Transformation Lessons from the Corporate Trenches

I thought it might be fun to post some hard-learned lessons regarding corporate incubation and strategy. Ten weeks and ten posts later, I thought it would be handy to roll them all up into an article. Here we go!

First, why do you do what you do? You must know why you are embarking on this journey to build/operate/join a corporate incubator, accelerator, or startup.

Is it to: Equip future company leaders, including yourself? Inform corporate strategy or enhance the brand? Build a new company core? Explore adjacency? Knowing why will impact your vision for success, your methods, your hiring, and your metrics. Recognize from the start that success means investing in many different 'what's and trying many different 'how's but your why is your north star...

Who cares? Who has given you corporate permission to succeed? Who presents an existential risk to your mission?

Success in support of company strategy is often in conflict with traditional operations and will ruffle some feathers. Find your advocates - especially those with authority to give you permission to do what is necessary for success. And just as importantly, what relationships have you nurtured in advance of the day those advocates are no longer in a position of support?

Set the Bar! Assuming you know why you're investing in growth and who has a vested interest, you now have to set the bar for those that follow your lead.

Like the old adage about good revenue and bad revenue, your company has a definition of attractive growth. Your job is to make that definition explicit and then challenge the risk takers to develop plausible scenarios that exceed it.

Too smart for your own good? Serial entrepreneurs gain experience and resourcefulness with every venture. Sounds good, right? It's actually dangerous for corporate innovators and strategists.

A dollar spent furthering an opportunity with a low probability of success has a bigger negative impact on the company than a dollar lost by giving up too soon. A venture or strategy full of compromises can create a 'false positive' growth path that leads you astray and wastes time and resources.

David Packard famously observed that organizations die from indigestion not starvation. The concept evaluation team at Google X for example, emphasizes finding a fatal flaw - a reason to stop - over searching for a plausible path forward. Of course, the part of the company entrusted with the core business needs to be more resilient. Trust me, when it comes to corporate incubation and strategy development there are always great opportunities just waiting for your attention. Celebrate failure and move on!

Successful organizations build execution competencies that make them well suited to assess (surprise!) execution risk. As a strategist and an agent of growth your job is to focus on existential risk.

Focus on situational awareness, identifying possibilities, estimating probabilities, and experimental sprints that inform your strategy. Once you have studied the things you can't control and met your threshold for acting, trust that your execution arm will sweat the things you can control.

Invest as if it was your own money.

With your personal investments you hopefully have some awareness of your risk tolerance and have designed a portfolio mix that balances your desire for gains with the magnitude of potential losses. If you're paying attention, you're changing your portfolio allocation over time as your risk tolerance and priorities change.

Managing a growth innovation portfolio is like managing your own money. What factors into an innovation portfolio mix? You can choose to take a number of risky bets where each could meet your growth goal or you can choose to build a portfolio of higher confidence but lower return ventures that in aggregate meet your goal. You may also choose to balance growth ventures with efficiency ventures - those risky investigations that you know you can complete more cheaply/quickly than the rest of the company. Somewhat like growth stocks, dividend stocks, and bonds...

We once had an influential executive sponsor who liked to say, "I want all the crazy sh*t in one place so I can both protect it and contain it." He was in fact doing portfolio management at another level! How is your growth portfolio allocated? Is it aligned to your mission? When did you last check?

Don't play it safe... In addition to portfolio risk vs. return, there is another key component of your innovation engine that needs to remain in balance - the risk vs. reward for your people.

If your innovation program is part of a leadership development plan then you must ensure that participants are afforded every opportunity to have an impact upon graduation. Don't expose a high potential employee to a broad entrepreneurial role with high autonomy and then slot him or her into a narrow role back in the machine of the core business. In the case where you are searching for growth and competing with more nimble members of the ecosystem, you must energize your entrepreneurs by allowing them to participate in the venture upside - and even potentially removing some aspects of the safety net that exists in the mature business.

Self-awareness is key. As much as you may want corporate startups to behave like external startups, some differences are insurmountable and others are too distracting or expensive to address.

In the corporate startup context, your responsibility is to prioritize learning - which often means resisting the tendency to follow the 'race to market' playbook. Don't start doing the things you know how to do well while existential questions remain. Build confidence in those areas as quickly and cheaply as possible, moving from key question to key question. By all means continue researching sustainable product/technical differentiation in parallel but don't engineer until you have the basis of a winning strategy.

If you're intent on competing like an external startup the best move is to spin out and focus on the startup-strategic investor relationship assets that can create differentiation for your ventures. Either approach can be a winning strategy. Just play to your strengths and don't pretend to be something you're not.

Watch out for tractor beams and heat rays! Corporate innovation/incubation programs not only need to be aligned to strategic goals, they need to be aligned to culture and organization.

In some cases you risk getting too close and sucked into a business unit to gap fill a perceived need. In other cultures getting too close means getting chased off the business unit's turf. Ideally corporate structure and innovation design are in harmony.

Consider the organization aligned around a central R&D organization with specialized go-to-market units. Such a structure lends itself to creating a spin-along incubator on equal footing with the internal businesses. However, in an organization with strong individual businesses, the best use of incubation may be as a 'tip of the spear' to answer key strategic questions rather than grow the next $B business. The antibodies might just be too strong for you to survive that long. The theme in this series of posts continues to be to pay attention to alignment issues!

A parting word: recognize this endeavor for what it is - a wonderful combination of creative vision and technical excellence. Enjoy every moment.

This video from Dewitt Jones underscores why I find these activities so important and personally rewarding. I first heard Jones' message over a decade ago. It contains so many important concepts: Define the parameters of the question. Always remember there is more than one right answer. Don't worry about making mistakes, just look for the next right answer. Practice your craft so that you can focus on looking for those answers. 7 minutes of pure gold!

In the corporate context, the point is to get your company to realize that there is more than one right answer and you only see those answers when you put yourself in the position of greatest potential. I have yet to find an endeavor that couldn't benefit from this approach to creativity. And if you can enjoy your journey as much as Jones enjoys his, you have really scored. We should all be so blessed, whatever our field.