How do start-ups innovate? How is the process they follow
different from that of large companies? And, how relevant is the process we
outlined in 8 Steps to them?
These are the questions Vijay Kumar Ivaturi, ex-CTO of
Wipro, and master planner of CII’s 9th India Innovation Summit, posed to us when
we proposed to hold a workshop on innovation for start-ups the day before the
summit. And, in the spirit of experimentation that we believe is critical to
successful innovation, we looked for answers to these questions in the
workshop.
We decided to work intensively with around 10 companies
rather than spread thin over many. But as part of our design, we asked them to
register as teams, rather than as individuals.
We had a good spread of companies: medical devices,
simulator for surgical procedures, tamper-proof labels, compliance systems for
new healthcare regulations, online art sale, 3D games on the mobile, etc. The
group had several older entrepreneurs. Though our sample is too small to draw
any conclusions about the Bangalore ecosystem as a whole, I was enthused by
both the range of ideas as well as the experience profile - these bode well for
the future of the city where I live!
Our participants got the seeds of their ideas from
diverse sources: a couple from needs unaddressed by their former employers,
some from personal experience, and some from friends or family. But, except for
one, all had stuck with their idea even though it had been refined and gone
through multiple iterations.
All of them had tried to validate their ideas before
starting their businesses by talking to experts, potential users and academics.
They claimed to have used multiple modes including demos and prototypes to
validate their ideas after starting.
The First Exercise
Yet, we soon learnt that there was plenty of scope for
them to push validation harder. Right at the outset, we asked them to identify
what they thought was the biggest challenge they faced at this juncture of
their enterprise. We then took them through an exercise where they identified
the assumptions related to need, technology, production and commercialization
that underlie their businesses. They explored these assumptions and rated them
on criticality, and extent to which they had been validated. Not surprisingly,
they found that some of their most critical assumptions were not yet adequately
validated. This made some of them re-think what was their topmost challenge!
Our experience from the workshop suggests that the
identification of the assumptions underlying the business and continuous
validation of these assumptions is the most promising area for the application
of systematic innovation methods to start-ups. This reminds me of what Peter
Drucker referred to this as the theory of the business and echoes the approach
recommended by Eric Ries in the Lean Start-up.
The Second Exercise
We found support for the importance of finding champions
as well, though here the most important champions are outside the start-up,
typically lead users or regulators. The second exercise we did with the group
was designed to help them reach out and influence such champions: it focused on
how to design a powerful pitch. Here, we used the powerful SUCCES model
developed by the Heath brothers, in their book Made to Stick. To make a pitch
effective, they advocate keeping it simple, giving the twist of the unexpected
to catch attention, giving concrete evidence or examples, enhancing credibility
through endorsements or the "self-test", infusing the pitch with
emotion, and making it sound like a story.
Interestingly, we found that many of the participants did
follow some form of a formal review process, perhaps reflecting the maturity
and prior corporate experience of our participants . We got the sense that
these participants were not as unstructured and fluid as is our common notion
of a start-up.
Conclusions: 8 Steps Framework and Start-ups
Given the size of a typical start-up, there is little need
for a formal idea management system, and formal efforts to engender
participation. Instead, the most important and relevant dimensions of our 8
Steps framework are those related to experimentation, going from proof of
concept to incubation, and business model exploration. Start-ups would do well
to include such approaches in their innovation process.
I felt that the start-ups we met (and others in general)
would benefit by sharpening their ideas using the notion of the challenge book
that we wrote about in chapter 2 of "8 Steps". Vigyanlabs, a company
I wrote about earlier, illustrates the power of this approach that focuses on
identifying pain, wave and waste to guide ideation. Vigyanlabs' patented
solution addresses the high power wastage (pain, waste) by data centres
(clearly a wave given the momentum with which IT is moving up the cloud).
By their very nature, start-ups work in a sandbox mode -
all the entrepreneurs in our workshop were intensively engaged in making their
enterprises successful. But, clearly, building the right partnerships was a
valuable way of taking their ideas forward (10 out of 11 companies emphasized
the importance of such partnerships). As we wrote in 8 Steps, such openness to
collaboration can be a significant contributor to achieving impact from
innovation.
Many of the start-ups see partnerships and validation as
key steps in managing risk. We were pleasantly surprised to find 8 out of 11
companies keenly aware of the need to de-risk their businesses. Steps 7 and 8
thus seem quite relevant too.
Vinay and I hope to work more closely with start-ups in
times to come!
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