Corporate Innovation:

The speed and agility of a start-up, powered by the resources of an enterprise:

• Reduce new product risks• Select projects with higher probability success

probability• Make better ‘build’ versus ‘acquire’ decisions

March 2014

Agenda

The PresentersThe ProblemThe Solution

EvidenceExamples

How to…Summary & Questions

Approximately 45 minutes

Dr. Peter Payne: Life Sciences & Early Stage Companies Xillix Technologies, Oncometrics Imaging, Biomax Technologies, Criterion Laboratories, Biosensus Technologies, University of British Columbia, Simon Fraser University.

Mr. Eamonn Percy: Clean Technologies & Large CompaniesPowerTech Labs, Ballard Power Systems, Pirelli Cables and Optical Systems

PRESENTERS

Problem:Large corporations appear less innovative than ‘start-up’ companies.

Evidence:Large US companies have lost 1.4 market share points ($10Bn USD) to SMEs over the last 5 years.

Examples:Amazon e-books vs. large books storesTesla electric cars vs. large automakers

The Problem

The Problem

You must adapt faster

Corporate Entrepreneurship

Strengths of a start-up company+

Strengths of your established company

= Increase Revenue

The Solution

Strengths of a start-up company Weaknesses of a start-up companyLow fear of failure Unproven business modelAdapt quickly No brand awarenessDisruptive technologies Unproven product

Strengths of a successful company Weaknesses of a successful companyPartners & Network Often slower to respond to marketResources: Capital & facilities Targeted by smaller companiesCan rapidly increase production betriebsblind

EXAMPLES

How?

A systematic approach known asLean Methodology

Lean Methodology is tested and proven effective.Used by world’s best companies

EVIDENCE

National Science Foundation (USA)3X funding success by defining business model early

Intuit Software50%Greater commercial success (new products)BDC preferential Convertible NotesBetter ROI from investments (no public data)

76% growth in Revenue

24% growth in Investment

16% growth in New JobsAug. 2013 data

Out performing Canadian averages by ~25%.

New data. March 2014: $102 Million

Evidence

MANY ‘NEW PRODUCT’ TOOLSSolutions

Start-up + Successful company: best parts

• Diverse team: e.g. Technical, Business, Sales, ‘Disruptor’• Teams should be 3-4 people (not 5+)

• Adequately funded to test hypotheses (product + business model)• Short time-lines• Ability to receive support from other business units• “Failure” does not end your career• Team is rewarded for success

Solution

hypothesishypothesishypothesis hypothesis hypothesis

hypothesishypothesis

hypothesis hypothesis

Solution = scientific methodBusiness Model Canvas

XHow to …

Hypothesis:Our customers require live support 24 hours/day, 7 days per week.

Experiment:Live call customers to see if this is true. Determine to a level of confidence (e.g. p=0.01)

Customer Discovery:What level of support would you like? What else would you like?

Step 1.Scientific method + Customer Discovery

ExampleXAMPLEHow to …

Simplified example:

Confidence level: 1 – 10 (10 = very high confidence)Critical level: 1 – 10 (10 = very critical to success)

Score: (1/Confidence)x(Critical) = proportional to success

e.g.High confidence and highly critical: (1/10)x(10)= 1High confidence and not critical: (1/10)x(1) = 0.1Low confidence and highly critical: (1/1)x(10) = 10Low confidence and not critical: (1/1)x(1) = 1

Higher numbers require action.

Step 2.Weighted result based on ‘critical-to-success’

EXAMPLEHow to …

Project Portfolio ManagementInternal projects are scored (simplified examples):Examine Competition and/or Acquisition Targets

911

141519

7

Determine which projects have the highest probability of best revenue

Project 1 Project 2 Project 3

Project 4 Project 5 Project 6

How to …

SUMMARY

Entrepreneurship Corporate

Questions & Feedback

Dr. Peter Payneppayne@sfu.ca

Mr. Eamonn Percyepercy@percygroup.ca