The Lean LaunchPad Goes to High School

Posted on February 28, 2013 by steveblank

While the Lean LaunchPad class has been adopted by Universities and the National Science Foundation, the question we get is, “Can students in K-12 handle an experiential entrepreneurship class?”  Hawken School has now given us an answer.

Hawken is an independent school for grades K-12 in Cleveland, Ohio, committed to the idea that students learn more “by doing than by listening.” Experiential education is threaded in the school’s DNA.

Doris Korda, spent the first 15 years of her career in the high-tech industry and is now the Associate Head of School. Natasha Chornesky, who ran a publishing business, is the Director of Entrepreneurial Studies.  They both attended our latest Lean LaunchPad Educators Class. These two posts are what they did when they returned.

Part one is about Hawken School’s experience using the Lean LaunchPad curriculum for high school seniors, part two is what happened when they used it for 6th- to 8th-graders.

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High School Entrepreneurship:  Choosing the Lean LaunchPad over a Mini-MBA Program
Adopting the Lean LaunchPad instead of a “mini MBA program” for Hawken students made good sense pedagogically, (we knew that searching for a viable business model is the core of entrepreneurship,) though it presented some challenges in perception:

  • None of the neighboring high schools was using the Lean LaunchPad
  • Most of these schools have entrepreneurship classes focused on students making crafts and selling them
  • Other schools curricula were steeped in traditional management and economics texts

Having taught grades 6-12, survived two “tours of duty” as a middle school principal, and designed curriculum for grades 3 and up, it was obvious to me that Steve’s Lean LaunchPad provides an accessible framework for young students to search successfully. We started with a few hypotheses, and iterated and pivoted to a successful program.Hawken High School Students

Hypothesis 1:
High school students will come through the door burning with passion to transform an idea into a business.

Reality: My seniors arrived to class with no ideas and no idea that they needed an idea. They thought they were learning about other people’s ideas in case studies and articles. They didn’t think they’d be doing entrepreneurship.

Practice:  We created time in class to share ideas. I framed the search for a viable business model as the focus. We determined as a class that we wouldn’t pass judgment on ideas until we dove into the customer development process. I stressed to the students they would be assessed on their ability to move through the Customer Development process, rather than be graded on an idea’s perceived worth. How quickly can you test hypotheses, learn from the tests, iterate?

Currency in my class became the ability to quickly test hypotheses, iterate and pivot.  It would be several months before my seniors, obsessed with college admissions, embraced this methodology, which felt so foreign at the onset.

Still apprehensive about working on their own businesses, I connected them with local entrepreneurs, but with a twist. Following Steve’s Golden Rule that entrepreneurs were not allowed as guest speakers in class, I went out to the community and located entrepreneurs who needed help with their customer discovery process. I worked with the entrepreneurs to craft a deliverable that was both helpful to them and with which my students would be successful. One of the requirements was that my students had to get out of the building and start talking to customers. Students blogged using Steve’s four prompts, below. The more they were out in the field, the stronger their entrepreneurial mindset grew, which was reflected in their posts.

  • This is what I thought . .  .
  • This is what I learned . . .
  • This is what I am doing next . . .
  • This is what I am keeping in mind . . .

Result: By the end of the first semester, the world opened up, questions and opportunities popped up everywhere, even where kids previously had seen failure or disappointment. Students’ entrepreneurial mindsets had permeated the most unlikely places.  “I don’t know what is going on in your class, but these kids have changed. Their entire mindset is different and the way they are showing up in the college admissions process is really different—in a great way,” remarked Director of College Admissions, Andrea Hays.

Hypothesis 2:
Hawken’s entrepreneurship class needed to look and feel familiar to students, parents and others in order to be successful.

Reality: A local school that is held as the pinnacle of entrepreneurship education uses Harvard case studies, so I thought we should, too. We were three-quarters of the way through the year and we hadn’t touched one. We didn’t need them.

The customer discovery and development process provides real experience, and real experience trumps case studies.  Plus, kids will tell you that the cases are the same old problems and they’ve already been solved.  Reading and discussing problems is never as meaningful as experiencing the problem, which can only be achieved by getting out of the building.

Practice:  Throughout the entire first semester, I maintained a routine of weekly take-home quizzes. Quiz questions asked students to use their favorite businesses to flush out business models using the Business Model Canvas. While the students aced these quizzes, they quickly forgot the information.

Initially students craved a syllabus, a checklist and the opportunity to easily memorize and regurgitate facts and concepts, and wanted to be told what to do. By second semester, they outgrew these needs. “We’re biased toward action and the action is always changing,” explains senior Peter Labes, adding, “We’ve learned to prioritize based on urgency, which is a lot different than operating off a teacher’s checklist.”

Iteration: I “flipped the classroom” by switched from assigning chapters to read to assigning Steve’s Udacity videos. Understanding, enthusiasm and retention increased. I abandoned the weekly quizzes and instituted weekly “here’s what I learned for customer discovery” presentations from the students , followed with a class Q&A session. The presentations demonstrated their hypotheses tested, results, customer interactions and iterations. I graded the presentations and I graded the verbal feedback students offered one another.

When the quality of the verbal feedback became such that there was too much great information for kids to just remember, I introduced the use of Steve’s live feedback through Google Docs. At first my seniors giggled and snickered and told me I was nuts to put this tool in their hands. We talked about the value of immediate meaningful feedback. They quit giggling. We’re never going back. The quality of feedback and the quality of the presentations has increased exponentially.  “I opened up the Google Doc to review the commentary from my classmates about the slide decks. The variety, complexity and creativity of ideas were impressive. Some people touched on concepts that our four-person group hadn’t even thought to consider. There really is strength in numbers,” writes a senior in her blog.

What’s next: Having completed in-depth customer discovery my students will be the first to tell you that “Being an entrepreneur is a TON of work!” Returning from spring break, the entire class will break up into teams and commence their own search for a viable business model for a passion-driven idea. It’s going to be dirty, messy and lots of time outside the building.

Result: “At the beginning of the year, we were scared to commit ourselves,” explains senior Emily Leizman. ”We worked, but not 100%. Now, we’ve worked the customer development process for three companies and we treated them like our own. We’re working at 110% commitment now, so it’s time to do it for ourselves. We’re ready,”

Lessons Learned

  • The Lean LaunchPad methodology is proven. Go 100% from the start.  Don’t phase it in.
  • Be transparent with your students. Your class is in Startup mode. Embrace failure.
  • Kids have less to “unlearn” than older students and they are naturally excited by Lean LaunchPad 100% experiential methodology.
  • Be clear in your mind that the skills acquired through Lean LaunchPad methodology trump content and act accordingly. Act tough, too.
  • Remind kids that they are being assessed on how quickly they learn from testing their hypotheses and how quickly they iterate and pivot.
  • Leverage your local entrepreneurship community in meaningful ways, instead of using them as guest speakers.

In the next post, 6-8th graders use the Lean LaunchPad at Hawken School.

Filed under: Lean LaunchPad, Teaching | 17 Comments »

Failure and Redemption

Posted on February 26, 2013 by steveblank

“What’s gone and what’s past help
Should be past grief.”

William Shakespeare - The Winter’s Tale

We give abundant advice to founders about how to make startups succeed yet we offer few models about dealing with failure.

So here’s mine.
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In my experience, living through failure has 6 stages:

  • Stage 1: Shock and Surprise
  • Stage 2: Denial
  • Stage 3: Anger and Blame
  • Stage 4: Depression
  • Stage 5: Acceptance
  • Stage 6: Insight and Change

While I had been part of a few failed startups, none of them had fallen squarely on my shoulders until Rocket Science Games where my business card said CEO. It was there that I lived through all 6 stages and came out the other side a changed man.

Failure

Stage 1: Shock and Surprise
We raised $35 million and after 18 months made the cover of Wired magazine. Wired 2.11 CoverThe press called Rocket Science one of the hottest companies in Silicon Valley and predicted that our games would be great because the storyboards and trailers were spectacular. 90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening to me.

Stage 2: Deny any of it was your fault
In my mind, I had done everything the investors asked me to do. I raised a ton of money and got a ton of press. We hired everyone according to our plan. It was everyone else who screwed up. I did everything right.

Stage 3: Get angry and blame everyone else
This was the fault of my cofounder since he was in charge of game development, it was the engineers who bailed on me, it was the sales and marketing people who didn’t tell me how bad the games were, it was the VC’s who refused to put any more money in the company, it was Sega’s fault for making a bad gaming platform…

State 4: Get depressed
When the inevitability and magnitude of the failure sunk in, I slept in a lot. There were days I’d get up late and go to bed again at 5 pm. I lost interest in anything associated with my past industry. (To this day I still can’t play a video game.)

Redemption

Step 5: Gradually accept your role in the failure
A few weeks after leaving, I began to think about what I should have done, could have done and pondered why I didn’t do it. (I didn’t listen, I didn’t act, I didn’t own my role as CEO, I wasn’t prepared to do what was right or leave.) This was hard and didn’t happen overnight. My wife was a great partner here. I often reverted to Stages 2 and 3, but over time I took ownership of my primary role in the debacle.

Stage 6: Gain insight and change your behavior
This was the hardest part. While I stopped blaming others, understanding what I could change in my behavior took long months. It would have been much easier to just move on, but I was looking for the lessons that would make my next startup successful. I looked at the patterns of behavior, not just at my last company but also across my entire career. I learned how to dial back the hubris, get other smart people to work with me – rather than just for me, listen better, and act and do what was right – regardless of what others thought I should do.

Epilogue
For my next startup I parked the behaviors that drove Rocket Science off the cliff. We established a team of founders who worked collaboratively. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.

Now when I listen to entrepreneurs who’ve cratered a company, I listen for their stories of failure and redemption.

Lessons Learned

  • Six stages of failure and redemption
  • Don’t get stuck in Stages 2, 3 or 4  - move forward
  • Don’t skip acceptance of your role
  • Get to insight so you can change your behavior—then commit to the challenge of doing it differently the next time

Filed under: Family/Career/Culture, Science and Industrial Policy | 48 Comments »

Why Big Companies Can’t Innovate

Posted on February 23, 2013 by steveblank

My friend Ron Ashkenas interviewed me for his blog on the Harvard Business Review. Ron is a managing partner of Schaffer Consulting, and is currently serving as an Executive-in-Residence at the Haas School of Business at UC Berkeley. He is a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.  For what I had thought were a few simple ideas about taking what we’ve learned about startups and applying it to corporate innovation, the post has gotten an amazing reaction. Here’s Ron’s blog post.

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What’s striking about Fast Company’s 2013 list of the world’s 50 most innovative companies is the relative absence of large, established firms. Instead the list is dominated by the big technology winners of the past 20 years that have built innovation into their DNA (Apple, Google, Amazon, Samsung, Microsoft), and a lot of smaller, newer start-ups. The main exceptions are Target, Coca Cola, Corning, Ford, and Nike (the company that topped the list).

It’s not surprising that younger entrepreneurial firms are considered more innovative. After all, they are born from a new idea, and survive by finding creative ways to make that idea commercially viable. Larger, well-rooted companies however have just as much motivation to be innovative — and, as Scott Anthony has argued, they have even more resources to invest in new ventures. Sowhy doesn’t innovation thrive in mature organizations?

To get some perspective on this question, I recently talked with Steve Blank, a serial entrepreneur, co-author of The Start-Up Owner’s Manual, and father of the “lean start-up” movement. As someone who teaches entrepreneurship not only in universities but also to U.S. government agencies and private corporations, he has a unique perspective. And in that context, he cites three major reasons why established companies struggle to innovate.

First, he says, the focus of an established firm is to execute an existing business model — to make sure it operates efficiently and satisfies customers. In contrast, the main job of a start-up is to search for a workable business model, to find the right match between customer needs and what the company can profitably offer. In other words in a start-up, innovation is not just about implementing a creative idea, but rather the search for a way to turn some aspect of that idea into something that customers are willing to pay for.

Finding a viable business model is not a linear, analytical process that can be guided by a business plan. Instead it requires iterative experimentation, talking to large numbers of potential customers, trying new things, and continually making adjustments. As such, discovering a new business model is inherently risky, and is far more likely to fail than to succeed. Blank explains that this is why companies need a portfolio of new business start-ups rather than putting all of their eggs into a limited number of baskets. But with little tolerance for risk, established firms want their new ventures to produce revenue in a predictable way — which only increases the possibility of failure.

Finally, Blank notes that the people who are best suited to search for new business models and conduct iterative experiments usually are not the same managers who succeed at running existing business units. Instead, internal entrepreneurs are more likely to be rebels who chafe at standard ways of doing things, don’t like to follow the rules, continually question authority, and have a high tolerance for failure. Yet instead of appointing these people to create new ventures, big companies often select high-potential managers who meet their standard competencies and are good at execution (and are easier to manage).

The bottom line of Steve Blank’s comments is that the process of starting a new business — no matter how compelling the original idea — is fundamentally different from running an existing one. So if you want your company to grow organically, then you need to organize your efforts around these differences.

Filed under: Big Companies versus Startups: Durant versus Sloan, Business Model versus Business Plan | 21 Comments »

Crazy enough to change the world

Posted on February 19, 2013 by steveblank

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.“

Steve Jobs, Stanford University commencement speech, 2005

Last week one of our mentors abruptly resigned from coaching one of the Lean LaunchPad student teams after claiming the students were ignoring his practical advice and years of expertise in the field.

His reaction reminded me one more time why entrepreneurship is an art, why VC’s manage portfolios of companies and why new ideas come from those who don’t respect the status quo.

I’m a Domain Expert Damn It
We always assign experienced mentors to our student teams. In this class this seemed like a perfect fit – a driven (irrational?) founder paired with a mentor who had two operating companies in this space, who had developed and sold vertical market software to companies in this space, and had studied the field as an academic specialty. A match made in heaven?  Not exactly.

The mentor tried his best to get the team to look at the actual operating data that exists for this kind of service and the likely regulatory hurdles they will find. He was very negative about the concept and strongly suggested the team do a pivot, but the founder was very determined to make a go of his concept.

He finally quit in frustration.

And here’s the conundrum – given a wise mentor (or VC) with years of experience telling you it’s a bad idea – what should you as the founder do?

Are You Crazy Enough?
What we suggest to teams in the classroom is the same as I suggest to teams in real world startups – after customers and experienced people are telling you it won’t work –

  1. Are you passionate enough to still believe?
  2. Can you explain after why getting out of the building and hearing all the negative news you still want to persevere?
  3. Will it change the world enough to make it worth the trials, travails and pain in getting there?

If so, ignore the other voices. The world moves forward on those who are dissidents. Because without dissent there is no creativity. A healthy disrespect for the status quo coupled with passion, persistence and agility trumps everything else.

Filed under: Customer Development, Teaching | 34 Comments »

Entrepreneurs Experience – Do It and Learn It

Posted on February 7, 2013 by steveblank

In 2012, in partnership with Stanford University, U.C. Berkeley and NCIIA, Jerry Engel and I first offered the Lean LaunchPad Educators Class. The class was designed to teach educators (and the adjunct entrepreneurs that support them) the Lean LaunchPad approach (Business Model Design, Customer Development and Agile Engineering) for teaching entrepreneurship. In addition the class offers a suggested “Lean Entrepreneurship” curriculum and the details of how to teach the capstone Lean LaunchPad class.

Matthew Terrell attended our latest Lean LaunchPad Educators Class. Matthew is an Adjunct Professor of Entrepreneurship at the University of Delaware where he teaches Introduction to Entrepreneurship in course called Entrepreneurs Experience.

He’s the Founder of Vision Creations & Founders Films. Matt asked some of the toughest questions in the class.

Matthew Terrell

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I came to the Lean LaunchPad Educators Program 2 ½ day workshop to learn from the best in the business of entrepreneurship education. My fellow attendees were an accomplished collection of international entrepreneurs, investors, educators and in most cases, comprised all three disciplines.  I had posed many questions during the three-day workshop, but I was struggling to accept the answer Steve now provided.

During the last session of the program I raised my hand and asked Steve, “Based on what we were learning about the Customer Discovery process, would my students develop a better understanding of entrepreneurship by learning Customer Discovery methods, or by launching a business during the semester generating as much as $50K in sales.” Steve’s answer to my question made me physically and emotionally uncomfortable.

Steve replied, “You have to decide if you’re running an incubator whose goal is revenue or teaching students a methodology that will last them the rest of their lives. The students would be better served if they passed on the cash if it meant they developed a better grasp of the key skills needed to be successful entrepreneurs.” I awkwardly shifted the weight around in my chair, my body tensed up, and I could not believe my ears. Steve said I was welcome to disagree with him, but in the long term, the students would be better off in their careers learning Customer Discovery skills. (To be fair Steve did point out that he did have teams that did both in class. Krave Jerky started in his Berkeley class and showed up with a $500K check from Safeway in the middle of course.) Far be it from me to disagree with a legend, but I struggled to digest his advice.

Take the Money First?
I am a founder first and an adjunct professor second.  I am opportunity-obsessed, and I believe the advice I received from Babson President, Len Schlesinger: “Action Trumps Everything.” I love entrepreneurship because it is a full contact sport, requiring complete commitment. New ventures favor the hard-working hustler over the naturally gifted individual. I love teaching entrepreneurship because it sparks a fire in students. As with many educators in this field, I evaluate my success based on the number of new ventures that emerge from our class. Starting a business is a hands-on endeavor, and I am thrilled when my students take action and execute.

Admittedly I have traditionally taught my course with an emphasis on the business plan as the students’ culminating final project.  Last year in recognizing the power of the business model canvas, I changed the final project to an Entrepreneurs Action Plan that required two pages of text on each of the nine canvas blocks, and students were required to create an Advisory Board.  I felt this was an effective approach but during the Lean LaunchPad workshop, I came to accept the death of the business plan. Steve explained (smiling) that the business plan was most appropriate in a University’s English department, specifically in its creative writing courses as they were all fiction. (What he really said, was that an operating plan comes after you have some facts.)

During the break between sessions at the Lean LaunchPad workshop, I could not resist the opportunity to delve further into this topic with Steve. I explained my position: theories and models are useful learning tools, but nothing beats actual business development experience. We agreed, then, the question remains: What is the goal and desired outcome of the class?  My goal is to teach the key skills needed to become a successful founder. Steve said that if this was my goal, then indeed, the Customer Discovery approach is best.

What’s the Goal of Teaching Entrepreneurship?
This concept has consumed me since I returned from the workshop. In trying to accept Steve’s perspective, I surmise that perhaps the customer interview process is not a theoretical feedback survey or focus group, but in fact, it is as dirty as direct sales.  I continue to grapple with the issue and will see it firsthand in my class this semester, as my students dive deeper searching during the interview process.

Steve’s second piece of advice I struggle with is the removal of guest speakers. As part of my course, I created Founders Forum, where I host entrepreneurs to come share their early work experiences, their stories building their businesses, their lessons learned, and their advice to aspiring entrepreneurs. I find the firsthand accounts to be extraordinary learning tools for both my students and for me.  I discourage PowerPoints and recommend the speakers candidly share experiences from the front lines.  Additionally, meeting with speakers grants students an opportunity to develop networking skills. Furthermore, I find the Founders Forum to be a helpful tool in creating a more vibrant local entrepreneurial ecosystem. Steve said, “guest speakers are a wonderful addition to the entrepreneurship curriculum, (and ought to be part of every program as in Stanford’s ecorner speaker series) but they are a distraction in this class. The purpose of the Lean LaunchPad class is full immersion in customer discovery – everything else is a distraction.”

Changes
Since returning from the workshop I rewrote my curriculum and started class last night.  It may best be described as Lean LaunchPad Light. We are using much of the Lean methodology for our curriculum, but I also include key career development skills.

Alexander Osterwalder’s Business Model Generation and Steve’s Udacity Lean LaunchPad Lectures are required reading/viewing.  Additionally I recommend but I do not require: Startup Owner’s Manual, Founders at Work and the Founders Films clips. I also recommend students keep a personal journal for mind-mapping and brainstorming business ideas. The first exercise we do in class is Dave McClure’s Half-Baked game (but students also have to use the Value Proposition & the Customer Segment.) This exercise demonstrates the need to be flexible in business.

Additional outside readings includes a number of excellent book summaries ranging from Tina Seelig’s InGenius, Tom Kelley’s 10 Faces of Innovation, Anthony Tjan’s Hearts, Smarts Guts and Luck and Dan Pink’s To Sell is Human.

Steve’s insight and inspiration during the Lean LaunchPad Educators Program was extraordinary. I am enormously grateful for the opportunity to learn from the legend and exchange ideas with the best in the field. I appreciate Steve’s continued advice as I do my best to carry the Lean LaunchPad flag in Delaware.

Filed under: Customer Development, Lean LaunchPad, Teaching | 13 Comments »

Qualcomm’s Corporate Entrepreneurship Program – Lessons Learned (Part 2)

Posted on January 30, 2013 by steveblank

I ran into Ricardo Dos Santos and his amazing Qualcomm Venture Fest a few years ago and was astonished with its breath and depth.  From that day on, when I got asked about which corporate innovation program had the best process for idea selection, I started my list with Qualcomm.

This is part 2 of Ricardo’s “post mortem” of the life and death of Qualcomm’s corporate entrepreneurship program.  Part 1 outlining the program is here. Read it first.

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What Qualcomm corporate innovation challenges remained?
Ironically, our very success in creating radically new product and business ideas ran headlong into cultural and structural issues as well as our entrenched R&D driven innovation model:

  • Cultural Issues:  Managers approved their employees sign-up for the bootcamp, but became concerned with the open-ended decision timelines that followed for most of the radical ideas.  Employees had a different concern – they simply wanted more clarity on how to continue to be involved, since formal rules of engagement ended with the bootcamp.
  • Structural Issues:  Most of the radical ideas coming out of the 3-month bootcamp possessed a high hypotheses-to-facts ratio.  When the teams exited the bootcamp, however, it was unclear which existing business unit should evaluate them. Since there weren’t corporate resource for further evaluation, (one of our programs’ constraints was not to create new permanent infrastructures for implementation,) we had no choice but to assign the idea to a business unit and ask them to perform due diligence the best they could. (By definition, before they had a chance to fully buy into the idea and the team).

With hindsight we should have had “proof of concepts” tested in a corporate center (think ‘pop-up incubator’) where they would do extensive Customer Discovery. We should had done this before assigning the teams to a particular business unit (or had the ability to create a new business unit, or spin the team out of the company).

The last year of the program, we tried to solve this problem by requiring that the top 20 teams first seek a business unit sponsor before being admitted into the bootcamp (and we raised a $5 million fund from the BUs earmarked for initial implementation ($250K/team.) Ironically this drew criticism from some execs fearing we might have missed the more radical, out-of-the box ideas!

  • Entrenched Innovation Model Issues:  Qualcomm’s existing innovation model – wireless products were created in the R&D lab and then handed over to existing business units for commercialization – was wildly successful in the existing wireless and mobile space. Venture Fest was not integral to their success. Venture Fest was about proposing new ventures, sometimes outside the wireless realm, by stressing new business models, design and open innovation thinking, not proposing new R&D projects.These non-technical ideas ran counter to the company’s existing R&D, lab-to-market model that built on top of our internally generated intellectual property.  The result was that we couldn’t find internal homes for what would have been great projects or spinouts. (Eventually Qualcomm did create a corporate incubator to handle projects beyond the scope of traditional R&D, yet too early to hand-off to existing business unit).

We were asking the company’s R&D leads, the de-facto innovation leaders, who had an existing R&D process that served the company extremely well, to adopt our odd-ball projects. Doing so meant they would have to take risks for IP acquisition and customer/market risks outside their experience or comfort zone. So when we asked them to embrace these new product ideas, we ran into a wall of (justified) skepticism. Therefore a major error in setting up our corporate innovation program was our lack of understanding how disruptive it would be to the current innovation model and to the executives who ran the R&D Labs.

What could have been done differently?
We had relative success flowing a good portion of ideas from the bootcamp into the business and R&D units for full adoption, partial implementation or strategic learning purposes, but it was a turbulent affair.  With hindsight, there were four strategic errors and several tactical ones:

1)   We should have recruited high level executive champions for the program (besides the CEO). They could have helped us anticipate and solve organizational challenges and agree on how we planned to manage the risks.

2)   We should have had buy-in about the value of disruptive new business models, design and open innovation thinking.

3)   We unknowingly set up an organizational conflict on day one. We were prematurely pushing some of the teams in the business units. The ‘elephant in the room’ was that the Venture Fest program didn’t fit smoothly with the BU’s readiness for dealing with unexpected ‘bottoms up’ innovation, in a quarterly- centric, execution environment.

4)   Our largest customer should have been the R&D units, but the reality was that we never sold them that the company could benefit by exploring multiple innovation models to reduce the risks of disruption – we had taken this for granted and met resistance we were unprepared to handle.

Qualcomm Lessons Learned

Qualcomm Lessons Learned

  • The Venture Fest program truly was ground breaking.  Yet we never told anyone outside the company about it. We should have been sharing what we built with the leading business press, highlighting the vision and support of the program’s originator, the CEO.
  • We should have asked for a broader innovation time off and incentive policy for employees, managers, and executives.  Entrepreneurial employees must have clear opportunities to continue to own ideas through any stage of funding – that’s the major incentive they seek.  Managers and execs should be incentivized for accommodating employee involvement and funding valuable experiments.
  • We needed a for a Proof of Concept center.  Radical ideas seldom had an obvious home immediately following the bootcamp.  We lacked a formal center that could help facilitate further experiments before determining an implementation path.  A Proof of Concept center, which is not the same as a full-fledged incubator, would also be responsible to develop a companywide core competence in business model and open innovation design and a VC-like, staged-risk funding decision criteria for new market opportunities.
  • It’s hard to get ideas outside of a company’s current business model get traction (given that the projects have to get buy-in from operating execs) – encouraging spin-offs is a tactic worth considering to keep the ideas flowing.

Epilogue
The program became large enough that it came time to choose between expanding the program or making it more technology focused and closely tied to corporate R&D. In the end my time in the sun eventually ran out.

I had the greatest learning experience of my life running Qualcomm’s corporate entrepreneurship program and met amazingly brave and gracious employees with whom I’ve made a lifetime connection.  I earnestly believe that large corporations should emulate Lean Startups (Business model design, Customer Development and Agile Engineering.)  I am now eager to share and discuss the insights with other practitioners of innovation – I can be reached at ricardo_dossantos@alum.mit.edu

Lessons Learned

  • We now have the tools to build successful corporate entrepreneurship programs.
  • However, they need to match a top-level (board, CEO, exec staff) agreement on strategy and structure.
  • If I were starting a corporate innovation program today, I’d use the Lean LaunchPad classes as the starting framework.
  • Developing a program to generate new ideas is the easy part.  It gets really tough when these projects are launched and have to fight for survival against current corporate business models.

Filed under: Big Companies versus Startups: Durant versus Sloan, Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 10 Comments »

Designing a Corporate Entrepreneurship Program – A Qualcomm Case Study (part 1 of 2)

Posted on January 28, 2013 by steveblank

I ran into Ricardo Dos Santos and his amazing Qualcomm Venture Fest a few years ago and was astonished with its breath and depth.  From that day on, when I got asked about which corporate innovation program had the best process for idea selection, I started my list with Qualcomm.

This is Ricardo’s “post mortem” account of the life and death of a corporate entrepreneurship program.  Part 1 outlining the program is here.  Part 2 describing the challenges and “lessons learned” will follow.

———-

The origin
In 2006, as a new employee of the Fortune 100 provider of wireless technology and services, San Diego’s Qualcomm, I volunteered to salvage a fledging idea management system (fancy term for an online suggestion box) by turning into a comprehensive corporate entrepreneurship program.

Qualcomm’s visionary CEO, Paul Jacobs, wanted to use internal Qualcomm ideas to find breakthrough innovation that could be turned into products, (not simply a suggestion box for creative thoughts or improving sustaining innovation.)  He gave my innovation team free reign on designing a new employee innovation program. His only request was that we keep two of the original program’s goals:

1. The program had to remain fully open to employees from all divisions.
2. The ideas were to be implemented by existing business or R&D units – i.e., no need to create new permanent infrastructures for innovation.

And he added a third goal that would ensure his greater involvement and support going forward.

3. The program had to have an efficient mechanism to bubble-up the best ideas (and their champions) to the timely attention of the top executive team.

The design challenge

We wanted to transform our simple online suggestion box into a program that encouraged employees to behave like intrapreneurs (and their managers and executives as enablers).  Our challenge was to design a program that could:

  • Teach participants on how to turn their ideas into fundable experiments.
  • Educate employees who submit ideas that in corporations, there is no magic innovation leprechaun at the end of the rainbow that turn their unsolicited suggestions into pots of gold – they themselves had to take ownership and fight for their ideas.

All while keeping in mind that employees, managers and executives have day jobs – so how could we ask them to spend significant time on new ideas while not sacrificing their present obligations?

Thus began our search for a program that would properly balance the focus on the present with the need to increase our options for the future.

Qualcomm Innovation Process

Qualcomm Innovation Process

Qualcomm’s Corporate Entrepreneurship Program – Venture Fest
In 2006 we searched outside of Qualcomm for other similar entrepreneurship programs where participants also had to balance other obligations.  We realized this mechanism had been occurring for years at University’s startup competitions, such as the MIT 100K Accelerate Contest.   In these competitions, multidisciplinary self-forming teams of students work part time to pitch new companies.  The program we implemented inside of Qualcomm ended up being very similar.  We dubbed the program Qualcomm’s Venture Fest and the process, “Collective Entrepreneurship”, a three-phase program combining crowdsourcing with entrepreneurial techniques for startup creation.

The first phase of the program leveraged the idea management system to collect a large number of competing entries then ultimately down-selected to the top 10-20 concepts with the most breakthrough potential, according to peer and expert reviews.

Qualcomm Venture Fest

Qualcomm Venture Fest

The second phase, and heart of the program, was a three-month, part time bootcamp that would prepare idea champions for the internal funding battle that followed.  The bootcamp requested that participants do what entrepreneurs do before requesting seed funding  – Discover, Network and Accelerate.  (In hindsight we were having our employees get out of the building to talk to customers, build prototypes and generate partner interest – essentially doing Customer Discovery years before Steve Blank taught his Lean LaunchPad class at Stanford and the National Science Foundation!). Our employees faced the typical impediments to corporate entrepreneurship – lack of employee time, skills, connections, pre-seed money, and official sources to discuss and manage the risk/rewards tradeoffs of sticking your neck-out. So our program staff built a support system of contextual education, mentorship, micro-funding, and hands-on coaching.

Finally, the third phase of the program, implementation, began with the top team’s pitches to the C-level executive team, which determined the competition winners, prize money and directed other promising teams to target business unit sponsors. Our program staff facilitated the handoff and disseminated the value extracted from any funded experiments, including future option, strategic and exit value.

In retrospect we designed something akin to a startup accelerator, the Lean LaunchPad classes or the National Science Foundation’s Innovation Corps, although none of these existed in 2006.

What went right?
We had C-level support. The CEO of the company embraced the program and supported the process, especially since it brought novel and thought provoking ideas to his executive team’s attention.

The program steadily generated healthy interest from Qualcomm employees – submissions grew from 82 in the first year to over 500 in its fifth and final year.  Several ideas were fully or partially implemented, (with hundreds of millions of USD invested), with a couple of genuine breakthrough successes, and hundreds of related patents were filed.  Employees reported noticeable gains in entrepreneurial skills and attitude, and the CEO seemed happy with how his baby was being raised.

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Part 2 – challenges and lessons learned – is here.

Filed under: Big Companies versus Startups: Durant versus Sloan, Business Model versus Business Plan, Customer Development, Teaching | 8 Comments »

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