Innovationat50x081515stz 150816052027 Lva1 App6892 PDF

Innovation at 50x
Steve Blank
@sgblank
www.steveblank.com
03/16/16
What is Innovation?
Innovation ≠ Incubator
Innovation ≠ Accelerator
Innovation ≠ Open
Innovation ≠ Startup
Innovation ≠ Lean Anything
Innovation ≠ Reorganization
Innovation ≠ Café’s
These are all physical

places to do innovation
Having them does not
guarantee any innovation
will happen
Innovation ≠ Café’s
These are all physical places

to do innovation
Innovation Development
• Places:
– R&D, Engineering, Incubators, Accelerators,
Hackathons, Open Innovation, etc.
• Methodology:
– Waterfall, Agile, Lean
• Pedagogy:
– Lean LaunchPad/I-Corps, Case-studies, Mentors
• Metrics:
– KPI’s, StateGate®, ECV, Pivots, IRL, TRL, …
• Funding
– VC, Corporate VC, M&A, etc.
Innovation Development
• Places:
– R&D, Engineering, Incubators, Accelerators,
Hackathons, Open Innovation, etc.
• Methodology:
– Waterfall, Agile, Lean
• Pedagogy:
– Lean LaunchPad/I-Corps, Case-studies, Mentors
• Metrics:
– KPI’s, StateGate®, ECV, Pivots, IRL, TRL,…
• Funding
– VC, Corporate VC, M&A, Incremental, etc.
Innovation Is?
Satisfying users current or future wants/needs
by turning an idea into a product or service
Innovation Is?
Satisfying users current or future wants/needs by
turning an idea into a product or service
with speed and urgency, using minimal resources
and costs
Innovation Succeeds
• Where there is a path to adoption
• When it fits into the overall mission and strategy
• Because it performs, has metrics, …
• It is managed as an innovation portfolio
• And has management support (the spirit of “yes”)
Continuous disruption requires
Continuous Innovation
Steve Blank
what’s this mean?
∧
Steve Blank
20th Century Corporate Lifecycle
21st Century Corporate Lifecycle
Steve Blank
Continuous Innovation requires
new management tools
Steve Blank
Continuous Innovation requires
new management tools
Lean Innovation Management
Steve Blank
Why Lean Innovation Management?
10x the number of initiatives in

1/5 the amount of time
50x
Can You Create an Organization that
Executes and Innovates?
Can You Create an Organization that
Executes and Innovates?
It’s Called an
Ambidextrous Organization
Source: James March, Charles O’Reilly, Michael Tushman

An Ambidextrous organization
achieves breakthrough innovations

while relentlessly improving the
way they execute current business
model

while relentlessly improving the way
they execute current business model
and serve existing customers

Here’s How
Types of
Company Innovation
Steve Blank
Three Horizons of Innovation
Mature Business Rapidly Growing Business Emerging Business

our established capabilities
Source: Baghai, Coley, White

our established capabilities
Source: modified Baghai, Coley, White

New Three Horizons of Innovation
Unknown
Partially Known
Known Explore
Extend
Execute
Level of innovation is defined by whether

the business model is being executed, extended or explored!
Known
Existing Business Model:

Process Innovation
Execute Core Mission

Partially Known
Known
Existing Business Model: New Opportunities via

Process Innovation Business Model Innovation
Execute Extends Core Business

Unknown
Partially known
Known
Existing Business Model: New Opportunities via New/Disruptive

Process Innovation Business Model Innovation Business Model
Execute Execute/Search Explores

Capabilities/Risk Assessment
Unknown
Partially known
Known
Existing Capabilities
Low Risk Some Capabilities
Moderate Risk Need New Capabilities
High Risk
Innovation Allocation Across the Horizons
5-10%
20-30%
Unknown
Partially known
60-70%
Known
Return on Investment by Horizon
Unknown
Partially known
Known
• Extend • Incubate
• Improve • Invest • Invent
• Partner • Partner • Invest
• Acquire • Acquire • Acquire
ROI 1-3 years ROI 4-6 years ROI 4-10 years

Evangelos Simoudis/Steve Blank
Product Mgmt Is the Current Process for
Horizon 1
Known
Stakeholders
Product
Management
Process
Horizon 1
Innovation
Extend the core
Use traditional methodologies for Horizon 1 projects
Steve Blank
Horizon 1: Roadmap Driven R&D
• Use product roadmap
• Success: Model$
use in next1:$Roadmap`Driven$
gen product
– With “better” performance than last gen
Example:$Processor$Roadmap$$
• Corporate competence: Predictable product improvement
• Assets: IP, Advanced design
Features$$and$
Performance$
Target$of$2018?$
Source: Ikhlaq Sidhu, UC Berkeley

Horizon 1: Market/Customer Driven
• R&D decide their own projects with signals from:
– Pilot studies
– Business Unit or CTO priorities
– External: start-ups and academic
– Demo days or open interfaces to suppliers, customers,
universities
• Projects must be relevant to core competencies
• Success: is awareness, market perception, $’s+ profit
• Assets: IP, Advanced design, External Industry Leadership
Source: Ikhlaq Sidhu, UC Berkeley

Lean Is the Process for
Horizon 2 & 3 Innovation
Disruptive Horizon 3
Lean Innovation
Speed &
Urgency
Continuous Horizon 2
Innovation
Process
Horizon 1
Innovation
Extend the core
Use Lean Methodologies for Horizon 2 and 3 projects

Steve Blank
Lean Innovation
Delivers Products and Services
that users want and need
in a fraction of the time
The Lean Methodology
Lean = 3 parts
Partners Activities Value Customer Customers
Proposition Relationships
Part 1 Resources Channels
Costs Revenue Model
Business Model Canvas
Source: Alexander Osterwalder- Business Model Generation

Partners Activities Value Customer Customers
Proposition Relationships
Part 1 Resources Channels
Costs Revenue Model
Business Model Canvas = hypotheses of how you

create and deliver value for the company and its
customers
1. Frame Hypotheses
• Frame Hypotheses 
1. Frame Hypotheses
• Frame Hypotheses  Business Model Canvas
Business Model Canvas

2. Test Hypotheses
• Frame Hypotheses  Business Model
• Test Hypotheses  Customer Development
Customer Development is how you search for the model

Customer Development
Turning the Business Model Canvas Into Facts

9 Guesses
Customer Customers
Relationships
Guess
Guess Guess
Guess
Channel
Guess
Guess Guess
Revenue Model
Guess Guess
Customer Development is
Hypothesis Testing
3. Build Incrementally & Iteratively
• Frame Hypotheses  Business Model

• Test Hypotheses  Customer Development
Agile Engineering
• Build the product 
incrementally &
Iteratively
The Minimum Viable Product (MVP)
• Smallest feature set that gets you the most …

- learning, feedback, failure, orders, …
- incremental and iterative
• It is not a prototype
• It is not a deployable version with the fewest features
• It is what enables a test of a hypothesis
• It may be a drawing, a slide, a wireframe, clickable
workflow, etc…
The Pivot
• Definition: A substantive change to one or more of the

business model canvas components
• Iteration without crisis
• Fast, agile and opportunistic
• Weeks and $100K
Pivot Cycle Time Matters
Search Execution
Customer Customer Customer Company

Discovery Validation Creation Building
Pivot
• Speed of cycle minimizes cash needs

• Minimum feature set speeds up cycle time
• Near instantaneous customer feedback drives feature set
Elements of Lean Startup
Part 1
+
Part 2
Part 3
Agile Engineering
Lean Gets Theory
Customer Development Business Model Canvas Agile Engineering HBR Cover

2003 2010 2011 2013
Blank Osterwalder Ries
Lean Gets Practice
~250,000 on-line
students
Udacity.com
MS&E 297: “Hacking for Defense”: Solving National Security

Lean LaunchPad
issues with the Lean Launchpad I-Corps I-Corps I-Corps
In a crisis, national security initiatives move at the speed of a startup yet in
For Students For SBIR/STTR
peacetime they default to decades-long acquisition and procurement cycles. Startups
operate with continual speed and urgency 24/7. Over the last few years they’ve
For Life Sciences For NSA
learned how to be not only fast, but extremely efficient with resources and time using
2011
lean startup methodologies. 2012 2014 2015
In this class student teams will take actual national security problems and learn how
to apply “Lean Startup” principles, ("business model canvas," "customer
1250+ teams 760+ teams
development," and "agile engineering”) to discover and validate customer needs and
to continually build iterative prototypes to test whether they understood the problem
and solution. Teams take a hands-on approach requiring close engagement with actual
Taught in 75 Taught by 50
military, Department of Defense and other government agency end-users.
Universities
Team applications Universities
required in February. Limited enrollment. Course
concepts introduced in MS&E 477.
builds on
Terms: Spr | Units: 3-4 | Grading: Letter (ABCD/NP)

Instructors: Blank, S. (PI) ; Byers, T. (PI) ; Felter, J. (PI)
2015-2016 Spring
• MS&E 297 | 4 units | Class # 47395 | Section 01 | Grading: Letter (ABCD/NP) | LEC
• 03/28/2016 - 06/01/2016 - with Blank, S. (PI); Byers, T. (PI); Felter, J. (PI)
How Does This Really Work?
Example 1:
Stanford Team
Share&Tell
Lessons learned
after 130 interviews
Karan Singhal, Undergrad Scott Steinberg, Yegor Tkachenko,

Eric Peter, CS & MBA
Consumer Insight Expert CS MBA MS
Management Consulting Web Development Marketing Growth Strategy Marketing Analytics
User Interface Design Management Consulting Machine Learning
Share&Tell
Day 1 (Clarified) Now
130
We create a way for consumers to Interviews We help retailers and CPG
make money by actively sharing companies understand online
their behavioral data and shopping behavior.
opinions.
We do this by creating a platform
Through this data, we help for people to donate their Amazon
companies unlock previously 3,500+ shopping history
unattainable insights. Survey to raise money for charity.
responses
Eric Peter, CS & Karan Singhal, Scott Steinberg, Yegor Tkachenko,

MBA Undergrad CS MBA MS
Consumer Insight Expert Web Development Marketing Growth Strategy Marketing Analytics
Management Consulting User Interface Design Management Consulting Machine Learning
Business Canvas - Week 1 blue = consumer
black = enterprise
Key Activities Value Proposition Customer Customer
Key Partners
Consumers Relationships Segments
• Panel acquisition, retention, • Getting paid for data that
incentivization, quality control
Consumers
has already been shared, Consumers
• Data API providers • Automated seamless • Profit sharing
but from which individuals
• Targeted ads in line • Millennials/students
• Data aggregators insights extraction are not profiting
• Data security • Provide sense of with customer’s tastes • Lower income
• Marketing agencies
• Empowered customer empowerment and control • Sense of empowerment consumers with
• Panel participants
service (for consumer) over data Enterprises smartphones
• Sales force, customer • Offers a natural, effortless • Unique data,analysis • Existing research
service knowledgable about way to share opinions • Easy and fast way to do
market research design & participants
• Feel heard and that it
execution opinion matters
Enterprises
Key Resources Enterprises Channels • Marketing agencies,
• Linking real-behavior with consulting
opinions (vs. stated Consumer
• Website • Marketing
behavior)
• Historical granular data • Mobile app departments at large
• Ability to follow up with
consumer companies
• Automated platform for • Faster turnaround Enterprise • Marketing
seamless insights • Direct web portal departments at non-
extraction • Resold through market large CPG companies
research agencies
• Expertise in market • Custom consulting &
research methodology, research design services
execution, statistics
Cost Structure Revenue Streams

Fixed - Infrastructure, servers, team of data scientists, 1. Custom research studies
corporate sales force, project managers & analysts, product 2. Per-feedback fees (surveys, video interviews, focus groups)
& user experience development team 3. Sales of raw data / data with automated analytics on top
4. Subscriptions to the platform
Variable - Payment to consumers for use of their data, profit- Pricing based on sample size/type, data type/amount, number of questions,
sharing model (dividends) with consumers, consumer feedback time
service reps
What we thought: Enterprise VP blue = consumer
black = enterprise
Enterprise Value Proposition:

Replace traditional survey providers by:
● Linking real behavior with opinions (vs.
stated behavior)
● Ability to follow up with consumer
● Faster turnaround
Surveys are based on

SELF REPORTED data
Survey
Key
Demographics
● Age?
●Resources
Gender?
●
• Historical granular
...
data
Behavior
● Where did you buy?
• Automated
● What? How much?
● ...
platform for
seamless insights
Emotions / Feelings
extraction
● Why did you buy?
● What matters to you?
● ...
Enterpris
e
What we did: Talk to companies Week 1-3
who use surveys for market research
Hypothesis:
What we did:
We can replace existing
12 Customer Discovery
panel vendors if we have
interviews with companies
real behavioral data
that conduct market research
(as opposed to self-reported
using surveys
data)
Enterprise
Week 1-3
What we found: Not that much
pain with self-reported data...
“In order to switch
“Self-reported data isn’t vendors, you need to be
great, but it’s directionally able to answer a question
good enough.” we can’t answer today”
“We have to use [vendor] -

“With real data, we’d get the we have a long term
same insight as we do now, but contract through our HQ."
perhaps we’d be slightly more
confident.”
Enterprise
What we found: Not that much Week 1-3
pain with self-reported data...

“In order to switch
“Self-reported data vendors, you need
isn’t great, but it’s to be able to answer
directionally good a question
Adding behavioral data alone does we can’t
enough.” answer today”
not make us 10x better.
We need to be able to answer a specific

question that marketers can’t answer
“We have to use
“With real data, we’d get today
[vendor] - we have a
the same insight as we
long term contract
do now, but perhaps
through our HQ."
we’d be slightly more
confident.”
Enterprise
Week 1-3
So, we focused on changing the value prop
to answer new questions for marketers
Customer Needs Identified through Customer Discovery:
How should I How do I better

identify my understand my
consumer target consumer target?
(SMB Businesses)
What is the path to

purchase for online What are current online
and omnichannel shopping trends?
shopping?
Enterprise
Week 1-3
So, we focused on changing the value prop
to answer new questions for marketers
Week 1 Week 3
Value Proposition Value Proposition
Customer Needs Identified through Customer Discovery:
Enterprises
• Identify target
Enterprises consumers to
• Linking real- increase marketing
✘
How should I
behavior with HowROI
do I better
identify
opinions my
(vs. stated understand my
consumer target
behavior) • Deeper
consumer and more
target?
• Ability
(SMBtoBusinesses)
follow up accurate behavioral
with consumer understanding of
• Faster turnaround consumer
segments
What is the path to • Understand

purchase for online What areonline/omnichannel
current online
and omnichannel path to
shopping purchase
trends?
shopping? • Understand online
market trends at
consumer level
What about the consumer?
What we thought: Consumer VP blue = consumer
black = enterprise
Key Partners
Consumers Relationships Segments
• Panel acquisition, retention, • Getting paid for data that
incentivization, quality control
Consumers
has already been shared, but Consumers
• Data API providers • Automated seamless insights • Profit sharing
from which individuals are not
extraction • Targeted ads in line with • Millennials/students
• Data aggregators profiting
• Data security • Provide sense of customer’s tastes • Lower income
• Empowered customer service empowerment and control • Sense of empowerment consumers with
• Panel participants
(for consumer) over data Enterprises smartphones
• Sales force, customer service • Offers a natural, effortless • Unique data,analysis • Existing research
knowledgable about market way to share opinions • Easy and fast way to do it
research design & execution participants
• Feel heard and that opinion
matters
Enterprises
Key Resources Enterprises
Channels • Marketing agencies,
• Linking real-behavior with consulting
opinions Consumer
Consumer• Value Proposition
Historical granular data
• Ability to follow up with • Website • Marketing departments
consumer • Mobile app at large companies
Hypothesis: - Faster turnaround • Marketing departments
• Automated platform for • Give additional context in Enterprise at non-large CPG
seamless insights extraction traditional surveys • Direct web portal companies
Get paid for your data • Resold through market
• Expertise in market ...and, that consumers are willing
Feel in control of your data
research methodology,
research agencies
• Custom consulting &
to provide all these data types:
Feel heard and that statistics
execution, opinions matter research design services
• Social media likes & posts
Cost Structure • Email
Revenue purchase receipts
Streams
Fixed - Infrastructure, servers, team of data scientists, 1. Custom research studies
corporate sales force, project managers & analysts, product
• Credit
2. Per-feedback feescard purchase
(surveys, historyfocus groups)
video interviews,
& user experience development team • of Amazon.com
3. Sales raw data / data with automated history
purchase analytics on top
4. Subscriptions to the platform
Variable - Payment to consumers for use of their data, profit- • GPS location history
Pricing based on sample size/type, data type/amount, number of questions,
sharing model (dividends) with consumers, consumer feedback time
service reps • Web and search history
Consumer
Week 1-3
First consumer test

Tested through:
Hypothesis:
~25 Customer Discovery focused
People will provide their data
consumer interviews
and opinions for money
Consumer
Week 1-3
Experiment: Take an MVP on
an iPad to the mall
Consumer
Week 1-3
What we learned
Tested through:
Hypothesis:
~25 Customer Discovery focused
People will provide their data
consumer interviews
and opinions for money
Findings:
People will provide data and opinions for money, BUT
Only younger and poorer consumers were interested
Cash-based model had other problems too:

● Doesn’t support retention and engagement
● Misaligned incentives
● Not scalable to get to large # of consumers
Consumer
As a result: What if Week 4
we offered equity instead of cash?
Google Consumer Survey: n = 500
Solves all business needs!

● panel retention and engagement
● identity verification
● quality of data
Consumer
Oh Wait… Need to Isolate Variables Week 4
Always be skeptical of your data!
Consumers aren’t interested in concept of being a

partial owner - they cared about the extra cash!
Designing a good experiment just

saved us 49% of our equity...phew!
Consumer
By Week 4, We Had No Idea What Week 1-4
Consumer Value Prop Should Be

Week 1 Week 3 Week 4
Value Proposition Value Proposition Value Proposition
Consumer: Consumer:
Consumer:
• Getting paid for • Getting • Control over
data that has compensated data
already been for data that has • ???
shared, but from
already been
which individuals
are not profiting shared
• Provide sense of • Provide sense
empowerment and of
control over data
• Offers a natural, empowerment,
effortless way to control over
share opinions data
• Feel heard and
• Partial
that opinion matters
ownership of
company
Let’s first focus on narrowing
down enterprise value prop to see
what data we need.
Enterprise
Week 4
What we did: Customer
Validation!
14 more enterprise interviews to (in)validate our
hypothesized value props and identify the most acute needs
✘ ✘
How should I identify How do I better
my consumer target understand my
(SMB Businesses) consumer target?
What is the path to

purchase for online and What are current online
omnichannel shopping? shopping trends?
Enterprise
Week 4
“Great value prop guys, but I
challenge you - if you had to do
something tomorrow as an MVP,
what would it be? This is a LOT to
do!”
Key learning: A startup can’t do everything. It needs to

do one thing well!
Note: Quote paraphrased, concept of “Big Idea” was likely referenced
Consumer
Well, why not focus on data Week 5
that’s easiest to get?
Most
Sensitive
Least
Sensitive
Google Survey
Enterprise
Week 5
And heard from companies that
Amazon data is big pain point
Enterprise
Week 5-6
As a result: An aha moment...
Share & Tell…

...helps better understand your target's online &
omnichannel shopping & purchasing behavior
• What is purchased on Amazon.com?
• What is my online/omni market share? Why?
• Where else does my target shop? Why?
• What does my target do before they buy? What
is their shopping path? Why?
• What products does my customer buy / not buy?
What do they buy with my product? Why?
...helps better understand your target's persona /

where to reach them
• What online behaviors (sites, apps, etc…)?
• What media consumption habits?
• What do they search for online?
• What activities, interests, hobbies?
• What demographics?
...provides ability to more directly and

narrowly communicate with your target
• Direct messaging / promos on S&T platform
• Better targeting on existing ad networks
Enterprise
Resulting Business Canvas blue = consumer Week 5-6
black = enterprise
Key Partners
Relationships Segments
• Panel acquisition, retention, Consumers Consumers
incentivization, quality control • Feel good by donating data Consumers
• Get: Charities send invitations
• Data API providers • Automated seamless to charity • Get/Keep: Shopping discovery
• Data aggregators insights extraction • (potentially) Service to + targeted discounts app • Smartphone using
• Data security discover, get discounts on, • Keep: Reports / comparisons of consumers who shop online
• Empowered customer and buy stuff online your data • Millennials
• Panel participants • Existing research
service (for consumer)
• Charities/non-profits • Sales force, customer Enterprises participants
Enterprises
• Get:partnership,telesales,PR • People who currently give to
service knowledgable about • Understand purchasing • Keep: Unique data, analysis charity
market research design & trends on Amazon by • Easy and fast way to do it
execution demographic group
Enterprises
Key Resources Channels • Retail (traditional)

Consumer • Retail (e-commerce)
• Website • CPG with online sales
• Historical granular data • Mobile app
Enterprise
• Understand purchasing
• Automated platformtrends
for • Direct web portal supported
seamless insights by research-experience B2B
on Amazon byextraction
demographic group sales force
• Retail (traditional)
• Projects sold through
market research & strategy
• Expertise in market • Retail (e-commerce)
firms
research methodology,
execution, statistics • CPG with online sales
Fixed - Infrastructure, servers, team of data scientists, corporate 1. Subscriptions to insights / platform
sales force, project managers & analysts, product & user 2. Per-survey fees
experience development team 3. Custom research studies
4. Linking data to client databases
Variable - Payment/donations for use of their data, consumer
service reps Pricing based on sample size/type, data type/amount, number of questions,
feedback time
Enterprise
Week 5-6
As a result: Develop low-fi MVP

Consumer
Week 5
Now, how do we incentivize

consumers to provide Amazon
data?
Consumer
Week 5
We identified a few possible
alternatives to cash...
Pay Provide a
cash valuable service
✘
Donate your
Receive
$5 / $10 cash data
targeted
(to benefit a
promotions
charity)
Personalized
product
recommenda
tions
Had learned previously consumers more willing to

share data if they get some intrinsic value
Consumer
Week 5
What we did: 10+ Customer Discovery

interviews...and 2,000+ survey responses
Consumer
Week 5
What we found: “Donate your data”
best meets the business’s needs
Retention
Gets /
Amazon engageme
data? nt? Quality? Large #? Outcome
$5 / $10 ✔ Cash is king! ✘ May be ✘ Limits to low ✔ ~>50% Kill for now or
transactional / income interested use in combo
cash one-shot deal w/ donations
Donate ✔ Interest in ✔ Donation ✔ Consumer ✔ ~27% Focus for

‘doing good’ implies opp to leads verified interested class; need to
your data ask for future through charities understand
donation impact of bias
Targeted ✘ Does not ✔ Creates clear ✔ Can verify

solve major pain, gain w. reason to respondent
promos already available come back behavior
✘ Quant test
running, Test for “keep /
Product ✘ Limited ✔ Creates clear -- Unclear if able
qualitatively poor grow” instead
interest - does gain w. reason to to verify
recs reaction
not solve pain, come back respondent
not 10X better • Need 0.75% of TAM to register (1M / 150M)
than others • Of those interested, ~3% will register
• Implies >25% interested
Consumer
Week 5
What we found: Consumers
skeptical of donation scams
“I probably would not Nonprofits should send out

donate to a random communication asking
startup unless I knew for people to donate their data
sure that they were legit”
Nonprofits are a customer
acquisition channel and a
new customer segment
“I’d donate my Amazon
data to raise money for
charity X, but only if that
charity asked me too”
Consumer
Week 6
As a result: 3-sided market
Consumer
Week 6
Resulting BMC changes (I)

Week 3 Week 5
Value Proposition
✘
Value Proposition
Consumer: Consumer:
• Control over data • Feel good by
• ??? donating data to
charity
• Doesn’t cost
money to donate
Segment Segment
✘
Consumer: Consumer:
• Millennials & • Millennials
students • People who
• Lower income donate to charity
consumers with
smartphones
• Existing research
participants
Consumer
Week 6
Resulting BMC changes (II)

Week 3 Week 5
Value Proposition Value Proposition
Non-Profit:
• A new revenue
stream
• A new way to
engage with donor
base
• A way to get
donations without
pushback
Segment
Segment
Non-Profit:
• All non-profits
Consumer
Week 6
Resulting BMC changes (III)
Cust. Relationship Cust. Relationship
Consumer:
✘
• Targeted ads in
Consumer:
line with customer’s
tastes • Get: Charities
• Sense of send invitations
empowerment
Need to test this

Consumer
Our Competitive Behavioral Consumer
Panels
Week 6
Set Has Evolved (w/ or w/o surveys)
Nielsen, NPD, IRI,

too LuthResearch,
VertoAnalytics,
RealityMine,
comScore Data aggregators
eCommerce Data & Slice, Clavis, Data Wallet,

Insight Companies Profiteero, Datacoup, Infoscout,
One Click Axciom, Experian,
Retail, LiveRamp, SuperFly
Profiteero,
Return Path, SHARE &
Paribus? TELL
TNS Qualitative, , Razoo, CrowdRise,

Conifer Research, Causes, Survey
Horowitz Research, Monkey, One Big Tweet,
Nielsen, Kantar, GoodSearch,
IPsos, AmazonSmile
dunnhumby
Marketing research Online Donation
Removed through pivots agencies Tools and Platforms
Online Survey Tools
Traditional survey panels
Online qualitative research
Nonprofits
Nonprofits might not be the right Week 7-9
route
What we did: What we learned: So what?
● Only nonprofits who value Focus more efforts on

Interviewed 10+ smaller donations (<$100) testing viability of direct to
nonprofits from larger base of people consumer route.
were interested in the
model Key hypothesis to test: Can
we build enough trust
Tested email ● Nonprofits are slow to make through social media and
campaign to 60 decisions and risk-averse website?
nonprofits to
gauge interest
Non-profits may
not be most
efficient
consumer
acquisition path.
Consumer
What we did: Tested ‘direct to consumer’ Week 7-9
using a high fidelity MVP...

https://www.datadoesgood.com
Consumer
Week 9
What we learned: ‘Direct to consumer’ might be a
viable route
Arrived to the 100%

landing page
Clicked ~18%
‘donate now’
~60%
Choose
~11%
a charity
~55%
Logged in with 25% ~6%
Facebook
~95%
Filled out ~6%
demographics
~80%
Shared
Amazon data ~5%
Final Business Model Canvas Week 10

Key Partners
Relationships Segments
• Donor acquisition?? Consumers Consumers
• Donor retention and • Feel good by donating data • Get: Social media campaigns & Consumers
engagement?? charities send invitations • Online shoppers
Short Term: to charity
• Keep: Reports / comparisons of
• Data quality control • Donating is free & easy • Current charity givers
• Charities/non-profits your data • Millennials
• Data security and storage
• Nonprofit • Automated analytics
Enterprises
• Existing research
Enterprises • Get:partnership,telesales,PR
hubs/associations • Custom analytics • Understand purchasing • Keep: Unique data, analysis
participants
• Legal • Sales force trends on Amazon by • Easy and fast way to do it
• Other collectors of • Legal demographic group. Nonprofits??
brand preference • Get: telesales, PR Enterprises
online purchase history • Buyers at e-commerce
Nonprofits?? retailers
• A new revenue stream • Marketers at CPG with
Long Term Key Resources Channels online sales
• A new way to engage with
• Data API providers donor base Consumers
• Data aggregators • Physical - workspace, servers • A way to get donations • Website
• E-commerce retailers
• Additional human (short-term) - Full-
without pushback • Mobile app Nonprofits??
stack software engineer, Database • Hungry for donations and
• Ad networks and architect, Security consultant, Legal
values small donations from
Consultant, Advisors/Industry Movers Enterprises
programmatic ad (long-term) - Sales team, Analytics team, • Web portal supported by large # of donors
buyers? Security team, Engineering team, B2B sales force • Private donations are main
Advisors • Projects through market revenue stream
• Intellectual - Trademarks, Contracts
with clients, Proprietary analytic tools, research & strategy firms
Software copyright
• Financial - angel/venture funding Nonprofits??
• Web portal

Fixed - Infrastructure, servers, team of data scientists, corporate 1. Subscriptions to insights / platform
sales force, project managers & analysts, product & user 2. Per-survey fees
experience development team 3. Custom research studies
4. Linking data to client databases
Variable - Payment/donations for use of their data, consumer
service reps Pricing based on sample size/type, data type/amount, number of questions,
feedback time
So...what’s next...
We are going to continue working on this after
the class.
First Priority Second Priority
Can we gain traction with Can we get a letter of intent from

consumers? any businesses?
Several additional experiments we We continue to hear companies say

want to run incorporating feedback they are interested and that this data
from our MVP. is valuable. Is one willing to sign a
● Facebook “nominations” non-binding letter of intent
● Linking more directly to causes
● Many improvements to the MVP
Appendix
Enterprise
What we learned: Refined value proposition Week 4
for enterprise...
Share & Tell…
...helps better understand your target's online &
omnichannel shopping & purchasing behavior
• What is purchased on Amazon.com?
• What is my online/omni market share? Why?
• Where else does my target shop? Why?
• What does my target do before they buy? What
is their shopping path? Why?
• What products does my customer buy / not buy?
What do they buy with my product? Why?
...helps better understand your target's persona /

where to reach them
• What online behaviors (sites, apps, etc…)?
• What media consumption habits?
• What do they search for online?
• What activities, interests, hobbies?
• What demographics?
...provides ability to more directly and

narrowly communicate with your target
• Direct messaging / promos on S&T platform
• Better targeting on existing ad networks
Enterprise
Week 4
...for 3 generic enterprise segments
1
Traditional
Retailers
2
E-Commerce
3
With online sales
CPG
Without online sales

What is market research?
Comes in many forms...
1. Surveys to understand consumer opinions /

emotions
2. Data to understand market trends
Initial hypothesis:
“disrupt” survey-based market research
A quick primer:
How do surveys work?
1 Business asks a question about their customer
What does my
What features do most valuable
my customers care customer look
about? like?
What drives
customer loyalty?
A quick primer:
2 Market research team writes a survey that will inform the answer
Survey
Demographics
● Age?
● Gender? 5 - 10 minutes of
● ... questions
Behavior
● What? How much?
● ...
Emotions / Feelings
● Why did you buy? 10 - 15 minutes
● What matters to of questions
you?
A quick primer:
3 Survey sent to consumers through a ‘panel provider’
Market Research team Panel Provider
Survey
Demographics
● Age?
● Gender?
● ...
Behavior
● What? How much?
● ...
$ / person
Emotions / Feelings
● ...
A quick primer:
4 Consumers answer survey based on their memory
Survey
Demographics Self
● Age?
● Gender? reported
● ...
data
Behavior
● What? How much?
● ...
Emotions / Feelings
● ...
A quick primer:
5 Market research team analyzes data to develop an answer
Market Research team
Insight &
recommended
business action
...Where we thought we fit in
Survey
Why can’t this be based on actual
Demographics
● Age? (vs. self reported) data?
● Gender?
● ...
Behavior
● What? How much?
● ...
Emotions / Feelings
● ...
Survey
Demographics
● Age?
● Gender? ...let’s be a “next gen” panel
● ...
provider that merges real data
Behavior with opinions
● What? How much?
● ...
Emotions / Feelings
● ...
What data? Opinions how?

• Social media likes & posts • Record short video / audio
• Email purchase receipts clips
• Credit card purchase • Take <5 min surveys
history • Write reviews
• Amazon.com purchase • 1-1 text chats
history
• GPS location history
• Web and search history
Other learnings
Presenting
1 2
Share the key insights that led Preempt question the
to a decision or answer. audience might ask and prepare
Don’t just share the answer responses.
Example: Equity Idea Don’t bullshit if you don’t know

We learned a, b, & c...therefore we want to the answer. It’s okay to say need
do “x”
time investigate it.
VS.
We want to do “x”. Here is some rationale

for why.
Group work
1. Set up regular recurring meetings at least twice a week
1. Carefully consider if the task is best performed by a group or by an individual

a. Everyone wants to participate in decision making, but it is often more efficient
if a single person completes 80% of the task and the group then finishes the
rest
1. If there is any tension, discuss it explicitly
1. Don’t take criticism of your ideas personally
1. Humor helps
Launchpad Methodology/Process
1. Applying the scientific method to business model is extremely useful
a. treating all ideas as hypotheses prevents attachment to bad ideas
i. also encourages rapid iteration to get to better ideas faster
b. using MVPs as tests of ideas rather than finished products avoids
wasting tons of development time
1. Interviews
a. what people initially say is not what they would actually do
i. need to push commitment to see what they actually do
b. interviews with experts are a quick way to get a lay of an industry
c. it’s surprisingly easy to get interviews with experts with a warm intro,
student status, and the purpose of learning as much as we can
d. need to clarify customer segment as early as possible to interview the
right people
i. early interviews should focus on figuring out who they are
Example 2:
National Science Foundation Team
Team 198
Tech Video http://youtu.be/RIR2SiQd1pk
Lessons Learned Video http://youtu.be/8q8l5i3ISeU
TAM
$172 Billion
©Technology Review
An energy efficient, temperature sensitive Total Customer

switchable window coating that blocks or Interviews – 105
transmits heat
Team 198
Sarbajit Banerjee – Principal Investigator

• Associate Professor in Chemistry at University at Buffalo
Brian Schultz – Entrepreneurial Lead

• 2013 Ph. D. Candidate in Chemistry at the University at Buffalo
• Panasci Technology Entrepreneurship Competition Winner 2013
Martin Casstevens – Mentor

• Director of Directed Energy at the University at Buffalo
• Business Formation and Commercialization Manager – STOR
Version 1 Team 198
Window OEMs IP Assignment OEM Windows

R & D / Engineering Increase Energy Savings
Glass OEMs Engineering Support Residential
Strategic Partnering for End Users
Architectural Firms LEED & Energy-STAR Cert. Commercial
End User Behavior Auto
Better Daylighting
Architectural Paint OEM Tradeshows Interior Glass
LEED & Energy-STAR Cert. LEED Points
Prototyping and Demos
Durability
Fortune 50 Chip Architectural Paints
Manufacturer Interior
Ease of Use & Integration
Cool Roofing
Higher Profit Margins
UB STOR – Incubator, IP,
Networking & Mentoring Electronics
Faster Memory &
Cell Phones
IP, Patents & Trade Secrets Computer Performance
NYSERDA - Directed Computers
Energy OEM Distribution Chains Tablets
Personnel Contractors Flash Drives
Nondilutive Support Architects
Strong Visibility (MIT TR35) Building Managers
UB & STOR Support Home owners
Raw Material Suppliers Retrofitting

Specially Engineered Equip. Renovations
B2B Strategic Partnering with OEM Proprietary Material Sales

Personnel IP Licensing
Equipment, Tools, Raw Materials, Supplies, & Lab Space Engineering Services
Research & Development
Standardized Ratings
Team 198
Market Size
Total Addressable Market – $172 Billion
• Total window and door sales worldwide
Serviceable Available Market – $29.5 Billion

• North American window
and door sales
Target Market – $6.6 Billion TAM

• Green Windows & Doors $172 Billion
and Smart Glass Sales in
North America
Source - Custom Syracuse Report, Syracuse University New Technologies Law Center, 2013
Freedonia Research Report & bcc Research and Forecasting, 2010
Team 198
First Hypotheses
Value Proposition – Energy Savings
• End users will pay for energy savings?
• Interview end users
Customer Segments
• Will OEMs partner with a startup on
new products?
• Interview OEMs and review past
behavior
Channels Home Depot
• Are there any choke points between the OEM and end user?
• Investigate channels, i.e. architects, integrators, distributors
Revenue Model
• What premium will end user improved performance?
• Customer interviews
Team 198
Ecosystem – Version 1
SOLARMINDER is a startup that seeks to license/partner with window manufacturers
to maximize (1) market penetration and (2) profit margins
Glass Manufacturer
Materials
SOLARMINDER Integrator
Eng. support
Window Brands
Residential Commercial
- Retail outlets - Const. Engineers

- Homebuilders - Architects
- General contractors
HOMEOWNERS BUILDING OWNERS

Version 2 - Expanded Team 198
Team 198
Customer Discovery
LOWES Banner Glass Inc.
BLAINE Window Repair Thompson Creek Windows

Team 198
Customer Discovery
Ryan McPhearson – Chief Woody Maggard – Former Ind.

Sustainability Officer Developer
Ann Brozek – Sustainability Architect

Martha Bohm - Architect
Jennifer – Architect
Ray McGowan – Senior Program Manager NFRC
David Macleod – Principal at Cannon Design
Ron Foley – Head Engineer MaXPro Window Films
Joseph Murray – Ace Energy
Albert Gilewicz – Associate Director Joanne – Sales at Old Castle Building Envelope
Utilities Operations Bob – Artic Window Tinting
Team 198
Archetypes
Customer OEM Archetypes
National – PPG, Guardian, ASG, MaXPro Window Films
International – CSR Australia, NSG (Pilkington)
Regional – Thompson Creek, Comfort Windows & Doors
Enduser Archetypes
High-end commercial buildings
often public
Commercial rehab and retrofits
Influencer Archetypes
Sustainability driven architects
Energy Consultants
Team 198
Ecosystem – Version 3
Window Manufacturer
Materials CUSTOMERS
SOLARMINDER Window Film Manufacturer
Eng. support
Glass Manufacturer
NFRC Ratings Self Rate
DoE Energy-STAR Residential Commercial 3rd Party Testing

BRANDS
Sales Reps
Retail outlets Const. Engineers

INFLUENCERS
Wholesale Distribution Energy Consultants
CHANNELS
Homebuilders Architects
General contractors INTEGRATORS
HOMEOWNERS BUILDING OWNERS
END USERS
Team 198
Advanced Energy Conference
Jacobs Javits Center Exterior Curtain Wall
Advanced Energy Conference 2013 - NYC

Activities
Revenue Streams Payments
Eng. Services
$150-200 per hour Customer Segments
Window Manufacturer ($65-75 per sq meter)
Sell Products
SolarMINDER Window Film Manufacturer ($45-50 per sq meter)
$20-30 per sq meter Glass Manufacturer ($45-55 per sq meter)
BRANDS Glazing Int. ($70-85)

Window Dist. ($65-75) Sales Reps Window Dist.
Retail Outlets (2-5%) % commission ($70-75) Architects (5-8%)
Wholesale Distribution MEP Engineers
Home Builders Energy Modeling
Developers Architects (5-8%)
Contractors (Bid??)
Contractors (Bid??) Energy Cons. (Contract)
Window Installers
Architects (5-8%)
HOME OWNERS BUILDING OWNERS

Activities
Revenue Streams Payments
Eng. Services
$150-200 per hour Customer Segments
Window Manufacturer ($65-75 per sq meter)
Sell Products
SolarMINDER Window Film Manufacturer ($45-50 per sq meter)
$20-30 per sq meter Glass Manufacturer ($45-55 per sq meter)
BRANDS Glazing Int. ($70-85)

Window Dist. ($65-75) Sales Reps Window Dist.
Retail Outlets (2-5%) % commission ($70-75) Architects (5-8%)
Wholesale Distribution MEP Engineers
Home Builders Energy Modeling
Developers Architects (5-8%)
Contractors (Bid??)
Contractors (Bid??) Energy Cons. (Contract)
Window Installers
Architects (5-8%)
HOME OWNERS BUILDING OWNERS

Team 198
Strategic Partners
• National – PPG, Guardian, ASG, MaXPro Window Films
• International – CSR Australia, NSG (Pilkington)
• Regional – Thompson Creek, Comfort Windows & Doors
Customer Segments
Potential Key Partners
Eng. Services
Window Manufacturer
Sell Products
SolarMINDER Window Film Manufacturer
Glass Manufacturer
Team 198
Competitive Threats
• Manufacturers of Low-E
• “Flip-of-a-switch”
(electrochromics)
• Metallic Low-E Plus
• Transitions
(photochromics)
• Lowering Energy Costs

electrochromics
Team 198
Next Steps
• Continue Strong Visibility
• Funding: SBIR, Angels, Venture Capital, NYSERDA

• Demo Projects: 3 sites identified
• Pilot testing with window film OEM
• Direct Engagement with OEMs
• Explore window curtain integrator in ecosystem
• NFRC accredited testing
Team 198
GO
©Technology Review
Tech Video http://youtu.be/RIR2SiQd1pk
Lessons Learned Video http://youtu.be/8q8l5i3ISeU

Lean Means Getting Out of Your Office
Disruptive Horizon 3
Lean Innovation
Speed &
Urgency
Continuous Horizon 2
Innovation
• If you’re not talking to 100’s of customers, it’s not lean

• If you’re not building iterative and incremental minimum
viable products, it’s not lean
Steve Blank
Managing Three Horizons of
Innovation - Current
Unknown
Partially known
Known Lean Innovation Mgmt

Process
Mgmt

Process Innovation Business Model Innovation Business Model
Execute Execute/Search Search

Managing Three Horizons of
Innovation - Goal
Unknown
Partially known
Known
Lean Innovation Mgmt

Continuous Innovation Business Model Innovation Business Model
Execute Execute/Search Search

Innovation Metrics
NASA
NASA/DOD
Technology Readiness Level (TRL)
• Formal Way to assess project maturity

• Quantify Relative Risks
• Data Driven
• Adopted by NASA, DOD, FAA, ESA…
NASA/DOD Technology Readiness:
Levels 1 & 2
Basic Technology Research

• Basic principles observed
• Technology concept formulated
Concept
NASA/DOD Technology Readiness
Levels 3 & 4
Research to prove Feasibility

• Experimental proof of concept
• Breadboard validation in lab
Research
Concept
Levels 5 & 6
Demo Prototype
• Breadboard validation outside the building
• System demo in real-world
Demo
Research
Concept
Levels 7, 8, 9
Deployment
• System Development
• System deployed in real-world
Demo
Research
Concept
What Can We Do
With Customer Discovery Data?
The Investment Readiness Level

Investment Readiness Level
We can do the same

for new ventures
We can do the same

for new ventures
Emphasis is on data
• A Formal Way to Quantify Relative Risks

• Data Driven
• Analog to NASA/DOD
Technology Readiness Level (TRL)
• Use IRL as a way to establish immediate
funding increments
Investment Readiness:
Levels 1 & 2
Hypotheses
• Value Proposition summarized
• Canvas hypotheses articulated
Hypotheses
Levels 3 & 4
Problem / Solution Fit

• Problem Solution fit
• Low fidelity MVP
Problem/Solution
Hypotheses
Levels 5 & 6
Validate
• Product/Market fit
• Right side of canvas
Product/Market fit
Problem/Solution
Hypotheses
Levels 7 & 8
Validate
• Left side of canvas
Product/Market fit
Problem/Solution
Hypotheses
Levels 9
Metrics That Matter
Left side of the canvas
Product/Market fit
Problem/Solution
Hypotheses
Technology Investment
Readiness Level Readiness Level
Metrics that Matter
Validate
Left side of Canvas
Validate
Right side of Canvas
Product/Market Fit
Problem/Solution
Hypotheses
Horizon 1 Procedures
Meets a Horizon 3 Project
Steve Blank
Horizon 3 Project
Horizon 1 Management
The Problem
Startups/New Corporate Initiatives
Start as Innovation Engines
New/Disruptive • Disruptive
Innovation • Business Model Innovation
• Better/faster/cheaper
• Innovation requires no restrictions

by plans, procedures or processes
• Success = finding a repeatable and

scalable business model
• Grows and scales
Steve Blank
Horizon 3 Needs To Leave Home
Horizon 3
• Physically separate from
Disruptive operating divisions
Innovation
• Company Incubator, etc
• Their own plans, procedures, policies,
incentives and KPI’s
Continuous
• They operate with speed and urgency
Innovation
• Goal is to find a repeatable and
scalable mission model
Process
Innovation
Steve Blank
Success Creates “Debt”
New/Disruptive
Innovation
Success creates
• Technical debt
• Organizational debt
• Refactoring “cleans up” debt

Refactoring
by restructuring it
Steve Blank
Innovation Becomes Execution
Type of Innovation
Disruptive • Success means scale

Innovation
• Scale requires plans, procedures,

Continuous processes, incentives, KPI’s
Innovation
• Innovation becomes execution
Process Refactoring
Execution Group
Steve Blank
Refactoring is an Integral Part of
Innovation
Horizon 3 • Horizon 3 takes shortcuts
• Technical shortcuts add up and
Disruptive
Innovation become what is called
Technical debt
• People/process shortcuts are
Organizational debt
• Refactoring “cleans up” debt by
restructuring it
Horizon 1
Process Refactoring • You need a process organization
Innovation Group dedicated to refactoring Horizon 3
projects
Steve Blank
Innovators Leave or Start New Initiatives
Type of Innovation
Disruptive Disruptive
Innovation Innovation
Continuous • Founders/early employees don’t

Innovation fit in execution organizations
• Short-sighted companies:
innovators leave
Process Refactoring • Far-sighted companies: they
Execution Group start the next cycle of innovation
Steve Blank
“Get to Yes”
Corporate support of Innovation in
All 3 Horizons
Disruptive
Innovation
• Task Support Organizations to work inside Horizon 2/3

• Assign Finance, Legal, HR, etc.
• Job is helping all Horizon projects “get to yes”
• leverage existing assets and capabilities is critical
Company
support orgs
Process Refactoring
Innovation Group
Steve Blank
Company Incentives & Goals
In support of Innovation in All 3 Horizons
Disruptive
Innovation
• Companies operate on goals and incentives

• Incent mavericks, incent support, incent adoption
Company
support orgs
Process Refactoring
Innovation Group
Steve Blank
Disruptive
Innovation
• Company operates on goals and incentives

If there are no Horizon 2/3 incentives in the company then
there is no real commitment to innovation
Company
support orgs
Process Refactoring
Innovation Group
Steve Blank
Disruptive
Innovation
• Company operates on goals and incentives

If supporting Horizon 2/3 is not part of Company goals &
incentives then there is no real commitment to innovation
Company Positive – Financial Awards, Performance

support orgs
Bonuses, & Honorary Awards
Process Refactoring
Innovation Group
Negative – You can lose product funding
Steve Blank
Innovation Becomes Execution
Horizon 1 Adopts Horizon 2 & 3
Type of Innovation
Horizon 3
Disruptive
Innovation
• Success means scale
Continuous
• Scale requires plans, KPI’s
Horizon 2
Innovation procedures, processes,
incentives
Horizon 1
Horizon 3 Process Refactoring• Innovation becomes execution
support orgs Execution Group
Steve Blank
Intrapreneurs are (Good) Rebels
Bad Rebels Good Rebels
Break Rules Change Rules
Complain Create
Assertions Questions
Me-focused Mission-focused
Anger Passion
Pessimist Optimist
Energy-sapping Energy-generating
Alienate Attract
Problems Possibilities
Vocalize Problems Socialize Opportunities
Worry That Wonder if
Point Fingers Pinpoint Causes
Doubt Believe
Social Loner Social Source: Carmen Medina www.rebelsatwork.com
Horizon 3 Protects Mavericks
Horizon 1 Fires Mavericks
• In Horizon 1
– Pains in the butt
– Always looking at something different
– Doesn’t get with the program
• In Horizon 3
– The head of your innovation project
– Invents your next capability
Why Innovation Fails
Shiny Objects
• Tech founder becomes enamored with new tech (shiny object)
• Company still dependent on Horizon 1 until new tech is adopted
Solution:
• Make sure that $’s, people, and infrastructure are in place to
cross the Tech Transfer “Valley of Death”
Leadership is Focused on Now
• Leadership managing for current business & quarterly earnings
• CEO and/or mgmt incentives all on current mission and goals
Solution:
• Align incentives
• Appoint a Corporate Chief Innovation Officer
Innovation Is a Buzzword
• Stop using it to describe everything
Solution:
• Use the Horizon 1, 2 & 3 metaphor
Failure is Career Retarding
• In a company a failed project is to be avoided at all costs
• In a Lean organization failure is part of the process
• Pivoting from a failure gets us learning
Bottleneck: The Intransigent Middle
Turning Go into No
• Top of the organization says, “Do it”
• Bottom of the organization Executive
Buy-In
(innovators) ready to go
• Middle management kills it GO
– Actively
Middle Mgmt
– Sabotage Barrier
– Benign Neglect
• Innovation programs die NO
Innovation
Groups Ready
Steve Blank
Why the Bottleneck?
• Threat
– Power, ownership, turf, prestige, pay
• Confused
– Job spec’s are still the same
– No training on how to support, participate
• No incentives to change behavior
• No penalty for ignoring it
Steve Blank
Sales Freezes Talking to Customers
• Sales says “no one can talk to our customers”
Solution:
• Customer Discovery is not pitching new products
Steve Blank
Engineering Is Not Talking to Customers
• Engineering believes innovation is about technology
Solution:
• Focus the organization on understanding customer problems
• Focus on solving current or future problems
Steve Blank
Towards New Horizons
Rethinking the Enterprise
Towards New Horizons
Rethinking the Enterprise
take best practices from startups and
apply it to the corporation
The Limits of Current Horizons
Horizon 1
Hor
Known
Business Model

Horizon 1
Research
Develop-
ment
189
Horizon 1
Research
Develop-
Business ment
Units

Horizon 2
Extend the
Business Model

Horizon 2
Customers
Customers
Customers
Research
Develop-
Business ment
Units

Horizon 1 & 2
• 90% of R&D dollars support existing products
•Customers
Research = adv development to support existing products
Customers
Customers
Research
Develop-
Business ment
Units

Horizon 3
Unknown
Business Model

Horizon 3
Customers
Customers
Customers
Research
Develop-
Business ment
Units

Today R&D’s mission Has Changed
Horizon 3
In most companies, Horizon 3 research $’s are

eliminated or outsourced
e.g., university funding, government labs consortia
Research
Development
Business
Units
Copyright 2016 Evangelos Simoudis

Solution = Innovation Outposts/Inposts
Customers
Customers
Customers
Innovation
Outpost(s)
and
Research Inpost(s)
Develop-
Business ment
Units

Innovation Outposts
Innovation Outpost
• Standalone unit for Horizon 2 and 3 innovation
• May contain as needed: Ecosystem
Strategy
Bus Dev & Corp Specific
• Corp VC Dev R&D
• Incubator
• Specific R&D
Corp
• Bus Development Incubators
Corp VC
Steve Blank/Evangelous Simoudis

Innovation Outposts
Innovation Outpost
Technology
Strategy Ecosystem innovations
Dev R&D Business Units
Business Units
Business Units
Corp Business problems

Corp VC
Incubators & context Spin ins
New
Business Unit
Business model & Technology Innovations
Startups
Startups
Startups
Innovation Outposts
Innovation Outpost
Technology
• Outposts operate under many degreesinnovations
Strategy Ecosystem of freedom
& Corp Specific
• Bus Dev
e.g., investments,
Dev
incubation
R&D Business Units
Business Units
Business Units
• Launches many experiments (investments, incubated teams)
inexpensively to test out innovation-related
Corp hypotheses
Business problems
Corp VC
New
Business Unit

Innovation Outposts – Moonshot Support
Innovation Outpost
Technology
• Moonshot = large commitment
Strategy of resources
Ecosystem for a Horizon 3 goal
innovations
Dev R&D Business Units
• Requires H1 & H3 collaboration Business Units
Business Units
Corp Business problems

Corp VC
New
Business Unit
Business model & Technology Innovations

Outposts Change the Culture
New
Unit
Existing
BU
H1 Corporation
New Employees
Existing
BU
New
Unit
As new business units created by the Innovation Outpost grow,

they hire employees with different culture than that of the H1
corporate parent
Outposts Change the Culture
New
Unit Existing Startups
Existing BU
BU
H1 Corporation
New 2) augmenting the H1 corporation

through their presence.
Unit

Summary
• Lean Innovation Management is not about efficiency
and innovation
• It’s about developing the capabilities necessary to
offset competitors who may have equal or better
technologies
• It’s how to integrate, build, and reconfigure internal
and external competencies to address rapidly
changing environments
• It’s about survival in the 21st Century
Thanks!
sblank@kandsranch.com
Removing the Bottlenecks
• Prove that this can work

• Then: Communicate, communicate, communicate
– Big idea – shared goal/mission
– Strategy – big picture of how the pieces work together
– Tactical implementation
• Update job specs to include innovation support
• Change incentives to include innovation support
• Shower those who came before with appreciation
• Support those who try and fail and try again
Steve Blank
How to Start an Innovation Engine- 0
• Reorganize around Mission + Innovation
• Each Horizon 1 division needs a Chief Innovation Officer
• Drives Continuous Innovation
• Finds Horizon 2 opportunities
• Starts and Funds 10x the new initiatives for MVP’s
• Company needs a COO of Innovation
• Runs/funds Horizon 3 incubators with I-Corps methodology
• Runs open innovation incubators
• Provides staff and infrastructure support for Divisional Innovation
Steve Blank
How to Start an Innovation Engine- 1
• Adopt Common Language: Horizons, Lean, Pivots, MVPs, etc.
• Identify Lean Innovation Vehicles
• R&D, Engineering, Incubators, Accelerators, etc.
• Adopt Lean Product Development: Digital Services Playbook..
• Adopt Lean Metrics: Hypotheses tested, Pivots, IRL, TRL, …
• Adopt Lean Funding: TRLs & IRL
• Adopt Lean Pedagogy: Lean LaunchPad/I-Corps
• Use Lean Mgmt processes
– Agree how to “Hand-off” and “scale” small efforts (hard)
– Develop organizational processes/procedures/incentives that support
innovation (hard)
Steve Blank
Start an Innovation Engine - 2
• Educate the company on Innovation
– Communicate goals
– Communicate process (hard)
• Everyone expects detailed specs like Horizon 1 - bad
– Consolidate innovation efforts (hard)
– Recruit teams (3-4 people)
– Recruit mentors - one per team (hard)
– Get divisional cooperation (hard)
– Train the Trainers
Steve Blank
Start an Innovation Engine- 3
• Design Programs
– Emphasis on speed, urgency, evidence, pivots
– 1½ day “Train-the-Trainers”
– 6/8-week “I-Corps” programs
– Investments and adoption of H1 and H2 by divisions
• Run Programs
Steve Blank
Start an Innovation Engine - 4
• Rally around a mission not theory
• Pick something everyone agrees is a good goal
and congruent with the company’s mission
• Legitimatize the need for exploration and
exploitation
Steve Blank
Start an Innovation Engine -5
• Leadership that is capable of managing the issues
associated with multiple simultaneous Horizons
– Resource allocation
– Incentives
– Etc.
• Needs to balance a culture of risk taking, speed =
mitigation, quick to opportunities, receptive to
innovation
Steve Blank
Thanks!
sblank@kandsranch.com
Innovation at 50x
Steve Blank
@sgblank
www.steveblank.com
2/1/16

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Innovation at 50x

Innovation ≠ Lean Anything

These are all physical

These are all physical places

Lean Innovation Management

10x the number of initiatives in

Source: James March, Charles O’Reilly, Michael Tushman

Source: James March, Charles O’Reilly, Michael Tushman

Source: James March, Charles O’Reilly, Michael Tushman

Source: James March, Charles O’Reilly, Michael Tushman

Mature Business Rapidly Growing Business Emerging Business

Source: Baghai, Coley, White

our established capabilities

Source: modified Baghai, Coley, White

Level of innovation is defined by whether

Existing Business Model:

Execute Core Mission

Existing Business Model: New Opportunities via

Execute Extends Core Business

Existing Business Model: New Opportunities via New/Disruptive

Execute Execute/Search Explores

ROI 1-3 years ROI 4-6 years ROI 4-10 years

Use traditional methodologies for Horizon 1 projects

Source: Ikhlaq Sidhu, UC Berkeley

Source: Ikhlaq Sidhu, UC Berkeley

Use Lean Methodologies for Horizon 2 and 3 projects

Part 1 Resources Channels

Costs Revenue Model

Business Model Canvas

Source: Alexander Osterwalder- Business Model Generation

Part 1 Resources Channels

Costs Revenue Model

Business Model Canvas = hypotheses of how you

Source: Alexander Osterwalder- Business Model Generation

Customer Development is how you search for the model

Turning the Business Model Canvas Into Facts

• Frame Hypotheses  Business Model

• Smallest feature set that gets you the most …

• Definition: A substantive change to one or more of the

Customer Customer Customer Company

• Speed of cycle minimizes cash needs

Customer Development Business Model Canvas Agile Engineering HBR Cover

MS&E 297: “Hacking for Defense”: Solving National Security

Terms: Spr | Units: 3-4 | Grading: Letter (ABCD/NP)

Karan Singhal, Undergrad Scott Steinberg, Yegor Tkachenko,

Eric Peter, CS & Karan Singhal, Scott Steinberg, Yegor Tkachenko,

Cost Structure Revenue Streams

Enterprise Value Proposition:

Surveys are based on

who use surveys for market research

“We have to use [vendor] -

What we found: Not that much Week 1-3

pain with self-reported data...

We need to be able to answer a specific

Customer Needs Identified through Customer Discovery:

How should I How do I better

What is the path to

What is the path to • Understand

First consumer test

People will provide data and opinions for money, BUT

Only younger and poorer consumers were interested

Cash-based model had other problems too:

As a result: What if Week 4