In 1943, Lockheed Martin created a 'skunk works' team to focus on advanced innovation. Most important, the group operated autonomously & unhampered by corporate bureaucracy. Today, that trend continues in some of the world's most innovative companies like Google's X team and Facebooks F8 Skunk Works. So ask yourself: Should you create your own Skunk Works team? Join Nicholas Holland, Director of HubSpot Labs, as he discusses the pro's and con's of establishing a Skunk Works group.

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STOKING THE FIRES
Practical guide to creating your own Skunk
Works & driving innovation from within
Nicholas L. Holland, Director of Product

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STORIES OF DISRUPTION
ARE EVERYWHERE…

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MARKET MAKERS
NOT JUST SHARE-TAKERS…

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TIRED OF PLAYING DEFENSE
READY FOR OFFENSE

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TECHNOLOGY
EXPLOSION
(specifically, digital…)
• Emerging solutions
• Evolving business models
• Changing customer behavior
• Erasing previous advantages

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TRANSFORMATION &
REINVENTION TO
EMBRACE DISRUPTION
These aren’t scary words

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INNOVATORS
DILEMMA
(you can’t read this enough…)
Successful, established companies are
prisoners of their success. They can
neither withdraw from their profitable core
business nor are they able to assert
themselves in small, emerging markets
with uncertain prospects for success due
to their processes and structures

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I SENT HELP
THREE TIMES!
… you weren’t listening

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INNOVATION
IS A MEANS
TO AN END...
“He who knows others is
wise; he who knows
himself is enlightened.”
― Lao Tzu

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• Diversify Revenue
• Explore business models
• Solidify your position
• Respond to competition
• Disrupt yourself
• Avoid disruption
• Provide fresh ideas
• Increase growth
• Attract & retain Talent
• Transform Culture
• Open up new markets
The many values of Innovation

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• Diversify Revenue (save / make)
• Explore business models (save / make)
• Solidify your position (save)
• Respond to competition (save)
• Disrupt yourself (save / make)
• Avoid disruption (save)
• Provide fresh ideas (save / make)
• Increase growth (make)
• Attract & retain Talent (save / make)
• Transform Culture (make)
• Open up new markets (make)
The many values of Innovation

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YOU SHOULD ESTIMATE THE
COST OF NOT INNOVATING

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Avoid Innovation
Theater
Unless you just want to feel better...

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“CORPORATIONS FOCUS
SO MUCH ON EXECUTION
THAT THEY FORGOT HOW
TO INNOVATE”
- Steve Blank

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SKUNK
WORKS
…Cool name for a Corporate
Innovations Lab
• Lockheed Martin
• 1943 - Today
• Secretive Projects
• Up to 4 Decades to develop

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SKUNK
WORKS
…Cool name for a Corporate
Innovations Lab
• Small Team
• Autonomous
• External to Bureaucracy
• Advanced mission

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CORE PRINCIPLES OF
INNOVATION
And knowing thy enemy

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Speed
Rapid Iterations & Reactions
vs.
methodical, stay the course until told otherwise

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Agility
Make & Act Upon Decisions Quickly
vs.
run things past others, periodic planning/approval

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Fearless
Comfortable With Known Unknowns
vs.
desire to de-risk, protectionism, avoiding failure

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Experimental
Repeatedly Testing Hypothesis With Data
vs.
stick to the plan the group agreed upon

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Streamlined
No Bureaucracy Or Red Tape (more speed)
vs.
hierarchy, CYA, check with legal / other departments

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Empowered
Personal Ownership, Speed Of Decisions
vs.
seek consensus, get management blessing

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Focused
Clear Definition Of Success (1-2 key metrics)
vs.
whiplash to whatever the executives fear

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Constrained
Necessity Is The Mother Of Invention
vs.
“fat startup” with plenty of resources & no consequences

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“A STARTUP IS A COMPANY
DESIGNED TO GROW FAST”
-Paul Graham

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1. Don’t build services for money, but make money to build more services
2. It's not about you, it's about what you do for customers
3. Stop focusing on limits, focus on possibilities
4. Speed kills… The Quick Shall Inherit the Earth
5. Greatness & comfort rarely co-exist
6. 20/20 Vision - Short view + Long view
7. Disrupt yourself or someone else will
NOTHING FUNNY ABOUT STARTUP CULTURE

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BOTTOM LINE
Customers don’t care if you’re a
startup or corporation. They only
care about the value you provide
to them

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SO LET’S
RECAP
(context before tactics)
● Recognize “Innovate or Die”
● Embrace Reinvention
● Place a value on Innovation
● Explore through Skunk Works
● Honor Innovation Core Values

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TACTICS… LET’S DO THIS!

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IF YOU DON’T HAVE A BIG
GOAL YET, THEN START BY
LEARNING & ASSESSING
Choose the mountain you want to climb

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INNOVATION
OUTPOST
Phase 1: ‘Sense’ the market
• Learning & Exploring
• Located in Innovation Clusters
• Trends & Technologies
• Competitors

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INNOVATION
OUTPOST
Phase 2: ‘Respond’ to
observations
• Invest
• Incubate
• Acquire
• Partner
• Invent

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“I HAVE NOT FAILED. I JUST
FOUND 10,000 WAYS THAT
WON’T WORK”
- Thomas Edison

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LET’S BUILD SOMETHING

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1. Executive Support
2. Protected Budget
3. Small Team
4. Entrepreneurial Leader
5. Periodic Check-ins
6. Short term wins, Audacious Goals
CRITICAL ITEMS FOR KICK OFF

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You Need The CEO
(Real support, not Lip Service)

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Make a Real
Investment
(appropriate funds or all is lost)

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Small, Autonomous
(Minimal Dependencies)

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THE TEAM IS
CRITICAL
(Game is won/lost here)
• Entrepreneurial
• Transformative
• Bold + Fearless
• Challengers
• Customer Obsessed
• High GSD Factor

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CAREFUL HOW YOU
STRUCTURE COMPENSATION

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SCIENCE FAIR
Bi-monthly showcase for team to
show progress, discoveries, and
impact
Repeat the Mission
Identify the Pain
Demonstrate Solution
Show Customer Impact
Explain Corporate Impact

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IMAGINE IF YOU HAD NO
MEETINGS HOW MUCH
WORK YOU’D GET DONE…
Meetings must die

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LEAN STARTUP
METHODOLOGY
(Ironically, Better for
Corporations)
• Problem
• Solution
• Key Metrics
• Unique Value Proposition
• Unfair Advantage
• Channels
• Customer Segments
• Cost Structure
• Revenue Streams

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Perfect is the Enemy
of Done
(Plus, nobody is perfect)

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Always Be Shipping
Iterate, Observe, Iterate (quickly)

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OODA
The faster you make this loop, the
faster you innovate & surpass the
competition

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MAKE
HAMBURGER
Kill the Sacred Cows
Solve for the customer, not
the corporation!

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LET THE INNOVATION SEEP INTO
YOUR LEADERS, THEN IT FLOWS
THROUGH YOUR ORG

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ALL OF THIS
IS REALLY
HARD
The corporate forces that stifle
innovation will most likely kill your
Skunk Works by sucking it back into
machine

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You are too small
(you can’t afford a separate team)

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Lack of Talent
(wrong people, wrong internal development)

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Conflicting Missions
(Avoid ‘default corporate winner’)

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BEWARE THE UNINSPIRED
COMPROMISE… IT IS THE
ROAD TO DEATH
#1 reason to keep input circle small

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KEEP THE PRIORITY:
CUSTOMER > EV > TEAM > ME

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MUTUALLY
AGREED UPON
EXPECTATIONS
(Between Skunk Works & Execs)
• Goals
• Metrics
• Timeline

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MUTUALLY
AGREED UPON
EXPECTATIONS
(Between Skunk Works & Execs)
• Disruption?
• Customer Solution?
• Indefinite?

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CAREFUL OF ‘THEM VS US’
INNOVATION ISN’T A MONOPOLY

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1. Do we agree on honoring innovation while executing
2. Do we agree on the mission
3. Do we agree on the metrics
4. Do we agree on the budget & runway
5. Do we agree on the leader & team
6. Do we agree on how we extract value
INNOVATION ALIGNMENT

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• STREAMLINED
• EMPOWERED
• FOCUSED
• CONSTRAINED
TEAM CORE PRINCIPALS
• SPEED
• AGILITY
• FEARLESS
• EXPERIMENTAL

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• Diversify Revenue (save / make)
• Explore business models (save / make)
• Solidify your position (save)
• Respond to competition (save)
• Disrupt yourself (save / make)
• Avoid disruption (save)
• Provide fresh ideas (save / make)
• Increase growth (make)
• Attract & retain Talent (save / make)
• Transform Culture (make)
• Open up new markets (make)
The many values of Innovation

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TRUE FAILURE COMES
FROM LACK OF LEARNING
There are so many ways to extract value
from a Skunk Works beyond core mission

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THANK YOU.

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