Better way to create growth

I'm writing an article for Harvard Business Review. Trying to organize my thoughts.

◆◆ Idea in brief ◆◆
Companies need a reliable way to create new growth engines. Today’s internal venture teams do not deliver.

There is a better way.

Transcript

1. a better way to create growth beyond the core internal growth engines => new & next generation lines of business
2. Problem Companies need a reliable way to create new growth engines. Today’s internal venture teams do not deliver. There is a better way.
3. Why internal venture teams fail Companies continually try to outsmart the laws of innovation ü Trust the “experts” ü Pick the “winners” Zero evidence this works. Not even a single billion dollar breakthrough.
4. Laws of Innovation
5. Law #1: Most breakthroughs come from people and places the “experts” least expect "If at first the idea is not absurd, then there is no hope for it. —Albert Einstein
6. Law #2: To win at innovation, let the winners emerge ü Phase I: Unfiltered experimentation ü Phase II: Pick promising projects This is how VCs do it. You can’t skip the messy Darwinian struggle. Don’t launch “official” projects until 80% of uncertainty & risk eliminated.
7. Corporate Example
8. Example: IBM EBOs* IBM started EBO program in 2000. Launched 7 EBOs that first year. By March 2005, IBM had launched 25 EBOs. 3 failed and were shut down. The other 22 were generating $15B in annual revenue. *EBO = Emerging Business Opportunity
9. How IBM did it Phase I: Unfiltered experimentation ü IBM Research = 2.5K employees ü Full freedom to experiment with all kinds of “crazy” ideas Phase II: Pick promising projects ü 80% of uncertainty & risk eliminated ü Customer willing to co-fund project ü Insider access to business unit customers, talent, resources ü VC style oversight
10. Thesis Global companies with 1,000s of unfiltered experimental projects can create new growth engines reliably and repeatedly
11. Beyond R&D
12. Where do billion dollar breakthroughs come from in big companies? 1. Corporate rebels* 2. Entrepreneurial managers 3. Entrepreneurial employees 4. Large R&D centers *By far the most success
13. Thesis Business units are better at creating new growth engines
14. Reliable Growth
15. A better model ü Most breakthroughs come from people and places the “experts” least expect Þ Companies that lack a lot of unfiltered experimentation will mostly fail at innovation Þ To win at innovation, let the winners emerge ü Business units are better at creating new growth engines Þ Solution: Bottom-up innovation
16. Bottom-up innovation Managers think they need to carve out time for exploratory projects. Assign resources. Limit projects to a manageable few. It's not true. Corporate rebels have given us a proven model. Let’s use it.