view from the trenches: lessons learned in the enterprise, ken durand, atlanta ideas factory...

Enterprise Lean StartupAdjusting for Success

ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 |

MOBILE INFRASTRUCTURE

OSS&BSS

SERVICES

MEDIA DELIVERY & IPTV

35,000

25,000

$5B 64,000

2.5 billion

1 billion

18050%

118,000

Subscribers managed by us

Subscribers supported by us

Services professionals

LTE smartphone traffic handled by our networks

Employees

Countries with customers

R&D Employees

Patents

In R&D

Ericsson

$30B Net Sales 2015

I expect this crowd to be much different than normal!

Let’s take a test


A new long term business idea is presented to you. It sounds very promising and the team is certainly very enthusiastic. Additionally, they have a background/history that indicates that they might be right about this. Unfortunately, the outcome is uncertain. What do you do?

A. The team should put together a business plan / business model canvas to determine if we could make enough money for this to work.

B. Since the idea is interesting, we should commission a market research study to determine if this market is viable.

C. Sometimes you just need to get started, so let’s get going.D. We need to understand if this is technically doable or not, so let’s do some

R&D work to determine the feasibility.

Question #1


Management Consultants have given us a set of potential new areas in which to develop business opportunities over the next 5 to 10 years. We should

A. Decide which area can be developed with minimum expenditure of resources such as time, effort, and money.

B. Analyze the market and choose target segments with the highest potential return on investment.

C. Determine the segments that are most closely aligned with our current strategy.

D. Develop Proof of Concept ideas for display at trade shows and solicit customer feedback.

Question #2


From our competitive analysis research, we have determined that our current go to market approach (including sales, incentive plans, customers, and technology) will not be acceptable to reach a new and targeted area; even though the potential revenue is very promising. We should

A. Step back and look for other alternatives to get to our targets that take advantage of current strengths.

B. Press forward anyway knowing that we can influence this new market due to our history, expertise, and resources.

C. Complete a proof of concept with one of our current customers to determine if we can move forward viably.

D. Find a go to market partner(s) that can fill our sales, incentive, customer, and technology gaps.

Question #3


A new business concept that we are working on with our customers has discovered an odd situation. In a focus group, the end users have determined that they do not like our product offering. In fact, they said they would not want it in their home. What should we do next

A. It’s only one focus group, so let’s analyze the questions we asked.B. Pause the project. Obviously we missed the mark, so let’s broaden our

research to include a better cross section of potential customers.C. Nothing. Surprises are expected. Learn from it and move on.D. Stop. If the end customer does not want this at all, we are wasting our time

and money resources to continue working on this.

Question #4

We’ll come back to this later

Test results


Understanding the Situation

Invention

• Over 27K patents

• Over 25K employees in R&D

Execution

• 118K employees doing business in 180+ countries

• World class Services organization

• High Customer Satisfaction Ratings


Understanding the Situation

Invention

• Over 27K patents

• Over 25K employees in R&D

Execution

• 118K employees doing business in 190+ countries

• World class Services organization

• High Customer Satisfaction Ratings

Which Ideas are worth executing??


Understanding the problem

Organizational

• Structure

• Technology led

• Communication

• Politics & Bureaucracy

Process

• Built to Execute

• Strategy alignment

• Risk aversion

• Incentive structure

Are these the key issues blocking authentic transformation??


Real transformative Innovation?


Innovation language

1999 McKinsey Paper: The Alchemy of Growth

Mehrdad Baghai, Stephen Coley, and David White, The Alchemy of Growth, New York: Perseus Publishing, 1999.

HBR: The Innovation Ambition Matrix © May 2012

2012 Harvard Business Review Paper: The Innovation Ambition Matrix

Bansi Nagji and Geoff Tuff, the Monitor Consulting Group.A Simple Tool You Need to Manage Innovation, Boston: HBR, 2012.

H3: Unknowable

H2: Risky

H1: Predictable

Transformative innovation requires that we reassess Process AND People


The first KEY is all about how we think

Horizon 3 must be different

› 2008 University of Virginia– Darden School of Business, Saras Sarasvathy– 2014 Copenhagen Business School

› Study of Entrepreneurs with >$250M› MBA Graduates control group

– Ages 25 to 45


›Entrepreneurs THINK differently than most everyone else!

›Their dominant thinking style is Effectual Reasoning

The Outcome?


› Causal - We can predict the future, therefore we can control it.

› Effectual - We can control the future, therefore we do not need to predict it.

Causal vs. Effectual ReasoningTraditional Thinking (Causal)Distinguishing Characteristic

Selecting between given means to achieve a pre-determined goal

Entrepreneurial Thinking (Effectual)Distinguishing Characteristic

Imagining a possible new end using a given set of means

GIVEN MEANS

GIVEN

GOAL

IMAGINED

ENDSGIVEN MEANS

M1

M2

M3

M4

M5

M1 M2M3

M4

M5

› 81% of MBA Graduates were Causal Thinking dominant› 89% of Entrepreneurs were Effectual Thinking dominant

© 2012 Society for Effectual Action


Best case - Illustrated

Emotions

Results

Deliver the Goal

Causal

CAGR

Results

Emotions

Change the World

Effectual

CAGR?


› I need a CAT to be successful› Where the picture of the cat is the

goal and the puzzle box are the means to achieving that goal

Causal Reasoning


› I need a CAT to be successful› The LEGO box is my means› The end is left up to my imagination

Effectual Reasoning

© 2015 The LEGO Group


› Causal Process– Idea– Market research– Financial projections– Form a Team– Business plan– Funding– Prototype– Product Management– Marketing & Business Development– Go to market


Effectual Reasoning

› Effectual Process– Personal competencies & dreams– Target customer within personal network– Idea– Form a Team– Value Proposition– Partner– Test guesses until you find one that works– Prototype– Funding– Go to market

Let’s score the test!


Principles of Effectual ThinkingBird in Hand Principle - Start with your means rather than wait for the perfect opportunity. Start taking action, based on what you know now.

A new long term business idea is presented to you. It sounds very promising and the team is certainly very enthusiastic. Additionally, they have a background/history that indicates that they might be right about this. Unfortunately, the outcome is uncertain. What do you do?

A. The team should put together a business plan / business model canvas to determine if we could make enough money for this to work.

B. Since the idea is interesting, we should commission a market research study to determine if this market is viable.

C. Sometimes you just need to get started, so let’s get going.D. We need to understand if this is technically doable or not, so let’s do some R&D work to determine the

feasibility.

+5

+2

-5-2



Principles of Effectual ThinkingAffordable Loss Principle - Set affordable losses and evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside.

McKinsey has given us a set of potential new areas in which to develop business opportunities over the next 5 to 10 years. We should

A. Decide which area can be developed with minimum expenditure of resources such as time, effort, and money.

B. Analyze the market and choose target segments with the highest potential return on investment.C. Determine the segments that are most closely aligned with our current strategy.D. Develop Proof of Concept ideas for display at trade shows and solicit customer feedback.

+5+2

-5

-2



Quilt Principle - Form partnerships with people and organizations willing to make a real commitment to jointly creating the future with you.

From our competitive analysis research, we have determined that our current go to market approach (including sales, incentive plans, customers, and technology) will not be acceptable to reach a new and targeted area; even though the potential revenue is very promising. We should

A. Step back and look for other alternatives to get to our targets that take advantage of current strengths.

B. Press forward anyway knowing that we can influence this new market due to our history, expertise, and resources.

C. Complete a proof of concept with one of our current customers to determine if we can move forward viably.

D. Find a go to market partner(s) that can fill our sales, incentive, customer, and technology gaps.

+5

+2

-5

-2

Principles of Effectual Thinking



Lemonade Principle – Leverage contingencies Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals.

A new business concept that we are working with our customers has discovered an odd situation. In a focus group, the end users have determined that they do not like our product offering. In fact, they said they would not want it in their home. What should we do next

A. It’s only one focus group, so let’s analyze the questions we asked.B. Pause the project. Obviously we missed the mark, so let’s broaden our research to include a better

cross section of potential customers.C. Nothing. Surprises are expected. Learn from it and move on.D. Stop. If the end customer does not want this at all, we are wasting our time and money resources to

continue working on this.

+5

+2-5

-2

Principles of Effectual Thinking



-20 Effectual

Causal +20

What is your dominant style



Is thinking style enough?

Ecosystem

› How we think– Critically important

› How we behave– Bias toward action– Obvious actions that can be seen by peers

and management

› The ecosystem we create– More than just cool space, game machines,

snacks, pizza and Red Bull– Different incentives and benefits– Freedom to fail– Potential for losses

PEOPLE


Exploration vs.

Administration

Effectual thinkers are explorers› Exploration is a mindset imparted to the individual at

birth, so explorers are discovered not created› Explorers are regularly marginalized and “drummed

out” of the organization by administrators› Incredible willingness to be comfortable with the phrase

“I don’t know” (loves ambiguity; life in the grey areas)› Embrace change every minute BUT, not stupidly

sailing about without a plan› Willing to “burn the ships” exchange the knowable for

the unknowable› A lifetime of uncertainty needs to be incentivized

differently


Two years of Lean Projects and Workshops in the Idea Factory

› Enterprise Culture is at the center of success

1. Most people have the wrong DNA2. Failure is not accepted3. Chaos is not embraced4. Small victories are easily ignored

Enterprise Key Learnings


› Horizon 3 objectives are BEST run by Explorers

› If you have Explorers, the idea is LESS important than the team.

› Not ONLY Explorers on the team

What should we learn?

HBR: The Innovation Ambition Matrix © May 2012