leadership & innovation 2014
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University of Dublin Trinity College
Leadership & Innova0on Presenta)on to M.Sc. classes
Paul Woods, 12th March 2014
Thank You • Deeply humbled to be invited to present again this year!
TCD, a fantas)c ins)tu)on, modeled on Oxford and Cambridge, best-‐in-‐class!
The Long Room, an inspiring place to ponder how you are going to change the world.
Background • Commercial experience.
Strategy experience across start-‐up, corporate, and public sector.
Successful design, launch, and scaling of many products.
Led winning teams: customer service and ICT team of the year.
Integrated Perlico upon successful exit.
Established Vodafone branded fixed line and broadband business.
• Technical experience.
Strong engineering competence including product and process design.
Managed P&L of eircom’s infrastructure division.
Programmed fault tolerant distributed systems.
Evaluated IPR ranging from encryp)on, early cancer detec)on …
Leadership • Leadership and management differ.
Leaders role is to set a vision, inspire and mo)vate a team desire to execute.
Managers role is to plan, organise, and coordinate.
• Leadership skills can be con)nuously honed.
Develop innate knowledge of weaknesses.
Focus on personal growth.
• How do leaders you admire lead and behave?
What values do they hold?
How do they start and finish their day?
Strategic vision: Amazon versus Apple?
How do they maintain energy?
Innova)on • Innova)on comes from the La)n word ‘innovare’, meaning “to change.”
Passion is key to innova)on, willingness to see beyond the status quo.
Lack of innova)on can quickly damage large companies; Microsob, HP, Dell …
• Difficult tradeoff in ensuring business focus while retaining innova)on.
This tradeoff usually provides gaps for new start-‐ups.
Many corporate companies allow start-‐ups take the risk and acquire if successful.
Successful technology management • Establish clear and prac)cal project plans.
Place emphasis on how value-‐add is created for customers.
Priori)se core over nonessen)al product features.
• Map resource alloca)on to “value add.”
Ensure resource alloca)on acts as catalyst for opera)onal momentum.
Treat every investment decision as if the money were your own, even when it’s not.
• Establish crystal clear key performance indicators.
Monitor execu)on to plan daily, especially core sales and opera)onal metrics.
• Refuse to engage in discussions around how well things are. going!
Success is not debatable, focus on achieving momentum.
Understanding value-‐add key • Problems that can be solved.
Iden)fying new markets or befer products / services for exis)ng markets.
Social networks, a market based on humanity’s innate social dimension.
A Kindle allows you to carry thousands of books.
• Opera)ng efficiency.
Lower overhead or solu)on that allows the customer reduce cost.
A drone can pull a higher g force, fly for longer, avoid traffic, …
• Ecosystem.
Keystone strategy, developing an ecosystem that acts as a biosphere for growth.
Ensuring clear stable incen)ves to join ecosystem!
Start-‐up culture / team • Convex lens leadership.
Choreograph: U)lise team as a super composer would make best use of an orchestra.
Darwinian selec)on: Limited investment and )me, respect precious resources.
Focus: Do not erra)cally pivot unless clear and well thought out befer path.
• Team.
Start-‐up environment suited to high-‐energy individuals.
It’s easy to find a good idea, pujng in place a great team is hard.
Highly incen)vise team for success, deal with underperformance in real )me.
• Culture.
Culture of ‘demo or die’.
‘Will to win’ needs to be cul)vated and protected.
Vectors of differentiation • There are many vectors of differen)a)on including:
Ease of use.
Low cost (airlines).
Design aesthe)cs (Apple).
Free to customer (Google).
Ecosystem (Amazon / Facebook).
Improving customers produc)vity.
Unique fundamental capabili)es (Kindle versus tablet).
Reducing customers total cost of ownership (cloud compu)ng).
• Business model must be supported by coherent focused strategy (Ryanair – cost leadership).
Thinking outside the box • If a baby incubator cost $25,000, could a product with equivalent benefit be made for $25?
Yes! Engineer insulated infant sleeping bag with wax hea)ng module.
Start-up strength: focused problem solving
• CLV for the customer (i) using current service can be denoted as:
Where
CFi,k = the net cash flow
D = discount factor
K = )me period
• Time period (K) = Customer length of service (LOS)
Number of transac)ons a customer will make.
Impacted by contract dura)on, compe))veness & special promo)ons.
Long LOS not necessarily correlated to higher CLV.
Acquire customers when CLV > customer acquisi)on costs.
Understanding customer life)me value
• Current value doesn’t provide insight into poten)al value via up/cross selling of add-‐ons or new products.
• Poten)al customer value can also be calculated as:
Where
i = customer who uses service j from compe))ve op)ons available.
ij = profit company can make from customer i.
• Decision tree can be used to evaluate poten)al value for distribu)on of customers, taken into account probability of up-‐selling op)ons.
• Acquisi)on threshold: weighted poten)al value > acquisi)on costs.
Understanding poten)al value
• Seeking investment rounds too early can compromise discipline and flexibility.
Cri)cal to understand cash burn and ensure it is mapped to high value-‐add ac)vi)es.
Working capital: If you haven’t got cash to keep you business moving, it will die.
• Befer a company manages its working capital, less equity it needs to raise.
Amazon, Walmart, Dell, all examples of good working capital management.
• Angel investors
Worth approaching, especially if investor has exper)se in field and can provide advice.
• Venture Capital
Seek to prove business model early, raise funding incrementally.
Demonstrate clear milestone delivery, seek to minimise equity dilu)on.
Funding
• What app is worth $19 billion?
WhatsApp $42 per user, based on growth to 1 billion, share in emerging markets ...
Several other ‘highly’ valued compe)tors: Kakao Talk, Line, Viber ….
Viber was acquired by Japanese firm Rakuten for $3 per user.
• Valua)on is complex.
Value as source of cashflow?
Standalone value?
Value to broader porwolio of acquirer?
Strategic value (IPR, market dynamics …)
• Ini)al focus should be on standalone value.
Valua)on
Super trends highlight opportunity ① Popula)on growth and aging.
New healthcare products / services and approaches to preventa)ve care.
② Globalisa)on and urbanisa)on.
Smart ci)es, grids & water management.
New forms of ci)zen protec)on, ways of working …
③ Intelligence, knowledge and innova)on.
Designing and interpre)ng big data.
Decision support tools that can take increasing variety of inputs.
④ Environmental and resource strain.
New technologies to op)mise and control use of scarce resources.
Everything is possible!
Maria Leijerstam cycling South Pole
Conclusions • Leadership is a choice.
Many are born with leadership traits, but skills can also be developed / honed.
• Innova)on requires passion.
Innovators don’t just consider rewards, love to challenge the status quo.
• Customer value.
Consider economics of customer acquisi)on and prospec)ve life)me value.
• Super trends.
Several super trends emerging, opening up opportuni)es for you all!
“A man who dares to waste one hour of )me has not discovered the value of life.” Darwin.
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