Innovation Capital: How to Inspire Entrepreneurship and Creativity in Business
Like it or not, the odds in business are at some point you're going to fail. Whether large or small, failure is a natural part of business life. But thanks to a mash-up of several new business methodologies, your failure may actually be a good thing.
There are many aspects to operating a successful business, things like hard work and perseverance are fairly obvious but other less tangible elements like creativity and culture are also paramount to the long-term success of most modern businesses. Over the last few years many companies have begun looking beyond the traditional idea of what makes a company innovative and have started to explore a kind of mix and match approach to applying various creative methodologies within their organizations in the attempt to inspire innovation.
Originating in the Silicon Valley startup world, terms like Minimal Viable Product, Pivoting, Design Thinking and Lean Startup are emerging as some of the hottest corporate philosophies in business today. These new and sometimes radical methods attempt to energize the best and brightest within organizations through a systematic approach that embraces a fail fast and experiment often mentality.
Among those at the forefront of this trend is Bruce Mau, a world-leading visionary, designer, and author. In a recent email interview, Mau outlined how everything around a business is changing. "If you think about the context that we're now working in, everything we're doing is being reconceived because of advances in technology, in computing, and in communications," said Mau. "The classical model is radically inefficient and ineffective. If you have to rely on one group of people to solve a problem that has been in some cases challenging us for decades and if you are trying solutions in sequence it takes forever; whereas, if you can activate the marketplace to take on that problem and solve it collectively there is so much more creative power in the collective than in the individual."
Recently I was given the opportunity to explore some of these new approaches to innovation and creativity through a unique Innovators Program launched at the Citrix Startup Accelerator in Santa Clara, California. It's a cohort of budding entrepreneurs and new corporate product teams, both inside and outside of Citrix, that receive seed funding, formal training, key tech tools, and mentoring from executives at some of the world's most innovative companies. You can think of my role as a kind of entrepreneur in residence and advisor, whereby we invest, mentor and cultivate promising ideas that could be transformative to our business in the future. It's a potent mixture of early stage investment or what I like to call innovation capital, a customized entrepreneurial curriculum and rapid research & development program wrapped into an intensive 12-week course.
To say this is an ambitious project would be putting it mildly. Essentially, it's an attempt to teach innovation, something that is equally as difficult to implement, as it is to define. In many ways "innovation" is the most sought after yet elusive of corporate adjectives. Simply, it's the action or process of innovating. For many, you either have it or you don't. Yet the reality isn't quite so easily dismissed. A company that doesn't believe it needs to be innovative in this day and age is a company that will most likely not remain relevant very long.
The old models for strategic corporate investment and R&D are no longer working. Research by Booz, Allen and Hamilton shows that between only 20-40% of R&D research results are ever transplanted successfully to a corporation's product or service portfolio. To address these challenges, Citrix and others in the industry are embarking on a journey, much like the program itself, a journey intended to help us discover the challenges and opportunities for creating a new kind of intrapreneur (internal entrepreneur.) We are doing this by bringing together a global team of innovators to share, inspire and hopefully create the next generation of enterprise technology.
Among those at the forefront of attempting to foster a structured approach to innovation is Steve Blank, an early Silicon Valley entrepreneur and associate professor of entrepreneurship at Stanford University. He is widely regarded for his work in developing the Customer Development methodology, which later launched the Lean Startup movement popularized by Eric Ries.
Although the concepts of lean have become very popular lately, the core concepts themselves have been around for a long time, being traced as far back as Henry Ford. It's a philosophy that focuses on the idea of preserving value with less work. Within the business world it's a term first coined by John Krafcik in his 1988 article, "Triumph of the Lean Production System," based on his master's thesis at the MIT Sloan School of Management. At its core, it's a 1990's production practice derived from the Toyota Production System that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.
Later, in the book "Lean Thinking" (Womack and Jones, 1996) expanded on the concept and introduced the philosophy of the five lean principles.
- Identify Customers and Specify Value (Why)
- Identify and Map the Value Stream (What/How)
- Create Flow by Eliminating Waste (Build)
- Respond to Customer Pull (Test/Experiment)
- Pursue Perfection (Revise)
Womack and Jones put the customer at the heart of everything that you need to do as a business to be successful. It provided structured methodology for customer centric empathy whereby you put yourself into the shoes of the end user. The thought is by doing this; you are ensuring that the product or service you produce adds as much value as possible for your customer.
More recently, the lean startup movement has adopted many of the core lean concepts. A philosophy that dictates companies can improve product development cycles by adopting a combination of business-hypothesis-driven experimentation, iterative product releases as well other approaches to ad-hoc learning. The overarching idea is that if startups invest their time into iteratively building products or services to meet the needs of early customers, they can reduce the market risks and sidestep the need for large amounts of initial project funding and expensive product launches and failures. Potentially solving a key problem most people have experienced at some point in their careers.
To address some of these challenges, in 2011, Steve Blank launched the Lean LaunchPad class at Stanford University. The class teaches founders how to reduce their failure rate through the combination of business model design, customer development and agile development. Around the same time, he was asked by the National Science Foundation to adapt the class to be the curriculum for its Innovation Corps which develops and nurtures a national innovation ecosystem by helping discoveries from fundamental research to become new companies. In 2012 The Harvard Business Review named him one of 12 Masters of Innovation. Citrix has essentially taken this curriculum and applied it to a group of internal and external innovators.
"The Lean LaunchPad is a very effective program for turning 'ideas and great teams' into great businesses and also to help prevent 'good ideas' from turning into really bad businesses, this is a big problem in the enterprise," says Nick O'Connor, Founder & CEO at LaunchPad Accelerate based in Palo Alto.
Driving innovation can be a tricky endeavor, James Patterson, Vice President, Capital One Labs says to, "draw inspiration from outside your company and outside your industry. And encourage risk-taking and highlight failures that ultimately lead to breakthrough ideas. Also, innovation should come from all corners of your organization — make sure you are seeking out diverse perspectives and engaging the curious people in your organization who think about problems bigger than themselves."
Patterson's Capital One Labs team's goal is a simple yet profound one, to make products that have a big impact. It's a mission to reimagining the way 60 million people interact with their money. "That's why we get out of bed in the morning. When our team isn't venturing to build the next generation of financial products, we're partnering with other Capital One teams to tackle their biggest challenges. But no matter the challenge, we're working to bring humanity and simplicity back to banking."
Capital One and Citrix aren't alone in attempting to address this need for organic innovation. Notable companies in the space include a who's who of the largest businesses on the planet that have all implemented strategies to simulate the core principles of entrepreneurship within their organizations using this mix of R&D and corporate sponsored startup accelerator.
Microsoft recently launched a global program called Microsoft Ventures, led by Rahul Sood, the global head who runs the Microsoft program and the former founder of VoodooPC. Microsoft Ventures positions itself as helping smart companies take flight. It's a strategic partner for promising startups around the world focused on business growth & development, industrial strength technology and beautiful usable products. Its motto, build locally, scale globally.
I recently had the chance to speak with Microsoft's Rahul Sood at the CloudFactory conference in Banff, Alberta. "Back in my time when I started my first company there were no accelerators, co-working spaces, incubators, or readily accessible capital. People worked in silos, everyone was in stealth mode – and we all wanted to protect our ideas. Now it's different — everything is different… Startups get together to collaborate and execution is everything. As you execute well you attract strong talent from the ecosystem and you start a movement. Big companies can learn from this process — beginning with starting a movement internally," said Sood.
Historically traditional R&D activities have been a pretty closed process, with questionable returns on investment. A new trend seems to be mixing R&D and external corporate investments specifically with early stage accelerators and incubators. According to the National Business Incubation Association (NBIA), as of October 2012, there were over 1,250 incubators in the United States; up from only 12 in 1980, today there are about 7,000 business incubators worldwide. They also estimate that in 2011 alone, North American incubators assisted about 49,000 start-up companies that provided full-time employment for nearly 200,000 workers and generated annual revenue of almost $15 billion.
GE Ventures has taken a similar tactic, creating what they describe as "innovation accelerators," with a focus on spotting new trends and creating new opportunities that drive growth for the company's partners and GE itself.
Capital One's James Patterson thinks "the future will reward large companies who understand that true innovation isn't something you just bolt on, but rather that it is a continuous process that must be core to who you are and how you work every day."
Thanks in part to the work of innovators at some of the largest companies, the idea of what is and what inspires creativity has been evolving to meet the new realities of a business world that takes good design and creativity for granted. The question is no longer framed upon the premise of how to innovate but instead how to inspire the innate creativity found within the existing people in a business.