Wednesday, June 5, 2013

4 things I liked about the corporate venture program at Ericsson

Ericsson hired Gabriel Broner in March 2010 as Head of Innovation at the development unit IP & Broadband headquartered in Silicon Valley. The mandate was, “Please make 6,000 people across world more innovative”. Broner narrates the story of the innovation program he has been running at Ericsson since September 2010 here. In two years, it has generated 2000 ideas, 200 of which got first round of funding and 20+ have got multiple rounds of funding. Top three in the pipeline promise an estimated $20 million in software revenue and productivity improvements representing greater than 5 ROI. Here are 4 things I liked about Innova.

Explicit sponsorship: Many times idea contests give awards for the winners and the story pretty much ends with that. Innova does it differently. If your idea is selected you get $500 and a week off from your regular office time to work on your idea. In November 2010, two guys in Milan, Italy received the first VISA card with $500 and the experimentation week-off. You can’t do a whole lot with $500 and a week’s time. Or so we think. But Gmail prototype was built overnight. Similarly, 3-D model and a prototype print can happen in a week’s time. The idea in the initial stages is to have the crude idea take some shape. Explicit sponsorship can send a strong message to people around.

Revenue or productivity impact: Growth is the primary driver for corporate venture programs. Hence, it is natural to have a bias for ideas that penetrate new markets or new products that delight existing customers. However, if you want more people to participate in such a program, you need to widen the scope of innovation. Far more people in the organization are internal facing and are likely to have ideas for productivity improvement than new product ideas. The story of Stefano and Paolo who got funding for their idea to improve simulation productivity by 10x tells that Innova included productivity improvement as part of its scope.

Rewarding failures: During the experimentation week Stefano and Paolo in the earlier example didn’t achieve the expected 10x improvement. They could get only 2x. However, they were given Innova award for “Best experimentation Week” for what they learned and achieved. The duo went back to Milan after receiving the reward in Silicon Valley and quickly proposed a plan for a second round of funding. During the three months they spent, Stefano and Paolo exceeded their target in some cases. Simulations that would take 40 days were now done overnight. That is the power of rewarding failures & learnings.

Methods & tools: Ericsson adopted Design Thinking as a methodology to promote methods and tools for innovation. DT emphasizes customer centricity and rapid experimentation. Whether it is DT or something else, it helps to provide coaching to teams in tackling their project / BU specific challenges. Many other organizations like P&G, Toyota, Cognizant, SAP Lab have integrated training programs with their innovation projects.

I don’t believe that working on the side could lead to large impact innovations. Companies need to find way to create space & time for incubating ideas. I hope programs like Innova inspire more companies. I appreciate Broner for sharing the insights through his article.


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