California Business - Volume 3, Issue 1 - Northern California - 13

FEATURE

"Companies think a lot about the market
externally, but they don't think about their
core competency," says Holly, who founded
two university innovation centers - the
MIT Deshpande Center and USC Stevens
Center. "Evaluation is iterative, so listening
is just as important to do internally."
Examine internal operations by questioning how the big idea would impact
workflows.
"The reason you are innovating is
ultimately to create revenue that translates
into profits that translate into free cash
flow," writes Scott D. Anthony in his book
"The First Mile: A Launch Manual for
Getting Great Ideas into the Market." "And
you can't dream of revenues, profits and
cash flow unless you solve operational issues such as production, distribution, post
sales support and so on."
Innovation shouldn't be too comfortable - or require a complete overhaul, either. Anthony advises focusing 70 percent
of your resources on strengthening current
business, 20 percent on growing adjacent
markets and 10 percent on developing new
business.
Roll it out in house
Before rolling out a big idea, carefully
map out who is responsible and how those
people will be affected. Growing beyond
a core competency may look strategically appealing, but not if operations are
stretched thin.
"Oftentimes, a company becomes attracted to an opportunity that doesn't fit,"
Stearns says. "The challenge is that, while
there is a great opportunity - you can
see the market - it means shifting talents
and skills into an unfamiliar arena. Instead
of spending four hours a day on this new
idea, people will spend eight to build the
skillsets. It's much more costly because it
doesn't fit."
Look closely to determine how the idea
overlaps with your current business. The
more you can make use of existing production systems, customers and geographies,
the more smoothly you can execute the
new idea.

"Make small
investments, so if
you fail, you aren't
stuck with a big
downfall."
- Timothy M. Stearns,
executive director, Lyles Center for
Innovation and Entrepreneurship

"If you don't have matches in at least
one of those areas, and ideally two, rethink
investing a lot of resources, because if it
doesn't work, you're going to damage your
current product lines trying to chase this
new one," Stearns says.
Spin it off
If your big idea doesn't make use of existing
resources, that doesn't automatically mean
you can't expand. If your research suggests
that a build-out could be profitable, spin off
the new service into its own division.
"Spinning off into another division and
setting up its own resource base is a good
idea if you don't have a lot of compatibility
in your core competencies," Stearns says.
"That means you're not contaminating
your core business with the mess that's going to go on in this new unit. It's not going
to spill over and divert undue resources."
Stearns suggests making "little bets,"
popularized by Peter Sim's book of the
same name. Limit your investments to
launch a product in as good a shape as
possible to see how the market actually
responds.
"It's a way to protect yourself from the
disruptions of a new product," Stearns says,
"Make small investments, so if you fail, you
aren't stuck with a big downfall."

Pass it on
If your company can't house the big idea
in any capacity, you may decide to share it
with someone else. Anthony uses the example of Procter & Gamble, which developed a new technology for garbage bags.
But with Clorox dominating that space,
P&G had no desire to compete. Instead,
it licensed the technology to form a joint
venture, developing ForceFlex products
by Glad.
But finding a partner and working
through the legal details can be challenging, especially the first time around.
"I had one guy walk in here with seven
or eight ideas that he wanted someone
else to do," Stearns says. "I finally told him,
'I've never had anyone walk into the Lyles
Center and say, 'I'm here to buy an idea.
Do you have any for sale?'"
Licensing and patenting are options,
but only if your company has experience
in that arena. Otherwise, you'll find yourself investing significant time and effort in
offloading an idea you don't want.
"It takes a long time to get proof of
concept," Holly says. "If you don't have
the resources and you don't think it's
worthwhile proceeding, then why would
anyone else?"
Let it go
If a mid-sized firm doesn't have the capacity to tackle a big idea, Stearns' advice
is simple: Move on. Focus your energies
instead on something that actually adds
value to your organization.
"Learn to fail fast - that's the first
rule," Stearns says.
For closure, Anthony suggests officially
killing the idea. First, document what you
learned. Then switch the team's focus to
another attractive project. Finally, make a
symbolic gesture to signal the end of the
project, such as a memorial party.
"Make it clear to people this one's
done," Anthony says. "If you don't, what I
see is the 'plague of the zombie' projects,
where people are still actively working in
hopes that somehow they'll come up with
a success." *

California Business * 13

California Business - Volume 3, Issue 1 - Northern California

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