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The FirstBuild Model for Self-Funding R&D Bringing Entrepreneurial Innovation to Large, Traditional Companies Request a FirstBuild briefing
| Date post: | 21-Jan-2018 |
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Business |
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The FirstBuild Modelfor Self-Funding R&DBringing Entrepreneurial Innovation to Large, Traditional Companies
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Start-ups and mature companies have very di�erentstrengths and weaknesses, separated by a chasmin capabilities.
The FirstBuild Model for Self-Funding R&D
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Start-up Phase
Freedom to take risks,speed, closeness tomarket
Low capacity to scaleproducts after marketvalidates
Ability to profitablyproduce and commercializereliable products at scale
Low tolerance for risk andexpense of disruptive innovation
Growth or Maturity Phase
Cha
sm+
–
+
–
To bridge this gap, GE Appliances launched FirstBuildwhich validates products with the early market for the parent company to bring to the mainstream market.
The FirstBuild Model for Self-Funding R&D
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Early Market(People who wantthe newest things)
Mainstream Market(People who want complete
proven solutions and convenience)
Innovators LaggardsEarly
adoptersEarly
majorityLate
majority
16% 84%
FirstBuild operates as a complete end-to-end enterprise.
The FirstBuild Model for Self-Funding R&D
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Design Build Sell• Open platform innovation• Fast cycles• Flexible teams• Lean work streams
• Low volume• Low capital, crowdfunding• High craftsmanship• Failure = learning
• Internet sales channels • Target early adopters• Sales volume as market validation• Independent brand does not dilute parent brand
FirstBuild is self-funding, delivering free R&Dto the parent company.
The FirstBuild Model for Self-Funding R&D
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• Product concepts posted on Indiegogo to attract crowdfunding investment• Profitability attainable at very low volumes• Business model delivers steady flow of self- funding R&D• Innovations validated by early adopters transitioned to parent company’s branded mainstream market product lines at zero net cost
Time to market
Market entry
Marketvalidation
Sale
s qu
antit
y
1–10
11–100
101–1,000
100,000+ (mass production)
FirstBuild attracts and hosts an open communityof inventors, tinkerers, engineers, and builders.
The FirstBuild Model for Self-Funding R&D
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Ideas are sparked byconstructive collisionsbetween creative innovatorsand technical experts.
Teams form organicallyto develop ideas andbuild prototypes.
Innovation is spurred bycommunity hardwarehackathons.
Participants can explore theirinnovative impulses in acreative space withoutdisrupting the mothership.
This open community elevates FirstBuild beyond incubators.
The FirstBuild Model for Self-Funding R&D
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Drivers of success
Vision andleadership
Passionand talent
Connectionalintelligence (CxQ)Partnership
Impa
ct o
f inn
ovat
ion
on P
&L
Investingin spite of
potential risks
Rallyinga gifted team
around animpactfulproduct
Collaboratingand bartering
to optimizescarcity
Tapping thepower of an
open community
FirstBuildIncubators
Source: CxQ is a concept developed by Erica Dhawan and Saj-Nicole Joni
FirstBuild and A.T. Kearney work together to help largecorporations deploy self-funding R&D.
The FirstBuild Model for Self-Funding R&D
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Self-fundingR&D
Source: CxQ is a concept developed by Erica Dhawan and Saj-Nicole Joni
Phase 1Visit FirstBuild in Louisville, KY
The FirstBuild Model for Self-Funding R&D
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• Understand self-funding R&D, both theoretically and practically• Observe community of innovators in action• Assess applicability of FirstBuild model to your company• Decide on best path forward 1
1Phase 2Prepare and pilot
The FirstBuild Model for Self-Funding R&D
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• Gain hands-on experience launching a product using self-funding R&D methodology• Identify target platforms and partnerships• Construct a self-funding deployment strategy 2
2Phase 3Launch and deploy
The FirstBuild Model for Self-Funding R&D
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3• Deploy your own self-funding R&D center• Instill best practices and support launch of first product
3The FirstBuild Model for Self-Funding R&D
A.T. Kearney is a leading global management consulting firm with o�ices in 40 countries. Since 1926, we have been trusted advisors to the world’s foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.
Take the next step towardself-funding R&D.
Read more about FirstBuildon Harvard Business Review.
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