Innovation @ Ntegra
July 14, 2023
Venture Capital and Corporate Innovation - A Point of View From Mayfield Fund
Mayfield is an early-stage venture capital firm that has been investing since 1969. There have been over 550 investments in that period across the enterprise IT landscape (B2B SaaS, DevOps, Cybersecurity, Data/Analytics and Cloud), Health and Climate. Mayfield has a People-First thesis for early-stage investments, with an emphasis on the founders and their journey from inception to iconic outcomes for their start-up mission. The areas of focus for Mayfield are captured in the image below.
We also believe that listening to the market and the needs of the market are important insights for our start-ups. We have built a substantial network - the Mayfield CXO Network, which provides a platform for us to learn and share ideas on emerging innovation, while our start-ups gain insight into the needs of the market. The members of this network are CIOs, CTOs, CISOs, Corporate Innovation Leaders and other operational CXOs like CROs, CSOs, CMOs, etc.
Over time, we have learned a lot about the struggles that corporate teams have driving successful open innovation - both organic and inorganic. So, we went ahead and captured best practices from many of these meetings, and turned the learnings into a summary that we call the 3 Is of Corporate Innovation (illustrated below).
Fundamentally, the big struggle with open innovation is the impedance mismatch – which is that corporate environments and start-ups are naturally opposing forces. Like any initiative, there are better ways to approach this and worse ways.
In a large organisation, corporate innovation can sometimes come across as a Sisyphean task. As soon as your team clears one hurdle, another comes into view. When this is combined with a weak budget and compensation allocation, it can feel like spending a lot of time focused on innovation is just not a high priority so it’s important to crawl before you run.
1. Get to know your customer
Having a huge customer focus is critical. We are seeing this today at very successful companies like Amazon and I think at this point it is common knowledge. But understanding customer needs is so important when it comes to making a blueprint for new business.
· Talk to them beyond just a survey and get to know their pains.
· Don’t outsource – executive teams should be directly involved.
· Over-index on data-driven insights than can be tested (as opposed to tradition or bias).
· Don’t bombard your customers with too much information, but instead the right information at the right intervals.
· Focus on what your customers’ needs are – as opposed to adding technology for the sake of technology.
· Better communication across IT and the business units can help foster better customer-facing initiatives.
· Customer engagement groups can help provide direction on where customers are going – and how your teams can go with them.
2. Bold Imagination
Give big ideas a chance to be debated – even the process of going through that discussion can yield some interesting insights. The volume of ideas matters a lot – leadership, beyond the innovation team, should understand what the key trends are in the market to better guide these innovation efforts.
· Make an effort to marry customer pain with the art of what’s possible – start-up style.
· Get your leadership team engaged in curated “corporate tourism” to stay on top of key innovations and trends.
· Partner with those who have an interest in helping you innovate: This could mean local incubators, appropriate VCs, or other start-up programs. Make an effort to cultivate these relationships to bolster your incoming flow of new start-ups
3. Deploy Small Bets
Small and fast is better than big and slow. We have seen programs that run MVPs as fast as 30-60 days against very small use cases and then expand from there. This keeps the risk and investment low while building out insights.
· Have a short-term process of go or no-go when working with a start-up; for instance, a 60-day trial to determine if there is any fit at all before moving to a deeper dive.
· Organise the core team from legal to procurement, to facilitate access as purpose-built for this short sprint process so that everyone is on the same page.
· Provide this as a prescriptive process for the start-up to succeed or fail when working with you.
· Test and measure MVPs against your customers’ pains (refine, retest, re-measure).
· Become an expert at small bets.
· Failure terminology gets replaced with a “learning loop” that celebrates new insights and learnings.
· Build a catalogue or library of knowledge – data-driven insights that capture what works and what doesn’t.
· Low risk but potentially high upside.
4. Remove Roadblocks
There are always tons of roadblocks to innovation efforts. The easiest way to make this a priority is to tie it to compensation and KPIs.
· Review obstacles, metrics, governance, compensation, resource allocation, policies, procedures and politics with an eye for innovation.
· Get everyone on the same page forPOCs – align the rest of the organisation to this fast-paced process of working with start-ups. Speed matters.
· Protest the barriers &obstacles and then systematically remove or reduce them.
· Consider these changes to be “preconditions” for success.
· Don’t let well-established legacy processes kill innovation – challenge legacy.
· Continue to re-review obstacles, getting more effective at every step…award successes in productivity here.
5. Define Your Team
· Who will be on the team?
· Who are the executive sponsors that will remove the barriers?
· Who can assist the team from the outside? Peers (competitive and non-competitive), non-peers (orthogonal insights), VCs, universities and other innovators.
· It is important to clearly define how and who in advance with clear roles and KPIs.
· Three core skills: idea makers, growth makers and efficiency makers.
What does success look like for an open innovation team? And that is going to mean different things in different places.
· Set Metrics - Set your targets, timeline, journey and what success looks like for you.
· Get Organised - Hone your innovation team’s methodology and process. Get everyone on the same page throughout the organisation. Become experts at the innovation learning journey and lifecycle.
· North Star Urgency - Honestly embrace facts of disruption and continuously fund, test and gather feedback on small bets. Driven to exceed customer expectations.
· Develop a Pipeline - Garner a VC-like investment thesis: A synopsis of the evolving market, and predictions around the future landscape, players, and early signals to track.
· Learn the players in the innovation ecosystem: VCs, incubators, entrepreneurs and suppliers.
A few of the themes we’ve been seeing across the ecosystem this year are:
· Generative AI - AI that generates something new rather than analysing something that already exists, using generative models such as large language models.
· Digital Twins - A digital representation of an intended or actual real-world physical product, system, or process that serves as the indistinguishable digital counterpart of the product for practical purposes, such as simulation, integration, testing, monitoring and maintenance.
· Autonomous Logistics - Systems that provide unmanned, autonomous transfer of equipment, baggage, people, information or resources from point to point with minimal human intervention.
· Low Code – Low code is an application development method that elevates coding from textual to visual.
· Datafication and Applied Observability - Transforming objects, processes and more, into a quantified format so they can be tabulated and analysed.