lean enterprise: innovation colonies explained
TRANSCRIPT
I’d like to share with you an experience…
Trevor Owens (@TO) - Author & Entrepreneur
I’ve met thousands of innovators in big
companies
FACT: They are just as smart
as the best entrepreneurs
I can’t even count how many times…
They did everything the right way
They had a breakthrough product
They were positioned to be extremely successful
in the market
But then…
The corporate anti-bodies came around…
They said, “We don’t like this.”
“This is threatening.”
And the project got quietly shut down.
Their only mistake was thinking too big…
Enterprises are not structured to disrupt themselves
Most have tremendous pressures to deliver short-term results
To hit their quarterly numbers
Business unit leaders want quick wins
That’s how the system is designed.
But there IS a better way
A structure to support disruptive innovation
INNOVATION COLONY
(Most) Innovation Labs talk about disruptive innovation
But they are beholden to what business unit
leaders need
SUSTAINING INNOVATIONS
DISRUPTIVE INNOVATIONS GET LEFT ON THE SHELF…
Innovation Flow Spin-Out Spin-In
123
Innovation Colony
Innovation Flow
FACT: 1 in 10 VC investments
pays for the other 9
FACT: 1 in 1000 YCombinator
investments is worth more than all the others
combined
Table stakes means a massive sample size of ideas to choose from
Enterprises have the people
They need the entrepreneurial energy
This is how Intuit fosters innovation flow…
#1 Education
Employees need training to deal with uncertainty and
use Lean methods
Not just a few, a critical mass (30%), so the culture
will change
Intuit runs quarterly bootcamps on Lean, design thinking, and
brainstorming
After several years, almost everyone has attended
them
#2 Opportunity
Unstructured time (10% time) shields
employees, so they can think outside the box
Innovation Challenges engage the whole company
and make disruption a sport
#3 Rewards
Innovation Vacation rewards employees for
testing new ideas
The Founder’s Award gives employees who create
significant new business lines an exit strategy
Hint: They don’t have to leave the company to earn
a 7-figure payout
SPIN-OUT
Once we have enough ideas, we spin-out the most promising ones
Shield them from corporate anti-bodies
Bring in outside talent and expertise (if needed)
But maintain ownership and control through preferred shares and
board seats
Most will fail
But a few will mature into incredible opportunities
SPIN-IN
When they get customers and prove the product
When most of the uncertainty is gone
We want to acquire the remaining shares in the
business
This process is not unlike the one Corp. Dev. does
every day
1. P/M Fit!
2. Corp Dev
Big win for the innovators!
Even bigger win for us.
Let’s put it in perspective
According to YCombinator, every successful disruptive innovation follows the same
pattern
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Trough of Sorrow is the hardest part
Most startups fail here because they can’t find
customers
Corporate bureaucracy kills the agility startups need
to pivot and survive
Without bureaucracy, less than 5% make it to
Product / Market Fit
But a single win creates enormous wealth
This is how the Innovation Colony maps to this process
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
Generate Innovation Flow
Education, Opportunity, and Rewards
To get a big sample size
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
In. Flow
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
In. Flow Spin-Out
Letting innovators take the risk is best for them
AND for us
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Innovation ColonyInnovation Colony
In. Flow Spin-Out
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Innovation Colony
In. Flow Spin-Out Spin-In
Bring them back in for the good part
When our resources can be used to scale the business
When the product is proven
There are smart innovators in every company
Who dream big
Don’t let their only mistake be
Growing up in the wrong environment
Expand your horizons
“Actionable insights that will allow any successful enterprise to continue to innovate in today’s fast-
changing environment.”
Brad Smith, CEO of Intuit
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Follow Trevor on Twitter @TO