Aligning innovation.support services with SAP services · 2019-05-23 · NPS > 8 First lighthouse...

SCALING-UP CORPORATE STARTUPSWEBINAR

7 out of 8 corporate

scaleups failSource: Bain&Company

© Tom Fishburne

Scaling-Up Corporate Startups - v3 - HANDOUT 3© innovation-3 // CONFIDENTIAL 3

Quick litmus test: Does your company have a ‘Scaling-up problem’?

A quick litmus test

What is your company’s Return On Innovation (non-incremental) done 3-5

years ago?

3-5 years

How much of your scaleup’s Management resources are spent on primary tasks?How much on securing funding and

politics?

%


Background

The story behind the story

Co-creating Next Practice Result

innovation-3.com/scaling-up-book


take-aways aboutScaling-Up corporate Startups


Scaling-Up: An integral part of the end-to-end innovation process

Without excellence in Scaling-Up, innovation is just Kabuki(*)

(*) Kabuki (歌舞伎) is a classical Japanese dance-drama.


There’s no point inUs ↔Them, Speed-boat ↔ Mothership

There’s no point in Us vs.Them,Speedboat vs. Mothership Three Playing FieldsAreas Of Tension


Areas Of TensionCollaboration model

The trick is to leveragemothership’s assetswhile remaininga speedboat

Understand the problem

TAKEAWAYS

02

01

03

‘Blue’ and ‘Red’: Two entities set up for different purposes

At least 10 Areas of Tension

Three challenges: (1) White Space; (2) Limitations; (3) Different Operating Models


What is going on?


LargeCo Think

Let‘s emulate the startup way

Design Thinking, Lean Startup can be applied in

our new Inno Centers

Strategy Surprise

Customercentricity

Tractionand scale

We‘ve got tons of ideas but no impact

Problem Shift:Can‘t be innovative →

Can‘t scale


Three Playing Fields (=Types of innovation, horizons plus Operating Models)


Playing Field 1

Incremental / Sustaining Innovation

Known biz model

Adjacent/Dig. enhanced biz

model

New (digital) biz model

Know

n

tech

nolo

gy

Adja

cent

tech

/

Dig

ital Add-o

nN

ew

(dig

ital)

tech

Playing Field 3Radical / Disruptive Innovation

Playing Field 2

Reshaping the Core

Legacybusiness


Red and blue are built on different paradigms, creating ‘Areas of Tension’ …


Core company business system set on PREDICTABILITY

To-be-scaled-up venture / venture business system set on AGILITY

MetricsGover-nance

Business model

Eco-system

Reward systems

Org com-plexity, Systems

Estab-lished and

proven

Validated but not proven

Qualifiedpartners

Unusual suspects

Top downCommitteesProcesses

Lean

Quanti-tative

Short-term

Qualita-tive

Long-term Low

Business metrics

Venture metrics

0mistakes

AgileLearning

FunctionalI-shaped

Intra-preneursT-shaped

Manage-ment

Traditional

FounderEntre-

preneurial

Culture PeopleLeader-/ Owner-

ship

Brand protection

Brand leverage(?)

Brand

High

„800 rules“

„20 rules“


Four reasons why the Scaling-Up problem must be solved


Failure to shape tomorrow’s business Other factors

Playing Field 1

Incremental / Sustaining Innovation

Known biz model

Adjacent/Dig. enhanced biz

model

New (digital) biz model

Know

n te

chno

logy

Adja

cent

tech

/ D

igita

l Add

-on

New

(dig

ital)

te

ch

Playing Field 3Radical /

Disruptive Innovation

Playing Field 2

Reshaping the Core

Legacybusiness

Innovation (Centers)just Kabuki /a costly hobby

Disruption

Talentacquisition /retention


Why is Scaling-Up so hard?Three challenges


White Space Limitations Different Operating Models

For preceding and following phases there are methodology (Design Thinking, Lean Startup,

… Customer / Business Development) and How-Tos.

For Scaling-Up not yet.

The corporate context provides a theoretical ‘unfair advantage’

against greenfield startups.

However, the corporate context also sets up limitations and

disadvantages.

Scaleup and Core are built on different paradigms / oprating

models. Separation is necessary but no stufficient for success.

Integration requires a third, distinct operating model.


Challenge 1: Scaling-up is a White Space

Turning a validated innovation concept

into a sizable, material business

Business impact

Insight, Ideation, Validation GrowthScaling-Up

Ventures / Innovation Units Segments / BUs

?(White Space)

time

Responsible units



Challenge 2: By design, corporate startups / scaleups face limitations

Sources: (1) Accenture; (2) Bain & Company

Corporate startup / scaleup Limitations

Deliver a piece of the strategic innovation agenda

Degrees of freedom for pivoting until a viable business model has been found are much smaller

Respect existing ecosystem and corporate context

Complex make-or-buy decisions; Asking for permissions slows down progress

Leverage corporate assets to capitalize on ‘unfair advantage’

Assets are right-sized and organized for daily business: Permanent struggle slows down progress

Temporary organization in search of a sustainable business model

Fundamental differences in operating models vs. Core organization



Challenge 3: Ambidexterity was seen as solution …

Securing today‘s business

Securing tomorrow‘s business

Market: Known, predictable, established competitors, incremental innovation

People: Improvement mindset, risk manager,

zero failure goal

Market: Uncertain, volatile,cross-industry competitors,

radical innovation

People: Entrepreneurial mindset, opportunity mana-

ger, fail fast/fail cheap

Business focus: Explora-tion of possible new

businesses Exploit Explore

Business focus: Efficiency in current business


Scaling-Up: Challenges

Core company business system set on PREDICTABILITY

To-be-scaled-up venture / venture business system set on AGILITY

MetricsGover-nance

Business model

Eco-system

Reward systems

Org com-plexity, Systems

Estab-lished and

proven

Validated but not proven

Qualifiedpartners

Unusual suspects

Top downCommitteesProcesses

Lean

Quanti-tative

Short-term

Qualita-tive

Long-term Low

Business metrics

Venture metrics

0mistakes

AgileLearning

FunctionalI-shaped

Intra-preneursT-shaped

Manage-ment

Traditional

FounderEntre-

preneurial

Culture PeopleLeader-/ Owner-

ship

Brand protection

Brand leverage(?)

Brand

High

„800 rules“

„20 rules“

… but Scaling-Up requires finding a productive Operating Modelamidst Areas Of Tension

Pathways to solve the problem

TAKEAWAYS

02

01

03

Real solution 1: Apollo

Real solution 2: Space Station

Outsourcing is not a real solution


Two to three basic options for solving the Scaling-Up problem

Pathways

ApolloShoot for the moon

Space Station: Launchpad for interplanetary missions

External business builders

Singular moonshotsAdjacencies

Unfair advantage?

Integration?

Constant stream of ventures

Create the New and Adjacencies

Building the organizational capability

Singular moonshots

Unfair advantage?

Integration?Sustainable?

Solution framework

TAKEAWAYS

02

01

03

Rigorous Validation

Scaling-Up process

Collaboration model Venture / Core


Solution builds on three cornerstones

Scaling-Up: Solution


The ‘MVP’ understanding in many companies does not justifythe Scaling-Up decision


● Typically, early-stage validating is done with Pioneers and Early Adopters

What we observe Four issues often missing / overlooked

‘Heureka! We have a MVP! Now let’s scale!’

Product-Pioneer-fit

1

Viability of Business Model?

3

● LHS of Canvas evaluated?

● Business Model assessed to be viable?

Traction?

2

Feasibility?

4

● Technical Feasibility (in case of radical innovation, e.g. TRLs)?

● Showstoppers?

● Crossing the Chasm: Product/mar-ket-fit? Traction with Majority segments in intended RHS of BM Canvas?


Four dimensions in Validation / Pre-Scaling-Up


DESIRABILITY

VIABILITY

CONTEXTUALITY

FEASIBILITY

START HERE

Attractiveness from the customer’s view, including willingness to pay

Sustainable and attractive busi-ness can be created, as judged by measurable traction into Pioneer / Early Adopters / mainstream segments

Product and business model

can be implemented (no un-

surmountable show-stoppers)

Corporate start-up aligned with / supported by Core

DESIRABILITY

FEASIBILITY CONTEXTUALITY

VIABILITY


Four Value Inflection point in Validation / Pre-Scaling-Up


Vali-dation

Phase

Dis-covery

Desirability Viability Feasibility Contextuality

Minimum Market-able Product

Minimum Sca-lable Venture

Minimum ViableProduct

Problem-solution-fit

1

2

3

4

Value Inflection Point

There is a valuable problem to be solved (Importance of problem / Dissatisfaction withexisting solutions; Size of the market). Initial ideas how to make a business out of it. Thepotential solution fits to the company. The organization sees some potential as well andhas provided some limited resources to take the next step

A ‘version of the intended solution which allows to collect the maximum amount ofvalidated learning with least effort’ appreciated by customers in a controlled environment.Value creation and go-to-market are outlined. Positive business case. No unsurmountableshow-stoppers. Small team, C-level sponsorship

Customers use a ‘version of the intended solution which has the smallest possible featureset that solves the problem’ in their environment. Traction in the market and in theorganization: Team with support from the BU and stakeholder aware-ness / support. Allmajor risks seem manageable. Key partners identified. Positive, detailed business case

Customers use MMP (or subsequent versions) in their environment. Traction of businessmodel becomes apparent. First paying customers(*), growing sales funnel. Pathway-to-profitability apparent. Partners defined. Scaling-Up concept / budget validated. Alignedwith corporate context: Governance, team. Funding and collaboration model. Scaleupintegrated into strategy, roadmaps, portfolio management


A corporate scaleup needs to work on four work streams


Value Chain building Market making Company shaping: Growth Company shaping: Transition

● ‘Crossing the chasm’ from Pioneers / Early Adopters to Early Majority

● Industrialization of Go-to-market (Channels, (Digital) Marketing, …

● Grow the organization of the merging Business to stay on top of a rapidly growing business

● Recruit and integrate talent who is performing in this environment

● Transition from a innova-tion-style management system to a business management system (KPIs, governance, processes, structures, …)

● Industrialization of pro-duct / service / business model

● Building production lines, industrial and secure web sites, …

● Building the value chain (suppliers, QA, SCM, …)

● Building ecosystem of complementors


Additionally, formal aspects need to be organized


Value Chain Building

Market making

Company shaping: Growth

Company shaping: Transition

HR issues Collaboration

● Procedures for HR exchange (From / to BU resp. Emer-ging Business)

● Incentives, tied to Scaling-Up progress

● Effective and effi-cient (day-to-day) collaboration bet-ween scaleup and BU and corporate functions enabling capability leverage / resource sharing (as defined in Collabo-ration Model)

Governanceand funding

● Lean, yet effect-tive governance for the individual scaleup

● VC-like, staged funding approach (release upon meeting mile-stones)

KPIs, Metrics

● Avoiding to im-pose too early fi-nancial metricsand approaches

● Planned transition from rather ‘inno-vation’ metrics to ‘established busi-ness metrics’


Broad B2Bmarket

Milestones are an effective way to organize formal aspects


Scaling-Up pathway

Phase

Pre-Scaling-

Up

Scaling-UpGrowth

Generic

mile

stone

Traction Check End Scaling-Up

Translation to types of target markets

OEM-typemarket

Internalmarket

Significant traction and

NPS > 8

First lighthouse customer in mainstream

market

Clear signs of customer lock-in (repeat, pene-

tration,…)

Significant traction in

mainstream market

First paying customers in

adjacent spaces(tech, industries,

value prop)

1st customerProgram Research

1st customerProgram

Start

1st customerProgramApproval

1st customerLaunch

Approval

2nd customerProgram Approval

Singular use in multiple locations

Connected use in multiple locations

Commitment from one BU for area-wide use

Commitment from all BUs for area-wide use

First external customers (sep.business model)

ILLUSTRATIVE


Collaboration model, Partnership balance: Rewards, efforts, risks


Chal-

lenge

Vie

ws

Eff

ort

s

Achieving a balanced effort / risk mix for Scaleup and Business Unit (BU)

Balance as seen from Scaleup Balance as seen from BU

Ris

ks

● Act as a first / reference customer (if relevant)

● Provide access to channels / customers, support sell-in, orchestrate sales force

● Support venture’s industrialization effort via functional expertise and human resources

Rew

ard

s

● No sustained support in generating business impact

● Exposed too early to processes / metrics / governance geared for predictable businesses

● Losing key people in transition to ‘secure and less stress-y jobs’ in BU

● Market confusion by radical / disruptive innovations

● Cannibalization effects (e.g. Osborne effect)

● Predictability of business harder since Emerging Business’s projected growth and pathway to profitability not 100% predictable

● Generating business impact / Option for growth

● BU as first customer (if relevant)

● Market credibility / Market access

● Leveraging capabilities and assets / Scale-up efficiency

● Resources (HR / Funding)

● Talent acquisition ('Startup with a safety net')

● Growth (top line / new customers)

● Solution to the Innovator's Dilemma

● Contribution to Innovation Leadership

● Strengthening shareholder's confidence

● Improved image and reputation

● Re-use of capabilities and assets

● Industrialize product / service / business model

● Crossing the chasm for creating business impact

● Organizational growth to support growing business

VALUE FOR CUSTOMERS VALUE FOR CUSTOMERSVALUE FOR CUSTOMERS

Summary

TAKEAWAYS

02

04

01

03

Many LargeCos do not succeed in turning validated innovation concepts into business impact

There is an emerging Next Practice for solving this ‘Scaling-Up’ problem

Emulating greenfield startups is only half of the equation

The key to the solution is careful orchestration of the interplay between scaleup and Core – including Proper Validation, Process and Collaboration



Peer Group Masterclass

Say hello to

business impact.

INNOVATION-3

https://www.innovation-3.com

OPEN INNOVATION

DIGITAL INNOVATION

DIGITAL TRANSFORMATION

DUAL INNOVATION /SCALING-UP

Frank MattesFounder & CEO

phone: +49(0)[email protected]

linkedin.com/in/frankmattes

Dr. Ralph-Christian Ohr Associate Partner

phone: +49(0)[email protected]

linkedin.com/in/ralphchristianohr

ralph_ohr

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Aligning innovation.support services with SAP services · 2019-05-23 · NPS > 8 First lighthouse...

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