View from the Trenches: Lessons Learned in the Enterprise, Ken Durand, Atlanta Ideas Factory (Ericsson)

Enterprise Lean Startup
Adjusting for Success

ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 2
MOBILE INFRASTRUCTURE
OSS&BSS
SERVICES
MEDIA DELIVERY & IPTV
35,000
25,000
$5B 64,000
2.5 billion
1 billion
180
50%
118,000
Subscribers
managed by us
Subscribers
supported by us
Services
professionals
LTE smartphone traffic
handled by our networks
Employees
Countries with
customers
R&D Employees
Patents
In R&D
Ericsson
$30B Net Sales 2015

I expect this crowd to be much different than normal!
Let’s take a test

A new long term business idea is presented to you. It sounds very promising and
the team is certainly very enthusiastic. Additionally, they have a
background/history that indicates that they might be right about this.
Unfortunately, the outcome is uncertain. What do you do?
A. The team should put together a business plan / business model canvas to
determine if we could make enough money for this to work.
B. Since the idea is interesting, we should commission a market research study
to determine if this market is viable.
C. Sometimes you just need to get started, so let’s get going.
D. We need to understand if this is technically doable or not, so let’s do some
R&D work to determine the feasibility.
Question #1

Management Consultants have given us a set of potential new areas in which to
develop business opportunities over the next 5 to 10 years. We should
A. Decide which area can be developed with minimum expenditure of resources
such as time, effort, and money.
B. Analyze the market and choose target segments with the highest potential
return on investment.
C. Determine the segments that are most closely aligned with our current
strategy.
D. Develop Proof of Concept ideas for display at trade shows and solicit
customer feedback.
Question #2

From our competitive analysis research, we have determined that our current go
to market approach (including sales, incentive plans, customers, and technology)
will not be acceptable to reach a new and targeted area; even though the
potential revenue is very promising. We should
A. Step back and look for other alternatives to get to our targets that take
advantage of current strengths.
B. Press forward anyway knowing that we can influence this new market due to
our history, expertise, and resources.
C. Complete a proof of concept with one of our current customers to determine if
we can move forward viably.
D. Find a go to market partner(s) that can fill our sales, incentive, customer, and
technology gaps.
Question #3

A new business concept that we are working on with our customers has
discovered an odd situation. In a focus group, the end users have determined
that they do not like our product offering. In fact, they said they would not want it
in their home. What should we do next
A. It’s only one focus group, so let’s analyze the questions we asked.
B. Pause the project. Obviously we missed the mark, so let’s broaden our
research to include a better cross section of potential customers.
C. Nothing. Surprises are expected. Learn from it and move on.
D. Stop. If the end customer does not want this at all, we are wasting our time
and money resources to continue working on this.
Question #4

We’ll come back to this later
Test results

Understanding the Situation
Invention
• Over 27K patents
• Over 25K
employees in
R&D
Execution
• 118K employees
doing business in
180+ countries
• World class Services
organization
• High Customer
Satisfaction Ratings

Understanding the Situation
Invention
• Over 27K patents
• Over 25K
employees in R&D
Execution
• 118K employees
doing business in
190+ countries
• World class Services
organization
• High Customer
Satisfaction Ratings
Which Ideas are worth executing??

Understanding the problem
Organizational
• Structure
• Technology led
• Communication
• Politics & Bureaucracy
Process
• Built to Execute
• Strategy alignment
• Risk aversion
• Incentive structure
Are these the key issues blocking
authentic transformation??

Real transformative Innovation?

Innovation language
1999 McKinsey Paper:
The Alchemy of Growth
Mehrdad Baghai, Stephen Coley, and David White,
The Alchemy of Growth, New York: Perseus Publishing, 1999.
HBR: The Innovation Ambition Matrix © May 2012
2012 Harvard Business Review Paper:
The Innovation Ambition Matrix
Bansi Nagji and Geoff Tuff, the Monitor Consulting Group.
A Simple Tool You Need to Manage Innovation, Boston: HBR, 2012.
H3: Unknowable
H2: Risky
H1: Predictable

Transformative innovation
requires that we reassess
Process AND People

The first KEY is all
about how we think
Horizon 3 must be different
› 2008 University of Virginia
– Darden School of Business, Saras Sarasvathy
– 2014 Copenhagen Business School
› Study of Entrepreneurs with >$250M
› MBA Graduates control group
– Ages 25 to 45

›Entrepreneurs THINK differently than
most everyone else!
›Their dominant thinking style is
Effectual Reasoning
The Outcome?

› Causal - We can predict the future, therefore we can control it.
› Effectual - We can control the future, therefore we do not need to predict it.
Causal vs. Effectual Reasoning
Traditional Thinking (Causal)
Distinguishing Characteristic
Selecting between given means to achieve a pre-determined goal
Entrepreneurial Thinking (Effectual)
Distinguishing Characteristic
Imagining a possible new end using a given set of means
GIVEN MEANS
GIVEN
GOAL
IMAGINED
ENDS
GIVEN MEANS
M1
M2
M3
M4
M5
M1
M2
M3
M4
M5
› 81% of MBA Graduates were Causal Thinking dominant
› 89% of Entrepreneurs were Effectual Thinking dominant
© 2012 Society for Effectual Action

Best case - Illustrated
Emotions
Results
Deliver the Goal
Causal
CAGR
Results
Emotions
Change the World
Effectual
CAGR?

› I need a CAT to be successful
› Where the picture of the cat is the
goal and the puzzle box are the
means to achieving that goal
Causal Reasoning

› I need a CAT to be successful
› The LEGO box is my means
› The end is left up to my imagination
Effectual Reasoning
© 2015 The LEGO Group

› Causal Process
– Idea
– Market research
– Financial projections
– Form a Team
– Business plan
– Funding
– Prototype
– Product Management
– Marketing & Business Development
– Go to market
Effectual Reasoning
› Effectual Process
– Personal competencies & dreams
– Target customer within personal network
– Idea
– Form a Team
– Value Proposition
– Partner
– Test guesses until you find one that works
– Prototype
– Funding
– Go to market

Principles of Effectual Thinking
Bird in Hand Principle - Start with your means rather
than wait for the perfect opportunity. Start taking action,
based on what you know now.
A new long term business idea is presented to you. It sounds very promising and the team is certainly very
enthusiastic. Additionally, they have a background/history that indicates that they might be right about this.
Unfortunately, the outcome is uncertain. What do you do?
A. The team should put together a business plan / business model canvas to determine if we could make
enough money for this to work.
B. Since the idea is interesting, we should commission a market research study to determine if this market
is viable.
C. Sometimes you just need to get started, so let’s get going.
D. We need to understand if this is technically doable or not, so let’s do some R&D work to determine the
feasibility.
+5
+2
-5
-2

Affordable Loss Principle - Set affordable losses and
evaluate opportunities based on whether the downside is
acceptable, rather than on the attractiveness of the
predicted upside.
McKinsey has given us a set of potential new areas in which to develop business opportunities over the
next 5 to 10 years. We should
A. Decide which area can be developed with minimum expenditure of resources such as time, effort,
and money.
B. Analyze the market and choose target segments with the highest potential return on investment.
C. Determine the segments that are most closely aligned with our current strategy.
D. Develop Proof of Concept ideas for display at trade shows and solicit customer feedback.
+5
+2
-5
-2

Quilt Principle - Form partnerships with people and
organizations willing to make a real commitment to jointly
creating the future with you.
From our competitive analysis research, we have determined that our current go to market approach
(including sales, incentive plans, customers, and technology) will not be acceptable to reach a new and
targeted area; even though the potential revenue is very promising. We should
A. Step back and look for other alternatives to get to our targets that take advantage of current
strengths.
B. Press forward anyway knowing that we can influence this new market due to our history, expertise,
and resources.
C. Complete a proof of concept with one of our current customers to determine if we can move forward
viably.
D. Find a go to market partner(s) that can fill our sales, incentive, customer, and technology gaps.
+5
+2
-5
-2

Lemonade Principle – Leverage contingencies
Embrace surprises that arise from uncertain situations,
remaining flexible rather than tethered to existing goals.
A new business concept that we are working with our customers has discovered an odd situation. In a focus
group, the end users have determined that they do not like our product offering. In fact, they said they would
not want it in their home. What should we do next
A. It’s only one focus group, so let’s analyze the questions we asked.
B. Pause the project. Obviously we missed the mark, so let’s broaden our research to include a better
cross section of potential customers.
C. Nothing. Surprises are expected. Learn from it and move on.
D. Stop. If the end customer does not want this at all, we are wasting our time and money resources to
continue working on this.
+5
+2
-5
-2

-20
Effectual
Causal
+20
What is your dominant style

Is thinking style enough?
Ecosystem
› How we think
– Critically important
› How we behave
– Bias toward action
– Obvious actions that can be seen by peers
and management
› The ecosystem we create
– More than just cool space, game machines,
snacks, pizza and Red Bull
– Different incentives and benefits
– Freedom to fail
– Potential for losses
PEOPLE

Exploration
vs.
Administration
Effectual thinkers are explorers
› Exploration is a mindset imparted to the individual at
birth, so explorers are discovered not created
› Explorers are regularly marginalized and “drummed
out” of the organization by administrators
› Incredible willingness to be comfortable with the phrase
“I don’t know” (loves ambiguity; life in the grey areas)
› Embrace change every minute BUT, not stupidly
sailing about without a plan
› Willing to “burn the ships” exchange the knowable for
the unknowable
› A lifetime of uncertainty needs to be incentivized
differently

Two years of Lean Projects and Workshops in the Idea Factory
› Enterprise Culture is at the center of success
1. Most people have the wrong DNA
2. Failure is not accepted
3. Chaos is not embraced
4. Small victories are easily ignored
Enterprise Key Learnings

› Horizon 3 objectives are BEST run by
Explorers
› If you have Explorers, the idea is LESS
important than the team.
› Not ONLY Explorers on the team
What should we learn?
HBR: The Innovation Ambition Matrix © May 2012

View from the Trenches: Lessons Learned in the Enterprise, Ken Durand, Atlanta Ideas Factory (Ericsson)

View from the Trenches: Lessons Learned in the Enterprise, Ken Durand, Atlanta Ideas Factory (Ericsson)

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View from the Trenches: Lessons Learned in the Enterprise, Ken Durand, Atlanta Ideas Factory (Ericsson)