Efficiency and teamwork

A university comprised of an efficient team of teachers, admin staff and managers will have credibility and the respect and of its students.

A business comprised of an efficient team of sales, account management, HR, finance, technology and support personnel will have credibility and the respect and of its clients.

A hospital comprised of an efficient team of consultants, registrars, junior doctors, nurses, and support personnel will have credibility and the respect and of its patients.

A government comprised of an efficient team of ministers, politicians, advisors, and civil servants will have credibility and the respect and of its people.

Examples are endless.

I am a firm believer in efficiency and team work. I believe they are the key building blocks to any successful system – be it the mechanical and physiological system of the human body, receiving the correct response to a query from an institution, or the decision making process of the steering committee at the most senior corporate layer.

Efficiency and team work form the bases for a driving force behind constant positive change.

Efficiency of a system will always dictate the credibility and reliability of that system.

Let us consider an example. Let us review the efficiency of a team in finalising a project they agreed (or “promised”) to complete by a certain time/date (“deadline”). Whether or not that team is able to keep to that promise (and therefore maintain the respect of their external members and build/maintain their reputation) is very much dependent on their A) “internal” and B) “external” efficiencies.

A. “Internal efficiency”

By internal efficiency, I am referring to the “individual” efficiency of each team member.

“The rate of any process is dependent on the rate of the slowest internal process.”

I remember the above from my biochemistry titration classes at school. For a team to perform efficiently, each individual member should compete to be the most efficient member to ensure that he /she is not the “slowest” one holding a process. Positive competition will always yield efficiency in the long run.

Now, to ensure “individual” efficiency, one needs to address a few aspects, which I will list below:

1. Technology

We all agree that in the modern age, technology plays a big role in our ability to perform well. Individual efficiency is dependent on i) the appropriate technology and ii) the appropriate skill set for that individual to utilise that technology in the most efficient manner.

2. Time management

The modern world, mainly the internet has brought about a lot of “distractions”. It is therefore of paramount importance that the individual understands the concept of time management and role that plays in their ability to perform in the most efficient manner.

3. Fitness

For an individual to perform well, their internal systems need to work in the most efficient manner. The individual is responsible for ensuring they are “fit” – both mentally and physically – to perform their individual tasks in the most efficient manner.

4. Communication

For an individual to perform well, they need to have the appropriate level of communication skills (in the appropriate language) and it is the individual’s responsibility that he/she is developing these on an ongoing basis.

Appropriate level of persuasive and assertive skills are essential at “individual” level to effectively manage internal communications.

5. Management and organisation

This relates to a certain extent to time management but is more encompassing as it also relates to the general organisation in life. The individual members of the team needs to manage their respective parents, girlfriends/boyfriends, husbands/wives, their children, friends and hobbies. It is only the ability to manage and organise these aspects in a sensible manner that will lead to an efficient “individual” efficiency.

6. Knowledge

Each individual team member needs to endeavour to be the most knowledgeable and socially aware member as to not slow down a process by wasting time for “explanations” for things they could have managed to educate themselves on, in their own spare time. The internet is a great source of knowledge – it has revolutionised the way we seek and define knowledge.

B) “External” efficiency

By “external” efficiency, I primarily refer to the ability of the team (and not the individual) to manage the process through correctly managing their external interactions. Some of the key elements that need to considered to ensure a successful “external” efficiency include:

1. Parallel versus series

The team should be able to establish which individual processes could be run at parallel versus series at the outset.

2. Deadlines

There is a famous saying that a “process will take as long as you allow it to take”. A deadline is a date (and time) collectively agreed by a team of individuals for the completion of a process. Deadlines for each individual process are important to ensure discipline. It also acts as a great “speedometer” for the rate of process and therefore a great measure of efficiency.

3. “Follow up”

Frequently following up on processes are important and particularly essential for missed deadlines to ensure a smooth process. It is not just the responsibility of the deliverer to deliver but also a responsibility of the recipient to “follow-up”.

4. “Next steps”

Agreeing on “next steps” is important because they provide “directionality” for a process. Next steps need to be discussed and agreed by the team both i) at the outset and ii) after each “mini” deadline.

5. Priorities

The least efficient process is that which does not prioritise. The team need to establish the key priorities on an ongoing basis.

6. Interaction

The interaction with the “external world” need to be appropriately managed to ensure that the reputation of the team is maintained.

7. Hierarchy

In a team, there should always be a “leader”but this leadership should always be “fluid” based on the knowledge / expertise / experience of the team member discussing the topic at hand. ” “Suggestions” or “recommendations” from the team leader should be “discussed” and “agreed” and this process of “discussion” and “agreement” should be as quick as possible as to not delay the overall process and to ensure that the team completes their project on or before the deadline.

How to measure the success of incuvation?

Success or failure

How to measure the success of incuvation?

Short term (annual) success could be measured by:

  • # events organised and attendees per event;
  • # ideas that are converted into early-stage ventures;
  • # discussions/workshops;
  • # investments into early-stage ventures;
  • #  capital raised; and
  • # people in the eco-system.

Long term (7-10 years) success can be measured by:

  • increase in the valuation of the investments;
  • # strategic investors in the ecosystem; and
  • # successful exits (M&A, IPOs).

What are the key tasks and responsibilities of an incuvator?


What are the key tasks and responsibilities of an incuvator?

In summary, the key tasks and responsibilities of an incuvator would include:

  1. Capital allocation (decides when an idea turns into a company – i.e. identify “winning teams”);
  2. Market scanning (understand marketplace) and asset sourcing (ensure regular deal flow / create new business options);
  3. Accelerate time to market (between ideation and execution);
  4. Ability to manage exits (timing, valuation); and
  5. Process management (communication layer between “oldco” (big corporates) and “newco”s (new ventures).

Priorities vis-a-vis the responsibilities above may evolve over the lifecylce of the incuvator.

What are the key success factors for incuvation?

What are the key success factor to successfully incubate innovation?

  1. People with the right KSA (knowledge, skills and attributes)
  2. A culture of success driven by embracing open experimentation
  3. De-centralised multidisciplinary small local teams
  4. Physical environment
  5. Insight at the core of innovation
  6. Plurality of options
  7. Right incentives
  8. Well-managed processes

1. People with the right KSA (knowledge, skills and attributes)

The single biggest challenge for incubators, investors and boards alike is finding, incentivizing and retaining individuals with the right knowledge, skills and attributes (KSA). This applies to entrepreneurs, investors, boards and advisors – any individual capable of contributing to success. Backing the right people is the most critical investment decision – it is part art, part science and it largely explains failure.

2. A culture of success driven by embracing continuous open experimentation

To create the right culture, the senior leadership (including  the Board and the executive management)  shold comprise of people who acknowledge importance of long term value creation.

Talent attracts talent and a culture of success and experimentation is infectious. The best ideas emerge when the entire ecosystem (not just a few designers and engineers from inside the organisation) has room to experiment. Open sourcing  and co-creation provide a rich canvas for idea generation. Ideas are not favored based on who creates them: they can come lower down the chain of traditional command and from outside the organisation.

Engagement and collaboration with all stakeholders on a regular basis is key and can be manifested via active participation in industry forums, workshops, and trade fairs.

3. De-centralised multidisciplinary small local teams

Those most exposed to changing externalities (new technology, changing consumer behaviours, etc.) are best placed to respond and most motivated to do so – these tend to be the front liners: individuals immersed daily in meaningful customer interactions. Teams are capable of operating horizontally and vertically: they cut across multiple disciplines and can deep dive as domain expert. Small teams of 3-5 individuals are an ideal size to start with – they can establish personal rapport, collaborate, communicate and allocate workload without the complexities and inefficiencies of larger teams.

4. Physical environment

Sharing a physical environment where teams (particularly if working on same asset class) can  interact.This is critical for cross pollination and essential for idea generation.

5. Insight at the core of innovation

Self-critical (honest) assessment of assumptions (e.g. customer problems trying to solve) and constraints (feasibility). Critical role of insights as the source of transformational problem solving which comes not just from numbers (or over reliance on market research) but from direct observation of the world around us (entrepreneurs know this best). Over reliance on traditional methods (eg: market research) to identify market opportunities are counter productive.

6. Plurality of options

To find a great idea, you typically need to have many ideas – incubation is about plurality as a hedging strategy. Plurality refers to both technology, product and market – this  raises the chances for the incubator to find and back the right product-market fit. Learning from multiple experiments can be retrofitted and adapted to the projects that deserve further funding.

7. Right incentives

Highly creative and successful people underperform and resent supervision, but respond  incredibly  well to incentives. These cater for personal time and material investment, for perceived reputational risk and reward for risk taking. Incentives relate to the capital and funding structure of both the incubator and the ventures which it supports. Equity is the most transparent and efficient basis for designing incentives. Long term commitment is key – no plausible way to gauge success/failure before at least 5 years.

8. Well managed processes

Corporate processes and procedures, well established and refined to work on internal budgetary decisions, do not apply to an incubator and the ventures within – they simply kill them. Some companies have established processes and procedures  for investments over a certain threshold or anytime it impacts the balance sheet. These  tend to be  over conservative and often too long to provide the time critical responses that are often required. Risk assessment is important but over-conservatism/protectionism can kill innovation.

What is incuvation?

What is incuvation?

Incuvation (short for incubating innovation) is successful development of entrepreneurial innovation through an array of support resources and services, developed and orchestrated by the incubator management and offered both within the incubator and through its wider eco-system.

What is the strategic rationale for incuvation?

In the modern world, leaders of big organisations need to acknowledge that existing businesses will lose much/all of their value in a 10-30 year horizon.

The Planning Fallacy (human beings are astonishingly bad at estimating how long projects will take) and the Innovator’s dilemma (when to disrupt the market by launching new products that would eventually cannibalize exisiting business) increases business uncertainty.

Incuvation is therefore needed not only for long term value creation (through successful commercialisation of next generation technologies/products/ideas) but in fact is a requirement for survival (see The Kodak Moment by Sean Park).

What are the key requirements for incuvation?

  • Access to resources such as financial capital, expertise, branding
  • Marketing expertise
  • Credibility through its affiliation with industry experts, customers, and suppliers to accelerate business building
  • Advisory boards and mentors
  • Management team identification
  • Technology commercialization expertise
  • Other (including help with accounting/financial management, help with presentation skills, business etiquette, regulatory compliance and intellectual property management)

The innovator’s dilemma

Clayton christensen’s four principles of disruptive technologies include:

  1. In well-led companies it is customers, not managers, who actually determine resources allocation. In essence: middle managers will not tend to invest in technologies that are not directly appreciated by important (large) clients, because they will not be able to get quick financial gains by doing this.
  2. Small markets can not fulfill the growth need of large companies. For several reasons, growth is important for companies. Unfortunately, the bigger the company, the harder it is to continue growth. A small company (40 million sales) with a growth target of 20%, must achieve 8 million extra sales. A large company (4 billion sales), has to achieve 800 million of extra sales! Emerging markets often simply are not large enough to fulfill such growth needs. They can, however, fulfill the growth needs of new small companies.
  3. Markets that do not exist can not be analyzed. The ultimate applications of disruptive technologies can not be foreseen on forehand. Failure is an intrinsic unavoidable step to success.
  4. Technology supply does not always equal the market demand. The speed of technological progress is often higher than the speed with which the customer demand develops.

These steps explain why traditional companies are often not capable of applying disruptive technologies. Christensen argues that you can not resist these four principles. What you can do however, is use them to your advantage. For instance: in a large company you can create an ‘island’ where the new technology is developed for the new market. Also it is possible get an ownership in emerging companies which develop the new technologies.

Factors that kill innovation

1. Fear of

  • experimenting with the unknown
  • failure (and/or perception of failure by peers)

2. Leaders with the “wrong DNA”

  • lack of a long term vision
  • protectionism
  • previous bad experiences acting as a mental barrier
  • restrictive supervision (killing ideas because too complex for them to understand / out of their comfort zone)
  • management via rigid roadmaps and spreadsheets (“tunnel vision”)

3. Too big to innovate

  • multiple management layers
  • misalignment of incentives
  • lack of seamless communication

What is innovation and why is it important?

So what is innovation?

This is what wikipedia says:

“Innovation is the development of new customer value through solutions that meet new needs, unarticulated needs, or old customer and market needs in new ways. This is accomplished through different or more effective products,processes, services, technologies, or ideas that are readily available to markets, governments, and society.”

How is innovation different from invention? 

Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself.

How is innovation different from just improvement?

Innovation differs from improvement in that innovation refers to the notion of doing something different (Lat. innovare: “to change”) rather than doing the same thing better.

Why do corporates need to innovate?

Corporates have a duty to increase long-term value for their stakeholders. Successfully incubating innovation (incuvation) enables companies to create new markets and exploit new opportunities.

What happens if corporates do not innovate? 

They will become extinct.

In the modern age of continuous technological change, innovation is key for survival (for those of you who have not yet read A Kodak Moment by Sean Park, I would strong recommend it).