCH THIS TALK

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MISHA DE STERKE – AUTHOR OF “10x GROWTH MACHINE” & SENIOR PARTNER AT INNOLEAPS

Lessons Learned In The Trenches of Corporate Venture Building Only 1 of every 9 companies achieves sustainable and profitable growth for two simple reasons. They ignore the small opportunities that could be the big businesses of the future. And accounting metrics within the company typically direct resources to larger opportunities in known markets. While it may seem logical to focus on the tried-and-true opportunities within your industry, this approach prevents your business from capitalizing on smaller opportunities that could help you grow. Change is constant in business, and in order to remain competitive, companies must be agile. These days, the future is more turbulent than ever, with economic shifts, technological advances, and new competitors entering the market. To stay relevant, it is important to explore growth opportunities outside your core business. WATCH THIS TALK

Three Organizational Stages To illustrate his point, Misha outlines the three organizational stages of a business:

1. Startup/ Scaleup: These are small, agile organizations focused on speed and establishment of the customer base.

2. Incumbent: This stage includes established businesses of various sizes who are leaders in their industry. They benefit from a large customer base and established reputation; however, they no longer have the entrepreneurial drive that characterized the business during the startup phase.

3. Struggling Bureaucracies: Established companies often turn inward rather than expanding, and though they may be leaders in their respective

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industries, they lack the agility to stay ahead of their competitors. At this stage, the size of the company has become a liability, and they are incapable of growth. In order to become competitive, the company is in need of radical change.

When considering the best way to approach radical growth, Misha points out growth models for successful companies such as Amazon and Google. These “Growth Machines” are among the 7% of companies that are able to grow by harnessing the speed of a startup with the scale of an incumbent business. Corporate Venture Building is a Solution Corporate venture building uses innovation to create solutions for businesses that need a catalyst for growth. In order to leverage the power of corporate venture building, your business must create an environment that encourages innovation. It can be difficult to convince leadership to take the risks necessary for business growth, so it is important to provide a structured plan that incorporates:

• Predictable Timeline: Outline a specific timeline with each development milestone and phase clearly delineated, from discovery through product launch and corporate integration. A predictable timeline will show that the project is organized and worth the investment. It will also help the project team to stay on task and ensure that the product development stays ahead of the competition.

• Established Scalability Potential: In order to convince leadership that a

project is worth funding, the corporate venture team will need to provide numbers for expected revenue and scalability potential.

• Use of Existing Channels: In addition to projecting the scalability potential of

new customers, the corporate venture team should be prepared to leverage existing channels of income in order to take advantage of existing partnerships when it is time to scale up.

8 Lessons Learned In order to help companies on the road to sustainable growth, Misha shared 8 lessons he has learned during his years of venture building and growth strategizing with some of the largest companies in the world. Lesson #1: Bring Leadership on Board In order to effect successful change, company leadership must be invested in the success of the venture. This involves both a growth mindset and role clarity. Rather

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than working from a traditional controlling role, managers should support their teams without judgment and foster collaboration between business units. They should have a thorough understanding of the process metrics, in order to gauge the progress of the team throughout the project. Successful change managers support the innovation team by listening, coaching, supporting, and celebrating success. They work to solve problems from a specific, not ideological perspective, and create an environment that is geared toward solving customer problems rather than internal complexities. With clear support from leadership and enhanced focus on the frontline, new products and services can be successfully developed and launched quickly and efficiently, thereby keeping your company ahead of the competition. Patience for Growth, Impatience for Revenue Leadership must also understand the importance of investing in the innovation process. Every industry has different goals and metrics to direct resources. The standard benchmark for fast-moving consumer goods (FMGC) is 50-30-20. 50% of the company’s capacity is used to sustain business operations, 30% for innovating existing processes, and 20% for disruptive development. Although the percentage differs by industry, it is important to note that successful growth is dependent upon the allocation of company resources to disruptive innovation of products and services outside the core business. Lesson #2: End-to-End Process An established end-to-end process with predictable timelines is key to a successful venture. A clear plan will help corporate investors feel confident about the venture, and keep the venture team on task. A traditional end-to-end process typically follows a linear timeline from product development through marketing and sales before bringing the product to market. Unfortunately, this straight-line approach compartmentalizes each team’s efforts, reduces teamwork, and encourages finger-pointing when things don’t go as planned. Instead, Misha suggests a circular “Learn Loop” that combines Lean Innovation with a Direct-To-Customer business model to keep all team members involved through multiple iterations of the development process. This allows the innovation team to reassess the product repeatedly and bring it to a greater level of maturity before scaling.

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Corporate Venture Methodology: 9-12 Month Growth Accelerator According to Misha, the end-to-end process for a corporate venture should follow a 9-12 month growth acceleration plan with the following milestones:

• Ideation Sprint: The initial creation and development of the product or idea should be completed within the initial 1-3 weeks of the process.

• Customer Discovery Program: Following ideation, approximately 10 weeks should be dedicated to building consumer profiles, identifying pain points, determining the function of the product, and deciding whether there is enough market opportunity.

• Grow MVP Program: Once the customer base has been analyzed, the venture team uses the next 3 months to work with a control group to establish customer expectations, determine the volume and speed of sales, establish the product’s viability, and make adjustments.

• Launch Program: The final 4-6 months is used to launch the program on a small scale in order to establish that the model is workable and ready for scaling, also involving existing salesforce from the incumbent to speed up scaling.

Using a skills-based timeline and multiple development loops makes the progress of the venture more predictable, thereby increasing the opportunity for funding and the chances of success. Lesson #3: Forecast Scalability To ensure a successful corporate venture, you must be able to estimate the predicted revenue. AARRR metrics are used to determine the number of customers the venture can acquire and how many of those customers will become paying customers. With these numbers, the business can predict the speed and volume of growth based on the amount invested. The venture team can then determine how many customers can be recruited in a specific time period, the percentage of those customers that can be retained, and the amount of money that can be made from the venture in that period of time. This makes the venture more predictable, and a more comfortable investment, especially for corporate entities.

Lesson # 4: Benchmark Success In order to determine scalability, research benchmark data for sales metrics from your industry. With this point of reference, you can determine how well your product will perform within existing channels.

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Lesson #5: Protect Your Venture It is critical to differentiate your product from that of your competitors and protect your ideas from theft. The best way to keep the competition from taking your ideas is to iterate faster. In addition, there are a number of established strategies available to protect your innovation:

• Exclusive Distribution: Negotiate exclusive agreements with distributors and retailers to make it difficult for competitors to copy your product.

• Exclusive Supply: Create exclusive agreements with suppliers to make it harder for competitors to duplicate your designs.

• Intellectual Property: If you have a design or process that you can patent or a product look or name that can be trademarked, take advantage of these protections.

• Customer Loyalty: Create a story or narrative to make customers fall in love with your product. Alternatively, use incentives such as loyalty points or exchanges that create brand value.

• Network Effects: Use social networking and incentives to encourage your customers to market your product. By making their interactions with friends and family a source of product value, it becomes more difficult for competitors to copy your innovation.

It is best to prepare these protective strategies in advance in order to foster trust between the investors and the innovation team. Lesson #6: Have an Exit Plan The venture team should create a clear monthly recurring revenue model (MRR) and plan for integrating the new product into the greater business operation. An exit plan should clearly show that the project can reliably make revenue on a monthly basis in order to make both the venture team and investors more comfortable with the initial project. In order to ensure optimal integration, team members from the core business should be included throughout the venture process. Involving the relevant business partners and core team members early in the journey allows the venture team to forestall any issues in advance. However, it is important to keep the need for quick movement at the forefront, so be sure to include the other stakeholders, but avoid getting bogged down.

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Lesson #7: Your Team is Everything Remember that your team is what makes your venture successful. When starting a venture from the ground up, you are faced with the challenge of establishing your venture within a given market. With corporate ventures, you also need the support of your corporate organization. Multiple playing fields means that your venture will require different skill sets at different points throughout the process. Create complementary teams by balancing your energetic inventors with process organizers, and don’t hesitate to switch out members of your team as you go through each step of the process. Each step will require different skill sets, and it is important to recognize which individuals you need. For example, if you use a team composed entirely of entrepreneurs and creatives, you may find your project insufficiently organized at the end. Don’t hesitate to challenge your team by holding them to tight timelines and forcing them to prove that the venture can be profitable. Lesson #8: Manage Problems Before They Occur As with any group effort, frustration and miscommunication are guaranteed. To avoid problems, manage irrational frustrations by creating an environment of open communication and discussion. Have regular check-ins with the team and address any issues as they occur. With these insights, committed leadership, and an established timeline, you can successfully use corporate ventures to diversify your product offerings, expand your customer base, and grow your company advance to the next level. WATCH THIS TALK

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ED ESSEY – DIRECTOR OF INCUBATION AND INTRAPRENEURSHIP AT MICROSOFT GARAGE

Innovating and Incubating in Large Organziations Innovation is a tricky word to talk about. Any time you bring up innovation, everyone’s mind goes in different directions. For your business, innovation might involve ad-hoc, disruptive projects done by teams and leaders with strange titles and fantastical project names. But for others, innovation may be a more holistic, integrated disruption that permeates every layer of their business strategy. Here’s one thing that 84% of executives can agree on: your organization’s future is dependent on innovation. But if we’re all thinking about innovation differently, how do we define a common framework? WATCH THIS TALK

How Does Your Organization View Innovation? Ed Essey likes to break innovation down into three easy-to-digest buckets:

• Fruit innovation • Tree innovation • Soil innovation

These three innovation “archetypes” represent the three main ways that organizations view innovation — in terms of framework, culture, and strategy.

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Ed suggests that you take a portfolio approach to funding innovation: you need to act like an internal venture firm. You have to fund many ideas to bear fruit, but you also have to look at your portfolio spread to make sure that you’re investing in the right mixture of projects that make the most sense from a financial standpoint.

1. Fruit Innovation Some organizations think of innovation as fruit. It’s something that’s readily consumed, and it’s a single, contained project. Usually, these organizations think of innovation solely in terms of innovation projects. So, you may hear, “deliver me this innovation project on this timeline.” Typically, at the end of that timeline, success is immediately measured, and praise or program shuttering occurs. Ed pointed out one of the major disadvantages to fruit-level innovation, it takes early success or crazy levels of patience. If the results aren’t positive early on, the entire project may get shut down — since results are heavily baked in “right now” KPIs.

2. Tree Innovation For other organizations, innovation is more like a tree. Instead of focusing solely on the project, these organizations focus on programs that will bear fruit in the long-run. These are typically comprised of multiple project teams working together to innovate new ideas that can scale. In programs like these, success is measured in more of the long-term, and the idea is to generate multiple fruits with the hopes that you can take one of them to market.

3. Soil Innovation This is what the Microsoft Garage focuses on. Viewing innovation as soil involves baking innovation into your culture, allowing you to plant multiple trees and bear fruit across all aspects of your organization (i.e., everyone can have an idea, and everyone can have a chance to discuss and proliferate those ideas.) Here’s the great thing about soil. It grows trees without effort. When your culture supports innovation, you have a long-term, innovation-forward org ecosystem that’s self-sustainable. You can plant multiple seeds, bear plenty of fruit, and use tried-and-true methods to vet each fruit for development.

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Again, each of these are valuable. And great projects can come from all three. Ideally, your organization wants to reach the soil stage if you’re interested in long-term innovation and disruption at scale. The 5 Reasons Why Organizations Innovate Why does your organization innovate? This may sound like a strange question. After all, the real answer always comes back to business results. But the types of results you’re looking for may dictate your reason for innovating in the first place. Ed breaks the primary reasons that organizations innovate down into five buckets.

• To publicize: We’re all guilty of this at one point or another. Innovation looks great. And it can give your company a significant internal and external boost. While it can be easy to think of using innovation for publicity as negative, Essey says it can actually be a great place to start for many organizations.

• To develop talent: Here’s the great thing. Innovation can be a great tool to

develop talent. But you have to empower people in the right way. Ed says you have to create programs that give employees the tools to “innovate battles big enough to matter and small enough to win.”

Everyone needs an opportunity to create, but they should have a framework where innovation is logical, structured, and supportive enough to know when to say no and when to say yes.

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• To improve culture: When businesses innovate at this layer, they’re making broad, nuanced changes. If you want to transform your culture, you have to give employees change agency. Culture can’t be transformed with policies and notepads. People change culture subtly and over time.

When you empower employees and give everyone in the organization a pipeline to innovation, you create sustainable cultural changes that will inevitably change with your organization — and the global marketplace.

• To deliver business value: This is the end goal. Every “reason” for

innovation should end with business value. Sure! Delivering value on innovation is great for your business, but it’s also great for employees. 76% of employees want to make a difference. It’s ingrained in our DNA. If you don’t give them a pathway to business value, your employees will get disenfranchised.

Ideas come from anywhere and everywhere. It’s up to you to develop the systems and policies that enable those ideas and transform the right ones into value generators.

Why You Need Organizational Ambidexterity Innovation is a balancing act. On the one hand, you have to be able to execute your existing business strategies. On the other hand, you have to create new models that facilitate innovation. Obviously, you can’t let innovation destroy your core business practices. You aren’t a startup with tons of fluidity. You need to keep the pipes flowing. Usually, we see ambidexterity as two separate lines of business that are intrinsically linked to your existing hierarchy. In other words, emerging business and existing business exist in two separate units, but they still have a spot in your overall business structure. According to the Harvard Business Review, ambidextrous organizations succeed with innovation 90% of the time. You need the fear of failure in existing processes, but not new innovations. We’ll talk about the fear of failure in a moment. But it’s important to remember that you have to focus on BOTH your existing processes and new ones sparked by innovation. And you need the policies in place to facilitate the growth of both, without any intersections that cause disruption.

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The Four Main Pathways to Creating Innovation If you want to create projects that provide business value, you need pathways. Every innovation needs a clear-cut pathway to success. Or, as Ed puts it, “you need to be able to take an idea, have it heard, and move it forward.” Here’s the problem: you can’t just plug-and-play pathways for a type of idea. They’re all unique. You can think about innovation in terms of McKinsey’s “Three Horizons” or any other innovation framework model you find best fits your organization. But you need to understand the differences in terms of scope.

Ed broke down four common pathways for innovation.

1. Incubation Zone Ed brings up incubation zones as one of the leading pathways for developing those long-term, horizon 3 innovations. This involves some hefty cross-collaboration between financial stakeholders and business leaders. In a nutshell, you break innovation teams up into unique groups with leaders, and then you have a specific zone where all of those leaders can secure funding and vet ideas.

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2. Incremental Improvement Pathway The key to harboring innovation as a way to spawn incremental improvement in existing practices is to find sponsors. Often times, these incremental improvements can spawn, “not invented here syndrome.” You’re nervous that it’s not the freshest idea on the planet, and you’re similarly worried that some of your competitors utilize the same type of innovation. That’s ok! It’s important to prove value with data and to share that data every step of the way. Here’s the dirty secret. You’re big. You don’t have to come up with groundbreaking innovations. You just need to have the resources and skills to execute ideas. Don’t think, “that wasn’t invented here…. was it?”; think, “how can we do this better than everyone else.”

3. Internal Changes If you’re using innovation projects to create internal changes, you need to align three things: – culture – processes – and tools Change management requires buy-in from sponsors. When you’re dealing with this level of innovation, fit is critical. You can have amazing innovations that simply don’t make sense in your organization. That’s fine! It wasn’t time wasted. Every fruit has value. When you get those shiny fruits that you can’t store in your grocery section, it’s a good idea to have an external network.

4. External Pathways Alright. So you have this great idea. But it just doesn’t make sense in your organization. What do you do? If you throw it out, you’re creating friction against your innovation culture. Obviously, you can’t keep it, right? Here’s what Ed recommends: find external receivers. Over 30% of Microsoft’s hackathon projects aren’t used internally. Instead, they’re shipped to nonprofits and external organizations who can really use them. If you can pair innovation with community programs and non-profit partners, you get to promote the innovation (which drives your culture), and you get to invest in the community (which improves your brand). It’s a win-win.

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Why is it So Difficult to Innovate? As an organization, you have so many innovation advantages. You have resources, rich skill and talent, scale-ready policies and frameworks, world-class leadership, a deep understanding of how to launch, and best-of-breed procedures. So why in the world is it so difficult to innovate? Organizations are almost always dealing with three hurdles to innovation.

1. Fear If you go to any startup blog, you’ll hear about how innovation requires bravery and sacrifice. That’s not an option for organizations. You can’t let innovation introduce risk and liability into your business. You just can’t. Fear is good. But that doesn’t mean you have to let fear destroy projects. Here’s what Ed recommends: put it in a box. In other words, create a safe zone for that incubation innovation, and let everyone know that it’s there, it exists, and that you’re working with it. But contain it. Strip it of risk and liability. Once it’s in that box, you have a chance to really get to know it, see what makes it tick, and figure out if it has actual business value or if the risks are too high. Make sure that everyone knows that this idea is in a box. Don’t hide it. Contain it. Innovation is risky. But you can’t afford any unnecessary risk. So organizations should find ways to play with innovation in an environment with the right policies and practices. According to a BCG survey, risk aversion and idea filtering are two of the top three barriers preventing businesses from innovating effectively.

2. Low Odds Lots of ideas fail. So, naturally, innovation may seem wasteful. It’s not that you’re scared of failure. You’re just scared of seeing nothing happen. But, here’s the thing. you’re not a startup. And you’re not a small business. Organizations are far better equipped to launch innovations than your average business. Ed had some suggestions on how to beat the odds.

• Have a funnel: Essey says that good leaders are solution seekers, not solution solvers. You need to have a step-by-step gated funnel that you can pour ideas through. The goal is to create merit-based states that act as an idea meritocracy. All of the ideas flow in; the best ideas are selected and make it to the bottom of the funnel. You should vet ideas based on both customers and stakeholders (or business users for internal innovations).

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• Create a selection process: To pick the ideas that are most likely to succeed, you need three things:

o The right people: Ed says you need a “hacker, hipster, and hustler” to get ideas to stage. In other words, you need a good combination of leaders to vet and accelerate ideas.

o The right opportunities: Ideas should be big enough to matter at scale. Sure! Every idea doesn’t have to be a billion-dollar idea. But ideas have to provide benefits relevant to the size of your business.

o The right alignment: Every innovation should be relevant to your organization’s mission and strengths. Again, push ideas to external sources when they don’t fit tightly into your organizational structure. 54% of innovative organizations have difficulty bridging the gap between innovation and larger business goals. Often times, it’s because that innovation simply doesn’t fit into your business.

• Design a method: Obviously, the method you use is huge. You should work with the method that best fits your organization. We could throw around the alphabet soup of methodologies (.e.g, LEAN, design thinking, agile, SCRUM, etc.), but this is definitely something that you should be developing internally based on a plethora of needs, metrics, and talent.

• Leverage your resources: You need to have policies in place that allow anyone, from anywhere in the company to bring an idea to the table. Everyone should have a clear path to funding. If you fail on this part, there’s a good chance innovation gets stalled. If employees feel like there’s nowhere to take those lightbulb moments, they’ll let them pass.

3. Rejection Recognizing when a project is a real death or false death is half of the battle. In fact, Ed spends a good chunk of his time helping organizations tell the difference between a bump and a mountain.

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Ideally, you want to work through all of the ways that an idea can get squashed before you start pushing it through an incubator. If you know what to expect, it will be easier to understand when innovation is no longer viable.

Some Actionable Models Ed brings some solid models to the table for curious organizations. We won’t dive deep into these models, but here are some clips of the video with some links to more information: https://edessey.com/one-chart/

• Modified Lean Analytics Model Ed talked about this model in some detail during our virtual event Zoom meeting. But the source of this model comes from Alistair Croll and Benjamin Yoskovitz.

• Lean Startup Model Another popular model, the Lean Startup Model by Eric Reis, leverages continuous innovation to create a more circular pathway for innovation.

• Lean Canvas Model The Lean Canvas Model by Ash Maruya borrows from Alex Osterwald’s Business Model Canvas. This is a very project-focused, problem-focused methodology that helps bear fruit.

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• Technology Adoption Curve The technology adoption curve is probably the most familiar model. It’s been around since the late 60s (or early 70s), and it comes from a book called “Diffusion of Innovations” (now on its fifth edition) by Everett Rogers.

• Growth Pyramid Another very famous innovation model, Growth Pyramid, is what Sean Ellis and Drew Houston used to grow Dropbox into a unicorn SaaS. This one is a little more focused on startups, but it can still be mined for organization value.

• Pirate Metrics AAARRR (or pirate metrics) is the brainchild of Dave McLure. Again, since Dave is a famous angel investor, this is very startup-centric. But, like the Growth Pyramid, it can be adopted to organizations.

Here’s a key point of advice; most of these “innovation models” are centered around tech startups. But they’re easy to tweak and apply to virtually any innovation. WATCH THIS TALK

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INNOVATORS INSIGHTS TRACK 1

Ford vs. Itself: The Art of Self-Disruption Safir Jamal – Head of Strategy & Operations at Ford X

Build Your Own Startup – The Story of Tide Spin David VanHimbergen – Principal at Sun Spin Advisors

The Story of MOBIKO, an AUDI Business Innovation Spin-off With a Realistic Chance Nicola Büsse – Head of Sales at Mobiko WATCH THIS TALK Safir Jamal: The Right Structure for Innovation Safir Jamal is an experienced innovator and strategist. As the Head of Strategy and Operations at Ford X, Ford Motor Company’s venture incubator, Safir has used innovation to help position one of the longest-operating automakers in the world for today’s changing transportation landscape.

Envision – Build – Validate In a 2011 TED Talk, Ford Motor Company Chairman Bill Ford expressed his concerns about his company’s place in an evolving industry. He said “In the past, I worried about how I am going to sell more cars and trucks. But today, I worry about what if all we do is sell more cars and trucks?” Ford gave voice to concerns that have plagued industry leaders across the board for the past decade. The face of business is changing and Ford had to consider what business it wanted to be in – in the long-term.

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Although Ford has long been in the business of auto manufacturing, it needed to move from being in the business of manufacturing cars to being in the business of moving people and goods – becoming a mobility services provider.

Creation of Ford X To bridge the gap between manufacturer and mobility services provider, Ford needed a whole new corporate approach, rooted in:

• New Talent • New Metrics • New Processes and Systems • New Capabilities • New Clockspeed

In 2018, Ford X was created to provide that approach. Ford X, Ford’s venture incubator, was created to “envision, build, and validate new mobility ventures and business models to shape the future of transportation”, for Ford X launches in-market ventures with its team of entrepreneurs, designers, and engineers across its three dedicated offices in Palo Alto, Detroit, and London. The incubator was founded upon the following three principles:

1. Small Teams: Each team consists of 3 dedicated full-time employees from both inside and outside the organization.

2. Small Budgets: Each venture team is provided with a maximum of $400k to cover all venture expenses, including salaries.

3. Short Timelines: Aspire to launch an in-market pilot and validate the venture with paying customers within 90 days

Ford’s Venture with Jelly: Embracing Micromobility Ford X used these principles to launch its scooter venture, called Jelly. One of the incubator’s venture teams discovered that 60% of all trips in the U.S. were 0-5 miles, which is a trip type that is well-suited for bikes and scooters. Despite the fact that the company traditionally specializes in motor vehicles, Ford decided to envision, build, and validate a new scooter sharing venture. Ford X successfully built a new app, paired it with scooter hardware, and piloted the Jelly scooter sharing service with paying customers at Purdue University.

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Based on the success of that pilot, Ford went on to acquire an existing electric scooter startup, Spin, illustrating how Ford X’s venture incubation work shaped a core pillar of its parent company’s strategic direction.. Nicola Büsse: A Beneficial Partnership Nicola Büsse, co-founder of MOBIKO, has been involved in this Audi-owned startup from the beginning. MOBIKO is a unique mobility app that allows employers to provide a flexible monthly mobility budget to employees for both daily commutes and private trips. The budget is available for use on all types of mobility, from bus and train tickets to cabs and ride-sharing services. MOBIKO was developed by a partnership between Audi Business Innovation GmbH, a wholly-owned subsidiary of automaker Audi, and mantro, an established company builder for cross-industry digital innovation. Much like Ford, Audi understood the need for innovation in order to stay ahead of the competition. Hence the purpose of Audi Business Innovation (ABI) is to “redesign the mobility of the future and to implement innovative business models”. With the help of mantro, they were able to achieve that goal.

MOBIKO’s Development Timeline MOBIKO was developed over the course of 2.5 years, using a simple innovation timeline that allowed them to thoroughly explore and test the concept before they went live.

• Design Sprint: In February 2017, ABI defined their value proposition and identified the key components of the potential solution.

• 1st MVP: By September 2017, they were ready with a first MVP and validated the solution through interviews with potential users and experts. During this stage, ABI also began internal discussions regarding the possibility to spin-out the project.

• Foundation: Having started the innovation partnership with mantro in December 2017, in February 2018 MOBIKO was founded with its first name “mantro benefits GmbH”.

• Pilot: As of August 2018, the project was ready for a 6-month pilot phase. This phase was conducted with 4 companies within different industries throughout Germany.

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• 1st Investment: Upon successful completion of the pilot phase in June 2010, ABI officially invested via a convertible loan, and the company was officially named MOBIKO GmbH.

• Go-Live: In July 2019, MOBIKO went live with their first paying customer and first contracted employees.

• Scaling: Today, MOBIKO is in a constant state of development to meet growing market needs.

Nicola’s 4 Lessons Learned Over the three years that Nicola was involved with the development of MOBIKO, Nicola learned four important lessons:

• Dedicated Team: Ensure that your venture has a motivated and determined team from every organization involved in the partnership. You need employees who identify strongly with the product and are 100% focused on the future of the venture.

• Equal Partnership: Each partner brings specific expertise and financial backing to the relationship. Build trust within the team based on equal partnership, so that all developers are invested in the success of the product.

• Transparency: Keep leadership from all partnering organizations involved throughout the development journey. Provide consistent reporting on each stage of the journey, so that all parties are on the same page.

• Entrepreneurial Decision Making: To keep the process faster and more agile, make entrepreneurial decisions rather than adhering to corporate processes. This allows for sufficient freedom to create a healthy start-up environment.

David VanHimbergen: Diversification in Innovation Former CEO/Co-founder of Tide Spin David VanHimbergen established his startup after more than 18 years with Procter & Gamble, the manufacturer of Tide laundry detergent. His journey toward innovation began in 2012. As a P&G representative, David often worked closely with retailers, so he started to notice when Target, one of Tide’s strongest retail partners began to sell less. “Software is eating the world. Will it eat ours?”

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After careful analysis, they discovered that both P&G and Target were facing three primary challenges:

• Sales Were Down: Due to competition with Amazon and other retailers, Target’s comp sales growth (stores open >1 year) was slowing. Target started to shift away from Tide and towards more profitable or differentiated laundry sku’s.

• Technology Was Taking Over: Technology was replacing brick and mortar retail stores with online sources. This marketplace disruption was taking a toll on both Target’s and P&G’s bottom lines.

• Consumers Wanted More: After conducting consumer research by asking “what is the most frustrating thing about laundry?”, David discovered that what they really wanted was to not do laundry at all. All he had to do was figure out how to capitalize on this.

The Innovative Process The key insight David brought to P&G leadership’s attention was that the total addressable market for laundry in the U.S. was really $25 billion…twice as large as P&G considered it to be. The market can be divided into two sectors: Do It Yourself (DIY) and Outsource. While Tide products held more than 50% of the market share in the DIY half of the market, they had virtually no share in the Outsource market, which included professional laundry services, dry cleaners, and laundromats. To address this lack, Tide developed and piloted a laundry service business in Chicago. Since they had already established dry cleaning franchises in the area, it was a low-cost option to convert unused space into a laundry service facility. To obtain customers for their pilot run, Tide offered free laundry services and dry cleaning to Walgreens employees, and they received over 100 bags from willing participants. In order to keep the operation running smoothly, Tide created a separate home office in Chicago dedicated to Spin operations. They then developed special branding and personal elements to set Spin apart from the competition, and their efforts were successful. The pilot ran for 2 years, at which point the company financed the purchase of an existing laundry service to scale operations.

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David’s 6 Suggestions for Corporate Startups After two years of hands-on development of the Tide Spin startup, David has six suggestions for corporate ventures:

• Diversify: Your innovation portfolio should encompass various business models and a mix of long and short term investment “bets”.

• Dedicated Team: The team that is dedicated to the future of the company must be different from your core operating team. Processes that maintain the core operations can be a liability to innovation. Rather than controlling, senior managers should embrace the process and stay out of the way.

• Focus: To innovate, you need a team that is fully dedicated and immersed in the project. Don’t make your innovation team wear multiple hats.

• Problem First, Solution Last: Study and define the problem you are trying to solve, and then validate your ability to solve the problem using the solution you have created.

• Discipline: Have an organized plan with a sound financial model and operational inputs. List your assumptions, and be sure to follow the path you have created.

• Good Enough: When starting a new venture, speed and agility are key. You will not have time to perfect before you launch, and you should be willing to make mistakes.

Finally, David suggests that innovators should always be looking forward. Look toward where the world is going with disruptive technology and be willing to change in order to stay ahead of the competition. WATCH THIS TALK

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INNOVATORS INSIGHTS TRACK 2

Lessons Learned After 2 years Incubation at Chemovator Markus Bold – Managing Director at Chemovator

A New Model for building New Energy Businesses Miriam Eaves – Head of Origination BP Launchpad at BP

Building Ventures With Impact in Times of High Uncertainty Steffen Knodt – Director Digital Ventures at Wärtsilä

The Challenging Step from Corporate Start-up to Corporate Scale-Up Christopher McLachlan – Head of Company Builder at EnBW Energie WATCH THIS TALK

Business Incubation @ BASF: Markus Bold, Managing Director at Chemovator GmbH Many large organizations have established different types of incubation and acceleration programs. These agile, design-thinking-driven idea chambers help you experiment with radical ideas outside the lens of your core business model. You get a chance to test out new tools, play around with those crazy business models, and experiment with the ever-tricky word “disruption” without actually “disrupting” your profit margins. Markus Bold is the Managing Director for Chemovator — an internal incubator at BASF. Markus broke down some of the primary challenges that BASF is dealing with

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in the current market. And, unsurprisingly, they’re the same set of challenges that most mature organizations deal with.

• How do you innovate without stalling the core? • How do you make new plays in the market without introducing significant

risk? • How do you rethink your KPIs without pausing your processes? • How can you deliver new experiences to customers while still delivering the

experiences they’ve come to expect? • How do you really nail digitization and digital transformation without caving

into expensive tech and buzzword-heavy marketing pitches? • How can you really challenge everything you know and do?

For BASF, the answer is Chemovator. This idea-fueled innovation think tank has a startup mindset and the freedom to operate outside of the traditional barriers that impede progress. As Markus puts it, “Chemovator enables a lean and customer-focused validation of business opportunities — with a startup mindset.” Chemovator is an incubator with two-year programs to build scalable start-ups like BOXLAB — a venture that uses advanced logistics to reduce waste in the chemical industry. The organization’s setup is based on three parts:

• Venture Teams: Up to 12 teams at a time can transform ideas into investable and scalable business opportunities.

• Core Team: A small group of five full-time people that runs and develops Chemovator while supporting the Venture Teams from behind the scenes.

• Entrepreneurs in Residence: Experienced external founders from various industries act as coaches and mentors for the Venture Teams in Chemovator.

You Have to Set Up Your Incubation Team With the Right Resources It can be easy to think of incubation teams as adjunct business units. And that’s true. But you need to offer incubation teams unique resources. You can’t just plug them in and wait for results. At Chemovator, they provide six core resources — which are relevant to almost every business:

• A protected space: Markus explains that Chemovator offers a corporate shield of convictions and goals. In other words, Chemovator uses the history, mission, and values driven by the core to safeguard its innovation team. They

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innovate within the context of their organization — not just for the sake of innovation.

• Learning opportunities: By pairing innovators with external founders, Chemovator gets coaches and external sponsors on board to assist with breakthroughs. This is crucial. You don’t want to keep your entire learning unit internal. Innovation is all about thinking outside-of-the-box. If you just pair innovators with internal stakeholders, you’re not getting new ideas and concepts; you’re just recycling the same ones you’ve always had.

• A supporting structure: You also have to have an internal foundation to support innovation. Does everyone know where to go with ideas? Do they know how to secure funding? Are they able to quickly scale startups without having to search for confirmation and answers?

• Commercial relevance: Innovating without results gets draining. If you’re not offering your innovation team the chance to scale to a commercial level, you may have issues with drive, ambition, and participation.

• Professional coaching: These are the “Entrepreneurs in Residence.” Obviously, these aren’t the only types of coaching you can offer. Internal coaches can be great. But only have internal coaches can quickly drive groupthink mentalities that stall forward momentum.

• Networks: This is what Markus calls the “unfair advantage.” This is how you can outpace your competitors. If you have a better innovation network, you have a commercial advantage. The more external organizations and founders you can rally under your banner, the more power and knowledge your innovators have to work with.

What Has Markus Learned While Scaling Chemovator? Markus leaves us with some lessons: You need external startup impulse: This is probably the biggest mistake most major organizations make when they set aside a budget for an incubation program. You need to have people with impulse. Reading books, attending seminars, and watching these digital keynotes isn’t enough. It helps, and it can give you the fuel and motivation you need to innovate. But you have to get out there and do it. And having someone that’s failed enough times to know how to win is huge for your program.

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Provide entrepreneurship enablement: Tools, training, and support are the backbones of innovation. Grabbing a team of radical idea-driven creatives isn’t enough. You need a supportive structure and the right systems to enable them. Make sure you have a diversity of ideas: Innovation is driven by diversity. The ideas you like most aren’t always the best ideas. Breed real diversity. If innovation is based on C-level thumbs up, you’re bound to create an echo chamber of ideas that end up mimicking the core. Get an unfair advantage: Chemovator has a unique unfair advantage. You need your own. Generally, organizations have built-in unfair advantages. You’re big, and you have the pockets and resources to really scale up ideas. You can fail without bruises. But you need to determine your unfair advantage upfront and use it to scale your program. Make sure there’s commitment: Glue your innovators to their ventures. You want to walk a fine line. They’re still part of your broader organization, but they’re not so tied to your organization that they exist outside of their ventures. It’s ok to be itty-bitty: Don’t consume too many resources. Don’t focus too hard on scalability. And remember that every breakthrough doesn’t have to be a billion-dollar marvel. And finally: there is no one-size-fits-all incubation model. Be daring. Be different. And do what works for you — not just what worked for Chemovator. Launchpad: Miriam Eaves at BP Launchpad Inovation labs are almost always built with a purpose. You may be looking to hit new target markets and grow. You may be looking to deliver new experiences to customers in a specific market. Or you may be looking to challenge your entire core by focusing on a shifting direction in your industry. At BP Launchpad, Miriam Eaves and her team are doing all three. Launchpad is looking to build companies that supply the world with “clean, reliable, and affordable energy” to help BP reach net-zero emissions by 2050. BP is in a great position in terms of innovation, since Launchpad is already established. They’re not starting from ground zero. Yet Launchpad is also separate from BP. They operate alongside BP Ventures, and they aren’t immediately involved in BP’s core processes.

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Of course, there are obvious reasons for this. The friction between the core and these innovations could quickly become a risk-fueled diaster party if they were integrated. BP Launchpad operates as both an investor and an operator. They invest in a private equity model and use BP’s assets and capabilities to scale the business. Imagine pairing a great energy startup idea with BP’s assets, partners, and supply chain. Plus, since BP Launchpad exists outside of BP, they can push BP to act as a first customer for some of these startups (so long as they actually contribute value to the core.) How Launchpad Selects the Right Candidates Launchpad has a careful screening process to identify internal and external deals that make a good fit for Launchpad’s portfolio. Companies need to have their technology ready to go and be able to operate at growing scales in order to be considered as “residents.” The process mimics the typical Series A funding round a bit, but BP has layered in a “Bootcamp” for promising candidates that don’t meet that standard because they’re too early, or they don’t have the traction. The program offers cornerstone accelerators:

• Performance Acceleration: funding and growth, financial management, and execution support

• Venture Building Excellence: founder support, access to world-class dev ops, and “Entrepreneurs in Residence” who can fill in C-suite positions for the business

• BP’s “Unique advantage”: rapid scaling through key BP connections Launchpad selected ten companies from this year that will, in five or six years, provide billions of dollars of enterprise value as in-house companies or through exit plans. What Should You Look For in a Startup? Launchpad looks for potential resident start-ups that are a good fit based on these four criteria:

1. They address a painful problem. 2. There are growth potential and scalability. 3. The start-up has a passionate team. 4. It has product readiness.

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They look for projects that fit with their mission and could potentially disrupt the existing business. For starters, BP is only willing to consider startups in fields like

• Mobility • Reducing carbon • Hydrogen • Sustainable fuels • Distributed energy • Biofuel • Digital transformation and data-enabled optimization • Circular economies

Building Ventures with Impact in Times of High Uncertainty: Steffen Knodt, Director of Digital Ventures at Wärtsilä Corporation Like BP, Wärtsilä exists in an industry that’s undergoing dramatic change. As digital transformation and digitization present themselves as a path forward for industrial, marine, and energy manufacturers, finding ways to disrupt the old ways and usher in the new ones requires innovation. Wärtsilä committed to addressing the UN Sustainable Development Goals (SDG), including things like ending hunger, eliminating poverty, increasing the quality of education. When Steffen and his venture team approach startups, they look for ideas that fit into at least one of those core SDGs. In a sense, this gives Wärtsilä some breathing room. They can approach startups that operate outside of their domain, so long as those startups exist within their core value levers. The first question that Wärtsilä’s venture team asks startups is, “what is your north star?” What is actually driving you beyond the product or service? What’s the end game? Generally, Wärtsilä works with “north stars” that fall into one of their SDGs. This is a goal-driven venture project. Here are some of Steffen’s lessons learned Build Trustful Relationships: Venture building shouldn’t be impersonal. Dumping money into the right number of startups based on market statistics to try to reap the most rewards works for venture capital firms.

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But it doesn’t work for Venture-driven business units. You want to build a meaningful relationship with your startups. You have the tools and resources to really scale their innovations. By disconnecting from them, you’re throwing your competitive advantage away. This is especially important if your venture is driven by SDGs or some other mission. Growing flowers is easier when you understand what type of soil that flower really thrives in. Be A Venture Client: You want to bring startups together in a safe environment. You have the resources, experience, and toolkits to help startups thrive. Steffen and his team give them space to spawn their proofs-of-concept, collaborate with other startups, and build their tech without outside market pressures. Put People First: Connecting the corporate world with the startup world starts with the right people. You need the motivation, interest, and skills to create a thriving venture ecosystem. Navigate All Horizons: The goal of corporate innovation is almost always to bridge the core with the future. But to do that, you can take your time. You have the tools and experience to fuel a project beyond that quick-fire time frame. Scaling is much easier when you have time to reduce risks and fine-tune your startups’ marketing plans and business models. Become Ambidextrous: You have to be ambidextrous. Build bridges between the core and startups, but don’t let traffic cross them. Keep the core separate from the innovation labs, but use the core to fuel it.

The Step from Start-Up to Scale-Up for Corporate Ventures: Dr. Christopher McLachlan, Company Builder at EnBW “Ditch the unicorn; scale-up deer.” That’s the opening statement from Christopher McLachlan. Don’t spend all of your time looking for the next Uber. Instead, focus on realistic startups with realistic expectations. Christopher is all about the “fail harder” and “done is better than perfect” mentality. EnBW has worked on 50 projects so far. They’ve stopped 25 of those. And the rest are at ~$50 million in revenue with year-over-year gains. There are currently 6 projects in the scaling phase, and they also have 7 spin-off businesses. In other words, things are going great. And there are no unicorns in sight.

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So how did they do it?

Mind the Gap In traditional venture capital, the gap between the initial seed funding and Series A is drastic. That moment where the startup has to look beyond the product and think about marketing plans, business models, market-fit, and all of the other real processes is where the majority of startups fail. According to Christopher, it’s the same for corporate ventures. To help combat the trend, EnBW created two teams: one for startup and one for scaleup. The startup team focuses on incubation. From ideation to piloting and launch, the startup team focuses on the standard incubation processes. The scaleup team takes it from there. They focus on growth, scale, and maturity. These two “stages” of venture require different skill sets. But, before the project can go from one team to the next, EnBW sits down with the startup and asks some questions. This “Ready to Scale” exam checks the startup for fit. Can it cross that gap? What is there market attractiveness? Can they execute? Do they have a strategic fit? The move from launch to scale shouldn’t be a small step. It’s a make-or-break moment. If you take the time and figure out when scale should really happen, you can figure out if the project is more of a spin-in or spin-out. The “Ready to Scale” Exam Christopher talked about the “Ready to Scale” exam in some detail. It’s broken down into three parts: Market Attractiveness In this part, you need to discuss size, growth, competition, and profitability in light of current market conditions.

• Is this project marketable today? • If not, what needs to happen for it to be marketable? • What market conditions would this project thrive in? • What are your market risks and opportunities? • Who are your competitions? • What do they do better?

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Ability to Execute In this part, you need to discuss how ready to execute this project really is.

• What’s the strategic vision? • What is the product today? • How did it get here? • What’s ahead? • Is the project well-equipped? • What are the financials? • What is the marketing and sales playbook?

Strategic Fit Finally, it’s important to consider where the project is actually a strategic fit for EnBW. If not, you need to push it outside. Is it actually relevant to you? It may be relevant on paper. But that doesn’t mean it is in reality. WATCH THIS TALK

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INNOVATORS INSIGHTS TRACK 3

Theories That Will Keep Your Innovation Practical Kristian Luoma – Head of OP Lab at OP Financial

Intrapreneurship & Incubation at Indeed.com Theories That Will Keep Your Innovation Practical Lisa Besserman – Head of Program, Global Incubator at Indeed.com

Corporate Incubation – What Works and What Doesn’t? Salman Taj – VP, Innovation/ Head of Ericsson ONE, Americas at Ericsson

Intrapreneurship growing up at Fraunhofer: From Research to Europe’s Most Entrepreneurial Tech Transfer program Thorsten Lambertus – AHEAD Team Captain for Company Building & Venture Incubation at Fraunhofer Venture WATCH THIS TALK

How to Maximize Innovation in an Innovation Lab Kristian Luoma is the Head of OP Lab at OP Financial, Finland’s biggest financial group serving over 4.2 million customers. Over the last four years of leading the lab,

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some projects have been stellar success stories. Others have failed miserably. He offers these five tips to help keep innovation practical.

Learn the Hype Cycle Kristian says that when it comes to innovation, you don’t want to focus on anything that is at the peak of enthusiasm. While it’s tempting to focus on the next new thing, be patient and jump on the train later. By letting new tech simmer, you can learn as much as possible about it before you double down on your investment. You’ll be able to bet on the tech that people are actually going to adopt, rather than a passing trend.

Study the Innovation Diffusion Cycle Different customers are going to adopt technology in different ways, but you’ll want to focus on the innovators and early adopters to know where to go next. Remember that with different needs, there will be different innovators and early adopters. It won’t always be young people who adopt your innovation first. Find those lead users who are innovating without the tools that you want to build. If they are already doing it, find out how you could make it easier and faster.

Focus on One Thing at a Time Dave McClure’s growth funnel theory includes the stages of Acquisition, Activation, Retention, Referral, and Revenue. Luoma encourages his team use this framework by focusing on one thing at a time. First, prove you can acquire the customers. Then prove that you can activate them. Later on, you can focus on things like revenue and referral. Labs often try to focus on too many things at a time, and that makes things messy.

Don’t Create Anything the Organization Doesn’t Want to Operate The optimal solution is the one that meets the needs of the user as well as delivers what the stakeholders want. One without the other is a recipe for failure. Kristian’s team learned this while working on a project turning OP branches into co-working spaces. What they didn’t stop to consider, though, was whether the branches wanted to operate as co-working spaces. They implemented it without understanding that the organization wanted to do something else. The project was a failure.

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Talents Are Not All Created Equally Innovation is a team sport, but weird individuals are the ones who plant the seeds that grow. Find the weirdos who are excellent innovators. Use them to recruit, too. After all, the best talent will find the best talent. Kristian says to always remember success stories take longer than you think. Don’t rush the process.

Pitching Innovation: How to Foster a Culture of Intrapreneurship Lisa Besserman is the Head of Program, Global Incubator at Indeed.com. She’s overseen 36 projects in the incubator and is a recognized leader within the innovation space. She’s successfully created a culture of innovation within Indeed. She shares the building blocks that helped to create and foster it.

Identify Entrepreneurs Within the Organization You don’t need to create entrepreneurs, you need to identify and encourage them. Let them self-select by communicating the current participation opportunities within existing innovation initiatives. Managers are key in recognizing and fostering this talent, too.

Empower Employees to Innovate Teach employees how to effectively pitch their ideas. A lot of people have ideas, but it can be difficult to articulate them and take on the product mindset. To empower employees Indeed conducts pitch workshops once per quarter. They teach them how to build MVPs, instill data-driven decision making, and provide info on user testing. They also connect product manager mentors with employees around the world. That way when they come to senior leadership with their idea, they have all the tools they need to effectively pitch their idea.

Increase Risk-Taking Quotient Failure is a part of new product development, and it’s something people should celebrate. To do this, Indeed created a shut-down initiative. When a project shuts down, the team shares the learning that came from the experience and celebrates the wins they had. Teams host Q&A events so those who worked on the project feel that they’ve contributed to the greater good despite the end of their project.

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Cross-Functional Collaboration The core team for each incubator project includes marketing, user experience, program management, product management, software engineering, sales, and legal. The success rate of initiatives when teams have cross-functional collaboration built-in is 59%. When there is no cross-functional collaboration, the success rate drops to 36%.

Provide Resources Indeed offers a variety of resources for potential intrapreneurs. They have a content hub for sharing documentation and resources. There is also a repository of learnings, a library, innovation training, and a professional development budget. When new founders come to the incubator they get book recommendations to learn more about startup principles and product development fundamentals. They also teach people about agile methodologies when they are in the early stages of building out their products.

Executive Support Lisa says that executive support is fundamental for a successful innovation program. Executives can sponsor innovation programs and offer mentorship. They can also acquire new products into their core portfolio. Executive-level support allows for autonomy and agility in innovation.

Innovation in a Big Company: What Has Worked? Salman Taj is the VP of Innovation and the head of Ericsson ONE, Americas, Ericsson’s innovation incubator. They’ve developed three spin-offs in the last two years by providing space for entrepreneurial employees to develop products and ideas in-house. Here is what he says has worked for this global institution when it comes to fostering in-house innovation.

ONE’s 5i Process Initiation. This is where they collect and crowdsource ideas. Before they move on, the team must determine whether the problem is clear and whether it’s big enough. They are only after big ideas. Ideation. During this phase, they evaluate the value of the project and then come in to pitch it. Before it moves on from this stage, the team must demonstrate the completion of customer validation, that there is clarity on the MVP, and whether there are trial customers.

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Incubation (MVP). Here, they implement the MVP with trial customers and learn from that experience. They determine whether they should pivot or continue with the project. They will need to show that there is a customer pipeline, the business is viable, and they have the team to support it before they move on. Incubation (Industrialization). The second part of the incubation stage will look at scaling the project. Can it scale to a successful level? If so, it will go to an acceleration board where they’ll determine if the project should stay within the business or spin out on its own. Ignition. In this phase, the team will determine if the project is sustainable. It may receive a cash injection based on its achievements.

What Has Worked for ONE? Executive support and championship. It’s critical for an incubator program within a large company to have executive support. You need a champion within the executive level to take it forward and help avoid roadblocks Find solutions to real problems. There is no point in building something that’s not solving a problem. While a simple concept, it’s not something that comes naturally to people. Building a solution without understanding the problem won’t result in a successful project. Keep it simple. Starting an innovation program within a big organization can get complicated. Making it complicated will result in intimidating your internal customers. Simplicity creates an environment of trust where people jump into the program without a high barrier to entry. Be transparent. At ONE, all evaluation sessions are broadcast so people can see the real-time discussion as its pitched. They then release all the data and information once they make a decision about the project. That way there are no alternative theories about why something is or isn’t getting support. This builds trust within the company. Let things mature. There is a tendency to look at a successful MVP and immediately direct them to a new unit or spin them out into a new business. These MVPs aren’t usually ready to survive and scale on their own. Let them mature within the business and learn more about the market before they move on.

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Intrapreneurship Growing Up at Fraunhofer Thorsten Lambertus is the Institute Director at Fraunhofer, Germany’s high-tech powerhouse and R&D giant. His innovation lab’s goal was to activate the entrepreneurial spirit within the organization. Over the life of the lab, they went through a lot of growing pains. He shares what they learned along the way.

Infancy In the lab’s infancy stage, they decided to follow Google’s 20% rule. They gave researchers one day a week to work on a passion project, and the lab would give them €15,000 to fund it. Initially, the lab had three applicants. They gave the projects the money and sent them out to bring back something innovative. When they brought the teams back to learn what they’d done with their €15,000, only two of them had been working on the project and generating results. The third project stated that the budget wasn’t big enough and they had other things to work on. What did they learn?

• Money doesn’t get people excited • Without guidance, there are no relevant results • It’s better to start in a niche

Childhood In this phase, Thorsten’s team developed a 12-week incubation program. Over the course of the 12 weeks, the team provided intrapreneurs with guidance and education on how to be entrepreneurial. They also built a network of ambassadors and roadshows to educate and guide the intrapreneurs. At the end of the 12 weeks, they had a demo day showing off the projects. What did they learn?

• Building up a stable flow of new innovations is hard • You have to tailor your program to your specific organization • Internal competition happens and you’ll have to deal with it

Adolescence Eventually, the lab became funded out of headquarter’s budget. That meant it was no longer a funky research project, but considered a core part of the business. The firewall against internal politics was gone. The team decided to shift their focus from

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educating researchers to creating more tech transfers. They learned that researchers are good at researching, but they might not be good at entrepreneurship. What did they learn?

• Experimentation is slower when you are a core business • Shifting mindsets is hard on your team • It’s difficult to merge internal and external cultures

Fraunhofer Lab’s Achievements The lab has supported more than 200 projects in five years. During that time, 38% of the teams achieve their tech transfer or make it onto the market. So it’s been a success, but building an effective program takes time. Thorsten says the learning curve is steep, and more money won’t always be the right solution. When the checks are bigger, so is the pressure to deliver results. WATCH THIS TALK

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NICK BOGAERT – CO-FOUNDER BOARD OF INNOVATION NEW YORK

Validation of Go-to-market Tactics in Life Sciences A successful product launch during the ‘New Normal’ is anything but a leap of faith.On the contrary, the assumption-based decision-making and persuasive selling that were commonplace as recently as January 2020 are being replaced with evidence-based decision-making and remote validation. These paradigm shifts are among the key points covered by Nick Bogaert, Co-Founder of Board of Innovation NYC. He outlines the behavioral changes that define the New Normal in the life science industry. He also describes the role of remote validation in developing a go-to-market strategy. WATCH THIS TALK

What does ‘The New Normal’ look like for product developers in the life science industry? Behaviors are changing rapidly in response to the COVID-19 pandemic. As innovators in the life science industry come to grips with the fact that the coronavirus is not a short-lived problem, they are gradually shifting their approach to product development. With aftershocks expected to occur in the near future, the most successful developers are adapting by perfecting a low journey to their product launches. Before diving into remote validation and its benefits, it is helpful to understand how the product development landscape has changed in the life science industry. Below is a look at some key elements of the New Normal for developers and manufacturers.

Digital Innovation Digital innovation has played a critical role in expanding virtual work capabilities for manufacturers and innovators across the globe. From Zoom meetings to online

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continuing education, live events are being replaced with digital experiences. With advances in digital innovation, product developers are able to maintain relationships with vendors, compliance personnel, and prospective buyers.

A Contactless Journey As social distancing and protective masks become commonplace in the business world, organizations continue to tighten restrictions on guests and live meetings. In the life sciences industry, some new products are being launched following development cycles that are virtually contactless in nature. From the moment a product idea is born to online testing to virtual meetings, product developers are able to complete key phases of the development journey with minimal physical contact.

Increased Sharing of Personal Data The reduction in face to face contact has increased the usage of online platforms and tools used to share and exchange information. Many of these platforms require users to divulge personal information and data. Given the physical limitations imposed by the pandemic, consumers seem more willing than every to provide this information in order to communicate with others.

Low Touch Sales and Marketing Within just a few short months, the coronavirus has transformed the way new products are sold and marketed. Before COVID-19, innovators conducted research and promoted their products during face to face meetings, at busy trade shows, and during live demonstrations. But the health risks associated with face to face interactions has forced sales and marketing professionals to adopt a lower touch approach.

What is remote validation and what is its role in the product development cycle? As manufacturers and other businesses take steps to limit face to face human interaction, remote validation continues to gain traction among product developers. The definition of remote validation differs very little from the definition of validation itself. Nick defines validation as the process of gathering information through experimentation and user testing to make informed, less risky decisions faster.

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Remote validation is the process of experimenting and testing without engaging in a face to face meeting. When properly executed, remote validation enables developers to gather useful, unbiased information that often plays a key role in guiding the product development process. By featuring evidence-based decision-making, remote validation can help prevent assumptions from influencing development.

What are the four key benefits of remote validation? Remote validation offers a host of attractive advantages to innovators who embrace it. In addition to offering convenience and time savings, this strategy allows innovators to devote more resources to critical issues surrounding compliance, pricing, business development, and securing capital. Nick highlights the following four benefits as ways that remote validation can expedite experimentation and facilitate a product launch.

1) Cost Savings Prior to the COVID-19 pandemic, the cost of employee business travel was steadily increasing. With companies spending nearly $1,000 per employee for each business trip and more than twice that amount on international trips, employee travel costs were rapidly becoming a heavy burden for companies to shoulder. By eliminating many travel and lodging expenses, remote validation can help companies save thousands of dollars annually.

2) More Frequent Interactions Remote validation can help shorten the product development cycle by making it possible for experimentation to occur with greater frequency. In contrast to face to face experimentation, which requires analysts and subjects to be present at the same location simultaneously, remote validation can occur with more spontaneity. With only a computer and interactive platform required, experimentation can occur more frequently and on a more continuous basis.

3) Increased Access Before the coronavirus, access was often granted during pre-arranged physical meetings. But with remote validation, experimenting and testing hypotheses is easier because subjects are easier to access. Additionally, you can easily access data online through activity on your website and social media pages.

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4) Ability to Experiment at Any Time As long as you have a computer or mobile device, you can carry out experiments at any point in time. For instance, you can compare responses to various online advertisements in the middle of the night or during the time of your choosing. You are no longer limited by regular office or meeting hours.

How can you validate remotely? Using experimentation to gather information from your favorite remote location is easier than you think. In fact, you can run your experiment from the comfort of your private office, living room, or even from your back patio while you are sheltering in place. In general, you should follow the same protocol you would follow during a traditional experiment. Nick suggests following these five simple steps to achieve validation remotely: Step One: Identify risky assumptions and leaps of faith The path to remote validation begins by removing any assumptions that may impact your results. Unless your team is filled with seasoned pros, multiple assumptions may exist. The best way to manage these assumptions is to prioritize them in order of their potential impact to your product or business. Then, be sure to exclude any assumptions that are impossible or difficult to test. Focus on those that are easy to test. Step Two: Design your experiment During the design phase, you need to develop an experiment that meets some specific criteria. Ideally, the experiment you choose should be one that you can run from any location and should possess the following three qualities:

• Simple to carry out • Budget-friendly • Easy to replicate

Keep in mind that you may end up running multiple experiments simultaneously. Be sure you have sufficient resources to adequately manage each experiment or you could miss out on key findings.

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Step Three: Carry out your experiment Once you designed an experiment that is easy to run and replicate, it is time to move forward with execution. Before you carry out your experiment, make sure you have taken the necessary measures to protect subjects. Seeking guidance with a compliance officer is a great way to ensure that your experiment is ethical, unobtrusive, and non-offensive. Step Four: Analyze your data and results Reviewing your findings through an objective lens is critical. Be sure to use caution during this step, as bias can rear its ugly head again and pollute the decision-making process. For example, you cannot arbitrarily decide to ignore a particular set of findings because they do not coincide with your own personal hypotheses. Your conclusions must reflect the results you obtained during your experiment. Step Five: Make decisions based on your findings After you have completed an objective analysis of your results, it is finally time to move to the decision-making phase of the validation process. During this phase, you can use your findings to make evidence-based decisions about your product. For instance, if 250 healthcare professionals click on an ad for a patient monitor that features a blue background but only 60 people click on the same ad with a red background that is positioned right next to it, then you have evidence to support your decision to choose a blue background.

How can you secure buy-in from stakeholders and management? Your efforts are more likely to be successful if you have the support of stakeholders and management. But securing buy-in and involvement from key decision makers is not always easy. For starters, some of them may not fully understand the concept of remote validation or why it is necessary. Others may have biases of their own that influence their opinion of your experiments. Here are some tips to help you earn the support of key leaders in your organization:

• Educate them quickly. Use clear and relevant language to tell them how your experiments will positively influence product sales.

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• Tell them what’s in it for them. This may require you to estimate how remote validation can lead to a much healthier bottom line.

• Cite previous cases. Touch upon the ways that past experiment results have led to stellar product design and impressive sales.

• Ask for their support. Let them know two or three simple, specific ways they can support your efforts.

• Don’t ask for money right away. Nick notes that a canned pitch that involves a request for a big check is not the best way to proceed.

• Keep them informed. Provide a clear, concise update on your results. Be sure to link proposed decisions to actual results.

With the support of your executive team and by following the five steps above, your organization can make a successful transition to remote validation. And by building an organizational culture that values evidence-based decision-making, your products will be developed without bias and in response to actual feedback or results from your subjects. Most importantly, you will gain an edge over your competitors by designing products that are truly desired. WATCH THIS TALK

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PATRICK VAN DER PIJL – CEO AT BUSINESS MODELS INC

Digital Business Model Shift: From Analogue to Digital As we all continue to struggle to adjust in the COVID-19 world, finding ways to disrupt isn’t just a competitive advantage; it’s a lifeline. Recent polls show that 25% of businesses are on the verge of shuttering permanently. So, it only makes sense that many organizations are rushing to incorporate new, digitally-centered business models. But Patrick has a word-of-warning: you can’t change your business model in a day. It takes time to breed an effective business model. In fact, it’s probably better to think of new models as startups. You have to give them time to grow and scale. WATCH THIS TALK

Changing Appetites and COVID-19 The word “a new normal” gets thrown around a ton during these times. But there’s not really a better way to understand the gravity of changes in consumption than to frame it as a completely new version of reality. 82% of consumers are worried about their loved ones’ health; 64% of them are also worried about their own health. Local, regional, and global news sources are all seeing bumps in viewership, including bite-sized information centers like Twitter — where traffic has jumped 23% over last year. According to McKinsey, optimism and spending habits are intrinsically tied together during periods like the COVID-19 pandemic. And a full 63% of Americans believe that their personal habits will be forced to change for more than four months due to this pandemic, possibly signaling a radical shift in the way that we consume for the foreseeable future. To help explain these changes, Patrick uses the term “The Digital Shift.” Obviously, the shift from physical to digital has been happening for years. But, now, the timeline

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has been accelerated. Patrick brought up the example of remote work. We’ve all been talking about “remote” as a disruptive working model for years. But there hasn’t been forced acceleration. Back in 2010, less than 10% of workers worked a full day from the house. During this pandemic, well over 16 million workers have been shifted to remote work for the first time. So, that leaves a problem. It’s do-or-die. Companies need new business models to adapt, but they can’t build them in a day. What do you do? First, let’s look at what a “Digital Shift” business model looks like.

Examples of Businesses That Disrupted Their Business Model

1. PicNic One of the first things that Patrick discussed was that businesses need to recognize is that you might take losses at the beginning of a business model transition. You have to have faith in the model. And the Dutch retailer Picnic is a great representation of that. Unlike traditional grocery operations, Picnic is a digital-only grocery delivery service that allows customers to place orders on an app for food delivery. The model was built around cost-cutting and digital growth. Since everything is processed on an app, Picnic doesn’t need physical locations, and they can source inventory from distribution centers using data lakes and deep learning models. Ideally, this should cut costs compared to physical grocer locations. On paper, the idea is solid. In real life, the execution was great. But they hit a hiccup. After securing +$100 million in Series A funding in 2017, Picnic ran into some liquidity and turnover issues. In 2018, Picnic’s turnover tripled, and they started to bleed money. Why? Because consumers weren’t quite there. Physical locations were still baked into the consumer consciousness. So, what did Picnic do? Did they close their doors? Nope! Did they try to back up and shift to physical? Nope! They stuck with it. We all know where this is going. Picnic is booming. They’re currently the fastest-growing Dutch company. To be clear, Picnic was the fastest-growing company before the pandemic. Now, they’re an atom bomb.

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2. New York Times So how does a newspaper founded in the 1800s stay relevant in a world where virtually no one is reading newspapers? They adapted. To be fair, the New York Times has always been cozy with digital. They were the first newspaper to introduce a website. But we aren’t talking about putting up a digital website. The New York Times completely changed their business model. Patrick brings up a valuable point in the talk. You can’t just shift a physical model to digital. That’s not what building a digital-forward business model looks like. You have to completely change your entire framework. And that’s what NYT did. They didn’t just copy-paste their model and put newspaper content online. They disrupted. Instead of relying almost entirely on advertiser revenue, they switched to a gated subscription model. At first, they bled a little money. But the long-term success of this business model is obvious. NYT sub counts are through the roof, and almost every major publication is copying the subscription gated model.

3. Disney How do you create disruptive business models and layer them over the top of your already successful models? It requires patience, investment, and vision. That’s exactly what Disney brought to the table with Disney MyMagic+. What’s the most painful part of going to a Disney Land? It’s the lines. So, Disney decided to use digital disruption to destroy negative experiences. MyMagic+ pairs smart technology with wristbands to give consumers benefits like FastPass access to rides. But here’s where things get interesting. Disney incorporated these MagicBands with smartphone apps and their local resorts to create a holistic Disney ecosystem. Consumers can use the MagicBand to make purchases, and their entire experience is tracked on their mobile app, which also gives product and eating recommendations. This was a billion-dollar investment. This isn’t startup disruption. This is a large organization pouring significant resources into layering a digital business model experience over their existing, tried-and-true business model. And it worked—big time.

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How to Build Digital Business Models in 2020

1. You Need a Leaders’ Mindset Like any big change, new business models need leadership buy-in. You have to think big. These aren’t small, incremental changes. You’re completely reshaping your business’s experience delivery methodology. You should try to lead by example. Patrick brings up Ralf Van Vegten — CEO of NEP Group — who saw his business start to struggle due to COVID-19. Shows and broadcasts were getting canceled, and revenue was starting to drip. So, Ralf did what great leaders do, he pivoted. In a matter of weeks, he created a virtual studio to support virtual video production. Obviously, this is a short-term change. But real business model disruptions require you to think in the long term. How can you create solutions that will help you today? And how can those solutions drive you into digital modernity?

2. Define Business Goals You have to have goals upfront. If you set solid goals, you’ll understand successes and failures. When we start talking about big, disruptive experience changes, measuring success can be difficult. Don’t get too caught up in the ideological side of change. Remember to set clear milestones upfront and track metrics at every turn.

3. Explore Technology Options Believe it or not, your business, no matter who you are, is well-positioned for digital change. Why? Because the technology is here. Seriously. Data lakes, cloud computing, data analysis, SaaS, and all the other amazing tech solutions on the market are mature, helpful, and have plenty of evidence to back up their efficacy. You should explore what solutions will help you disrupt — and which ones will get in the way.

4. Test Small Go Fast Lean, design-thinking, SCRUM, agile, DevOps, and all of the other trendy modeling words come into play during this part. You want to test small and rapidly accelerate your programs.

5. Make it Personal You want it to be personal to your business AND your customers. This is all about data. Every experience should be personalized. You need a business model that

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makes sense within the contexts of your organization structure and mission (copy-and-paste won’t work here!), and you need to lean heavily into all of those rich consumer personalization metrics that tech can bring to your tabletop.

6. Think Beyond You don’t want to think about digital as an experience on top of your existing business model. That doesn’t mean that you have to completely change your profitable business models to embrace digital experiences. Look at Disney. They layered a new experience into their framework. But it isn’t just adding digital to their parks. They created an entirely new business and merged it into their existing one. Or, alternatively, look at the New York Times; they completely changed their entire business model to support digital. We’re all different. You have to find a solution that works for you. You should be ambidextrous when you’re fleshing out these new models. Keep your core practices and your new innovations separate at the start. Eventually, they should merge, or the digital model should replace the existing model.

7. Stay Human Finally, Patrick says it’s important to stay human. Digital solutions still have to be personal. Don’t get lost in the metrics.

Digital Innovation in Uncertain Times COVID-19 has changed the game. We’re all working in this crazy-fast accelerated timeline of disruption. If we don’t adjust, many of us will sink. New business models aren’t just pathways to future success; they’re lifelines in a world that’s changing at unprecedented speeds. But before you start fleshing out new models, it’s important to take a step back. You need leadership buy-in, a concrete game plan, solid tech vetting, and rapid testing methodologies. Don’t think about these digital-first innovations as nifty solutions you can build ad-hoc; they’re completely disruptive changes that will shift your business model. WATCH THIS TALK

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MANFRED TROPPER – CEO AT MANTRO

Last Exit: Trust – How to Build New Companies in Eye-to-eye Partnerships Manfred Tropper, Managing Director of digital company builder Mantro, provides insight into the innovation process and the importance of trust and interpersonal connection in both individual startups and corporate company building. He provides a summary analysis of venture building structures and the way that trust between individuals and organizations as a whole can help spur innovation and growth. WATCH THIS TALK

Last Exit: Trust When building a new company or startup, it is important that everyone involved in the partnership see eye-to-eye. No matter how you define the structure, partnership, or organization of your venture, the only thing that keeps things running when two or more parties are involved is trust. All of the parties must be able to trust each other. In addition, all parties must be seen as equals within the partnership, regardless of size, relative importance, or investment. Only through trust and equality between all partners can you ensure the success of your enterprise.

The Value of Company Building The concept of company building has grown and evolved over the past few years. Four or five years ago we saw the structure of venture building becoming a mainstream idea, and it has since grown into a massive and highly influential industry in its own right. It is the nature of innovation that there is no right/ wrong or black/ white approach to company building, but there is an underlying structure and an overarching focus on capital.

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In fact, there are companies that are created with the express purpose of developing innovative ideas and bringing those ideas to fruition, so that they are ready for venture capital investment. Once they have reached the investment phase, these companies generally exit the process and give it over to the standard investment cycle. While this is a useful means of approaching new startups and individual businesses, corporate investment in ventures are different. Due to the fundamental organization of corporations, they require a more strategic and structured approach to innovation.

Objectives of Corporate Investment Corporate investment has two primary objectives, strategic and financial. Taken separately, they can stifle innovation and growth; however, with a healthy balance, you can use both strategic and financial focus to contribute to company building.

Strategic Objective The parts of the organization with a primarily strategic focus include the innovators and explorers who take into account both internal and external opportunities for growth and change.

Financial Objective The primarily financial parts of the organization will focus on ways to exploit new ideas internally and commercialize them externally for profit. This is also the aspect of an organization that will focus on financial investment in new ideas and concepts.

Balanced Objectives Directly between your primarily strategic and primarily financial objectives, you have a balanced approach that incorporates both perspectives. At this junction, you have internal educators, company builders, and strategic investors. With a well-balanced set of objectives that incorporates both strategic and financial focus, you have sufficient structure and adequate financing to achieve your innovation goals.

Why Companies Are Struggling With Innovation As technology continues to advance and more businesses than ever are entering the market, established industry leaders are struggling to find ways to innovate.

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Manfred identifies three specific reasons that companies are struggling with innovative transformation:

Value Chains are Changing Due to growing technology and increased market transparency, it has never been easier for a new business to enter the market. People are stepping into industries and creating new platforms at high speed. These game changers are taking market shares from already established industry leaders that do not have the ability to make changes to compete with new players.

Nobody Can Do it Alone Although it may be tempting for companies to try to create new business using their own knowledge and resources, it is unlikely that your highly efficient organization with an established core business has the knowledge and skills necessary to successfully innovate and expand. There are many organizations out there to help small businesses and startups with financing and advice. In fact, startups can often get funding from multiple sources, so they don't have to focus on only one source of financing. Corporate investment, on the other hand, faces more challenges due to the financial structure of the existing organization. For this reason, it can be more beneficial for corporations to view their ideas as an entirely new business, rather than a separate startup under the corporate umbrella.

New Business, Not Startups Organizations and corporations with established structures and efficient business models tend to work from the perspective of the core business. Instead of focusing on ways to use innovative ideas to expand your current business, reframe the discussion. You are building new business, not expanding old business. Approach the structure and financing from this perspective, and you remove many of the limitations imposed by the corporate structure.

The Role of Trust in Business Innovation No matter how big and powerful your company is, and no matter how interesting or valid your ideas are, it is still fundamentally people who handle the business. Whether you are working with an established industry leader or a small, brand new business, collaboration is about trust between the people who are involved in the development of your ideas. it is important to remember that trust works both ways, so if you want someone to trust you, you need to be trustworthy. This can be a particular challenge for large

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organizations, whose cultures have been developed to do away with trustworthiness. Rather than focusing on personal and interpersonal development, large companies tend to focus on efficiency. Everyone is trained to be as impersonal as possible. They are identified by their number within the process, by their job description, or by the role they play within the larger workings of the company's internal system. With this approach, there is no personality, and how can you trust someone who has no personality?

How to Grow Trust Within Your Organization Fortunately, it may still be possible to establish trust between large organizations and other partners in the innovation process. In order to do so, you must realign the cultural and organization motivations to focus on training people to grow trust. In order to help foster trust within your organization and your innovative partnerships, Manfred suggests reframing your approach in the following ways: It's Not Yours, It's Ours Rather than approaching ideas, innovations, and even businesses as belonging to one particular organization or member of the partnership, remember that you are all in this together. Every one is equal in an innovative partnership, and creating a business can only be successful if you come from a place of trust and equality. It Won't Hurt to Make Mistakes Remember that in order to grow, you must be free to make mistakes. Failure is a necessary part of innovation and transformation, and mistakes on the path to growth are inevitable. Embrace mistakes so that you can learn from them and enhance your strategy. It's a Long-Term Game Although it can be easy to focus on short term development and financial return of an idea, it is important to keep in mind that innovation is a long term game. When you are establishing a new business, you need to plan for the future of your idea. Consider ways that your idea can grow and expand, and consider who you can bring into the game as the process continues and you need different skills and solutions. Ask yourself: how can this product evolve to remain strategically relevant? Imagine it in the marketplace three years from now. Will you be willing to buy the product? Will it still be useful in three years?

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Don't try to project using only internal resources, reach out to your suppliers, partners, service providers, and customers to obtain a realistic view of your product's projected viability. Use this information to hone your idea and project improvements over the long term. Keep the Contract Simple Keep your contract with your innovation partners simple. Not only does it establish trust between you and your partners, it makes it easier to create a functional partnership. Outline exactly what you hope to achieve with your partnership, and avoid trying to plan for every possible eventuality. You can't predict what will happen, and you simply create unnecessary complication with detailed contracts. None of You Knows Anything Along the same lines, it is important to remember that nobody knows the future. We don't know what may happen in two days, two weeks, or two years. Rather than trying to plan for every potential downfall, be brave and willing to take risks. Follow your instincts and don't be afraid to make mistakes. Above all, establish an atmosphere of trust between your organization and all of the partners involved.

This Is Not a Project There is a huge difference between a project and a company: Projects have an end. When you are embarking upon a journey of change, it can be tempting to couch your innovation or drive for new business as a project. It is important to remember that the modernization of your business is not an individual project with a start and an end date. All projects eventually end, but a business will continue to grow. In order to facilitate this growth, businesses must create a fundamental structure that fosters continuous development and growth. Growth and development of your business are dependent upon creation of a culture of trust not only within your business but between your business and your innovation partners, suppliers, and customers. It is only through trust that you can truly create new business and business growth. Don't be afraid to take the risks necessary to foster change. Mistakes are part of the process of innovation, and having trusted partners on your company's modernization journey will help you ensure lasting, measurable growth. WATCH THIS TALK

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FRANK MATTES – CO-FOUNDER AT INNOVATION-3

Selecting Your Corporate Startups for Post-Crisis Bounce-Back Chances are, your corporation knows how to generate ideas for startups. But how do you scale them? Obviously, scaling innovation is the biggest issue for most corporations. The ever-present Valley-of-Death lingering below the drawbridge to success is plagued with scale issues. During a “crisis event” like COVID-19, scaling innovations is more critical than ever. You need the right adjacent business models to support digital shifts, and you may need a springboard of completely new innovations to stay afloat and competitive during a period where consumer habits are undergoing radical shifts. Does your organization get tripped up during the scaling process? Frank Mattes, CEO at — author of Scaling-up Corporate Startups and CEO of Innovation 3— sat down at this year’s Innov8rs Connect Business Design and Venture Building to talk about scaling innovations. WATCH THIS TALK

5 Themes To Help Corporations Nail Innovation During a Crisis The first prime minister of India — Jawaharlal Nehru — said, “Crises and deadlocks, when they occur, have at least this advantage, that they force us to think.” Things are changing fast. There’s one important lesson for all corporations — crisis doesn’t have to stall progress. So how do you innovate when the world around you is undergoing massive shifts and changes?

Have an unbiased look at general assumptions According to McKinsey, 80% of business models are in danger. When you try to innovate during a crisis, you have to challenge your existing assumptions. Do they

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still make sense in the context of today’s competitive ecosystem? Have changing consumer habits or economic pressures disrupted your orthodoxies? There are new value chains and value propositions to think about. Don’t just blindly innovate. Challenge your innovation machine, and see if there are any parts that need to be repaired or replaced.

Capitalize on a crisis The term “capitalizing on a crisis” has a negative connotation. We aren’t talking about hiking prices and taking advantage of people’s unfortunate situations. We’re talking about creating new, innovative solutions that bring value to customers during periods like this. With social distancing and a low-touch economy quickly becoming a temporary (or maybe more permanent) part of our everyday lives, finding ways to leverage innovations that play into those situations is the key to rising while the competition sinks.

Prune your portfolio Crisis is the perfect time to increase your vetting framework. Digital transformation and disruptive scaling are important factors when considering innovations. What ideas are really worth being scaled in the first place? What ideas no longer make sense? And what old ideas suddenly make sense? Don’t just pour capital blindly into innovation. Pick and choose the right ideas and prune your zombies.

Gear innovation towards the core Done right, you can inject innovation into your core business model in a relatively short timeframe. These adjacent innovations aren’t completely disruptive, but they help solidify your core standing. Don’t lose your ambidexterity and shoot for the moon on innovation. Keep your core model close to the heart and inject new ideas into that core. Of course, in the long run, you want disruptive, game-changing, horizon 3 solutions. But when you’re playing basketball in a crisis, it’s ok to take the easy layup. Embrace digital + innovation Our hands are forced. We need rapid innovation in this climate. By bringing together digital units that understand tech with innovation units that understand customer

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problems, you can create agile atmospheres that embrace test fast, move quickly, and perfect later.

The Historic Problems With Corporate Startups Here’s the harsh truth. 85 – 90% of corporate startups fail. Somewhere between the post-selection MVP stage and success, the majority of startups sink under the pressure of scale. And this happens across business models. Whether you’re running agile, design-thinking, DevOps, or any of the other buckets of best-in-class development frameworks, the results are relatively consistent. Most startups won’t make it. So if the problem isn’t the selection process or the vehicle, why in the world are corporations — who have nearly unlimited advantages of Greenfield startups — failing at nearly the same rate? There’s obviously something happening at a deeper layer that’s interrupting progress, right? According to Frank, the problem lies in these three arenas:

White space Frank breaks the innovation process into four core units. 1) ideation, 2) validation, 3) scaling-up, and 4) growth. Businesses have the tools to deal with stage 1 and 2 (e.g., lean, design sprints, lean canvas, design thinking, etc.) Businesses also have the system and guardrails to deal with stage 4 (e.g., growth hacking, business models, etc.). But when they hit stage 3, they don’t have a concrete system. This is the white space. Scale-up exists in a no-mans zone of innovation. It’s still dealt with using ad-hoc practices and scrappy frameworks.

Intrinsic corporate limitations to innovation While corporations have ample benefits over greenfield startups, they are also at a disadvantage. Innovation has to align with the core, follow mission values, and provide strategic (not just financial) benefits to the company. Areas Of Tension exist between the innovation bubble and the core business practices: Even when organizations have two separate DNAs for their core business model and startups, frictions between the two pop up in the business hierarchy. Typically, these frictions are due to scale. Companies have grounded strategies to deal with incremental innovations that add value to the core. And they also have the incubation chamber strategies to deal with massive startups that exist outside the core. But what happens when you want to scale startups that add deep layers of

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value to the core itself and evolve the core using tech in a disruptive way? That’s the area of friction. There aren’t any solid models to deal with these types of innovations. So how do you fix these issues? According to Frank, you use the Lean Scale-up Model.

Using Lean Scale-up to Defeat Those Historic Issues Frank discussed the Lean Scale-up model that he uses to help organizations scale corporate startups. There are three primary pillars of the lean scale-up model (which is essentially a lean business model to deal with the “white space” scale-up component of innovative startups. In his book, Frank discusses all three in detail. For the purposes of this keynote, he focused on the first key pillar — methodology. The Lean Scale-up model calls for the Design Thinking validation pillars (i.e., Desirability, Flexibility, Viability) to be connected to four “Value Inflection Points” (i.e., Problem/Solution Fit, Minimum Viable Product, Minimum Marketable Product, and Minimum Scalable Venture). The idea is to find the swim lane between Minimum Marketable Product and Minimum Scalable Venture.

How to Choose the Right Post-crisis Bounce-back Startup When your organization looks for its post-crisis bounce-back startup, you want to start by finding the space between “worthy of being scaled” and “ready to be scaled.” By focusing on the scalability of products before pushing them to the MVP spot, you can ease the transition over that terrifying Valley-of-Death and create startups that are more likely to succeed — both in terms of launch and post-launch success. Like Frank says, corporations have disadvantages when it comes to launching startups. That may be counterintuitive, but your innovations have to align with your core and incorporate strategy, where startups can immediately scale for liquidity. By choosing the startups that make the most sense, you can maximize your chance of post-crisis portfolio wins. WATCH THIS TALK

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EMILIE SYDNEY-SMITH – CEO AT EXO.WORKS

Pivoting Companies During the Downturn COVID-19 has sent the world into a massive economic downturn, and it feels like the crises keep coming. The United States started implementing large-scale shelter-in-place measures at the same time as a truncated oil price war between Russia and Saudi Arabia. The virus is still changing how all of us act and interact, even as we move through hurricane and monsoon season. But COVID-19 isn’t the sole cause of disruption. Even before the outbreak massively changed the markets, it was predicted that at least 30% of Fortune 1000 companies would be obsolete in 10 years. COVID just sped up the countdown. So in times of exponential turmoil, only exponential organizations can thrive, let alone subsist. WATCH THIS TALK

Exponential Organizations Share These Attributes in Common The first step to becoming an exponential organization is identifying how close you are. Exponential organizations have two types of key ingredients: at least four of the ten attributes found in exponential organizations and a Massive Transformative Purpose (MTP). Those ten attributes center on how to deal with abundance. There’s SCALE attributes, which describe how businesses access abundant demand or capabilities, and IDEAS attributes, which describe how organizations manage that abundance: SCALE Staff on Demand Community and Crowd Algorithms Leveraged Assets Engagement

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IDEAS Interfaces Dashboards Experimentation Autonomy Social But a Massive Transformative Purpose is at the heart of every exponential organization. It defines the company’s goal rather than focusing on specific products, services, or percentages. Peloton’s MTP, for example, is “Allowing people to be the best version of themselves,” whether that means buying a bike, subscribing to workouts, or both. This MTP lets them grow and change while focusing on their community and a core message. GitHub is another example of a transformative exponential organization. In fact, they received a score of 90% when they measured their exponential quotient. You can assess your own business’s exponentiality with the same assessment at exo.works/exq

What Innovation Is and Isn’t Many of the attributes that exponential organizations need focus on software and digital might. Disruptive technologies are at the heart of disruptive businesses, and that means focusing on innovation. But there’s a difference between saying innovation and doing innovation. Innovation theater — emptily talking about innovation without actually making changes — plagues 72% of digital innovations projects. Between that and the well-established corporate tracks many businesses can’t work their way out of, innovation is harder than it looks. So it’s important to identify what innovation isn’t. First, it’s different from making do or making small improvements. Businesses need to define their products and services based on the customers they want to have, especially the larger target markets, instead of making retention-based moves. Even if you don’t have a burning platform and nothing is critically wrong, that’s not enough. It’s also important to distinguish between growth brought about by actual improvements and growth brought about by exogenous factors. Exogenous factors can often conceal if your products aren’t improving because they’re external factors that increase profit.

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Those exogenous growth factors include:

• A growing market size that’s bringing companies along for the ride • General digitization trends that are exponentially reducing costs • Regulations that cut your competitors out of your market share to give you

artificial dominance • Comparative success: market testing often compares products against each

other instead of asking about how new, better ways of solving customer problems may disrupt the current methods

Disruptive Technologies from the Pre- and Post-COVID-19 World The world as we know it has changed. But the same disruptive technologies that were going to revolutionize the world are still developing. Those key technologies are:

• 3D Printing • Agriculture Technology • Artificial Intelligence • Blockchain • Commercial Space Travel • Digitized Medicine • Driverless Vehicles • Drones and Flying Taxis • Emotion Sensing AI • Genetic Engineering • Internet of Things • Quantum Computing • Robotics • Solar Energy • Virtual and Augmented Reality

While transportation-based technologies, such as flying taxis and commercial space travel are roughly on the same adoption trajectory as before COVID , the rest of these disruptive technologies are at a tipping point. Global markets need the capabilities they have to offer. Solar energy, for example, ends communities’ dependence on rocky global supply chains for fuels. AI can power medical breakthroughs, and digitized medicine provides increased access to health services in a quarantined world.

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The Tipping Point for Technologies Why is COVID-19 such a tipping point? It has created unforeseen chaos in the markets and unreliable supply. It’s shown that tightly interwoven global supply chains and markets are vulnerable and that we need localization of production. For example:

• 3D printing, vertical farming, and solar energy enable communities to provide more of their own resources locally.

• Robots, used in manufacturing, distribution, and services, can reduce contact and increase sanitation.

• Telemedicine provides at-home diagnostics. Telepresence technology will revolutionize video experiences for consumers and professionals so they don’t have to leave home.

Once things are automated, they won’t go back, and that trend has held strong even before COVID-19 first appeared. Now automation is even more desirable because the reduction of human contact will remain part of our culture as the virus and its aftershocks continue to linger.

Use Moore’s Law to Pivot Your Business Moore’s Law is an example of exponential thinking. According to this maxim, the number of transistors on integrated circuits doubles every two years. The trend of doubling capabilities has had far-flung implications across technological innovations. First, Moore’s Law proved to be true: the cost per gigabyte of data 1980 was $200,000. In 2010, it reduced to $0.07 and $0.004 in 2019. The doubling of capability leads to a halving — at least — in price over time. In the age of exponential change, profits are a measure of exponential demand exceeding exponential price drops. Lidar sensors, which allow driverless vehicles to operate, were $75,000 (and bulky) in 2012. Most companies and consumers ignored them except as a novelty. But then the price dropped to $7,500 in 2017 and $500 in 2020. Today, those sensors aren’t just building out maps of the world like years ago. They’re creating ridesharing opportunities. Ridesharing and the future development of driverless cars will eventually drive down the demand for car ownership, which will, in turn, reduce the demand for steel by $90 billion. From just a single sensor, software can change industries and the demand for physical resources on a massive scale.

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Sensors won’t be finished with that one move. It’s predicted that there will be a trillion connected by the end of 2020, which could become one hundred trillion by 2030. In fact, Goldman Sachs anticipates a $6 trillion market value by 2025 as we start connecting everything. Sensors today can even detect COVID-19 in wastewater to predict outbreak paths. It would have been impossible to know in 2012 what sensor technology could do today. But it’s not impossible to apply the right investment strategies to move your business in the right direction.

Invest in the Knowledge Curve, Not the Excitement Curve Industry experts don’t always get adoption curves and market predictions right. In fact, they frequently get them wrong. While the energy industry predicted that demand for solar panels would stay low or rise and then fall, demand is growing and isn’t going to slow down any time soon. The exponential drop in the price of solar panels and exponential growth in installations indicates the strong adoption rate. Some of the confusion and wrong predictions are because people measure the wrong curves. The excitement curve is the most visible curve: it hypes up a technology in the market before falling into a trough of disillusionment because the developing product can’t match the hype. But then the product starts building steam and popularity again. The knowledge curve of a technology, which tracks the growth in understanding of a technology is behind the scenes. It’s what powers the adoption curve — where the money is — with a soft rise, and soft trough, and an exponential rise. If you and your business follow the excitement and adoption curves, you won’t be able to invest at the right time for the right price. You need to be involved as knowledge is growing and the product is about to disrupt the market. This is also where’s Moore’s Law, and the price/performance doubling patterns, come in. These disruptive technologies double in power and potential quickly: – Computing Power: Every 18 months – Digital Camera Sensors: 59% per annum – IoT Sensors: Every 12 months – Brain Imaging Resolution: Every 12 months – Drones: Every nine months – Genome Reading: Every five months – Medical Knowledge: Every 2.5 months What are the impacts of this fast development? Even aside from the amazing capacity, it should caution industries about making the wrong long-term

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investments. For example, drones may soon replace ports because of increased lifting capacity for containers. With that in mind, ports shouldn’t invest in physical improvements that will take eight to ten years and that only ameliorate today’s challenges. Some companies that plan for these disruptive technologies include Elon Musk’s portfolio of businesses, which follow the knowledge curve to intersect with demand and the technology readiness level later. Similarly, Apple is popular for its focus on consumer goods. But underneath that, it has a stealth team in every industry so they can release disruptive products at scale using their large, pre-made production engine.

The Takeaway Exponential organizations grow and thrive — and, sooner than you might think, take the place of organizations that fail to adapt. Instead of sticking to the pre-COVID-19 mindset of 10% improvements, focus on 10x improvements, your Massive Transformative Purpose, and substantive changes. Ask yourself these five questions as you plan your business’s next moves:

1. How would you reinvent your existing company if you could start over? 2. What pre-COVID-19 constraints are gone? 3. What problems can you solve that your company isn’t solving? 4. What legacy processes can you remove from your company? 5. How can you improve millions of lives?

WATCH THIS TALK

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ERIC SILLIES – INNOVATION DIRECTOR AT LPK

Running Business Experiments: The Why, What, & How After years as a product designer, Eric Sillies grew frustrated by the amount of time he and his teams were wasting. They would spend months—and sometimes years—on a project, only to have it fall by the wayside. As a self-proclaimed “serial side hustler,” he saw an opportunity to help businesses save time and achieve higher rates of success by leveraging the strengths of big companies and start-ups: budget and resources with scrappy, quick-pivoting innovation. Eric is currently helping brands in the “now, near, and next”—ensuring they are relevant to culture today and built to last. One of the keys to successfully bringing innovative products and services to market is to run business experiments. Eric breaks down the what, the why, and the how of business experiments. WATCH THIS TALK

Why Run a Business Experiment? Eric says the last decade of innovation has been both incredible and devastating. On the plus side, we’re innovating like never before: innovation ambition is high, with 97 percent of CEOs calling innovation one of their top priorities for company growth. Meanwhile, 86 percent of Fortune 500 companies have a formal innovation program. They recognize it as essential to a successful future. This drive for innovation means a lot of today’s innovators are expected to do more with less. Leaders want big ideas despite small budgets and limited resources. Furthermore, new companies are emerging all the time and disrupting the landscape. Businesses today don’t last as long as they used to, because new ones crop up and push them out. Today, innovation is survival—which leads to a great sense of urgency. When new ideas are rushed, we see the dark side of all that innovation ambition: high failure rates.

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Among newly developed products, up to 80 percent of them don’t even make it to market. Among the lucky ones that do, 85 percent fail to meet revenue expectations. That all adds up to a lot of wasted time and effort. Enter the business experiments. Eric points out that experiments have proven to give innovators of all types the tools and processes they need to build, test, and prove in-market success quickly and efficiently. Simply put, business experiments save time and money.

What Is a Business Experiment? Business experiments are quick, focused tests that (in)validate the riskiest assumptions and uncertainties related to a new proposition, initiative, or business opportunity. These experiments are laid out almost like the scientific method:

• Concept • Hypothesis/Assumptions • Prototypes • Experiment Design • Results • Conclusion

First, you develop a new concept, then make assumptions about how people will respond to it. How can those assumptions be invalidated? After coming up with a prototype, you create a way to introduce it to people in a “real life” manner, so they behave like actual customers instead of people who have been asked for feedback. This isn’t a focus group or a survey, which can give you very different results as participants like to imagine they’re the type of people who would use this stellar new product. As a part of a survey, people want to be helpful and positive. As real customers, they’re looking at their budget and weighing it against their need/want for this new item. This is why proto-selling is key. Proto-selling measures what people do, not what they say. It’s about creating a real experience, to the highest possible extent, with real shoppers in real stores who are as likely to purchase your product as they are to purchase anything else on the shelf. You can do this online with landing pages, in an e-commerce shop, or in a brick-and-mortar store.

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After running the experiment, you examine your results and draw conclusions. Is it worth pursuing this idea any further? While traditional validation methods are generally slow and expensive, not to mention serving as a poor indicator of actual market success, the business experiment offers a fast track to information about the likelihood of success for new products and ideas. It’s a sprint instead of a marathon, but Eric likes to point out that speed is an effect of the sprint, not the purpose of it. When you have a focused, iterative plan, it’s naturally speedy. You’re able to pivot as you learn, adapting as you go to move more quickly through the process. Any type of business can use this technique to help them bring a new idea to life. In 2019, Eric helped design and manage 25 unique business sprints. No matter the industry or the product, business experiments can work for you.

How to Run a Business Experiment There are three essential elements: hypothesis, risks, and experiment design.

Turn Your Concept into a Hypothesis The hypothesis is a key step that is often overlooked. It’s all-too-easy to fall in love with your idea and push it forward the way you envision it, without considering what your consumers are really looking for. You should create a hypothesis statement that includes what you’re making, what will be different because of it, and what’s the value of it to the consumer and the company. It will sound something like this: We believe (our solution) will (drive this specific action or outcome) and (result in this benefit to the business). The more specific you can be, the better.

Understand Your Risks and Assumptions Eric says the only dangerous assumptions are untested assumptions. However, you won’t be able to test them all, so you have to prioritize your riskiest ones and design the experiment to validate/invalidate them. Practice finding them with phrases like these: – This solution will only work if _____.

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– If we can _____ then this will work. – Without ______ this is destined to fail. Though assumptions can focus on consumer demand, technical aspects, and the business/economic impact, most of them tend to be about consumer demand, or desirability. We tend to assume people will love our new product—it’s a good idea, otherwise you wouldn’t have gone this far with it, right? Examining your assumptions helps you recognize if and how that may not be the case and gives you a framework for finding out for sure.

Design Your Experiment Your experiment should focus on the quickest, least expensive way to invalidate your riskiest assumption. This includes three key components: – Prototype: What do you need to make? – Metric: How will you measure success? – Success Criteria: What’s the minimal outcome that you can access as success? For elegant experiment flow, you need to manage the on-ramping, behavior, and off-ramping. That means finding people to participate in the experiment without letting them know it’s an experiment. If they’re aware, you’ve compromised the integrity of the project and you’re less likely to end up with feedback you can actually use. Then, it’s matter of tracking behavior until you get to off-ramping, which can be challenging. How can you manage the participants when you can’t fulfill their orders? This could mean including an “out of stock” or “we’re brand new and not available in your region” notice at checkout. Though that may sound like a devious bait and switch, Eric mentions that none of his companies have ever received backlash for it. It’s something consumers are faced with every day, and they don’t think anything of it. The shopper goes on his or her way, and the company is left with real feedback about the value of the new product. Carefully designed and properly run business experiments are serving companies of all sizes in a variety of industries. This is smart innovation, and it’s a technique you can use to test your latest ideas. WATCH THIS TALK

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SEBASTIEN MÜLLER - COO AT MING LABS ANTONIO USAMA DELORENZO - INITIATIVE LEAD, TRADE TECH LAB AT ING

Sailing Against The Wind – What We Learned From Trying To Change Shipping There are thousands of seaports scattered across the globe and every single port is unique. In fact, the maritime industry is so complex that it is not uncommon for two ports situated 15 kilometers apart to have completely different operational standards. Navigating this steep learning curve was one of the biggest challenges for Kapsool’s Antonio Usama DeLorenzo. During his discussion with MING Labs co-founder Sebastian Mueller, Antonio outlines some key challenges facing maritime service providers and industry newcomers. He also outlines some process enhancements that can help maritime industry professionals operate more safely and efficiently. WATCH THIS TALK

Key challenges facing the maritime industry With a background in technology and finance, Antonio was accustomed to working in industries marked by standardized processes and centralized data. He entered the maritime industry with limited exposure to port calls, shipping vessels, or export documents. To gain industry familiarity, Antonio immersed himself in the world of maritime logistics. In addition to visiting some of the largest and busiest ports in the world, he spoke with countless charters, vessel owners, and agents to gain insight into their everyday operations. It was through these conversations and observations that Antonio identified the following key challenges facing the industry:

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1) Poor standardization No two ports in the world operate according to the exact same policies and procedures. Some are highly organized with strict receiving policies and procedures while others are known for their chaotic operations, internal hand signals, and stacks of loose cargo. In the same vein, some ports have dozens of workers involved each port call while others involve a more modest number of agents. This lack of standardization between ports can cause confusion.

2) Complicated documentation Virtually every maritime shipment requires a key collection of export documents. The most common examples include sea waybills, commercial invoices, packing lists, shipper export declarations (SEDs), and certificates of origin. Additional documentation may be required depending on the port, the nature of the cargo, and the country of location. Finally, original signatures and official stamps are required are sometimes required to receive cargo.

3) A lack of digitalization As other segments of the logistics industry embrace digitalized documents, many maritime shipping agents still depend on hard copies of documents with original signatures. This is because you cannot digitalize shipping information and documents in one country and guarantee that they will be accepted by government officials in another country.

4) Cargo delays Cargo delays are among the most frustrating pitfalls facing agents in the maritime industry. While some delays are unavoidable, others are the result of the poor standardization and document complexities outlined above. Here are some examples of specific challenges that can cause cargo delays:

• Missing signatures or stamps: Government regulations may prevent cargo from being received if documents lack required seals or stamps.

• Cargo discrepancies: For instance, a shipment may contain forty crates while the documentation shows that thirty-six crates were shipped.

• Weather conditions: Hurricanes, storms, and natural disasters can cause damage to ports and cause cargo to arrive days or weeks late.

• Vessel maintenance problems: Technical difficulties, failed maintenance checks, and malfunctioning parts require time to resolve.

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• Congestion at the receiving port: Delays can result when there is no space for vessels to dock and safely unload cargo.

• Staffing shortages: Strikes, widespread viruses, and holidays call contribute to port staffing shortages, which can impede efficiency.

5) Financial losses Delayed receipt of cargo costs businesses and the maritime industry billions of dollars annually. When vessel activity comes to a standstill, the financial impact can be felt by employees at all levels. Antonio points to the amount of money spent on fuel alone when freight is delayed. Filling a vessel’s gas tank can cost between $80,000 to $200,000. Even a short delay caused by an incomplete invoice or a lack of docking space can cost $10,000 USD or more. The financial losses suffered by the maritime industry are just the tip of the iceberg. Manufacturers, retailers, the auto industry, and other businesses suffer financially when their shipments are delayed. Consider the example of a respiratory ventilator manufacturer that produces 100 ventilators per month with a sale price of $25,000 USD. If the manufacturer is waiting on a shipment of compressors and flow sensors to arrive from China, the manufacturer may face a $2,500,000 shortfall in revenue if the shipment is delayed. Even worse, the manufacturer could lose customers and may potentially face difficulties covering payroll or overhead costs if the delays continue.

Overcoming maritime challenges with a practical solution There is no magic bullet that will quickly resolve all the challenges facing the maritime industry. But Antonio notes that even if you are able to “shave off a tiny bit” of the waste and expense, “you are helping,” as the industry is facing a $20 billion problem. With this realistic philosophy in mind, he made it his mission to develop a practical maritime solution that achieves three key goals:

1. Easy for users to learn and apply 2. Efficient for all parties involved 3. Well-received by key stakeholders

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After months of visiting ports, communicating with maritime agents, and relaying progress to stakeholders, Kapsool was born. In contrast to traditional maritime experiences, Kapsool is fully digital. For the first time ever, users can find everything they need pertaining to a shipment all in one place. And because it is available in many languages, there is no room to misinterpret key pieces of information. Here is a look at how Kapsool addresses the challenges outlined above:

1) A single global experience The path to an improved maritime experience begins with a standardized platform that houses all relevant financing data and documents in a single, easily accessible location. By encapsulating data and housing it in a single location, industry personnel can access information faster and minimize delays. And with a multi-lingual format, there is little chance that important details will be overlooked or misinterpreted due to a language barrier.

2) Digital processing of documents The cornerstone of Kapsool’s design is its shift to a digital maritime agent. Antonio describes the “massive” amount of data in the maritime industry and notes that many of the inherent problems in the maritime industry can be addressed through digitalization. Here are just a few examples:

• Fewer lost or damaged documents: With documents processed and safely stored in a central location, loose paperwork cannot be lost or damaged.

• Faster shipment updates: The ability to access real-time data with a few clicks enables users to obtain and provide customer updates faster.

• Seamless system integrations: Compatibility with third-party systems makes it easy for users worldwide to use the platform.

3) Transparent data Missing or inaccessible data is often to blame for port call inefficiencies. Digitalizing and centralizing data boosts transparency, thereby helping to earn the trust of all key players involved. Data transparency also helps reduce errors, laying the foundation for highly accurate port calls.

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4) Support from a network of accomplished experts Even the most robust maritime platform in the world is not immune to operational glitches. Users deserve the peace of mind that comes with a 24/7 team of expert problem solvers who are ready to answer questions and resolve any issues that may unexpectedly arise. Each trusted support network includes skilled industry professionals on the ground who have the resources to address questions and concerns quickly.

5) A personalized approach Users are able to engage with inspectors, share documents, and request information through live chat. Users can also receive real-time information regarding weather conditions and other factors that may cause cargo delays. Finally, port calls are displayed as cards containing an image of the vessel to provide users with a visual of the shipment.

Reflections on venture building in the maritime industry Resolving the challenges of the maritime industry requires innovation, drive, and a willingness to tackle a steep learning curve. When asked to reflect upon his launch of Kapsool and describe anything he would have done differently, Antonio highlights three key points:

1) Seek the guidance of an industry expert Antonio was quick to note that it would have been helpful to have a trusted advisor with maritime experience on the Kapsool team. An experienced expert is a valuable resource to other team members in navigating the steep learning curve of the maritime industry.

2) Standards are necessary Also, Antonio re-emphasized the need for standards. Even if some standards already exist, there is always room for improvement, especially in industries marked by complexities.

3) A maritime dictionary would be helpful While some regional organizations such as the American Association of Port Authorities (AAPA) offer a helpful Glossary of Maritime Terms, Antonio highlights the need for a universal maritime dictionary that features definitions of key terms along with other phrases that are also used to describe the same concept.

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Antonio points to the wide use of different terms people use to describe things in the shipping industry. For example, the terms “given name” and “family name” may mean the same thing as “first name” and “last name.” But unless an industry expert explains these terms, industry newcomers are left to figure out the meaning of terms on their own.

Final Thoughts In addition to covering ways to address the challenges within the maritime industry, Antonio reminds listeners of the important role that invested corporate leaders can play. Experienced executives understand the expectations of investors and can provide meaningful advice when you need it most – even in the middle of the night. Finally, Antonio cautions about confusing “willingness to pay” for a solution with “ability to pay” for a solution. Many prospects who appear to be receptive to investing in a maritime solution are ultimately not able to pay for the solution. Ultimately, it is up to us as innovators to help uncover those prospects who are both interested in boosting efficiency and have the cash flow to invest in a forward-thinking maritime platform. WATCH THIS TALK

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DAVID J. BLAND – CEO AT PRECOIL AND AUTHOR OF “TESTING BUSINESS IDEAS”

Testing Business Ideas David J. Bland set out to help fix a problem that seven out of ten products face. That’s their failure to deliver on expectations when they launch. David believes that systematically testing new business ideas will dramatically reduce the risks that products face when entering the market. As co-author of Testing Business Ideas: A Field Guide for Rapid Experimentation, he helps organizations test business ideas using design thinking, lean startup methods, and business model innovation. He shares why testing is important, what you should be testing, and how to get it done. WATCH THIS TALK

Why You Need to Test To understand the importance of testing, David shares the story of the now-infamous startup Juicero. The company behind the juicer raised $118.6 million to make the machine, which initially retailed at an eye-watering $700-800. The idea was users inserted specially-designed packets into the Juicero machine, which then squeezed out fresh, high-quality juice. When you raise that much capital, though, you run the risk of making extravagant design choices that don’t add customer value. That’s what happened to Juicero. The company founder bragged that the motor within the juicer was strong enough to lift a Tesla. That sounds impressive, but it’s not something you really need in your juicer. The big problem came when people discovered that they could simply squeeze the juice packets themselves without the use of the expensive, powerful juicing machine. So why pay for the machine when you can just squeeze a bag? Consumers didn’t need the machine, and the company flopped. That’s why you can now find these juicers on the shelves of thrift shops.

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Testing can help you avoid this sort of business disaster. It’s about making actionable plans to test the feasibility, desirability, and viability of a business idea or product.

What You Need to Test When you start testing a new product or business idea, you need to test three things. Is this new product or business idea:

1. Feasible? Can we do it? 2. Desirable? Do people want it? 3. Viable? Should we do it?

The company behind Juicero focused on feasibility alone. They wanted to know if they could build the world’s most powerful juicer. The answer was yes. They never stopped to ask whether this was something consumers actually wanted, though. They didn’t question whether consumers had an issue with the juicers currently on the market. They also never looked at whether they should build the product. Was a $700 juicer going to be financially sustainable? And did it tie into their corporate strategy? When you can answer the questions of feasibility, desirability, and viability, it’s much easier to address your risk. It’s vital that as you are testing, you look at all three of these areas and pay attention to how they interconnect. Don’t treat them as a checklist. Because if one of the areas doesn’t hold up, the new product could fail in a big way.

How to Do the Testing There are dozens of ways to test a new product. David organizes them in his book around discovery and validation. Discovery experiments are things like landing pages, surveys, and customer interviews. He provides dozens of examples of discovery experiments that will help you gather information on customers and a potential market. While discovery tests are important, they don’t really address a lot of your risk. That’s especially true when it comes to the feasibility risk. That’s because discovery experiments aren’t going to reveal any risk about what’s happening behind the scenes. So balance discovery experiments with validation experiments to reveal the real risks behind a product launch.

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Examples of Validation Experiments

• Concierge. This is when people manually deliver the product and potentially even charge for it. David recommends always doing this validation experiment if it’s at all possible. Companies will learn so much more when they are manually delivering the product. They can then take that new knowledge and automate it into their next design. So unless it’s a regulatory hurdle preventing you from manually delivering the product, this is one you should definitely add to your testing sequence.

• Wizard of Oz. You deliver the product manually, but the end customer doesn’t see the interaction occurring to make it happen. It’s like the “man behind the curtain” in The Wizard of Oz. David gives the example of a dating app that promised artificial intelligence coaching for men on their first dates. In reality, the “AI” was a team of women offering advice, but the end-user didn’t realize it.

• Single-feature MVP. It does one thing, and it does it well. You don’t expand your product until you can test the value and interest of that single feature.

• Mash-Up. This is popular in the No Code movement. You can do a lot without knowing how to code, by connecting existing resources and different tech to create an MVP.

Example of Discovery Experiment Most companies know how to run a discovery experiment like an online ad. However, they may not follow a structure that helps them understand the results and what to do with them. David suggests asking three questions from Steve Blank’s 4 Steps to Epiphany:

1. Do people have a problem? 2. Are they aware of the problem? 3. Are they actively seeking a solution to the problem?

Take that framework and apply it to an experiment like an online ad. David worked with a company trying to target people with mouth pain. They started with online ads on Facebook and Twitter which brought the potential customers to a landing page that offered a solution. They were getting a 1% conversion (and that’s a generous estimate). That led to the team feeling ready to give up. David asked them, “If you had mouth pain, where would you go and what would you do?” Most people answered that they’d go to Google and search for their symptoms.

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So the team pivoted and targeted their ads on Google search results, dropping the searchers onto the same landing page as before. They were targeting people in the moment of their pain. By changing their strategy with their online ad, they hit an incredible 40% conversion rate. In this case, experimentation led to dramatically different (and much better) results.

Build a Testing Sequence There are dozens of discovery and validation experiments available to test your idea. They aren’t all going to be the right experiment for each product. You’ll need to create the testing sequence that’s right for your new idea. Start by understanding what kind of testing is available. When you know that, it’s easier to see the right path for testing your new idea. Don’t feel that you need to do all your discovery experiments first before your validation experiments, either. In reality, it’s more likely that you’ll jump back and forth. That will help you refine your viability, feasibility, and desirability strategies with the information that you learn. Before you move on from one experiment to the next, think about what you’ve learned already that you can bring forward into the next phase. When you develop a testing sequence, you can determine when you have enough evidence to pivot, persevere, or kill an idea.

David’s Challenge to Innovators Remember that this is a system that’s all interrelated. You can’t have a great product and a terrible business model; the product will fail. At the same time, you can have a great business model but have a terrible product that doesn’t meet your value proposition. You need both to succeed. So think of experimentation from a product point of view as well as a business point of view. Generate the evidence you need to know you are making the smart business investment decision. WATCH THIS TALK

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SCOTT SNYDER - PARTNER, DIGITAL AND INNOVATION AT HEIDRICK CONSULTING. CO-AUTHOR OF “GOLIATH’S REVENGE”

Raising the Profile of Innovation Leaders and Teams in a Post-COVID-19 World COVID-19 marks an unusual and uncertain time of the world’s history. Traditional sectors are not the only ones being forced to respond. Business changes and transformations are happening at every level, and, truth be told, they already should be. In his talk, Scott Snyder reinforced the importance of taking action. As the past has shown, a failure to do so will result in businesses and companies getting left behind. WATCH THIS TALK

Innovation and transformation should always be at the forefront of all businesses’ missions and plans. Legacy businesses can utilize their unique advantages such as data, brand reach, supply chains, and previously established trust to help fuel these innovations. The world is currently being aggressively thrown into even more virtual channels and digital experiences, and there is no better time to begin taking action. When it comes to providing a service and creating a successful dynamic with customers, companies such as Amazon have set the bar pretty high. Due to the current times, the bar only continues to get higher and higher. Some businesses are struggling to keep up. However, Scott and his co-author Todd Hewlin, have developed a set of six rules that will aid all businesses in successfully establishing a presence when it comes to digital disruption. In the book, Goliath’s Revenge, they share the key points that they believe are absolutely critical in this process:

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• Deliver Step-Change Customer Outcomes, a little better than last year is not good enough.

• Pursue Big I and Little I Innovation, innovate both top-down and bottom-up • Use Your Data as Currency, you own your data so use it • Accelerate through Innovation Networks, overcome the curse of ‘not

invented here’ • Value Talent over Technology, preemptive skill development pays off • Reframe Your Purpose, have the guts to stay focused on what really matters

Being a Two-Speed business According to Scott, being a two-speed business is the only way companies will be able to thrive in the future. In many ways, this element serves as the prerequisite to innovating. Leaders must be able to continually innovate to play the “game” better while also exploring new opportunities to “change the game” in the future. This fundamental aspect of businesses is often driven by having a clear vision to achieve 10X customer outcomes. Having a clear and definite 10X will allow business leaders to guide their organization towards step-change long-term goals while also delivering value along the way. This is also a great way to create a solid and successful foundation for continual reinvention, something that will define successful companies in a post-COVID era.

“Little i” and “Big i” Innovation Scott shared that the second component of working as a two-speed business lies within addressing “Big i” and “Little i”. “Little i” is best driven by employees. Simply put, they are the ones who are closest to the customers, actions, and operations. Taking advantage of the knowledge and information of the employees is an invaluable tool. Unfortunately, more often than not, the issue becomes the follow-through. Many businesses will begin the conversation or open a door for new possibilities, but it is important that these discussions and conversations become more than just ideas. Businesses must provide their employees and teams with things like tools, support, coaching, and mentoring in order for the execution of any professional opportunity to come to fruition. Doing this will only make a business stronger. “Little i” will most likely start to develop a more positive and healthy relationship with “Big i”.

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The main hurdle with “Big i”, disruptive innovation, is providing protection from the weight of the core business while still allowing access to the company’s legacy advantages. Yet when things tend to cause a true disruption, “Big i” begins to sense the tension at all levels. The company’s instinct is often to try to smother it or kill it. However, this isn’t helping anyone. Exploration and openness seem to be at the heart of this endeavor.

Why is data an essential piece of innovation? Data is key to understanding how to set a business aside from the pack. How data is being acquired and implemented can make or break a business. Scott reinforces how strongly he believes that data is the metaphorical fuel behind all innovations. One thing Scott highlighted is the trouble and frustrations surrounding dark data. Dark (or inaccessible) data represents untapped potential to organically create more opportunities for the business. Data should be accessible to innovators at all levels of the business. This will increase a business’ chances to develop and create a data flywheel. In addition, this will model and guide a business to creating better products, services, and experiences.

Example: Best Buy, leveraging their legacy In 2012 Best Buy was losing close to 2 billion dollars a year. After spending some time evaluating, the business came to the realization that they were losing at playing the Amazon game versus trying to leverage their unique legacy advantages. One advantage was having professionals who possessed the technology-based knowledge to sell and assist the items the store provided its customers. In addition, they recognized the unique ability of Geek Squad to enter customers’ homes to help with their technology. Leveraging these unique advantages, Best Buy was able to move into home health monitoring by acquiring GreatCall to electronically monitor the health and safety of the elderly in their homes. Best Buy’s success was a direct result of embodying the two-speeds mindset and thinking. WATCH THIS TALK

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Innov8rs Connect Unconference

14 JULY 2020 - 17 SEPTEMBER 2020

Not another virtual event or webinar series...

Instead, the agenda for Innov8rs Connect Unconference is designed by you and for you.

Throughout the 10-weeks program, you’ll address your actual questions and challenges, so that you are able make better decisions faster, adjust your approach and improve your outcomes.

More info and sign up via innov8rs.co/unconf