Investing in Innovation: A Venture Capital POV
As a VC investing in technology-related companies, be they atoms or bits, the depth and breadth of the innovation is critical. This is a rather obvious. So how do I define innovation? Innovation = invention + commercialization. If it isn’t viable in the market, if it doesn’t even reach enough of the market to know, it’s a lovely, but it’s an invention, not an innovation – and most of us VCs like the latter more. Take a look at most pitches and usually more slides are on the technology and functionality than sales and marketing. Take a look at most ‘use of funds’ and most of the money goes to product development, with not that much towards sales and marketing. Granted, in the early stages there is a lot of discovery to be done on sales and marketing. That’s ok. We’d like to know the business’ thoughts on how it is going to find out what it doesn’t know. Everyone in the room knows there are a ton of unknowns. It’s ok not to know but a plan for finding out is critical. VCs know there are risks, and we want to know how the business will discover, mitigate and provide contingencies for those risks. Now maybe I’m a bit unusual in what I’d like to see and hear from entrepreneurs coming to our firm for funding, and I probably am. Coming from Bell Labs, I have a passion for technology…but I also know first hand that if you don’t market and sell your ‘stuff’, it’s doesn’t really matter. The Lean Startup Movement has helped some in terms of getting feedback for the product or service but it’s not a panacea for identifying markets, marketing and sales. Even when the markets and plans for attracting those markets are identified and great, effective messages are developed, the gulf between how the startup wants to sell and how customers want to buy can be huge. Unless you have the next iPhone and can dictate the rules of the market, changing customer buying behavior is not easy and is critical. Startups need to test and find the balance between how their targeted customers want to buy and an effective and efficient way to sell. So, after 10 years of being a VC, and loving the opportunity to help companies grow, my advice is don’t neglect marketing and sales. It’s not as ‘sexy’ or as fun perhaps as working on the product or service. It’s usually less tangible, more open to wide interpretation…but it’s critical. You can have the greatest product or service in the world, but if no one knows or cares, then why should I?
by Deborah Mills-Scofield
InnovationExcellence
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What Anala Beevers Teaches Us About Ideas
If you’ve been paying attention to the news, you may have heard Anala Beevers, a four year old who’s been recently invited to join MENSA. She’s not only remarkable because of her age, but because she’s in the highest percentile of IQs MENSA has to offer. According to People, Beevers learned the English alphabet at four months old and numbers in Spanish by age one and a half. The New Orleans resident now names capitals of countries across the world without hesitation and has no qualms about her achievements. When asked, “How smart are you?” she’s said, “Really smart”. Her parents admit that their four year old daughter is miles ahead of them and she already has plans to become a nurse when she grows up so that she can help people. It’s clear that Beevers would have quite a lot to teach the average businessperson, but what her story demonstrates is something more that people within large companies often forget. A common acronym used throughout businesses is the HIPPO, or the Highest Paid Person’s Opinion. Many articles warn about the dreaded HIPPO running your company and urge everyone to be wary, but the truth is that hierarchies dominate most of the business interactions we have. And within those hierarchies we’re encouraged to view certain opinions and ideas as more valid or more important automatically due to the hierarchy. And while there are some hierarchies that make sense (e.g. consulting an employee who does factory work about factory work vs. an office employee who’s never done factory work), sometimes power structures are the biggest obstacles to innovation, even when utilising idea software. Anyone looking at Beevers as just a four year old child might immediately write her off. When we picture a “genius” in our heads, it’s usually an adult, sometimes a man, maybe with a clipboard in hand and a lab coat. Very rarely do we assume that a young girl would have what it takes. But perhaps that’s part of the problem that keeps us from finding jewels like Beevers within companies. Our assumption that geniuses come in one flavour and one look actually harms us and prevents us from finding the best solutions. In order to reach a point where a company becomes innovative, they have to be willing to look at all ideas democratically and, rather than factoring in a power structure, they should factor in experience and knowledge. Maybe Beevers doesn’t have the same experiences her parents have in the world because of her age and she still may have a lot to learn, but she has her own experience and knowledge to contribute. Looking at all ideas from the standpoint of what they provide rather than our assumptions about who’s providing them can lead us to find the geniuses within our own companies. And in the end, that’s what creates solutions and drives innovations further.
By Lola Olson
InnovationExcellence
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Start of Innovation in Software Development Companies
How can any software developer become an Innovator? Is it possible that innovations exist in any software company? Software development in small and middle size companies can be encouraged in the same manner as in big companies. The effort and the time spent surely must be scaled, but the general principle which should bring the innovation culture into the teams can be copied. The target can be that after introduction of innovation process following sentences shouldn’t be heard: “We are here only to do our job and that is all…” “We are not supposed to give suggestions.” “I can have ideas, but no one will care about it.” “I don’t know what to do with new idea and how will care about it.” To encourage new ideas, the process must be build and it doesn’t have to be complex. Let’s start with answering first question that can arise: “Can software developers have ideas?” Well, everyone can, and the ability to have new ideas is really close to everyday work of any developer. Let’s just say that any savings in development, planning, testing process is a worthful idea. “What could be the suggestion in software industry?” Many developers do many small improvements without recognizing that it was an idea that made some savings to the company. Some examples can be: new testing tool which provides more valuable information in shorter time, script for making the working environment or the new mechanism that makes your development process faster or more efficient. “Aren’t the new ideas part of our everyday job already?” To make this visible, whole organization must be prepared for taking care of such ideas, specially lower and middle management which should recognize and evaluate such ideas. This process will add value to any organization, it will give: savings of time = money idea-makers will be recognized improvement in working environment new ideas will be encouraged this will prepare ground for other ideas knowledge about innovators or creatives in the organization In short, introducing of innovation process will give additional benefit through the savings of money, but also in increasing the culture inside the organization and preparing it for next step which should follow – radical ideas that will come from developers.
By Tomislav Buljubasic
Blog: 7innovation.worpress.com
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