Do We Really Understand Innovation?

I recently read an article that was sent to me from Edgelabs CTO titled Innovercy: Misunderstanding Innovation written by Horace Dediu @ Asymco.com and it really got me thinking about how Edgelabs is uniquely positioned in the market, but more importantly the role true innovation plays in society and why this is so important.

You can throw a word around all you like but sheer repetitiveness won’t guarantee its reality.

The problem I see is that this behaviour appears to have affected many around us. By simply coining a behaviour, product, workflow or whatever it is as innovative it appears that in the eyes of some, innovation will magically occur.

Perhaps this is primarily a result of misunderstanding.

To combat this misunderstanding Horace points to a term dubbed innovercy (read the article here for more on this).

In Innovercy: Misunderstanding Innovation, Horace does a great job of highlighting the key differences between novelty, creation, invention and innovation

  • Novelty: Something new
  • Creation: Something new and valuable
  • Invention: Something new, having potential value through utility
  • Innovation: Something new and uniquely useful

Image

Image Credit: http://www.asymco.com

Here’s the thing, in my opinion, there is little to no difference between these four terms in the eyes of many. Hence, the term innovation getting thrown around like it’s going out of fashion.

One cannot simply be innovative. Innovation requires validation, validation from an intended market that typically leads to some form of commercial success.

The point of all this is that a person, team or organisation cannot expect to ‘be innovative’ if a clear understanding of the concept isn’t deeply ingrained in ones culture.

Put simply, innovation is about delivering something new and uniquely useful to the market that people actually pay for.

I’ll come back to this over the coming weeks but in the meantime, think about this: are you guilty of misunderstanding innovation?

 

An Introduction to Design Doing

I recently wrote about Design Thinking and the reasons why your organisation needs it (and no it’s not dead, it just needs a little extra something).

“Design Thinking is the human-centered approach to innovation that draws the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” – Tim Brown, President and CEO @ IDEO

Image

Image Credit: IDEO

I also recently wrote about Customer Development and spent a little time discussing the practical experience I’ve had with it.

“Customer Development is about testing the founder’s hypothesis about what constitutes product/market fit with the minimum feature set.”Steve Blank 

Image

In simple terms, that means that a founder starts with hypotheses, constantly engages with customers to test the hypothesis they have, iterates those hypothesis and makes decisions based on what they learn. This provides potentially the best path to attaining product market fit.

Image Credit: steveblank.com

And there’s a reason I am bringing these two together with the intention of providing some context around the concept of ‘Design Doing.’

So if you delve into both concepts at a practical level, there is one prevalent focus. People.

Ultimately, company’s are human institutions that serve human beings. Therefore everything we do is and ‘has’ to be about people.

Both concepts provide the means for a team to identify and learn about problems, as well as test potential solutions. What this adds up to is that innovation occurs incrementally based off of what you learn from real customers.

The ‘build it and they will come’ ideology is dead, and rightly so.

Our focus now as functional teams is on turning what we assume into fact and then taking action based off of that learning.

In this sense, both Design Thinking and Customer Development have a lot of synergy.

There is however a caveat to this synergy in that one of these processes typically has a lot more practicality than the other.

Customer Development is deeply practical and has very little to do with what you do inside your building. Whereas Design Thinking often perpetuates a more internal environment in which you engage external customers or advisors at different stages throughout the process.

Customer Development is completely dependent upon what’s outside the building, not in it.

My thinking is that to truly get the most value, both internally and externally from Design Thinking, we need to add a lot more Doing into the mix.

Design Doing is about identifying and learning about customer problems, bringing together the best human and technical resources available, testing assumptions about solutions, validating their accuracy or inaccuracy and using the human and technical resources you have to deliver tangible value.

Design by nature is an action. It’s something you do. And although the process by which we form potentially viable ideas is important, the true metric we aspire to is delivery.

Therefore, Design Doing is about the delivery of innovation, not the process to help foster it. 

I’m going to leave this one hanging right there and come back to it regularly over the coming weeks and months with both theoretical and practical explanations from my experiences, and the experiences of the greater Edgelabs team.

For now, I’ll leave you with the below image. Ideally this will get you thinking a little about where I’m headed towards with this Design Doing content (and maybe it’ll keep you coming back ;)

Image

The VC Bubble

Q1 of 2014 saw $9.9 billion fund 880 deals. It looks like the Venture Capital community has been digging deep.

What quite clearly appears to be the cause of this is the fact that companies are taking their time to go public, and therefore typically raise a few rounds of external capital. Often in astronomical quantities.

In many ways this is great, but how sustainable is it?

I don’t really think I’m the best person to answer that question so I’ll push it to the side for a moment and discuss something I do know a little about, early risk capital and the lack thereof.

Now, the numbers above come straight from the US and were summarised nicely in this article by Inc.com. But I think this trend appears to have synergy with much of the world.

There’s a debate in Australia at the moment surrounding the lack of early stage risk capital available. The Series A market as an example appears to be relatively healthy, but ultimately early stage risk capital is what we need to assist the ever increasing local talent pool work on building companies that generate real value.

The first time I raised funds I definitely experienced this problem. I managed to secure a few meetings locally, delve into relatively high level negotiations and ultimately receive an offer. However the proposed deal, valuation and therefore dilution didn’t work in our favour and I didn’t believe it gave us the opportunity to raise more rounds and still keep founders and early employees motivated.

At the time I had zero experience raising capital, didn’t have a product and didn’t have customers. All I had was an idea. What could I do?

Turns out, like with most things, Google was a good place to start.

I assessed a number of ‘funding platforms’ and introduction networks before settling on VentureGiant.com.

Venture Giant (http://www.venturegiant.com) is UK based and they have a pretty interesting model. Basically they accept proposals for entrepreneurs and send those to investors. However it’s isn’t quite that simple and it’s much more targeted than you’d think.

For an entrepreneur it provides a great opportunity. The VG team pre-screen every proposal they receive, provide feedback and only allow a proposal to be sent throughout their network once it meets their minimum standards (many get turned down).

For angel investors and VC’s, VG screens all applicants quite diligently and only accepts a fraction of the invites they receive.

Put simply, they work really hard to ensure that there is a high quality of investors that receive very high quality and targeted proposals.

My experience was actually really smooth.

I found the platform via a Google search, created a proposal by following their guidelines and submitted it for approval.

They didn’t accept initially but after three rounds of amendments they graciously passed it through.

Here’s the best thing. Upon receiving my proposal they crawl their network to match the proposal’s investment readiness, industry and amount of capital with the most likely investors to be interested.

I only ended up getting one enquiry…

VentureGiant.com then notified me and I agreed to pay the listing fee of about $145 AUD (the best $145 I’ve ever spent! That’s all I had to pay. Zero commission and you only pay if they find you a solid connection)

The investor and I were then connected and the rest is history.

Two Skype calls were enough to get us on the same page regarding our vision, or why and agree to the terms of the investment.

My point; just because the risk capital sector in Australia is struggling doesn’t mean you’re doomed. There are people working diligently to try and make this better, however these things can’t always wait.

If you need to go offshore then take the leap and do it. VentureGiant.com is a great platform but there are others out there that you should look at too.

If you are truly inspired by your why and ‘need’ to make it work, then do whatever you have to and look at every possible avenue.

Sometimes an early seed investment can make all the difference, enable you to achieve some level of product market fit much faster and ultimately get you on track to achieve your grand vision. There are never any guarantees, but hey, this is the startup game.

You could always get a 9-5… ;)

 

What Is Design Thinking and Why Do You Need It?

“Design Thinking is the human-centered approach to innovation that draws the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” – Tim Brown, President and CEO @ IDEO

For more, see this article from Fast Company way back in 2006.

Design Thinking, like Agile is more than just a set of steps, a process or methodology. It isn’t just a way of doing, it’s a way of being.

Like Agile, Design Thinking is ingrained deeply in your culture and spreads throughout everything that you do, the reasons behind you doing it and therefore the decisions you make and actions you take.

It’s not just about technology or design, it’s about people, interactions, problems and solutions.

If you’ve read the Fast Company article then I think you’ve got a pretty decent understanding of what Design Thinking is. The thing that interests me is the why. Why would you do it, why would you need it?

For me, why is always the first, and often the last question as it enables one or many to delve deeper into a problem or solution and match it with what’s truly important, the human element.

Companies are human institutions and they exist to serve the needs of people. Therefore truly understanding the people you work with and aim to serve is pretty important.

Developing a Design Thinking culture promotes the vital importance of the human element, both internally and externally.

You first focus on the external human element, or the need that you target. You then combine this with the internal human element, or your ability to deliver a solution to that need.

Design Thinking put simply is about matching problems with solutions and it’s a proven way of doing so.

From where I’m standing almost everything that we do revolves around identifying a problem, its root cause and then finding the best way to fix it. Therefore Design Thinking is the state of being that exists to enable us to truly understand and solve problems, whether internal or external.

In closing, you need to foster a Design Thinking culture because it will enable you to better connect with your customers’ needs and work more effectively with your colleagues to deliver a solution.

How? More on that in a later post…

 

Image Credit: ideo.com

 

How Do We Leverage The BS?

I recently wrote a post called Cut The BS’ and by that I meant cutting out everything that isn’t 100% necessary for you to achieve your objectives and to purely focus on the essentials.

I made note that there are a lot of potential distractions in the startup scene and also that I fell victim to them many times before learning to focus more effectively.

However, even with all the startup BS I’ve always thought that there had to be a way to leverage much of what existed.

How can you take advantage of everyone out there that’s trying to make money from startups? How can you take advantage of the noise and the false portrayal of ‘entrepreneurial lifestyle’ we see in the media? Is there a way to use all of the unnecessary to assist you in achieving your objectives?

I believe the answer to these questions is yes and it’s something that we need to consciously think about as founders and members of the startup eco-system.

Think of the hundreds of accelerators, incubators, co-working spaces and Meetup groups that flood our inboxes with invites on a daily basis. Is it possible that all of these invites are relevant and potentially beneficial to us?

Of course not.

A high percentage of these programs, organisations and events are just ‘along for the ride’ and you have to work hard to identify the value in a very crowded market.

When any industry is seemingly flourishing, people see opportunity to take advantage and capitalise on that opportunity.

As a local example, think of the Victorian gold rush in the mid 1800’s. There was promise of unforetold wealth (some actually achieved this, however most didn’t. Ring any bells?) and of course, a flurry of individuals and organisations that took advantage of the ‘perceived opportunity’ that the gold rush brought.

They provided equipment and supplies, all for a fee to those who were looking to create wealth and find that one nugget that would change their lives.

This seems pretty viable commercially, and indeed it was for some period of time. However, the supplier’s reason for being there, or their ‘why’ was very different to that of the individual looking to attain vast wealth.

They wanted to create wealth through selling to those who had or were sold the dream. They were opportunists. (Not that I have anything against that, I just wanted to highlight the difference between the reasons for each party’s actions).

I see some similarities to this example in the current startup market. It appears to me that there are service providers in the startup eco-system of all types that have applied a similar model to those who sold spades and shovels back in the mid 1800’s.

They see an opportunity to take advantage of the fact that entrepreneurship is now seen as a viable career path and that it’s also possible to monetise around founders and founding teams that are trying their hand at building a startup.

To me this is just plain wrong when you take into consideration what many startups are trying to do, make stuff better!

Keep in mind this isn’t the first time we have seen incubators, accelerators and the likes popping up all over the place. It’s happening again largely due to the ‘perceived opportunity’ in the market.

Put simply, money talks.

Is this to say that everyone in the startup scene is evil and wants to take money from people who don’t have it? Again, of course not but I’m making this point to highlight the fact that a portion of service providers have entered this very market because it’s a ‘hot market’ and not because they desire to drive value at national and global scale.

In my eyes this is reality and that’s okay as long as we acknowledge it. I’d dare to say every industry has many similarities.

The more pressing question surrounds what you, as a startup founder or member of the startup eco-system can do to truly leverage this as there’s an abundance of opportunity and plenty of people doing things for the right reasons.

Well, this is a hard answer to generalise because of the disparate nature of startups. Two are rarely the same or have the same experiences but I’m going to give it a shot.

Startup teams, especially in the early days typically have limited resources, often have limited contacts and typically have even fewer customers, if any.

At this stage this is okay. You are searching for a business model that you believe will become repeatable and scalable.

The problem is you won’t be around for too long if this doesn’t change. You need to find what you’re looking for and begin executing that model.

My belief is that you can in fact leverage various different resources and service providers within the startup eco-system to help you find your business model faster. But in order to do this you need to figure out whether the resource owner is handing out spades and shovels for a fee (the opportunist), or whether they are there for a similar reason to you.

It’s about judgement and aligned objectives.

I think there are many examples of this and Y Combinator is often mentioned for this very reason. They provide teams a true foundation to build their company, they genuinely care about startups and they produce results!

They have a similar why to their founders. This of course isn’t the only example, it’s just the most publicised one.

The thing is, people connect based on common values and beliefs. Common values and beliefs create trust and trust enables you to build truly fruitful partnerships, or at least gives you the best opportunity to do so.

You need great relationships to make it through.

It’s easy to get caught up in the hype, the big exits, the newest and hottest incubator, the events and everything else that encompasses ‘startup BS’.

I’ve been in that boat. I’ve been caught up in the BS more times that I can remember but I’ve been fortunate in that I have the opportunity to go at it again, take what I’ve learned and apply it.

I feel that leveraging the BS is very possible and realistic for founders to attain. But not only that, I also believe it provides vast opportunity for us to increase our odds of survival.

From what I’ve learned, observed and been told, building a great company requires you to make tough decisions daily. These decisions will drive your direction and ultimately affect your success.

Apply the same level of care to your decision making when judging the resources within the startup eco-system and whether or not they are right for you. Remember, it’s about judgement and alignment.

If you get this right, not only will you sift through a bunch of BS that will slow you down and damage you, but you’ll also create great relationships, achieve your goals faster and increase your odds of survival and ultimately success.

 

The Problem with Your Network

Now that’s a pretty assumptive title but hear me out.

Here’s the problem with most people’s network, especially when the primary focus is on building connections through networking events. There is far too much focus on breadth and not enough focus on depth.

Having 4000 connections on LinkedIn is great but what’s the quality of those relationships?

I would rather have 100 connections that I have developed a deep and trusting relationship with than 4000 who I’ve met once, exchanged business cards with and given each other the old 30 second elevator pitch.

I’ll give you an example.

A startup that I’m currently advising has developed an amazing bespoke tailoring service. I mean amazing. These guys build your personality into beautifully tailored shirts. Check them out @ www.saibunoakuma.com.au (new website coming really soon ;) and book yourself in for the tailoring experience of a lifetime! (Couldn’t help myself…)

They’ve spent the past 6-7 month focusing on product, distribution and brand and they’re now in a pretty decent position to look at an ‘official launch’ and start achieving some scale.

They have two primary challenges that could inhibit them from achieving their goal; PR as they’re selling a brand and a highly personal experience (not a product), and technology as the ultimate vision for their company is to achieve global scale through an eco-system that is facilitated by a back-end technology platform.

I believe they can achieve this but like anything, you start with why and you need to execute on that.

Because of the challenges they face I knew that they needed to develop some very strong connections with someone who could facilitate their brand building and another who could facilitate their technology platform.

The first connection I made was to a good friend who I’ve done a lot of work with over the past couple of years. I first met this guy at school whilst I was focused on sport. He was always a hustler and has built a very reputable boutique PR firm (Spin & Co. www.spinandco.com).

At any stage I can call him, or he can call me and we’ll make time for each other. A friend of his is a friend of mine and vice versa.

I’ve set up a meeting for them this weekend, briefed both of them and I’m pretty confident that they will do some great work together (I’ll let you know if that turns out to be correct…).

The only reason that I now have this level of connection with a decent number of really talented and successful people is because I first made the mistake of focusing on breadth rather than depth.

I went to a bunch of events, handed out and received business cards, added to my LinkedIn profile but never delivered much, or received a great deal of value. The relationships I was developing were mutually useless.

My primary focus now is developing deeply personal relationship that are mutually beneficial in both the short and long-term.

My advice, focus on your objectives. The people within your network should align with your objectives and it should be your aim to develop a deeply personal relationship in which you give, and can potentially receive value.

What it all adds up to is that phone call you make when you are really in need and the person on the other line is there to help. You’d do it for them and they’ll do it for you. But only if you develop the right type of relationship that aligns with the objectives of you and the other person.

 

The Role of Entrepreneur in Residence @ Edgelab Ventures

I recently read a blog post from Sten Tankivi, EIR @ Andreessen Horowitz titled So… What Does and EIR Actually Do?

It was a really interesting read because articulating the role of Entrepreneur in Residence at times seems a little tricky and perhaps even ubiquitous. I think it would be pretty easy to just say, “I’m just a crazy dude in between ideas”, and sometimes that’s probably right.

In Sten’s case he dubbed it ‘the ultimate meta-job’ as you’re basically just surrounded by awesome people trying to figure out what you’re going to do next.

But what if you’re an EIR that knows what they’re going to next and is already doing it?

Is that a little counter-intuitive?

Perhaps, but I don’t believe it has to be.

The great thing about Edgelabs in that we have a multi-faceted offering and our Ventures arm is home to a number of startups, many of which have been founded or co-founded by key members of the Edgelabs team.

After recently moving away from my previous startup and becoming EIR at Edgelab Ventures (EV), I’ve been exposed to some amazing, inspiring and straight up intelligent people through our network.

I think this is one of the reasons that my next venture was defined and we were able to secure early funding so quickly.

So, how does my role of EIR at Edgelab Ventures work?

Well, the new venture I have co-founded (will be publically announced over the coming months) resides under the Edgelab Ventures arm and EV provides a massive support platform from technology all the way through to human resources.

As a co-founder your role is completely ubiquitous. You are everything and anything you have to be. However, it’s important to know what activities align with your objectives and deliver the best bang for buck.

Edgelabs helps beyond belief in this regard. They help me and our team focus on the essential tasks required for us to achieve our key objectives.

So that’s one component of my involvement with EV and I’m really grateful and humbled for this opportunity.

However my involvement doesn’t stop there. I’m fortunate in some respects in that I made plenty of mistakes the first time I built a company and I regularly work with startups to speak about my mistakes and to try help them make less. (I also did one or two things well, so its’ not all bad…)

So I’m now part of the Edgelab Ventures team that works directly with the Australian startup eco-system to help first time founders all over the country focus on the essentials.

I remember what it was like for me the first time.

You’re basically walking the plank, about to dive into a deep ocean with little to no swimming experience. At any moment you could go under.

This is the uncertainty of the startup world.

I had nothing to call on, a fairly light network and a bunch of hypothesis I wasn’t 100% sure how to test and validate. How was I going to build this company?

Sure enough I built my network, began to test hypothesis, made mistakes, learned from experiences and began building a company.

I / we can’t say we’ve been in your exact situation, however we really hope that many of our experiences can become yours so that you can learn quicker, make less mistakes and build truly great company’s.

To sum it up, the role of Entrepreneur in Residence at Edgelab Ventures is a really empowering one. I get to follow my vision with the support of amazing technology and people, and I also get to work with piers all around the country who are trying to do the same.