We analyzed 20 of the most innovative companies, some 100 of their enterprise size competitors, and the theoretic potential for enterprises to compete. As a result, we found three key reasons why enterprises fail:

CONSERVATISM

Most enterprises completely underestimate the investments necessary to fund innovation. When we look at one of the most recent innovative companies with just one product like Tesla, Cisco, Google, Facebook and so forth, they needed funding of about $1 Billion before they went public and became self sufficient. All of these companies had only two risks: 1) to fail and shut down, 2) to not return the funding to investors. An established enterprise, when disrupting themselves has three more risk: 1) loosing a billion$ enterprise, 2) risking tens or hundreds of thousands of jobs, and 3) risking that general investors loose their investment entirely, which is different for average joe versus a venture capitalist. However – going forward those risks also persist when the FAIL to be innovative and get disrupted by others.

MANAGEABILITY

Enterprises with more than 10,000 employees have a size that almost forbids to be innovative. Innovation is not only expensive but resource intensive. Employees need to be at a healthy utilization rate in order for the company to be profitable and stay in business as well as sustain all kinds of downs and difficult times. How could a company inspire their teams to be more innovative while keeping their current performance. If the teams have time for innovation, they have not been fully utilized and the company must focus on getting back on track and not derail. And if the team is fully utilized, there is no time to relax, meditate, get inspired and think of new and industry shaping ideas. Innovation needs to be managed as well and it needs resources. Hoping for a lucky punch is a really bad idea. And dreaming to get a free lunch… you know. Why does innovation work in a startup? Well, at least so far it only worked in the initiation phase. What Intel, Cisco, Google , SAP did was ground braking. But today 30 – 50 years later…? They ran into the same challenge. Like everybody else, they try fiercely to innovation – but we still wait for the outcome. And there is a chance they get disrupted from a startup that may have been already founded.

CUSTOMER EXPERIENCE

Enterprises with millions of consumers (BsB or B2C) are essentially out of touch with their target audience. They know only through questionable research what those users or consumers really want or need. The c-level of a global enterprise does not know what their customers painpoits really are and what their dreams may be. The hierarchies, reporting structures, value definitions have no path for innovation to be happening. The experiences of top level managers and the experiences of their customers are almost fundamentally different. The experiences of startup founders and the ones of their future customers however, are well aligned or at least perfectly understood – until they grow to an enterprise level. Microsoft executives get their laptop configured by their team. That way they save the day it cost to get everything in order after buying a new machine. And on top of all that, the “customer experience thinking” is still seen as an esoteric luxury by most top managers as it is too hard to report on and getting it into the annual report in a way that it wows the investors.

In the past 4 years exploring the entire “Innovations Paradigm” based on our own experience building startups to billion dollar companies and working with other startups that became billion $ companies we finally developed methods and tools that harness the innovation power of an enterprise by bringing new ways of thinking and new working models and cultural elements to selected teams.

Innovation based enterprises

Most of the big enterprises of this world started as innovative startups. Whether it was Alfred Esher, founder of Credit Suisse with a – back then – innovative banking system that laid the ground for the Swiss Banking System, or Carl Benz with a radical idea of building a machine driven carriage they have been major disruptors. Or Henry Ford, Ferdinand Porsche, Robert Bosch and so forth, all created global enterprises with their ideas that have been at best – crazy. What happened in the past 50 years? There have been continuous innovations from Silicon Valley including Intel, Apple, Oracle, Cisco, Google, Facebook, AirBnB, and Tesla which made it to global leadership. The last ground braking innovation from Europe was SAP, 50 years ago. We have seen less popular, yet ground braking “inventions” in laboratories from all over the world. But non of them made it to a ground braking “innovation”.

From invention to innovation

The automobile evolved from INVENTION to INNOVATION. The disk breaks moved from INVENTION to IMPROVEMENT. The first electric BMW made it from INVENTION to an EXPERIMENT, while Tesla made it to an innovation much later then BMW. A self driving Mercedes S-Class made a 1,000 mile journey from Munich to Copenhagen and back! It was already using computer vision and computers to react in real time. The robot achieved speeds exceeding 109 miles per hour (175 km/h) on the German Autobahn with nearly no human intervention for 95% of the distance. It drove in traffic, executing manoeuvres to pass other cars. Despite being a research system without emphasis on long distance reliability, it drove up to 98 miles (158 km) without human intervention. Also here it did NOT go from INVENTION to INNOVATION but to DRAWER.

Invention vs. Innovation

In most enterprises we may find hundreds if not thousands of geniuses with amazing ideas but no way to go. There is this massive difference between INVENTION, the act of having and documenting an idea, maybe building a prototype and INNOVATION, the full cycle of invention, prototyping, market validation, product-market-fit, funding, marketing, testing, producing, launching, more funding, branding, selling, customer engagement, servicing, business model optimization, more funding, going international all the way to being a global player in that segment.

Failing of the enterprises

The single biggest mistakes enterprises can make is 1) never developed a comprehensive plan to identify the brilliant ideas, which their teams already have, 2) seeing the brainspark of an invention already as innovation and wonder why it is not successful in this highly competitive global economy, and 3) completely ignore the fact that innovative businesses require a lot of funding to become that innovative business everybody is dreaming about. Running innovation on the side and hoping for the magical growth and market disruption is simply childish.

What to do

  1. Seeing the act of invention as an ignition point from the process of innovation is a very helpful starting point.
  2. Developing trust in the Innovation Potential of a company’s employees is far better than looking into startups and hope that somebody thinks more like a startup. If they would,they would be gone.
  3. Rationalize that any major innovation is also a major investment and there is no difference between a startup and a global enterprise.
  4. Stop hoping that employees think like startup entrepreneurs. If they would they would be long gone and if they don’t they can much better contribute to an enterprise level innovation process.

In the past 4 years exploring the entire “Innovations Paradigm” based on our own experience building startups to billion dollar companies and working with other startups that became billion $ companies we finally developed methods and tools that harness the innovation power of an enterprise by bringing new ways of thinking and new working models and cultural elements to selected teams.

The Innovation Challenge

Corporations of all sizes, older than 15 years are in jeopardy. It is NOT LACK OF INNOVATION as such, it is lacking the UNDERSTANDING HOW TO INNOVATE. TEST: Tell your teams to be more innovate. The response to the question may be: “Yes, we’d love to do that, but please teach me what I must do to be innovative”. Your team learned to handle machines, compile algorithms, develop strategies and business plans, how to sell and how to market, create a long term financial forecast or how to hire talents. They never learned how to innovate or how to create a disruptive business model. Most even set innovation equal to invention. The real challenge is:
1) We need to understand how one creates ideas in the first place?
2) How these ideas may turn into an ‘innovation’?
3) How do we know that those ideas are actually something the market will buy?
4) When do we invest in such an innovation and how much?
5) How do we organize an innovation process from idea creation to market success?

Not lack of innovation but lack of understanding how to innovate

 

IN SEARCH OF INNOVATION

Most businesses are seriously challenged and try all kinds of ways: Creating an innovation lab, investing in startups, trying to observe young innovators, hire teams to be creative and innovate – and all kinds of random actions in the pursuit of “finding innovation”. This already went on for decades with no serious success. Young businesses continue to disrupt entire industry segments. Whether it is the car industry, the taxi industry, the hotel industry, the mobile communication industry, the micropayment industry, the mobile payment industry, and on and on and on. Who is next: the insurance industry, the airline industry, the food industry, the waste industry, the ITC industry, the automobile industry, the mechanics parts industry, the legal advice industry…  Every industry will experience major disruption in the coming years. And this is NOT because some come up with some crazy ideas and think differently. 200 to 500 out of 1 million startups make it. So that is not much . But those 200 – 500 disrupt any available industry. And will not wait for anybody.

LEARNING TO INNOVATE

Each and every corporation has its own innovations paradigm. Most don’t even know. The innovations paradigm is the entire complex from idea development in an R&D center or innovation lab to successful market entry. Today this is all experimentation, trial and error. And we apply the mechanisms that we know to find out. Yes we need to think very differently – but not how we try today. Funny enough we need to follow age old rules:

  • We need to find out how ideas are actually created and processed
  • Once we understand how our brain works, we can apply strategies to use it.
  • We then will need to dive far deeper into our business ecosystem than ever before
  • And finally develop radically different solutions that unfold an ideal way for customers
  • Leadership in this entire process can make it a repeatable process so one can continuously innovate

Implementing such a “Innovations Paradigm” into the enterprise is far less difficult as it may look, yet it is not done over night and requires the buy-in of the C-Level. When anybody says we need to think like a startup, WE is all of the company. And the key driver is always the CEO – Startup or Global Enterprise. Carl Benz, Henry Ford, Robert Bosch, Graham Bell, Robert Noyce, Steve Jobs, Bill Gates, Larry Ellison, Mark Zuckerberg, Jeff Bezos were all young crazy entrepreneurs when they started. And many of that league are just about to get disrupted from people who think and act different – but that thinking is no secret any more and not unique.

You may want to join our webinar series of how to innovate and how to get your team to true innovation.
http://www.society3.com/webinars/

@AxelS

Our world brings ever more new products to markets. And the growing population and their different needs and desires add an extra layer of complexity to the new product world. Products get faster copied than ever before but at the same time adjusted to the local needs. Uber could not catch up with the fast paced Asian market and eventually sold their operations to Grab. While Grab is similar in nature it is different in its execution. Grab is not a highly focused and perfectly executing organization like you would expect from the west. It does all kinds of things, offers countless other services and shows a convoluted set of offerings on their mobile app. As a foreigner you need to adopt to their needs. If you setup Grab as steven Smith, you will fail. Grab driver won’t take you because you most likely don’t speak their language and that is doomed to conflicts. So your only choice are Taxis, which like in the rest of the world drive you through town any way they like and then present you a horrendous bill. Nothing you can do. Just pay. Or, yo create an Asian identity like Tran Dug Tri. You may still get flagged but with an extra tip you may get through. Wanting to enter the Asian market with it’s 3.5 billion population. Get innovative in any way. A startup told me that they have no interest in entering the US or European market “Too small. Why should I invest in the effort and have still only 25% of the Asian Markt”.

Payment models in Asia are plentiful. Adopt or forget the market. Mobile Pay is omnipresent. Credit Card is so yesteryear. But Credit Card businesses don’t notice. Their market is not shrinking – yet. Only they missed about 1 Billion new customers – about the same size they have today. Missing a market that is double of your own but also your competitors miss it – makes it an interesting situation.

New Asian Car Manufacturer

E-Cars from Asia will disrupt the US and the European automobile market. And this is no longer about China, South Korea or Japan. VINGroup, a large Vietnamese Conglomerate will enter the global automobile market with all electric cars any soon. With a former GM executive on its helm, the new automaker VinFast will start selling cars in 2020. Now, Europe could prevent foreign car manufacturer to enter Europa but for the car manufacturer Europe is only a part of THEIR market. To prevent disruptors with legal action like against Uber, AirBnB and other innovative products is not an option. Innovate or get disrupted.

In the end, the world as a whole is a competitive space that provides amazing advantages for its consumers. And the advantage is not price!!! The advantages come as better, easier, more advanced products, better customer experiences and more what the up and coming generation actually is looking for – whatever that is at any given point in time.

Innovate or get disrupted

When we launched our first Accelerator Program, in San Francisco in April 2014, little did we know that we may end up as an innovation development organization. While we had great successes helping our startups thrive, and was named one of the top 100 most influential accelerators in the world, already one year later, in 2015, we noticed that our unique and methodical approach gave us an enormous advantage over all our competitors.  Unlike most accelerators, or program was scaleable. While “methodical approach” doesn’t sound right in a fast evolving startup ecosystem – it is one of those counter intuitive things about disruption in general. Our accelerator was in a similar way disruptive like all the four businesses we created before. After discussions with other accelerators about teaching disruption, it seemed to be equally odd. How can somebody teach disruption when each disruption is taking an entire industry onto a radically different course.

In 2016 we began to work on our first methodical approach to create disruptive business models. We looked for the key characteristic of disruption, how can one become disruptive and how can somebody come to a disruptive business model idea. In our 2016 accelerator we managed to get 5 out of 8 participating companies to create a disruptive business model. This was a totally unexpected success for us and our teams. We were hoping to get 1 out of 8 to achieve their goal.

Approximately 2 years of research and continuous observation of our own thought processes got us ever closer to understand certain mechanisms how our brain gets to ideas and how ideas are actually formed in our brain. In 2019 We began to realize that methodically guided thought processes show far better results than the random ideation and brainstorming processes. It felt a bit like the difference between randomly hitting piano keys and hitting them in a structured order. When hitting keys, we see our hand, get haptic feedback and kind of know what we do.

But we don’t really know – yet – how we trigger our roughly 85 billion neurons and trillions of synapsis. We learned that those neurons are not statically connected to each other but can dynamically “rewire” themselves. That means our 1,000 Trillions of network nodes are a masterpiece of information aggregation and dynamic association. In a nutshell: Ideas get formed based on dynamic connections of our neurons, which in turn carries information that we accumulated one way or the other from the moment we have been created as an embryo.

To build an analogy to a computer, we don’t need to know the billions of transistors in a CPU and all the connected chips and devices – all we need to know is a programing language to develop code that know where to go. Very similarly we need to know a language or method that triggers the brain’s trillions of synapse through their neural networks. With that understanding we started to model ways to create innovative and disruptive concepts with an astounding high success rate. Getting a glimpse of an understanding how the brain works was an interesting step in understanding innovation creation.

All this is just the very beginning of a journey to come.

 

The Growth Accelerator and the brand new Entrepreneurs Academy are now open for applications.
Lots of news:

  1. Updated Growth Accelerator Program
  2. New Entrepreneurs Academy
  3. Partnership with World Innovations Forum

Updated Growth Accelerator Program

we added a new session INNOVATIVE THINKING based on our experience with “Disruptive Business Model Development”. It’s all about thinking out of the box, creative, big… but how do you actually shape your thinking process? In this new session, we teach you how to actually think innovative.
Admittedly – our all online accelerator program failed in emerging countries. Hence we are back to the former and highly successful “hybrid model”, consisting of a one week bootcamp and 10 weeks online program.

New Entrepreneurs Academy

Between fall last year and now we developed an all new Entrepreneurs Academy program. This is thought to be a precursor to the growth accelerator. It covers the key topics of entrepreneurship, company purpose, team development without a budget, business concept & funding, and so forth.

Partnership with World Innovations Forum

The partnership with the World Innovations Forum Foundation allows us to give stipends with substantial discounts, up to 99% to attendees from emerging and developing countries. It may also allow us to provide stipends for teams in developed countries with special conditions.

 

 

Share

The post Accelerator Open for Applications appeared first on San Francisco Accelerator.