Corporate innovators are turning their attention to creating innovation-led growth by creating high-potential corporate startups and to scale them to make a significant impact.
In the second in a series of articles is a prelude to the Roadmap to Scaleup 2021 peer-group later in 2021, I discuss how to stimulate ideas for new ventures – “On Demand”. The first article discussed the problem and can be read HERE.
Let’s think about the concept of value pools.
We can do this by bringing together two demonstrated approaches; business ecosystem mapping and strategic roadmapping.
But first, let’s consider the business environment of a company.
Biological ecosystems are very good analogies for business ecosystems. It confers complexity, the interactions between the various species that exist in a common network of organisations acting very much like those in the biological ecosystem. The individual species are creating and sharing resources, influencing each other and competing. And they’re also affected by external disruptions.
In a network of suppliers, customers and competitors business interaction is being increasingly played out at the ecosystem level. And so we need to understand with specificity and granularity.
Some of the world’s most important and successful disruptive companies like Uber, TripAdvisor Airbnb are providing components within an ecosystem such as providing the structure for the businesses using it.
What are the key ideas around ecosystem mapping and how we might be able to use it?
IfM at the University of Cambridge has developed an approach to analyse and exploit opportunities for innovation and look for high potential ideas for ventures. A unit within the IfM, the Cambridge Service Alliance, is a partnership with major companies and has been looking into service models, business models and data analytics.
Do you understand the business ecosystem that you operate in, with granularity?
For developing venture ideas we need to develop a granular mapping of the composition of the business ecosystem. From that, we’ll be able to exploit that understanding and come up with new ideas for exchanging value within it; to satisfy value in new ways that are appreciated by another party and for which they are willing to give up some of their retained value; profits, today for greater profit, tomorrow.
In the graphic, you can see a very simple chain between you, a supplier and your customer.
When we add in more members of the business ecosystem things can become a little bit more complicated. Customers have customers and there are suppliers of suppliers. You can also signify the strength of connections indicated by the strength of the arrows that also these exchanges can go in one direction or both directions. Very quickly we build up layers of complexity, which is useful but also challenging to manage. And then we can see how competitors come into the picture and of other influences in the network.
It’s from this understanding of how value is created and exchanged that develop ideas for the product-service systems; the new sources of innovation we are looking to stimulate and ultimately start-up ventures.
Another point to mention is the idea of an ecosystems “platform” which is something that a company can construct to create and exchange value in a network and to exploit for its purposes.
Thinking again about Uber. Who is Uber’s customer? Is it the passenger? Or maybe it’s the driver?
Drivers services that Uber provides on its platform creates access for a community of providers such as car servicing, making sure the car is always available, car cleaning and insurers.
All these service providers on the Uber platform allows the customer, the driver, to maintain maximum time on the road and therefore maximise earnings.
A second concept is this idea that between ecosystem members where they exchange and capture value perhaps selling services or selling products. Value can be generated in two main ways either directly through financial exchange or indirectly such as proximity to each other, trust between members, tacit knowledge and strategic intent.
Let’s take an example.
Imagine an earthmoving excavator company that makes the heavy machinery selling it to the dealer-retailer and the sale price is the direct exchange.
The company could offer services that can monitor the condition of the excavator through its lifetime. That provides knowledge as an intangible or indirect value and a potential source of innovation. That can mean that the service provider can always maintain that excavator at a premium for those customers who value top condition all of the time and the productivity it enables.
From this position of knowledge about value exchange that companies can seek out more sources of value and capture that.
How to harness that thinking?
We do that through a structured analysis and mapping.
- Start with defining the customer as we map this ecosystem.
- Brainstorm other ecosystem members and build up that complexity.
- Cluster ecosystem members together as types.
- Create connections.
- Identify key relationships where see where there are strengths and weaknesses and therefore opportunities.
- Analyse the key relationships to understand the value propositions.
- Develop new ideas for value exchange; potential trigger ideas.
- Pull these into innovations, and for our purposes, ideas for startups.
- Evaluate these on an ongoing basis as they’re nurtured through the Lean Scaleup process,
This, in a nutshell, is the usefulness of business ecosystem mapping.
Roadmapping creates your narrative for investment
Strategic roadmapping is a second approach to help companies with strategic thinking, analysis and planning.
We set up a grid to structure information. At the top layer, information about the market and business or competitive environment. Things that create value in the middle layer includes products, services, systems or some other solution. At the bottom layer, technology, capabilities and resources, are positioned and all of this maps out over time, usually running left to right from now to some visionary point in the future.
And we’re asking questions. Where do we want to go? Where are we now? And how do we close the gap?
We need to understand the competitive environment and the business strategy and use that to pull through ideas of value creation in a market Pull approach.
In the bottom layer; the company’s resources and enablers could hold very interesting technology to generate business ideas in a resource Push strategy.
Roadmapping also reflects types of information such as value, function, performance to know what value creation idea will be valued by customers.
How to use roadmapping for venture ideas and investment narrative
- Set up our roadmapping grid so that the value creation area is designed for new business ideas, new ventures. We set the groundwork with a well-prepared scope of exploration and objectives
- Think about trends and drivers and bring a granular understanding of the competitive and corporate strategies on both the company and competitors
- Harvest current and future capabilities, to develop products, services and venture ideas
- Create an initial vision for the ventures and develop an initial narrative for investment
High Potential ideas for New Venture startups
Business ecosystem mapping and strategic roadmapping are well-tested tools that we can use to work on the venture problem.
We can then go and work on high potential ideas and nurture them through the LeanScaleup process and increase the number of high-impact businesses that make it through to scale.
In the next article, we see how the LeanScaleup methodology nurtures high-potential ideas from start-up to business impact at scale.
What to Shift the Dial? Consider joining the Peer Group later in 2021.
I’ll be co-running the Peer Group later in 2021 under my association with IfM Engage and Lean Scale-up with Frank Mattes. If you are an innovation leader in a large company and would like to discuss participation, please contact me by email email@example.com or with a short message (Yes, I’m Interested)
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