A week and a half ago I got a message on Slack from Ricardo Marvão, founder of Beta-i and Head of Global Resources, asking me if I wanted to interview Tendayi Viki, our invited speaker for the Future Is Innovation, next March 21st. I said yes, of course, but back then I knew very little about Tendayi, other than he was a top corporate innovation consultant and author of a well-known book called “The Corporate Startup”.
However, it didn’t take me long to get to know him. I read many of his articles on Forbes, where he regularly writes, and I was absolutely fascinated. I found out that he co-designed an innovation framework that won the Best Innovation Program 2015 at the Corporate Entrepreneur Awards in New York. Not to mention that he had worked on innovation with huge companies such as American Express, Standard Bank, Airbus, Pearson, General Electric, Whirlpool, or The British Museum.
As the questions were taking shape in my head, I grew more and more excited about this interview. How will big companies take on the innovation challenge from now ahead? What can they learn from startup methodologies? Which industries will technology breakthrough in the next decade? How will startups survive and how will corporates adapt?
Recently, you have written an article for Forbes in which you say that “large companies will be the largest beneficiaries of the lean startup movement”. Why is that?
Several reasons. The first thing is that technology goes through waves. During certain periods or certain waves, it’s either very expensive to launch a company or very cheap. So, this is from Steve Case’s new book called The Third Wave. In the First Wave, people were building the infrastructure, putting all the broadband, building the underlying technologies for the internet, and it was very expensive to launch a company at this time. So, during this period it was harder for startups to compete with larger companies, with more resources, and the startups that succeed in this period had a lot of money, large Venture Capital investments. In that era, you got companies like IBM, Microsoft, or AOL. And that’s simply because if you’re building the infrastructure, and if you’re a company that starts with that you’ll lay down most of the expenses so, you need big investments to do that.
And once that infrastructure was established?
Yeah, so, once the infrastructure is laid, starting a company becomes cheap. So, in the Second Wave starting a company became really cheap. You could use Amazon Web Services, you could create websites like Airbnb, or Uber, and build a company on top of other technologies.
So, the lean startup movement emerges at the same time as the Second Wave and as these new companies appear, and people think that this Second Wave is going to last forever. People think that the world has changed completely, that startups will dominate the future, entrepreneurs think that “the world is ours”. And this is very successful because the lean startup movement was put down as a methodology to help startups. However, now that the Second Wave is peaking, and we’re about to enter a Third Wave, and the Third Wave is expensive again.
What exactly happens in this Third Wave and when will we see it happen?
In this Third Wave, companies that weren’t yet impacted by much technology are going to be impacted, like banking, health, transportation, or food and beverage. For example, in health and education you can’t do anything without influencing policy, and also research in health is really expensive. Fintech startups are also finding that it’s better to partner with the banks to get the license, than trying to get a banking license for yourself, which is a much harder thing to do. So, large companies are going to dominate the Third Wave because it will be much more expensive to launch companies and technologies that are successful.
Now, you put that together with the fact that for the last 5 years, 6 years, 10 years, startups have been bragging about their methods… I mean, they’ve been talking about their methods in public, showing off for the last 10 years. Lean Startup this, MVP that… So, the large companies that were listening to all this stuff, they were trying to figure out how they can take those practices and put them into their company. They struggle with it, they do it wrong, but that’s what happens with disruption, it always looks like people aren’t doing it the right way. So, the more they struggle with it, the more they figure it out. So, now, we’re entering a period where it’s going to be more expensive to compete against a large company, but large companies are also going to have to act more like startups.
Can you give me a few examples of companies that are already implementing a few of these methodologies?
Philips is a good example, General Electric, Pearson, the company that I’m working with, a few banks too. The other day I had a call with an old, mutual fund, like 100 years old, that is trying to implement this. I had a pet food company in Germany that is implementing lean startup methodologies in manufacturing. This is slowly getting out there, and their first versions are always going to be really bad. They’ll struggle, they’ll open an innovation lab, then they’ll close it, and they’ll figure this stuff out, but, the fact that they have more resources than any startup will ever have, makes a difference.
And what about Portuguese companies who are now trying to implement these innovation methodologies? They’re now opening innovation labs, starting accelerators, and all that, but this is still very new.
Well, don’t sleep on that. Trends in Europe catch on. Companies in Portugal will look at other companies in Europe and say: “oh if this company is doing it we need to figure out how to do it ourselves”. So, this is kind of a domino effect. And I know that this movement is going in the right direction because China, the government of China, and there’s nothing more traditional than that, they have put into their 5-year goals to transform China from being just a manufacturing company to a company that creates new products and innovates. This is a government mandate, they have set up a department to do this. I’m soon heading to China to run a workshop with the pet food companies there on how they’re going to apply innovation principles.
Just before you were talking about your work with Pearson. I mean, you have co-designed Pearson’s Product Lifecycle, an innovation framework that won the Best Innovation Program 2015 at the Corporate Entrepreneur Awards. Can you talk about this framework and how it was implemented?
Yeah, so, co-designing it was fun, implementing was hard. Implementation is always hard because that’s where you get the resistance from all the major players in the company, and that was really tough. We started off with the product teams within the company to teach them how to use lean and agile, and then we discovered that if you teach product teams to do lean and agile it’s easier to tap into the decision making process. So, the Lean Product Lifecycle comes out of that, from this need that teams are doing the right thing at the right time. They’re not launching ideas before they’ve tested them, but also the managers are doing the right decisions and asking the right questions at the right time. So, they’re no longer asking for 5-year projections. We built the Product Lifecycle in stages, and in each stage, teams are supposed to know what they’ll be doing, and know the right question to ask a team in another stage. This allows you to measure, understand how to invest, and what to do next.
People have been talking a lot about industries such as healthcare, transportation, like you mentioned before, which are very complex industries for startups to disrupt by themselves. Do you think that if startups don’t partner up with big companies they’ll most likely fail?
No, no, no. Not necessarily. I saw a quote the other day from Alex Rampell of Andreessen Horowitz, and I think he nailed it. He says that ‘the battle between every startup and incumbent comes down to whether the startup gets distribution before the incumbent gets innovation’. So, if the startup is quick to get distribution, get everything it needs, get set up and start rolling, then it may disrupt the incumbent because the incumbent has already all of that. If you think about in terms of education large companies like Pearson already have government contacts, contracts with major districts, global innovation deals all over the world, except that they have everything locked up. So, the question is can an education technology startup crack-down code before Pearson cracks the code of how to make it hectic.
How do you envision the companies of the future? Will they be a hybrid between startups and big corporates?
I think that companies are learning one thing, which is that they have to balance the searching for new business models to executing on current business models. So, for me, a company of the future is ambidextrous. It has really great expertise in executing and delivering on the core products, but it also has a great expertise in searching for new business models. This is the great company of the future. Now, how the company does search, that’s up to the company and its context. The company can do searching by collaborating with startups, it can do searching by opening an innovation lab, it can do searching by R&D, it can do searching by running an internal accelerator, it can do searching by running an external accelerator, there are so many tools. At the heart of it, it’s just to do searching the right way, so, just making sure that whatever you’re working on, you end up using the methodologies that lead you to having a successful product, and that, you’re not doing what we call of ‘innovation theater’, you know, just for marketing purposes.
Tendayi Viki will be giving a keynote on innovation for the top corporate companies in Portugal at The Future Is Innovation, at Beta-i, next March 21st. This event is invite-only, but, if you’re interested in corporate innovation and want your company to be there, reach out to our team and request an invite here.