Last Friday, flight BA286 made a bumpy descent over west London. We touched down at Heathrow, and my time as an adopted Californian came to an end. The perennial Silicon Valley sunshine was absent. It was time to embrace drizzle again.
I’ve just returned to Elixirr, after a year on secondment at Sequoia Capital. In that year, I’ve been fortunate enough to receive a world-class education in the business of emerging technology. I’ve immersed myself into an unparalleled ecosystem of entrepreneurs, investors, and corporate leaders. I’ve seen first-hand how large enterprises can get innovation right – and how they can get it wrong.
And now, from that vantage point, I’m excited to build the best consulting firm in the world.
I’ve seen first-hand how large enterprises can get innovation right – and how they can get it wrong.
Here are a few things that I learned:
Targeted partnerships > ‘corporate tourism’
Corporate CEOs and boards are spending increasing time in Silicon Valley, their tour buses shuttling up Sand Hill Road in search of left-field answers to their biggest strategic challenges.
This is fundamentally a good thing. Aware that they can’t out-innovate the market, executives look to partner openly with the entrepreneurs that would otherwise disrupt them. This can drive immense mutual commercial opportunity – whether you’re a CIO trying to design your next decade’s infrastructure, or a CEO looking for your next 100 million customers.Aware that they can’t out-innovate the market, executives look to partner openly with the entrepreneurs that would otherwise disrupt them.
However, open innovation can be too open-ended. It only works if you arrive with a precise strategic goal, rather than the all-too-frequent mission statement of “wanting to see what’s out there”. Every time our team brokered a game-changing partnership, it started with a clear heuristic for all parties: “what’s the biggest market / product / customer segment / pain point that I can’t win on my own?” If the answers align, pursue the idea hard.
Culture: all about network effects
Silicon Valley is often perceived as a Schelling point for dynamic, energetic, optimistic people. Whether you’re in SoMa or Sunnyvale, there’s a clear network effect at play. Talent leverages talent, and the value of the ecosystem increases exponentially relative to its size. Young companies come to speak a common language which helps them grow – there’s a consensual focus on pace, experimentation, short feedback cycles, and failure as a source of learning.
So how, as a corporate executive, do you replicate this? One can’t change a firmwide mentality overnight, so many turn to setting up innovation units. This is hard, but some get it right. Success lies in building a function that’s:
- given absolute – often uncomfortable – freedom to experiment on major strategic problems;
- situated in proximity to the C-suite and Corp Dev, so that it can drive top-line impact;
- staffed by the most visionary talent in the business;
- enabled to instil its ways of working into the wider business over time, through a subtle introduction of new incentives, structures, and controls.
At Elixirr, we’ve helped a number of clients do exactly that. Get in touch if you’d like to learn how we do it.
Every category of GDP is open to meaningful disruption
It’s likely that 2019 will be a record-breaking year for tech IPO exit value. While linked to macroeconomic conditions, this is also an indicator of the pace at which a vast spectrum of emerging technologies are maturing. We’re at a point where many major tech trends are reaching maturity, including AI/ML, AR/VR, and autonomous transportation. We’re also seeing new products emerge at a fast pace in verticals as diverse as finance, biotech, retail, and media. Meanwhile, there’s also continued growth and consolidation in apparently more mature tech revolutions, such as mobile and cloud.
The cumulative effect of these factors is a major creation of new market value, and a substantial reallocation of existing market cap. Suffice to say, I could not have picked a more interesting time to spend a year in Silicon Valley.
In summary, it’s been a phenomenal year: inspiring and challenging at the same time. I’m grateful for the privilege of working with an extraordinary community of people at both Sequoia and Elixirr. If you’re interested in learning more, drop me an email at email@example.com.