Category Archives: Student Posts

When is an Intrapreneur really an Entrepreneur?

Rodney Williams is a smart and ambitious man. You can come to this conclusion by just reading a list of what he’s accomplished in his career so far. Williams has four degrees under his belt, including an MBA from Howard University. A marketer from birth, as a kid he perused ads and commercials, always thinking about how products and services can truly serve people. He is a natural entrepreneur, even having started several business ventures as a student.

It was when he was at P&G, though, that Williams’ talents really shone. As a brand manager for Pampers, he accomplished quite a bit; by 27 he had three patents and nine wards for his work at P&G. Williams had done well with P&G, but his entrepreneurial spirit had never left him. During a brain storming sessione was having at work, Williams thought of an idea, that data could be sent by inaudible sound waves instead of Wi-Fi or Bluetooth.

Now Williams could have gone and tried to run with this opportunity inside of P&G. He even compliments them as the place he wanted to be as a brand manager, because, as he says, they “wrote the book for brand management.” He liked how they developed and brought products to market. Though Williams had the resources at P&G to commercialize products under well-known brands, he was always forging his own path when his ideas didn’t fit the traditional brand model or well understood product categories that P&G dominated.  So Williams, instead of continuing to be an intrepreneur, did his research and returned to the world of entrepreneurship.

Williams had decided to try to do this new enterprise on his own. What he did was reach out to a friend, Chris Ostoich, and they kicked the idea around. When the two had developed the idea a bit, they asked their engineer friend to see if it could be done. He told them it could but it would be tough, and to bring their idea to a startup competition SXSW. Here they got a lot of attention for their idea, including a lot of people and investors that wanted to be part of their new company, LISNR. It was then that Williams finally quit his job at P&G to fully develop this venture.

After doing my analysis on the articles I had read I reached out to Rodney William’s. I had asked him if my previous analysis was right, was he a champion at P&G? He said that I was right in what I thought. That he had a great idea and the culture wasn’t right at P&G and he had an idea that he wanted to keep completely to himself. Lastly, I asked if innovation was a key component in his new company. He said that “Innovation is a part of LISNR’s DNA it’s in our culture and will be how we succeed.” This statement wasn’t just interesting to see what he thought of innovation, but its place perhaps in LISNR’s success.

-Andrew Garwys

Sources:

http://www.forbes.com/sites/matthunckler/2017/01/20/how-a-lifelong-marketer-leveraged-his-experience-in-corporate-innovation-to-launch-a-tech-company/#7b670f2b1d59

http://www.forbes.com/sites/rodneywilliams/2016/12/01/how-i-arrived-at-my-big-idea/#620cb99e1268

How to Live for 120 Years

“Every CEO talks about making his or her company more innovative, but for GE it’s a matter of survival. GE is a corporate mainstay, the only original stock left in the Dow Jones industrial index, which began tracking the performance of large public companies in 1896. It must succeed now in a world in which the only constant is change”.

– Boston Globe, April 17. 2017

As reported in this recent article by the Boston Globe, GE has successfully operated for over 120 years. But how have they managed to do this? The answer lies in the performance of a number of best practices and a willingness to change.

GE has long been an industrial exemplar in terms of technical and managerial best practices. It should not be surprising then that in this era of ever-quickening change they have continued to lead in this way. GE has long been distinguished for its internal employee development programs whether it’s helping employees continue their technical education with graduate work or placing them in leadership training programs to become more effective managers. This in itself is a best practice. Three more best practices, as identified by the Harvard Business Review, are “(1) resource allocation that nurtures future businesses, (2) faster-cycle product development, and (3) partnering with start-ups.” In terms of resource allocation, it can be tempting to funnel too much money to expand the current cash cow business, and while these must be adequately supported, it is equally if not more important to invest in future businesses that are just emerging. Today’s emerging ventures will be tomorrow’s cash cows. Related to this is achieving a fast product development cycle; that is, not only does GE invest in future businesses, but they consciously move quickly to develop them. For example, GE has worked extensively with Silicon Valley entrepreneur Eric Ries to implement “Agile” and “Lean” methodologies. Finally, GE is partnering with startups as part of an “open innovation” strategy in which startups provide novel business opportunities and capabilities and GE provides capital as well as 120 years’ worth of experience in launching new businesses.

One particular area where GE has invested for the future is in digital capabilities through the creation of its new GE Digital division in 2015. This story started with the emergence of big data analytics and the Internet of Things (IoT) as new, high potential technologies. GE recognized the implications for its business and the importance of leading this wave of technology. In fact, it is changing GE’s entire business model. Rather than its traditional “transactional” relationship with customers – in which GE sells a physical product and may provide some maintenance service – GE is shifting to an “expanded customer outcome” relationships in which IoT product integration can provide improved asset management for customers. In essence, GE has moved from selling hardware to selling a platform as a service (PaaS). This is a truly inspiring example of GE’s willing to change with the times; not only did they create product innovation and develop an entire new digital competency, but they innovated at the business model level, a huge shift for the company.

GE has spent the last 120 years continually growing by continually innovating. They have learned and now model a number of best practices, especially the ability and willingness to constantly change.

-Andrew Eagan

Sources and further reading:

Why do they like M&A?

Recently I saw an interesting news article, on TechCrunch.com, about a telecom company purchasing a drone company. The title of the story is “Verizon buys Skyward, a drone operations company.”

Here is an excerpt:

Forget about Yahoo for a minute. Verizon just announced it has acquired Skyward, a drone operations and management company based out of Portland, Oregon for an undisclosed amount. Verizon says Skyward will help developers and businesses better create and manage drones that also happen to utilize Verizon’s mobile network services and infrastructure.[1]

Why would a telecom company purchase a drone company? The fact is, Skyward could bring their drone operation management system to Verizon’s Internet of Thing portfolio. They could leverage their investment in mobile network infrastructure and by adding associated services. This purchase strengthens Verizon’s investments that will help them establish a position in the emerging Internet of Things area.

In 2016 $612.9 billion was spent in mergers and acquisitions within the global tech sector. The phenomenon of large companies acquiring small companies or startups is fierce. Verizon wants to acquire the drone company to expand their business. Google is one most the prolific acquirers in the technology field. Facebook uses its stock as an acquisition currency. Those big technology companies love to purchase startups. Deloitte’s 2016 Tech Report of M&A trends[2] indicates that 41% of the executives surveyed believed in expanding/diversifying products or services, and technology acquisitions is the most critical driver of M&A. Unlike IPOs, last year was active for tech startup M&A, and more and more tech-startup M&A activities are happening as M&A is one way forthe large established companies to access these new resources.

Why do big companies prefer to purchase startups rather than launch a new project?

I think there are several reasons:

  1. It’s time-consuming to launch a new project. Every project has a different mission. Sometimes company leaders just want to make a monetary investment rather than invest a huge amount of time and talent. Big companies are always facing fierce competition, and they will let the opportunities slip away if they don’t make decisions quickly.
  2. High uncertainty. Triumphs require a certain amount of luck, and that’s not always predictable or reproducible. Not every successful entrepreneur can ensure they could create a successful business again. Therefore, M&A is one way to manage the risk.
  3. They are targeting talent and resources. Startups have unique assets such as their team, market connections, and patents.
  4. Strategy considerations. Every company has competitors, no matter how big they are. Some competitors are obvious, direct and immediately threatening. Others are less clear, but they’re potential threats. Startups are potential threats, and they could engulf a big company’s market in the future or face acquisition by other competitors. Those problems can be solved by purchasing the threat when it is small.

External aquisitions solve problems better than internal projects, but there is a negative side of solely relying on acquisitions for new platforms of growth. The cultures of the two companies could easily clash. There will be increased administrative burden if they have different divisional structures. It’s always easier to working with internal projects because you’re already familiar with the organization and can put more resources on innovation. All divisions are integrated as a part of the organization and more efficient at focusing on innovation.

Every approach has its pros and cons. The strategy of innovation by acquisition could be a great catalyst, it could broaden your talent pool, be beneficial to R&D capabilities, but also could go wrong when not executed properly. For M&A, integrating the new group into the existing environment and focusing on innovation is the key. For internal innovation, one of the barriers is how to break through the organizational inertia and implement the new strategy. Companies should choose the right approach depending on the situation.

-Mark Li

[1]https://techcrunch.com/2017/02/16/verizon-buys-skyward-a-drone-operations-company/

[2]https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Technology/gx-tech-trends-2016-innovating-digital-era.pdf

Bringing Innovation to the Military

On March 1, 2016, Former Secretary of Defense Ashton Carter spoke with the Commonwealth Club of California. To begin his speech, Carter said, “one of my core goals in this job has been to build, and, in some cases, rebuild the bridges between the Pentagon and America’s wonderfully innovative and strong technology community.”[1] To support that statement, Carter created the defensive innovation advisory board, headed by Eric Schmidt, the Executive Chairman of Alphabet. The board has offered a set of informal recommendations to Carter, including building software platforms and human networks to encourage innovation, sponsoring innovation contests, providing education to advocate collaboration and creative thinking, increasing the recruitment of computer scientists, and spending more on machine learning technologies. Finally, the board suggested the DoD establish a Chief Innovation Officer position, which Carter has made an effort to do. Little has been said about the role of the position, but the Officer would be a senior advisor to the Secretary of Defense.

With innovation becoming the big push, companies have been advised to establish a Chief Innovation Officer. The Forbes article notes, “businesses need to establish uniformity of command by designating a single person to be accountable for their innovative programs.”[2] Guess who disagrees? That’s right, Eric Schmidt. The Chairman of the board who just advised Ashton Carter to hire such position. In his book How Google Works, co-authored by Jonathan Rosenberg, Schmidt writes, “As business managers, we like to manage things. Want something done? Then put someone in charge of it. But innovation stubbornly resists traditional, MBA-style management tactics. Unlike most other things in business, it cannot be owned, mandated, or scheduled.”[3] Tim Cook, CEO of Apple, echoes a similar message about the position. “As soon as a company has a Chief Innovation Officer you know that a company has a problem.”[4]

If adding structure to innovation will only hinder innovation, how does a company/agency encourage or capture innovative ideas? Udi Manber, a previous employee at Google and the former Chief Innovation Officer at Yahoo, comments, “Innovative people do not need to be told to do it, they need to be allowed to do it.”4 So don’t force innovation; evolve it organically.

Then maybe Carter is on the right path with his DIUx initiative. The Defense Innovative Unit Experimental (DIUx) is an experimental group within the Department of Defense with the mission of “accelerating technology into the hands of the men and women in uniform.”[5] The first DIUx technology hub facility opened in Silicon Valley in August 2015. The California team connected innovators with senior level DoD leaders. These connections opened Pentagon funding sources, fellowship, and rotational programs to encourage innovators. Carter then followed a Silicon Valley lesson and decided to iterate DIUx to create DIUx 2.0. This iteration pushed DIUx as a nationwide initiative. Since then, two more DIUx hubs have opened in Boston and Austin, TX. Carter also upgraded the start up’s processing power and operating system. He implemented a flat structure with DIUx 2.0, another a page out Silicon Valley’s playbook. He even snagged Isaac Taylor, a former head of operations at Google X, to join in the leadership team. And finally, Carter reorganized the communication system of DIUx so the unit would report directly to the Secretary.

Of course, none of these efforts mean anything if the new Secretary of Defense, Jim Mattis, doesn’t continue the work initiated by Carter. But, it has been reported that Mattis will continue to invest in innovation, so it seems as though the innovation advisory board will remain intact, along with the DUIx hubs. So far there is no word on Mattis’s plan to hire a Chief Innovation Officer, but it looks as though the option remains valid.

-Lauren Young

[1] https://www.defense.gov/News/Article/Article/683790/carter-dod-must-innovate-to-lead-in-a-competitive-world

[2] http://www.forbes.com/2009/12/16/chief-innovation-officer-leadership-managing-accenture.html

[3] Schmidt, Eric, and Jonathan Rosenberg. How Google Works. New York: Grand Central, 2014. Print.

[4] https://channels.theinnovationenterprise.com/articles/the-chief-innovation-officer-a-symptom-or-a-solution

[5] https://www.diux.mil/

Can Corporate Entrepreneurship Cure Big Pharma?

Most of us are all too familiar with the current state of big pharmaceutical companies. These giants plow an enormous amount of money into R&D for often mediocre results, leading to outrageously-high drug prices, slow movement, and the ever-present reminder that there are an uncountable amount of diseases out there still needing to be cured. As a result, these giants risk being drown out by generic companies, which fight the soaring drug prices but still do little to advance the state of pharmaceutical research. It is clear that a change must be made toward real, meaningful research.

Some firms have begun experimenting with various methods of bringing a more entrepreneurial R&D process to large pharmaceutical companies in order to better encourage long-term value creation through innovation. In particular, there appears to be an emphasis on small, relatively autonomous divisions within R&D which specifically focus on a very small number of therapeutic areas and driving one or two breakthrough solutions in these areas to early clinical trials. GlaxoSmithKline and Vertex Pharmaceuticals have had successes with bringing the small company R&D feel to big pharma research in this way. Pfizer attempted to take this further, establishing therapy group skunkworks projects in the form of a network of small companies, but this has since been dissolved. GlaxoSmithKline has implemented a reward system to compensate for breakthrough innovation and Eli Lilly is examining the possibilities of doing the same. Eli Lilly has also been successful at investing in integrating other companies into their R&D network in order to have several different sources of innovation working together (Douglas, Narayanan and Mitchell). Dr. Shreefal Mehta, currently CEO of the Paper Battery Company, a board member of Pulmokine and an entrepreneur who has been involved in the founding of two biotechnology firms noted that many of these efforts get killed off due to large changes of management when these big pharmaceutical firms acquire other companies- “During these acquisitions many new management figures become involved. If someone doesn’t like the direction this innovation machine is headed in, it is killed off before any results can be obtained.” These big pharmaceutical firms need to adopt some sort of protective framework for these entrepreneurial divisions if they are going to survive in this existing corporate structure.

Too often large pharmaceutical firms are judged by the number of new chemical compounds which proceed to clinical trials (Douglas, Narayanan and Mitchell). This focus on volume rather than real breakthrough medical discoveries has lead to a pharmaceutical equivalent of incremental innovation in which the reality is that many of these new compounds are simply some minor additions made to an existing compound in order to be able to quantify it as a novel innovation. Dr. Mehta says that risk adversity plays a big part in the sluggishness of big pharma R&D, whereas in small companies there is a drive to make a true breakthrough in order to gain notoriety and to really help people. This kind of short-sightedness in research mirrors the quarter-to-quarter short termism that is rampant in large, public companies in order to keep shareholders happy and, similarly, creates a largely stagnant, numbers-based form of R&D that does not add any real value to the industry. With the kind of advances being made in drug discovery thanks to advances in big data analytics and its relation to chemical compound discovery, there are more effective methods than ever to create a pool of potential compounds likely to be game-changing for the pharmaceutical industry, and there is becoming less and less reason that these large corporations cannot organize a push towards real breakthrough innovation in a way that could save countless lives.  Failure to do so will result in extinction as these pharmaceutical giants are outcompeted in price by generics, sealing the fate of meaningful R&D in the pharmaceutical industry.

As these innovative changes have begun to take hold over the last few years, it will be interesting to see if there will be new life breathed into R&D at big pharma companies. These companies must overhaul the way they do drug discovery if they hope to stay competitive and beat back the growing tide of generic medications. Only time will tell if they are able to adapt quickly enough to these new models of innovative discovery.

-Stephen Notley

Works Cited

Douglas, Frank L., et al. “The case for entrepreneurship in R&D in the pharmaceutical industry.” Nature Reviews, Volume 9, September 2010 (2010): 683-689.

Food: The Last Piece of the Digital Pie

Intro by Gina:  Sometimes in Corporate Entrepreneurship class we stray from the topic of how large companies can institutionalize capability for innovation….and we talk about interesting emerging innovations themselves.  Pelin, an architecture student studying for her Masters’ degree in Technology Commercialization and Entrepreneurship, is struck by the many attempts that have been made to increase the convenience of grocery shopping.  It’s all about the business model, and to date, it appears, no one has found the winning model.

Since the advent of the internet, big business and startups alike have been exploring the possibilities of online shopping. More and more people have stopped frequenting stores and instead opt to buy necessities online. Groceries, however, have had an increasingly difficult time jumping into the digital marketplace. Today, over 80% of groceries are purchased from brick-and-mortar stores according to the FMI, but it’s not due to a lack of options. Nearly every major grocery store has both pickup and delivery options in addition to the plenty of newer companies that offer food delivery services to major cities. However, no innovation has made a dent in traditional grocery sales, and even the “successful” ventures aren’t nearly as profitable as physical stores.

This lack of success is primarily due to customers’ continued desires to inspect their produce before purchasing it. This desire trumps any perceived inconvenience of physically going to the store. Additionally, both pick-up and delivery options come with fees or minimum delivery requirements. Customers won’t pay for others to do their shopping when they believe that selecting their own produce results in better quality. Of the 5% of people who utilize online grocery shopping, it is typically as a one time interest or last resort.

In 2007, Amazon introduced an online grocery delivery service in Seattle called AmazonFresh. Since then Amazon has expanded to several other cities, but has run into the same challenges in the food delivery business as others have faced. The company has begun transitioning towards physical stores in order to increase sales. Just this year, Amazon opened its first Amazon Go store in Seattle.  Using technology similar to self-driving cars, items taken off the shelves and placed in your shopping cart are digitally recognized and your Amazon account is charged automatically when you leave the store, eliminating lines and hassle. Amazon touts the notion of convenience as a major advantage of these stores, although they assure their customers that this is just the beginning.  As much as anyone, Amazon is unsure if the stores will be a success and are working on other options such as a grocery pick-up area and drive thru’s. Amazon is confident that the next generation will embrace online grocery shopping, it’s just a matter of time and establishing buyer trust.

At the same time Wal-Mart, which already commands 25% of the grocery market, is also pushing the limits of the grocery store business model. Rather than promoting online shopping, the company is moving forward with another concept which Amazon considered: pickup stations. Setting it apart from other stores that offer similar services, Wal-Mart’s dominance of the market enables the corporation to provide in-store pickup at no cost to customers. The few stores currently offering the services proved the stations to be remarkably successful. However, nothing is free, and offering an additional service at no cost to customers means that prices increase elsewhere. In addition, this pick-up option does nothing to alleviate the worries of the average customer about purchasing produce before even viewing it.

If Wal-Mart’s small sample size is indicative of the rest of America, perhaps Amazon should abandon its high-tech no-lines store in favor of a pick-up option. However, the pick-up option is not new, and others are skeptical of how successful it will be, and doubtful that it will make a significant profit for Wal-Mart.  Only time will tell if either innovation will be successful.

-Pelin Akman

David vs Goliath, the story of Fitbit vs Apple.

Wearable fitness trackers are hot as lava nowadays, and for many reasons. Whether it’s helping track heart rate, calories burned, and personal activity, “shipments of the devices spiked from 35.5 million in 2014 to 85 million in 2015, representing a 139% increase year-over-year.”[1] With such an eruption in sales continuing on, new fitness trackers and models are coming out every day by competitors in the industry trying to edge out one another. The two biggest ones are Fitbit and Apple. These companies share a similar product and target market, but they differ in many more aspects. Apple is… well its Apple. Everybody knows Apple is able to develop the newest innovations in products for both hardware and software better than arguably any company ever. And they have been at their best producing innovations from the early 2000’s until now. They have an advantage compared to Fitbit, a much newer company which had IPO’d in June of 2015. Now to gain an edge over each other, they have to compete with new models and apps that work with these watches, which means the company with the better corporate innovation will come out on top.

The strongest brand in the world is that way for a reason, constant innovation, and they stay on top because of it. The brand is very important here, since Apple will get customers who want to wear an Apple Watch more than they want a fitness tracker. The technology they bring to the smartwatch industry is similar to other products they have made in the past, like the iPod Nano with a touch screen, making it easy for them to innovate and create a product better and quicker than competitors. Not only that, when you check your Fitbit stats, you generally use an iPhone to do so. With the better technology than Fitbit, and the brand which is unbeatable, it’s easy to see why Apple is Goliath.

However David, also known as Fitbit, has something to say about that. Fitbit, being a newer company, still specializes in just fitness trackers and smartwatches. They innovate much quicker than Apple in this niche area, producing a wider variety of products, and all for a cheaper price. Not only that, they innovate in the fashion area, meaning people will buy their product based on how nice it looks, which makes its fashion at least as  important as brand. With a lower price point, they are able to win on fashion, as people can upgrade to a new style tracker more frequently than with a more expensive model such as Apple. With a whole company more focused on innovating in a certain area of products, it makes Fitbit the top dog. In Sept 2016 Fitbit held 25.4% of the market share in wearables, while Apple was third, with 7%, after dropping from 20.3% of market share just a year prior[2]. This shows how Fitbit, a new company, is beating one of the most innovative companies in the world. Fitbit is an excellent example of a niche player being able to maintain a 3 times the market share over the leading technology company in the world by intense focus and great execution.

-Dom Pizzano

Update: even more recent market share information can be found here: http://connexity.com/blog/2017/02/fitbit/

[1] https://www.fool.com/investing/general/2016/03/20/7-wearable-tech-trends-to-watch-over-the-next-5-ye.aspx?platform=hootsuite

[2] https://9to5mac.com/2016/09/06/apple-market-share-wearables-apple-watch/