Linda Yates is founder and CEO of Mach49, the growth incubator for global businesses with clients including Goodyear, Gundersen Health, Hitachi, Intel, Pernod Ricard, Schneider Electric, Shell, and more.
The Unicorn Within is a comprehensive guide to launching game-changing ventures with speed and agility. Drawing on her extensive experience working with large companies, Linda Yates outlines strategies and tactics that will help any organization launch new ventures quickly and effectively.
The book covers key topics such as identifying opportunities, developing business models, finding and utilizing resources, creating innovative teams, and building a culture of innovation and agility. By applying the principles and strategies outlined in the book, organizations can create game-changing ventures that can drive disruption and growth.
Small Bets
Once you have a set of possible solutions, you place a series of small bets. Do pilots, run experiments, test, iterate, pivot, and test again. In Silicon Valley we look at funding like an onion, every layer of the onion is a layer of risk.
It could be market risk, financial risk, technical risk, or in the case of a large company, governance risk, which is when you love your venture to death, or you starve it of oxygen. The goal of any entrepreneur, whether inside a large company or in a traditional startup, is to remove the greatest amount of risk on the least amount of capital.
You have to run experiments to prove you can mitigate that risk and, only then, unlock subsequent rounds of funding.
Building the blueprint
You must build a blueprint for your venture factory and make decisions on how you will run it by design, not by default.
Startups in Silicon Valley go public and get a hall pass for years before they are expected to turn a profit. Yet they get incredible valuations solely on the financial markets using the metrics of customer acquisition and revenue growth.
Our big companies deserve those valuations as well, and creating a division that is responsible for developing and nurturing new ventures often enables that division to have a different set of metrics to report that are separate from the core and legacy business metrics.
Financial markets need to value the unicorns within and reward them with the same or better multiples than pure startups who have none of the advantages the large companies possess.
1. Understand customer pain, marry it with the art of the possible, and then place a series of small bets.
All great ventures start with understanding customer pain. No one knew they wanted a DVR, a microwave oven, or a minivan.
What they could tell you was their pain: they weren’t getting home in time to watch their favorite show; they didn’t have time to cook a healthy meal; and they were having to cart an ever-increasing number of kids, dogs, and sporting equipment to myriad places.
Take that customer pain and marry it with the art of the possible. Ask yourself, what are the current trends and technology you can employ to solve that customer pain? Remember Uber does not exist if we don’t have mobile phones, GPS, and real-time payments.
The challenge many large companies have is that they don’t stay current on the art of the possible, so they have a hard time coming up with disruptive solutions to customer pain.
Focus on the people behind New Venture Teams, New Venture Boards, New Venture Advocates, and the Venture Factory Team
There are four types of teams involved in venture building which means lots of exciting opportunities to participate and be engaged across your organization.
The New Venture Team are your “founders,” your internal entrepreneurs who are passionate about the idea and are ready to turn it into a new venture. We don’t just mean the millennials: disruptors come in every age, gender, race, sexual orientation, geography, learning difference, or any other category you want to define.
We do mean people who thrive with ambiguity, can handle a fast pace, and love talking to customers.
Ideate, incubate, and accelerate
The first step in venture building is to make sure you have an idea you can incubate in the first place. Typically, companies fall into one of three buckets when it comes to the ideate phase: they have one or two great ideas that are ready to incubate; they have too many ideas and need to conduct a portfolio review to prioritize the ideas; they don’t have a specific venture, but a domain they want to explore.
We had one client who was interested in water, road safety, and food, but you can’t incubate water. You can, however, incubate Zero Water Homes as one of our Japanese clients did.
To get to an incubatable idea, companies will often do a domain exploration, an ecosystem map, or run a venture competition. It’s important to remember garbage in, garbage out, as it is important to pay attention to how you are assessing ideas during the ideate phase. Ensure you only move ventures with the greatest potential to the incubate phase.
Build the platform for your Venture Factory.
To truly institutionalize growth for decades to come, every company can and should build and run its own venture factory, or even better, their own growth division. No venture capitalist invests in one venture, nor should you only build one venture.
You need a pipeline and portfolio of ventures to drive meaningful growth. Among the many benefits to building a venture factory, it’s important keep three things in mind.
First, a venture factory drives growth by creating and launching a portfolio of high-quality new ventures, manages the downside risk by reducing the greatest amount of risk on the least amount of capital, and develops a laser-like focus on solving customer pain.
Find your purpose while doing good and having fun
To make work more meaningful and purposeful for people who will be working longer, large companies need to adopt a portfolio approach like Berkshire Hathaway, which allows for more creativity, agility, and experimentation.
These big companies have the power to solve the world’s biggest challenges, such as climate change, education, and poverty. We all have the capacity to drive change, and new ventures can be a way to test solutions and move with speed and agility.
Building ventures can also do good in and of itself, by being role models for sustainable and ethical practices. We can all do well by doing good and have fun along the way. The time to start making a positive impact is now.
From Pain to Product
The magic moment in any incubate phase is not pitch day, rather it is the moment when your team moves from pain to an exciting product, service, or solution. This is the phase where you ask: What should we build? Can we build it? Can we deliver it? If we can’t build it, can we buy, partner, or invest to make it happen?
If there is enough pain, and the product is feasible, then the team will move on to the last phase of incubation—building a very rigorous and robust business operating plan that you will present to your new venture board members to decide whether the business is worth funding or moving forward.
Besides information on the customer and the product, the business plan needs to include: size of market; the business model; the funding ask; the operating plan including staffing and organization chart; the gives and the gets; risks and competition; why us; and the immediate next steps you will take assuming you get funded.
Accelerate
Accelerate has three stages: build to validate, build to automate, and build to grow.
In addition, there are five swim lanes that you need to experiment with to minimize risk and maximize returns across all three stages.
- The first swim lane is building and testing the product, which is where most teams tend to focus initially.
- The second swim lane is about going to market. This involves finding and converting prospects into users and buyers, determining the best customer acquisition and selling models.
- The third swim lane is about the business model. You need to figure out how to make your customers pay, when and how they are likely to want to pay, and what pricing model to use.
- The fourth swim lane involves operations and unit economics. You need to figure out how to deliver your product, solution or experience profitably, and set up the infrastructure.
- The fifth swim lane is about building the right team to execute across all of these swim lanes at every stage. This means recruiting, hiring, and compensating the right people with the right skills.
Remember, you were funded to create a new company, not just a product. So, focus on all five swim lanes to ensure success.
