AUST-Abuja Innovation Lecture Notes & Ideas on Small Business Development: “Breaking/Changing the Frame” October 24, 2014 By C. Uche Onuora Co-Founder/CEO, Flexfinity Media

The Big Picture!

“…And&the&beau-ful&thing&about&innova-on&is&that&you&do&not&have&to&be&a&technical&genius&to&deliver&an&idea&that&has&monumental&impact.&!&!

Actually,&it&is&quite&the&opposite&because&the&successful&innovator&is&usually&someone&who&is&not&in&the&ni>y?gri>y&details&of&product&development&that&can&see&the&bigger&picture.&!&!

To&innovate,&you&have&to&be&knowledgeable&about&what&products&are&already&available,&percep-ve&to&the&needs&of&society&(whether&they&know&it&or&not),&and&have&the&stamina&to&obtain&funding,&navigate&barriers,&maintain&quality,&and&push&it&into&the&market.&Add&collabora-on&to&the&picture&and&the&possibili-es&are&endless.&!&!These&are&abili-es&that&most&people&have&at&their&finger-ps&regardless&of&how&educated&you&are&or&what&your&profession&is.”!!!Joseph!DeVoe!–!Responsible!Engineer!for!AREVA!Inc.!Plant!Modifica>ons!Group!(Comment'on'

Web'Ar,cle'“Innova,on'vs.'Inven,on.'What’s'the'Difference?”'by'Hiroshi'Mikitani'–'CEO'of'Rakuten,'

Inc.)!!

[A]!Introduc>on:!“Breaking/Changing!the!Frame”!

Phrase!is!not!mine.!Courtesy!of!a!phenomenal!professor!and!thought!leader!named!Paddy!Miller;!please!google!him!later!!!

Nugget:!Ironically,!Kodak!invented!the!Digital!Camera!(and!was!in!pole@posiAon!to!dominate!in!a!digital!world),!but!Digital!Media!put!them!out!of!business!!

They!did!not!“break/change'the'frame”.!They!did!not!anAcipate!the!pervasive!velocity!of!mass@market!migraAon!from!an!analog!orientaAon!to!a!digital!reality!!!!

Flickr,!Instagram,!or!Pinterest!could!easily!have!been!birthed!in!and!incubated!from!a!Kodak!R&D!Lab;!but!they!were!not!!

Instead,!Kodak!is!no!more!!!

Ques>ons?!• !Are!you!siNng!on!a!gold!mine?!!• !Are!you!ignoring!or!overlooking!a!relevant!and/or!criAcal!issue?!• !Is!that!issue!perAnent!to!business!success?!!• !How!do!we!find!a!soluAon,!when!we!do!not!know!the!problem?!!!

Experience!is!a!significant!bias!that!is!important!in!how!we!define!problems;!so!we!must!“correct”!for!this!bias.!We!must!“break/change'the'frame”,!so!that!we!can!think,!see,!and!act!clearly,!with&the&greatest&chance&of&success!!!

Kodak!CEO!came!from!prinAng!background!at!HP;!and'so'perhaps'could'not'sense'shiKing'sands'that'brought'on'digital'revolu,on!!!!

Kodak!Engineers!invented!Digital!Cameras,!but!Kodak!Business!Leaders!did!or!could!not!recognize!potenAal!for!massive!user!adop>on!as!media!device/plaQorm!in!rapidly!evolving!digital!era,!AND!disrupAon!it!ignited!when!combined!with!other!emerging!technologies!–!e.g.!the!Mobile!Phone!!

Business!Concept!Dynamics:!Good,!BeTer,!Best…!

InvenAon!is!good!(costly/complex),!innovaAon!is!even!beTer!(costly),!but!sustained!experimentaAon!pracAce!and!effort!resulAng!in!either!of!the!two!(or!nothing!at!all!–!for!that!ma\er)!is!best!(affordable)!!!!

Nugget:!For!instance,!“Breaking/Changing&the&Frame”!can!be!canceling!the!noAon!of!“small”!business!development,!especially!when!it!comes!to!technology@driven!businesses!!!!

A!company!might!be!“small”!by!certain!parameters!(e.g.!number!of!employees,!size!of!revenues,!etc.),!but!its!business!could!engender!seismic!disrupAons!or!societal!impact!!!!

Apple!was!not!“small”!when!it!started!in!a!garage;!di\o!Google!!

StartZUps!&!Innova>on!Combina>on!PaTerns!

Apple!&!Google:!Simply!Start@Up!Businesses!that!developed!according!to!trajectory!confirming!*Schumpeter’s!classic!theory!of!innova>on!combina>on!paTerns!proposed!to!drive!economic!growth:!!!1)!ProducAon!of!a!new!good;!!2)!IntroducAon!of!a!new!method!of!producAon;!!3)!Development!of!a!new!market;!!4)!AcquisiAon!of!a!new!source!of!supply!of!raw!materials;!and!!5)!Emergence!of!a!new!organizaAon!of!any!industry.!!!*Joseph&Schumpeter&was&a&professor&at&Harvard&University,&and&was&one&of&the&20th&century’s&major&economists.&

Taking!a!Step!Back!“Breaking/Changing'the'Frame”!represents!an!imaginaAve!way!and!creaAve!means!of!conceptual!thinking,!carried!through!to!>mely!implementa>on,!and!driven!by!itera>ve!adjustment,!!

outside&a&frame&or&perspec-ve&or&bias…&&

e.g.&Groupthink,&Resistance&to&Change,&Consensus,&Bureaucracy,&Risk&Aversion,&etc.!!

Involves!taking!a!step!back,!“breaking/changing'the'frame”,!and!analyzing!situaAons!from!audacious!experimental!perspecAves!!!

For!instance,!a!hypothesis!is!proposed!and!tested!iteraAvely,!unAl!a!successful!failure!results!!

[B]!Discourse:!Inven>on,!Innova>on,!&!Experimenta>on!!

Necessity!–!Mother!of!InvenAon!(Inven>on!as!a!Goal,!to!be!achieved!or!celebrated)!!!

Opportunity!–!Father!of!InnovaAon!(Innova>on!as!a!Process,!to!be!adopted!or!sustained)!!!

Imagina>on!–!Catalyst!of!ExperimentaAon!(Experimenta>on!as!a!Culture,!to!be!embodied!and!relentlessly!pursued)!!!!

Experimenta>on:!Nurtured!culture!of!Business!Agility,!via!pracAcally!discovering!+!eliminaAng!what!does!not!work,!to!arrive!at!what!works!!!!Is!not!a!process!of!finding!what!works,!is!an!ingenious!way!and!means!of!iteraAve!eliminaAon!of!failed!soluAons,!un>l!what!is!lec!is!the!best!possible!failure!!!!Eccentricity!&!Fluidity!are!core!enablers!of!experimenta>on,!which!can!ohen!result!in!innova>on!and/or!inven>on!as!outcomes!!

Failure!as!Primary!Op>on!And!so!failure!is!the!primary!opAon,!success!is!equal!to!iterated!failure!+!innova>on!OR!inven>on!leading!to!breakthrough,!market!rewards,!and/or!disrup>on!that!shape!and!mold!human!behavior!and!enhance!user!experiences!!!!

Aim!of!experimenta>on:!to!"fail&successfully",!and!hopefully!–!“sustainably”,!unAl!ONE!failure!discovers!a!corresponding!opportunity!for:!

• !business!acumen/operaAons!to!exploit,!

• !enriched!user!experience!(service,!efficiency,!producAvity!–!resulAng!in!traffic!or!“sAckiness”)!and/or!

• !financial!reward!(resulAng!in!profitable!operaAons)!!

Pause:!Google!2003!Fast!Company!Ar>cle!Excerpts!

Failure!is!good.!But!good!failures!are!even!be\er.!!

Good!failures!have!two!defining!characterisAcs.!First,!"you!know!why!you!failed,!and!you!have!something!you!can!apply!to!the!next!project."!!!

But!good!failures!also!are!fast.!"Fail,!But!fail!early."!Fail!before!you!invest!more!than!you!have!to!or!before!you!needlessly!compromise!your!brand!with!a!shoddy!product!!!

One!reason!Google!puts!its!innovaAons!on!public!display!is!to!idenAfy!failures!quickly.!Another!reason!is!to!find!winners!!!

One!big!factor!is!the!company's!willingness!to!fail.!Google!engineers!are!free!to!experiment!with!new!features!and!new!services!and!free!to!do!so!in!public!!

Issues!Facing!Business!Development!

1.  Sustainability!(Commercial!Model)!2.  Stakeholders/Partners!Convincing!3.  GeNng!too!comfortable!with!what!works!(Overlooking!the!

Next!Big!Thing)!4.  Business!Agility!!!

Business!Development!is!built!on!breaking/changing!the!“frame”!for!what!we!think!problem!is…!!!!

Business!Development!also!depends!on!implementa>on!capacity!as!a!key!to!successful!outcomes!vis@à@vis!sustainability,!stakeholder!convincing,!anAcipaAng!shihs,!&!business!agility!!

Case!In!Point:!Moneyball!Movie!

Have!you!seen!the!movie!“Moneyball”?!!

Movie!essenAally!depicts!empirical!cum!algorithmic!analysis!&!leveraging!of!player!staAsAcs!to!build!and!sustain!a!winning!team!in!baseball!!!Is'a'biographical'sports'drama'based'an'a'real'life'account'of'Oakland'Athle,cs'

General'Manager'O'Billy'Beane’s'aPempt'to'assemble'a'compe,,ve'team'for'the'

2002'MLB'Season;'using&a!sophis>cated!sabermetric!approach!towards!scou>ng!and!analyzing!players!!!!Sabermetrics!is!the!term!for!the!empirical!analysis!of!baseball,!especially!baseball!staAsAcs!that!measure!in@game!acAvity!!!!Approach!is!vivid!illustraAon!of!“breaking/changing'the'frame”,!and!is!directly!applicable!to!Business!Development!!

Case!Studies!&!Learning!Materials!

Review!the!Case!Studies!&!Learning!Materials!

Various!ArAcles!on!Amazon,!Starbucks,!Apple,!Google,!Beacons,!IoT,!etc.!(circulated'before'hand)!

Google!–!“Permanent!Beta”,!Project!Loon,!Driverless!Cars,!etc.!

Double@Sided!Open!Plaoorms!@!Introductory!Concepts!(Tech!Titan!model,!ATV!or!OrganizaAonal!model,!etc.)!!!

[C]!A!Note!on!PlaQorms!!Digital!world!is!all!about!plaoorms.!!!Structure!1)!DoubleZSided!–!ConnecAng!Users!and!Other!Stakeholders!(Content!Owners,!Developers,!AdverAsers,!etc.)!!!2)!Open![CompeAAve!Rents]!vs.!Closed![MonopolisAc!Rents]!(Level!ground!compeAAon!–!Compete!IN!the!market!vs.!Control!point!compeAAon!–!Compete!FOR!the!market)!!!Factors!• User!AdopAon!Costs!(Cost!of!Access)!• SAckiness!(User!Experience!–!Uptake,!Mindshare,!RetenAon)!• Switching!Costs!(High!vs.!Low!–!User!Churn)!• Complementary!Assets/Offering!• Superior!ExecuAon!(Speed!to!market!with!innovaAons,!services,!distribuAon)!!

PlaQorm!Deployment!Phases!

Phases:!Must!be!developed!and!deployed!in!phases!

Aggrega>on!(Lower!the!cost!of!your!product!OR!change!the!rules!of!the!game!–!disrupAon).!Free;!Easy!Sign@Up;!IncenAves;!Sweeteners;!etc.!!!Mone>za>on!(Sustainability:!usually!via!SubscripAon!or!AdverAsing!or!Enabling/Brokering!Paid!TransacAons!on!the!Plaoorm!–!depending!on!the!dynamics.!Open!Plaoorms!generally!moneAze!by!adverAsing.)!!

[D]!Business!Development!Dynamics!!

Business!Development!Steps!!

1.  Breaking/Changing!the!Frame!2.  Hypothesis:!Concept/Challenge!DefiniAon!3.  ArAculated!SoluAon!!4.  Proposed!Business!Model:!Sustainability!even!if!not!

Profitability!!5.  Business!Summary!or!Plan!Development:!ExecuAon!and!

ImplementaAon,!given!constraints!of!the!Nigerian!local!operaAng!environment!!

Sample!Business!Development!Parameters!

1. Legal!–!Corporate!OrganizaAon!IncorporaAon,!Records,!etc.!2.  Intellectual!Property!(IP)!@!Patents,!Designs,!Copyright,!Marks!

[Service!or!Trade]!!3. Human!Resources!(HR)!&!AdministraAon!!4. Research!&!Development!(R&D)!5. Accounts!–!the!Books,!etc.!6. Regulatory!–!Licenses,!Permits,!Approvals,!etc.!!7. Funding!–!IniAal!+!Subsequent!Stages!8. MarkeAng!–!IniAal!Feedback,!Launch,!Publicity,!etc.!!9. OperaAons!–!Post@Launch,!Product/Service!IteraAons,!etc.!!

[E]!Op>onal!Prac>cal!Session:!Reinforcement!Exercise!!Do!pracAce!session!!!

Break!Class!into!Groups!!!!

Select!broad!themaAc!areas!of!focus!!!!

Get!students!to!idenAfy!exisAng!or!prospecAve!challenges!in!Emerging!Economy!environment,!based!on!focus!areas!or!other!exigencies;!then!hack!out!possible!soluAons!!!!

Students!will!create!an!audacious!hypothesis,!and!then!pursue!a!soluAon,!by!experimentaAon!!!

Each!student!pitches!their!soluAon!to!his/her!Group,!let!all!members!vote!for!each!soluAon,!and!then!coalesce!into!Teams!to!further!develop!the!soluAon!(that&most&breaks/changes&the&frame)!collabora>vely!!

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