disrUPtBusiness Driven Innovation

naheed@gmail.com

ProblemGrowthBusiness Development targets incremental innovation while sidelining disruptive innovation.

Disruptive Innovation requires new structure to survive in the organization

RiskWater-Fall model for product launch increases Capital Risk

Capital Risk can be mitigated by iterative product launch and customer validation

TimeTraditional processes take too long to launch new products to Market

Competitive Market requires quick opportunity evaluation and execution

Solution

Work around the inertia of a 1000 pound Gorilla.

Why does it work?• One product, one leader.• Organic growth. No handoffs.• Streamlined incentives for the team.• Validation driven funding.• Strategic leadership buy-in that trickles down the

organization through strict SLAs for new teams. • Diverse team members with A-players.

The Process

Phase I – Opportunity• 1 month – 2 months• Pick one of the growth areas for the business• Identify resources that feed into Phase II

o Strategy – Leverage strategy work done by internal units as well as external consulting firms.

o Design – Basic User Research to understand customer behavior. Either hire external consulting firm or engage in-house design resources at the Foundry.

o Technology – Key underlying technology enablers relevant for the domain.

o Fast pitches from partners and vendorso Customer asks through Sales channels

Phase II – Business Model

Innovation• 10 days

o 2 days – Introduction, Share background knowledge. Training on team based brainstorming (half day). • Strategy, Design Research and Market technology map.

o 3 days – Breakup into 3 teams with 5 members each.• Divergence: Create ideas based on the shared knowledge mix. Create 6 solid ideas per team including multiple business

models per idea. o 1 day – Convergence: Bring teams together and create a wider pitch to the whole team of 15. o 1 day – Consolidate: Consolidate ideas and pick top 9. o 1 day – Breakup into 3 teams with 5 members each. Each team is assigned 3 ideas to work on and build a formidable business plan. o 1 day – Pitch Day – All top 9 ideas are pitched to the wider team. And top 6 ideas are selected for Phase III. o 1 day – Synthesis for the Startup teams and plan of action. Team selection criteria for Phase III.

• People (15) + Support Staffo Design (5) -- User Researchers, Designers o Technology (5) – Developers, Entrepreneurs, Architects, Consultantso Business (5) – Strategist, Business Development, Product Managers, Sales Managers, Finance, Consultants.

• Selection Criteriao Company Strategy Alignmento Viability to build MVP in 12 weeks and market launch in 6 to 9 monthso Existing Complementary Assets inside the company

• Network• Resources – People, Connections, Sales Relationships

o Market Readinesso Growth Potential

Phase III – Validation • Equivalent to seed funding with a team of 6 (Total 6 teams)

o 1 Entrepreneuro 1 Sales/Marketing Manager o 4 Developers/Architects/Designers

• Recruitmento Recruit from Phase II if possibleo Resources are loaned from the organization for the duration of the Phase. o If the concept is validated, all the resources automatically graduate to Phase IV.

• 12 Weekso Agile methodology with 1 week or 2 week sprintso Lean Startup Methodology – build MVP to validate the Business Model

• SLAs with internal organizationo Higher priority for resources (Fast-Track) – Budget, people. o Time-bound execution. Clear success or failure definitions for startups to Graduate to next phase.

• Fundingo If there is a customer buy-in, the concept is validated and moves to Phase IV, and the team scales up to

support the first client. o The product teams whose solutions are cancelled returned to host organizations or absorbed into other

expanding teams.

Phase IV – Scale• Equivalent to Series A funding ($3MM) with a team of 20+

o 1 Entrepreneuro 1 Sales/Marketing Managero 4 Developerso 2 Architects/Developer Operationso 4 QA, 4 Support

• Recruitmento The loaned resources are transferred under the Entrepreneur and P&L Setup. o Financial incentives for the team in place

• 6 Monthso Agile methodology with 1 week or 2 week sprintso Lean Startup Methodology and iterative product launch cycle

• SLAs with internal organizationo Higher priority for resources (Fast-Track) – Budget, people. o Time-bound milestoneso Incentives for the company-wide sales teams to cross-sell products.

• Graduationo Product Realization is the key milestone for this phase with positive Revenue generation. o Successful products are either absorbed into current Business Units (Complete acquisition) or else they remain

independent units. Group of Independent units could become new growth unit internally.

Pillars of Success

Culture {Attitude + Action}

• Customer and their Value Proposition first!o Driven by bringing products to market

• A-Players with diverse backgroundo Diversity brings tension which leads to creativity.

• Regular show & tells (Demo day every week)o Pressure build-up, Pressure release cycles

• Cannibalization is oko Look at the big picture

Incentives • Intrinsic Motivation

o Potential for risk-takers to develop quicklyo High organizational visibilityo Empowered to make a big impact

• Extrinsic Motivationo Recognitiono Scale-up promotionso Financial rewards

• Environment to thriveo A-Player team-mateso Culture of performance

Innovation Investment

• Revenue expectation/requirement = 3x of investment

FTE 97 per hourHours/week 40

Seed Funding Series A (3M)Phase I Phase II Phase III Phase IV Overhead

People 100 20 6 20 3Phase Duration (weeks) 2 12 36 50

Time (hrs) 2 80 480 1440 2000Team Count 1 1 6 4 1

Sunk Costs 19,400.00$ 155,200.00$ 1,676,160.00$ -$ -$ 1,850,760.00$ Investment -$ -$ -$ 11,174,400.00$ 582,000.00$ 11,756,400.00$

FTE Swell 20 36 80 3 139

Key Takeaways• Endorse disrUPt methodology as a unique and

distinct product development concept. • Help identify one or two product areas to

demonstrate capability (No funding required)• Create an innovation fund under Chief Marketing

Officer / Head of Strategy with upto $12M success based funding over 1 year.

• Better leverage with partners (internal/external)