Startups and large companies.What large companies can learn from the working culture and

methods of startups and why you need to navigate through the two realities along your career

29 ottobre 2014

Roberto Sapio Stefano Mizio

Future Work Skills 2020

2

Understading of both culturesLarge companies and Startups

Different PerspectivesJanus two-faced

I started my career as a startupper…

Startupper

MBA

Country Sales manager in a large

company

Innovits

Roberto

Vodafone

MBA

Omnitel…

Silicon Valley

Startup

InnovitsStefano

I started my career in a fast growing company…long time ago

Senior Consulting

VUCA

Business Models have always lasted a long time

P. Hobcraft

Startup Definition

Steve Blank

What does a business model mean?

• “A business model is simply the ‘way of doing business’ that a firm has chosen: (Davenport, T. H., M. Leibold and S. Voelpel

(2006). Strategic Management in the Innovation Economy. Publicis Wiley.)

• “The business model is a company’s answer to the question of how to make money in its chosen business. It describes, “…as a system, how the pieces of a business fit together ” (Magretta, J. (2002). "Why Business

Models Matter." Harvard Business Review 80(5) May: 86-92.)

• A business Model is the the story of how value is created, delivered, and captured .

Here ...

Stability

Can you describe your Business Model?

Maybe not…because it has been in place since the business was started… It is taken for granted!

Are you aware of it?

"Business models are not meant to be static . In the world we live in today, you have to adapt and change. One of my fears is being this big, slow, constipated, bureaucratic company that's happy with its success. That will wind up being your death in the end." Nike CEO

S.. Kaplan

“In the twenty-first century business leaders are unlikely to manage a single business model for an entire career ”.

Blockbuster

Blockbuster was netflixed!

Netflix, netflixed

Verb:1.to cause disruption or turmoil to an existing business model2.To destroy a previously successful business model3.To displace the way value is currently created, delivered, and captured4.To be disrupeted, destroyed, or displaced by new business model.

S. Kaplan

Senior management were so busy pedaling the bicycle of their current business model they didn’t

think about and experiment with potential new ones.

David versus Goliath

Too big to produce game-changing inventions?

innovate?

Do you agree?

Uncertainty Ratio = Assumptions/Facts

Entrepreneurial management could be more important than

traditional management…

What if your best friend has a great idea…

Customer need

Example by Nathan Flurr

Instead of purchasing designer dresses, women might prefer the option of renting designer dresses online for special occasion.

What would you advise??“Write a Business Plan”

Product&Service Size of the market

Revenue&Profit based on projections of: pricing

costs

Unit volume

growth

Anything else?

Or …

Example by Nathan Flurr

You can suggest to set up an experiment to answer some “Key questions”

Will middle – to – upper class young women rent a designer if it is available at one-tenth

the retail price??Will women who rent dresses

return them in good condition??

Or…Would women rent dresses they couldn’t try on??

So …

Example by Nathan Flurr

• You can borrow or bought 100 dresses from designers;

• rent a location; advertise around your campus and invite young women and test your Hypothesis

This is exactly what happendThe experiment answerd the

first two questionsThis experiment resolved

some of uncertainty reflected in the two questions it was

designed to answer.

“its inventory dressed 85 percent of the ladies who attended President Obama’s second inauguration”

Example by Nathan Flurr

Performance Engine

Traditional management theorycertain type of problem: attempting to optimize

under conditions of relative certainty

Houston we have a problem

New business ideas –outside and inside organizations – are characterized by a

different type of conditions:

uncertainty

How can we lower costs by 5%?

The right style of management

by Nathan Flurr

Will people buy products over the internet? ( Amazon )

A riddle

Alfred SloanGeneral Motors

Billy DurantFounder of General Motors

Guess Guess

Guess

Guess

GuessGuess

Guess

GuessGuess

Untested hypotheses

The best you can do is guess and you may be wrong…

Business Model Canvas by A. Osterlwalder

Chief Experimenter vs Chief Decision Maker

How and Where decisions are made

“…you know how big companies make decisions: they tend to rely on politics, Powerpoint and

persuasion.” Tim Cook - Intuit

Let’s consider this case

You have to choose between two investement proposals:• a team of young entrepreneurs hoping to bring word-of-mouth marketing to China (team A)• Seasoned team inside large company looking to tap into a growing segment adjacent to its current business (team B).

• They forged their idea in the “white hot heat” of the market.• Many assumptions that remained were grounded in the Real World of Experience.

Team A

• They forged their idea in the lights of the conference room.• The plan was based on assumptions the team didn’t even realized it was making.

Team B

By A. Scott D. Anthony

Team A got founded

By A. Scott D. Anthony

Why?

• They had spent significant time in the market pitching their idea to potencial corporate customers.

• They simply hadn’t done the fieldwork.•The proposal underestimated how unique the value proposition was compared with offerings from competitors/startups.

The Ratio of the time spent preparing for and attending internal meeting to the time spent in the market < 1:3

Team A Team B

By A. Scott D. Anthony

Team A fits the right “process to make decisions”

Experiments

A new strategy for entrepreneurship in the 21 st corporation

• forming “leap of faith” assumptions;

• rapid testing those assumptions through experiments;

• letting the data make the decisions.

What’s the fastest way to get an experiment to test that idea?Vs. traditional approach (build and deliver)

Steve Blank

Startup and established company

“In God we trust,all others bring data.”

- W. Edwards DemingOngoing operation (90% data, 10% unknowns): central focus is to execute the plan.Innovation initiative (10% data, 90% unknown): the plan is a hypothesis.

There is comfort in Data ☺

The Value Hypothesis The Growth Hypothesis

The Minimum Viable Product

Leaps of faith assumptions

Eric Ries

We have a set of management practices and theory

Customer Development Modelor How we search for the business Model

Learning and DiscoveringDesign experiments, start listening

• there are no fact inside your building • testing your hypotheses outside the building• no business plan survives first contact with customer

Pivot

Search Execution

Steve Blank

By S. Blank

Core Principles: scientific method

The two worlds are coming together

Implications for Big Companies…

21st organizations

Established Companieshard-to-replicate advantages over start-ups

Entrepreneurial approach/method

Experimentation/ get out of the building : diagnostic camps to identify potential patients or

engaging in customer discovery

Business Model Validation

Open minded

Observation

Humility

Unique capabilities

Partner relationships

Strong Brand Reputation: local doctors/ Regulatory approval/…

“Last mile” distribution channels

Process and internal resources: design, staffing and execute

pilots and expanding programs

Recombining existing capabilities

Break all the rules?

You are the Innovation leader and just joined the company. You live the “ startup garage” culture

The CEO told you : “guy, we must innovate!What do you do?

Again, Break all the rules?

Ok, Hero, What do you do?

You can say: we , the innovators, are a blessed a superior lot

They can say: you seem to think you are superior, you get all the glory,…

No custom organizational model in placeOngoing Operation Innovation

Strategy

Organizing &

Planning

Execution

V. Govindarajan – C. Trimble : The other side od Innovation

Making Innovation Happen

Something missingAgile approach? What kind of relationships?

Skills? Operating rythym?

?

Committing to an Innovative

Idea

“Great idea! Go make it happen”

Trap: usingexisting

processes

Organizing an innovation initiative

Company

Performance Engine

Shared Staff

Dedicated Team

Partenrship

V. Govindarajan – C. Trimble : The other side od Innovation

Intrapreneurship Startup – acqui-hiring

Intrapreneurship/Corporate Entrepreneuship

Intrapreneurship can be definedas using entrepreneurial skillswithout taking on the risks oraccountability associated withstarting your own business.Instead, intrapreneurs areemployees in larger organizations,who act as entrepreneurs whilehaving the resources andcapabilities of the larger firm todraw upon

Corporate Entrepreneurship: isthe process by which individualsinside organizations pursueopportunities without regard to theresources they currently control(Stevenson)

What are the challenges of partnership??

List

Competition with Performance Engine leaders for scarse resources

Remember: one person against the system is an extraordinarily bad bet

The divided attentions of the guys in the P. Engine you need

Disharmony in the partnership

Managing Diversity

Dedicated Team

(Startup)

Performance Engine

Conflicts must be anticipated, mitigated or neutralized

Summarizing…

• Organizations need more “innovation” but don’t know how to do it.

• Established companies are Performance Engine with an “ efficiency uber alles” culture.

• A new set of methodologies are emerging from startups (lean startup, customer development, agile approach).

• Reverse mentoring is taking place (millenials –digital native).

• Large organizations need new perspective ( startup or intrapreneurship).

Having experience within corporates and startups can give you different perspectives and methods to manage uncertainty and your personel career.

The linear career path is long gone

Bridge Building

Innovits is committed to bridge the gap!

InnoVits is a non-for-profit organization who iscontributing to create an Entrepreneurial,Innovation-Based Economy fostering startupmethodologies and contaminating traditionalmanagement practices and culture.

A BRIDGE BEETWEEN TWO CULTURES

STARTUP MANAGEMENT

EXCHANGE COLLABORATION

A new Breed of manager

Organizations need a structure and a corresponding culture where accelerated change is

the new normal. It requires an environment, a strategy in which experimentation and pioneering is the most common thing to do in order to be able

to innovate.

Innovation begins with your look at the world

This talk...

By Frits Oukes

Illustration from the film Bakara 1992

It’s a matter of perspective