Innovation is hard. It takes more than a clever idea to make a business. Tendayi Viki works with entrepreneurs in startups and large corporates who are looking to innovate. Here he presents 8 business model questions to consider when attempting to innovate, followed by a Q&A with some great questions about innovating in a large corporate.
BoS Europe 2021 BoS USA 2020
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Tendayi Viki: OK. So if any of you know my friends please don’t tell them I walked into rock music. I won’t be allowed back in the hood. All right. Thank you for having me. My name is Tendayi. It’s a great pleasure for me to be here. You never know what to do with this thing. Do you walk around it? I’ll hold it. But yeah it’s a great pleasure for me to be here. I am the person that’s going to try to keep you awake after you’ve had your big lunches so I will try and do a good job of doing that. I spend a lot of my time hanging out with entrepreneurs and innovators in large companies and small companies and startup accelerators. And if you spend as much time with entrepreneurs as I do the first thing you learn is that they’re full of it. I’ve never met a bunch of people who are so full of it like entrepreneurs and innovators and inventors. And it’s because they see the world differently than most people and probably for all their lives they’ve seen the world differently. And they actually think that the fact that they see the world differently is the reason they’re going to be successful. Like as if that’s like sufficient. And then if it actually happens that they become successful, then they become truly unbearable. Because you see, entrepreneurs are great storytellers. And so if they start to tell the stories of their success they start to have foundation myths about their startups and successful companies. And these founding myths tend to paper over the details. Their success seems linear in nature. They talk about how one day they were having dinner and they suddenly realized that it was annoying to look at the menu. And in that moment the idea came to life. Or one day I on a train and I suddenly realized that wouldn’t it be cool if dot dot dot right. And this foundation it just keeps going on and on and on and on and on and what I dislike about the foundation myth is that it over emphasizes the value of clever ideas. Right. And what we know about entrepreneurship is that successful entrepreneurship sometimes has little to do with clever ideas. A lot of the companies that are really successful nowadays – most entrepreneurs don’t succeed at the idea the first idea that they had. If you think about PayPal that were working with some cryptography software stuff. Then it was money transfer via PDA and ultimately landing on the product that they have now. If you think about the journey of Flickr from an online game to whatever they became. Hotmail has got a journey. Instagram has got a journey and yet we forget about these journeys.
Just process for a minute. A lot of people when they’re talking about entrepreneurship will claim that if you stretch it over a few years maybe five years, 70/80/90 percent of all startups fail. And of the 10 to 15 percent that succeed, almost all of those succeeded doing something other than what they started doing – which actually means that the failure rate of original ideas is a 100%. And so this whole idea that entrepreneurship or innovation is somehow linear, and great ideas are really valuable, this is the myth of entrepreneurship and I think it’s something that we have to constantly challenge and it’s very frustrating for entrepreneurs and innovators to have someone continuously questioning that but actually it is something that we actually have to do. And one of the reasons why we have to do it is when aspiring entrepreneurs hear successful entrepreneurs speak, and then they try to do what the successful entrepreneurs are talking about, they end up engaging in innovation theatre right. And so if you walk into any large company these days they have an innovation lab and in the Innovation Lab is a mini Silicon Valley. Inside the mini Silicon Valley are post-it notes and canvasses and foosball tables. And people that dress like most of you in the room. And these people are supposed to bring innovation in the coolness factor to the organization. If you ask the leadership what they’re supposed to do like I don’t know go in there and come up with some cool stuff. What we need is an app. And so the more and more they engage in this innovation theatre the more problematic it actually becomes. Because what we know is that this misrepresents exactly what becomes successful entrepreneurship.
So I came up with an equation, a very simple equation, and the equation is that clever ideas are important for sure we like clever people, but actually successful innovation is the combination of clever ideas and sustainably profitable business models. When you put those things together you have successful innovation. If you have one or the other you have a problem. If you have only creative ideas you have starving artists. If you’ve only got successful business models you’ve got snake oil salespeople. And so you have to put both together so that you can have successful innovation. Now I wish that in reality innovation was really this clean right you just kind of get an equation and use you and you solve the equation. But actually what happens to you when you start working on your idea is… What you actually get is a bag of puzzle pieces as you start to do the work. And what’s crazy about this bag of puzzle pieces is that you get no picture with it so that’s the first thing you get a whole bunch of puzzle that you have no picture. And then what’s even more crazy is that the bag is packed full of other puzzle pieces that have nothing to do with the puzzle you’re trying to solve. So it’s a mixture of like the puzzle pieces you need, the puzzle pieces you don’t need, it’s all noise and signal and it’s just all messed up. And then what makes it worse is I don’t even know what to call it – a puzzle where as you fit in one piece or the other pieces you get figured out change. That is the chaos of entrepreneurship and so somehow in the bag you have to dig in there and find the pieces for customer value, the piece for creating the right solution, the piece for finding the right channel, the piece for finding the right revenue model, the puzzle piece for finding growth and scalability. It’s somewhere in that bag and it you don’t know exactly how it’s going to work. And as much as you write business plans and all these things, nothing that’s ever in a business plan ever happens in reality. And so I really love this quote – “Enlightened trial and error succeed over the planning of the lone genius”. And I think this really really speaks to entrepreneurship because with that bag of puzzles you can’t really plan your way through that. You kind of have to feel it out as you go. And it’s that feeling out process that entrepreneurs have to actually do, that’s the work of entrepreneurship and the work of innovation is feeling your way out through through that puzzle.
And the way to do that is really experimentation and trial and error. This is a version of the build, measure, learn loop. We’ve seen this a million times I’m sure – you just have to actually use this engine to navigate your way towards success. You have to surface to yourself the things that you’re assuming are true, but not necessarily true. And then be disciplined enough to check if those things are true before you make decisions. And this is a hard discipline for entrepreneurs to have because what they wanted to do is make this stuff. You’ve all heard about the Lean Startup movement right. People are talking about Lean Startup and MVPs etc etc. If you actually go to a startup accelerator right now the worst people that are doing Lean Startup are startups. Like most founders just want to build their stuff – they don’t want to talk to customers, they don’t want to test business models, they don’t want to worry about any of that they just want to make their stuff because they’re Elon Musk. Or at least that’s what they think they are.
Now what’s interesting about about the bag of puzzles is that if you look really closely at your business model or whatever the stuff that you’re working on whatever product that you’re working on right now it’s a bit of a mess if you go right down to the granular level of the stuff that you’re trying to figure out it’s a bit of a mess. But if you take a higher point of view, if you just go like one level up you start to realize that actually business (including the business of software) is you have to figure out the same sort of things. At the heart of it is selling things for more money that it costs you to make. That sounds absurd right. But actually when you’re in a startup accelerator when people are founding startups, you have to keep reminding them of that. We actually have to remind people of that because they’re so focused on building whatever product that they’re actually working on and that insight is fundamental to everything else that we’re trying to do. And so what I bring is like the seven questions or the seven plus a bonus question that you need to kind of answer in order to navigate your way towards business model success.
Question number one – Customer needs. This is about who are we serving. And what problem are we’re solving for them. This is something that we’ve heard several times but I’d actually like to go a step further and say to entrepreneurs and innovators that actually if you can’t find a core group of people that truly love your product it’s very hard just to succeed. A lot of companies want to make their products and people like your product but actually what we’re learning is that a lot of the struggles people have in growth and scaling up their products is because there has been a lot of resource or marketing because they can’t find a core group of users that love their product so much that they’re willing to go around talking about it without the entrepreneurs being there. Right. And so this is an interesting challenge. And a lot of entrepreneurs… This is actually one of the things that people talk about all the time but nobody wants to figure out how to do it. Nobody wants to even talk to customers and it’s a real challenge that we face out there in the world.
And then you have to think about creating the right solution for those customers. OK. So what is the solution that you’re gonna create? And does that solution solve their problem? Now this is the part where most software engineers disappear. The moment you put them in front of the computer you’ll never see them again. There’s this joke about engineers going dark – like you don’t hear from them. They’re only even they don’t like tweets or reply to text messages for two days because they’re hacking, and when they come back from hacking they’re really really happy about how clever they are because they figured out some really cool hack. I’m a former academic, so I spent a lot of my time writing papers and speaking at research conferences. When academics hang out or they’re trying to do is show other academics how clever they are. And as I’ve been hanging out with engineers I’ve also figured out that what engineers are trying to do is show up the other engineers how clever they are. But actually you’re not working on a solution if it doesn’t solve a problem. In English, solution means something that solves problems. This is something that you have to keep reminding people. Right. And so it’s like you can work on cool stuff all day but it’s not a solution unless it’s actually something that delivers value to customers.
And then you’re jumping to actually making the solution – I’ve got a crazy man testing stuff. And the question is how much will it cost to create the solution? How are we gonna be able to create it? Can we do it? This stuff is is kind of slightly independent from how clever we are or how clever our idea is. This is stuff that we have to actually figure out because the cost of creating this solution might have an impact on how much money is the solution for or whether or not we can scale the solution at all. And this is stuff that we have to figure out, it is a piece of the puzzle that we have to kind of slot in it’s place.
The funnel. How are we going to acquire customers? How are we going to activate them. You’ve seen this before. This is Dave McClure’s AARRR matrix – the pirates, that’s why there’s a pirate there. Right. So this is how we’re going to acquire, how we’re going to retain them, how are they ever going to refer, are they going to pay us. If we don’t figure out the channels for acquiring customers then you know it’s like if a tree falls in the forest and nobody hears it does it make a sound? It sounds a bit like business 101, but what’s fascinating about this is that like when you actually in situation with startup founders it is this is the hardest conversation to have because they don’t have answers to these questions and they don’t feel that they should.
Revenue model. Are you going to be able to make money from the product at all? How much money are you going to charge? Is what you’re going to charge what customers are willing to pay. Is it more than what it’s going to cost you to create the solution? These are conversations that you need to have.
The growth engine. How are you going to scale from your core group of users? Is it going to be viral? Have you ever heard “I’m going to do a viral video”. That’s not how it works. You can’t know on the first day that your video is gone there’s no way of knowing upfront. Right. We know that virality is a coefficient that you have to measure and actually track. And so you can’t just say you’ve made a viral video. There’s a metric that tells us whether or not your video is actually viral or that your product is viral. So you have to think about these things and think about how you’re going to grow the product and figure that out, it is a piece of the puzzle that’s actually important.
Another one is the business environment. This speaks to the adaptability of your product. What is the lay of the land there? Is there anything that’s coming up that might knock you out without you realizing it? Competitors, changes in law? All these things – is your product actually adaptive to the environment that is about to go into? And this is something that most people that are hacking don’t even think about at all. This is like I’m going to put it on the App Store. Like OK. There’s millions of other apps on there. How are they going to find yours et cetera et cetera. And these are challenges that entrepreneurs don’t want to think about.
And then my bonus question – timing. This is this is the eighth question. I have a friend called Adam Burke who’s a really cool cat and he’s got this saying that I really love. He says – Do you know what being too early is? Failure. That’s what you call it. You get those entrepreneurs like Yeah man I did a startup and then you know I got some funding I was in YC and TechStars and Seedcamp. You know we were too early. That’s a good story to tell. But being too early equals failure right. So the question is can you figure out that you are too early before you spend a lot of money and time is a piece of the puzzle that you have to figure out. Is it the right time to launch? When is the right time to launch? This is something that entrepreneurs can actually figure out.
And back to my point – I was just raising those as like business model questions that everybody has to answer. Your job as an entrepreneur is not to work on your clever idea. I’ve had a lot of fights with hackers about this and I’m kind of waiting for you guys throwing tomatoes at me. I’ve had a lot of fights with hackers about this – I had a guy who was like carrying the big ticks software books and it’s like so have you read any business books and you’re like No I don’t read these books, my job is to make the best product possible. It’s like, the best product possible for who? These are foundational questions that people have to answer. So as you work to try and like fit these puzzle pieces together, the problem is that a lot of the ideas that we work on are not linear so it doesn’t look like the way I’m putting it up here. So if you have a startup and you are in a startup and you have a startup all of you will have different puzzle pieces that are missing from your understanding. Some people will understand the channel well and customers well you will have a really great piece of technology that’s that that they figured out so they figured out that the solution of looking for market. So you have to kind of meet entrepreneurs where they are. You have to benchmark where they are and then help them make decisions about what to do next. And this is kind of foundational. And so that’s the kind of struggle that that we have.
And so in order to deal with some of that with some of the teams that I’ve worked with I’ve invented this little tool. It’s not a canvas for the record. It’s an A4 piece of paper. Right. And all I do with the teams is I have a conversation with them where I help them think about how they think that business model is going to work. When entrepreneurs talk about their product and their idea and how it’s going to hit the world they talk about it as if that’s exactly what’s going to happen. So I ask them how do you think this is going to work in order to raise to them that whatever they’re thinking is tentative. So it’s how we think this will work. And then they kind of describe how they think this will work. And then we go into a conversation of what they know so far, what they’ve learned so far. What do they know for sure, for sure. And they kind of outline the stuff they know for sure about how they think it will work. And then the hard part – what we still don’t know. And then we list out and things that we still don’t know, the puzzle pieces that we still haven’t figured out we can begin to map those out. And then we make decisions about what we plan to do next. This is absolutely foundational. And what I do with the teams that I work with is that we use this sheet of paper every single week as we do a sprint. We would get back together and we walk through this sheet of paper to do another Sprint get back together, because every time you figure stuff out stuff that you thought you know moves to stuff you now don’t know. And that’s the kind of evolution of the business model journey. This feels like going through like crazy iterations like you have to give your teams a sense that they’re making progress. So in addition to that what we do is we update and we rank status the key questions of every business. To what extent have you answered these questions right to what extent is all the work you’ve done made you feel confident? And so what we’re trying to do is to get them to benchmark where they are every week in terms of answering those business more questions. Have they figured out customer needs, have they figured out customer value, solution, the funnel, the revenue model, the growth engines, the business environment. And the timing and as I’m working with them you can see which teams are making progress and which ones aren’t. Because what we think about when we think about innovation sometimes especially with the Lean Startup movement is that like people are supposed to run experiments. So when you actually talk to people that run innovation labs and say like give us the metrics of your team they go we have run 100 experiments we’ve spoken to a thousand customers. They’ve got these like vanity metrics about number of experiments of all these like the reason we run experiments is to make progress. So if a team runs one experiment and that experiment helps them move or turn one of these things to green, that experiment is more powerful than a team that runs 20 experiments and still can’t figure out how to do this. So the number of experiments you’ve run is not a metric that helps us measure what progress you’re actually making. And so the combination of this tracker where we capture all the activities that people are doing plus the progress tracker helps us navigate entrepreneurs towards success. OK. I thought I was going to speak for longer than that but I’m going to stop now. So thank you very much.
Audience Member: If you meet an entrepreneur for the first time, if you only gave them one piece of advice what would it be?
Tendayi Viki: OK that’s an unexpected question. Go work at McDonald’s. Because yeah you got more chance of making money there.
Audience Member: So I have been that that person corporate has brought him to bring innovation etc. and the corporate is very old school corporate are the Canary Wharf Group and the innovation is still going on Level 39 saying they wanted to bring FinTech Innovation to Canary Wharf and it is working and it has happened. But what would you say the advice for an intrapreneur is? Because a corporate really wants to meet certain business goals. But when you are in that position you have so many stakeholders that you’ve got to adhere to. What would your advice be to someone that is in that role within a corporate? Because it is really hard to do and you have this really fine diplomatic balance that you’ve got to keep hold of as well as you’ve got to keep the bottom line going. So we had crash meetings every week – where is the money? Why are you wasting time kind of conversations? But money has now been returned so it’s success which is great many innovation projects don’t work like that. So what would you say your core advice to intrapreneurs is because a lot of people are given these roles within the corporates now?
Tendayi Viki: All right. So for intrapreneurs are a problem for a few reasons. Number one is innovation theatre – a lot of intrapreneurs… if they were entrepreneurs they’d be starting companies. So they kind of… I was once in a large company and I ended up like ranting at the group of teams that they put together to work on projects like you guys are not real entrepreneurs because you get the salaries every month. You’re just here to hang out. That’s why you keep arguing about the color of the button right. I was kind of to ranting. If you were a real entrepreneur you’re worrying about how to make money and care about the business model because your house is on the line. So you have a problem with that is a theater for them. That was all like being on sabbatical in the lab and then after that they could say you know I worked in a cool app or whatever. So you have to do with innovation theatre element. And because they don’t have that pressure of like being a real entrepreneur you have to work on the philosophy of what they’re thinking about doing which is the philosophy that we really want to make the product successful we want to work on this and then the second thing that is what I call the myth of the innovation lab is that when intrapreneurs get an innovation lab from their leadership they think that their leadership likes them. So they just like fall asleep, like we are in like this lab the ideas lab or the imagined lab. “Come into the emerge lab or level 39”… and they think that lead leaders like them. But actually a lot of leadership don’t care about what’s happening in an innovation lab. It’s a place to go play over there. We’re going to run the real business here. And a lot of the innovation lab stuff that’s going on is innovation theatre at the leadership level just so that big companies can appear to be entrepreneurial. And so for me I say to intrapreneurs we have two choices. You either run a guerrilla movement or you do a full frontal assault on your organization. In a guerrilla movement you try and lower the cost of innovation so that you never rise to the consciousness of the people that might kill you. It’s a proper guerrilla movement and you show up unexpected, blow stuff up, and you run away right. And so and in order to succeed at a guerrilla movement what you need is a diplomat you need a leader that gets it that can kind of run screaming for you and cover stuff up and get you resources etcetera etcetera. But when you’re running a guerrilla movement you’re not trying to transform your organization and a lot of intrapreneurs get confused by that. They confuse trying to transform their organization with just trying to get cool stuff done inside the organization. If you’re just trying to get cool stuff done running a guerrilla movement you’ll spend all your time trying to hide. Don’t then surface and start telling the leaders you don’t know what you’re doing. That’s right. This is actually very important. If you do make the other decision which is that you don’t want to keep hiding and you want to change your company you want to then you start instantly into the stakeholder management. You have to start having meetings and conversations and politics and pleading and begging and embarrassment and humiliation and almost losing your job every two days. All of these things come as part of that but you have to make that choice consciously right. And also you know with your own temperament and your skill set.
Mark Littlewood: Talking about a kind of a less like a big corporate but an established software company. This is the question that we get asked quite a lot. Maybe they’ve got 100/200 people, a successful product but market that’s not going to be there forever. A lot of companies of that size really struggle with coming up with that new breakout idea. You got any kind of thoughts on how they can go about that and whether that innovation should come from within or is it something that you can acquire?
Tendayi Viki: Yeah. So before you before you actually start having a conversation about whether or not you need to acquire or whether you need to come with innovation from within you need to have an innovation ambition. And so the time to have an innovation ambition is when you are actually successful which is the hard thing to do. So I’m starting to think that the work that I do is about is a human problem. And the human problem is that when you are successful you then tend to forget that success doesn’t last forever. So how do we help successful people from being complacent right. Because we manage everything to the bottom line. You’re making profits you’re growing and it is at that point when you are growing that’s the time to set your innovation ambitions. So for example if you work in a company how many of you would say so you’ve got like these three types of innovation. So you’ve got a core where you’re constantly updating your core product. You’ve got adjacent where you turn into new markets or trying a different kind of type of product similar to your core product. And then you got like transformational innovation which is like this crazy place, new products for new markets you’ve never been in. How many of you would say like in your companies that you’re working right now 10% of your investments are in transformational? Put your hand up. 1, maybe 2. Great. How many of you would say 5%? Another 1. 1%? So you’re not even in the game. It’s hard to win in the game if you’re not even playing right and that’s what I mean.You have two to three innovation ambition up front. Every organization the moment you start becoming successful that’s the moment that thinking about the balance in your portfolio. You’ve heard this advice that large companies should act like startups. I object to the advice large companies don’t need to act like startups. Large companies need to act like ecosystems, portfolios of products. And in that portfolio of products you have core products, adjacent products, and transformational products. If you don’t have a balanced portfolio of products and services in your company you’re not preparing for the you know preparing for the future. And what’s interesting about the cultural artifacts that we use to run our companies is the cultural artifacts we used to run our companies are useful for a stable world. So if we have an accountant and we do annual budgeting and we do five year projections all of these artifacts are based on a philosophy that the world is stable and predictable. And those artifacts constrain innovation because those are the only tools we use to run the company. Now can you imagine a religion or a culture that doesn’t have artifacts and rituals? How would you even practice it? All right. So if we say we want to transform the culture of our organization and bringing an innovation culture, we have to start creating artifacts and rituals for balancing our portfolios, doing incremental investing, running experiments, tracking progress. We have to create these management artifacts. If we don’t have those artifacts it will be harder for us to manage the future.
Audience Member: Yes I have a question. How do how you manage timing? What sort of metrics would you use? So how would you know if you’re too early or way too early? In other words when it’s time to call it quits or wait?
Tendayi Viki: So part of mapping your business model questions is asking whether or not you need some other things or not inside a startup that are out in the ecosystem to succeed. Do you need technology to be a certain way? Do you need your key partners to be thinking or working in a particular way? Do you need certain resources to be available right? That’s the way to do to map whether or not you’re at the right time. What do you need outside of your own company in order for your company to then succeed? And if those things aren’t there, you either then have to do the hard work of creating them – Like if you’re going to be making an electric car you might have to do the hard work of creating electric charging service stations along the motorway because they’re not there – or you wait. All right. And so that’s thought that is the hard decision that you have to make. It just means that for everyone who’s working on a clever idea, the success of your clever idea has a lot to do with the ecosystems around that idea. And we tend to forget that as entrepreneurs.
Audience Member: In my company a few times we had these pushes to move into a new market or develop a brand new product. And I found that there was a different culture within the new thrust vs. the old stuff, and it created a tension in the company that wasn’t always positive. Everybody on the old stuff wanted to work on the new stuff until the new stuff wasn’t going as fast as they thought it should and they want to go back to the old stuff. Do you have any comments on how to set the culture in the company up for success?
Mark Littlewood: Could I just put a little bit more context around this because that Jason actually spoke last year at BoS Europe about selling his company. He can name it if he wants to, but one of the things you were saying that when you actually sold it was that you got to that point where you didn’t see that super growth kind of coming through. So this is obviously something that you’ll still thinking about.
Audience Member: I’m still trying to crack it. I’ve run into a lot of other people that have to have this they have the same challenge.
Tendayi Viki: So I don’t know what was happening in your company but what I’ve noticed when I’m working in companies is where you tend to see the culture clash is when there’s a misunderstanding about the tools for running and managing innovation that are different from the tools for managing and running the core product. Right. So these two things don’t kind of go together well they don’t work together they operate a completely different rhythms. They experiment is like iterating and the core product is about like you know scaling and growing and so they’re moving it at different paces. And what most companies have failed to do is to make that distinction explicit at an organizational level so that everybody in the company understands exactly why they see this distinction right between what the so-called cool guys are doing in the innovation space and how we’re running the core product. And so what we actually need now what I think is management 101 is like this connectedness between like here is the part of the portfolio that at this stage of the innovation cycle and here’s what we’re going to do with it. Here’s another part of the portfolio that’s at a different stage and here’s what we’re going to do with it and here is another part at a different stage and this is what we going to do with it. And that balance of like managing that management philosophy that kind of connects these two elements together. I think that’s really what’s missing. So what tends to happen then is like a lot of large companies or people that work in large companies and then go we’re going to set up an innovation lab because the innovation labs will be far away from the mothership. We’re going to be away from the MBA. And all these people that we’re going to do cool stuff over there. And then what happened with a lab that I was working with that they had like 14 successful products that the large company was refusing to scale, because when you bring back your 14 successful products the leadership is like Who are you again? I’m the guy from the innovation lab, Tendayi from level 39. But why do we want to scale this? It’s not in our strategies? And so what I want when I’m working with large companies, what I’m trying to do – and this is the hard part of the work that I do, that’s why I think I have like stomach problems and ulcers and stuff – I spend a lot of my time speaking with leadership trying to convince them to change the way they run the business so they can adopt these new practices so they can put innovation as part of the strategy, part of the corporate strategy, as part of the companies strategy, to say we’re going to start adding these new growth engines and the way we’re going to manage that is going to be different to other artifacts we’re going to use. And then when they succeed here’s how we’re going to integrate them back into the company. All of that has to be kind of mapped out and kind of thought about upfront. But we don’t tend to do that. And so that’s why we then end up with these conflicts and tensions and we don’t know how to manage it because when we just kind of making it up as we go right. And it gets hard. I don’t know if that answers your question.
Audience Member: I’ve kind of sat on the two sides of the fence and in between as well. So I’m working big corporates, I run my own startup, and I did a bit of the innovation lobby thing. And the question I’d like to put forward is: should large corporates actually bother with innovation? Because the mentality is very different. In a large corporate you are about incremental gains, 5 or 10% sales growth, 5% cost reduction, that will get you promoted and the people that you get into those companies are people who can do that very well. A startup is basically a binary bet, it’ll work or it will fail and if it works it’ll be great and if it fails you know there is no 5%, it’s minus 20%. End of story. And so trying to bridge between those two worlds is actually very very hard work. Also the timelines are different. You need to show 5% in six months time, in three months time preferably, in a startup world it’s very very different. So is it not better to say to corporate keep your eye out in the market when you see something emerging. Buy it for $100m and spin it up from $100m to $1bn because that’s what you do well. But that beginning stage don’t bother, just look at what’s there and buy $100m. Don’t spend $10m on an on incubator because it’ll be wasted spend $100m on something that you know you can scale to $1bn.
Tendayi Viki: Yeah I agree with you completely. If only it was that simple. If only $100m, that’s an expensive buy right. And a lot of companies bet $100m and then fail to scale the startup. So actually large companies are also places where startups go to die. So if we follow your argument all the way through, large companies should just stop doing everything. Stop buying startups, stop investing in incubators, stop because it is not inevitable that when a large company buys the startup to succeed inside the large company in fact the data shows that the startup is much more likely to struggle and the founders will quit. And then the product will get absorbed and die or just get put somewhere where it’s not supposed to be. So I always have a conversation with us when a large company asked me Should we acquire or should we should we do innovation internally. And I say if the reason you ask me that question is because you feel that you can’t innovate within your culture then even the startups you acquire will die in your culture. So they don’t have a choice. Large companies don’t have a choice. It’s not that they have a choice to keep working on 5% growth or 5% cost reduction. They no longer have the choice. Because when the disruption moment happens to them they can disappear like that regardless of their size. So most companies no longer actually have a choice. And so when you meet a lot of executives the only thing that’s on their mind these days is how do we innovate. Back in the days when you did an MBA they would tell you your job is to find a competitive advantage to build a moat around your competitive advantage and then protect it with your life. That was like management 101, strategy 101. But these days there’s no such thing as competitive advantage. The world is changing so quickly. And the thing about human beings is that it is hard for us to understand exponential change. What we understand very easily is linear change. But like this exponential change stuff is hard for us to kind of wrap our minds around it. So that’s the first thing. Second thing is that it’s hard for us to predict exactly which product for technology is going to be successful in the future. We can see things happening and we have to kind of play in it and experiment with them. So to my mind they have to figure it out. It’s now that time of. In human history where they have no choice. That’s my sense okay.
BoS Europe 2021 BoS USA 2020
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