Monday 7 April 2014

When a spin-off is the only answer

When a spin-off is the only answer

If your employees have come up with a promising innovation, a separate venture may be the best home for it

Carly Chynoweth Published: 23 March 2014
Monica Beltrametti of Xerox: ‘The tendency is to hang on to ideas’Monica Beltrametti of Xerox: ‘The tendency is to hang on to ideas’
Some companies invest a lot of time and money in innovation in the hope that their staff will come up with profitable ideas. It doesn’t necessarily follow, however, that they should develop those ideas themselves.
Instead of pursuing innovations in-house, it might sometimes be better to spin them off into new businesses, or even let them leave the company entirely, according to Ulrich Hege, a professor of finance at the HEC business school in Paris.
For a start, the established structures and processes of an existing business can limit the opportunities for turning an idea into a genuinely new product or service.
On top of this, a company may find that attempting to develop new ideas is damaging to the business it already has because it distracts employees or steers it from its core purpose.
“Ask yourself whether your company really is the best host for the new idea, or whether it would be better to create another organisation for that product,” said Hege. “If the second is the right answer, do not be afraid. You might make more money and have better value from doing that than if you kept it in the company.”
Spinning out the idea into a separate business offers a number of benefits, he said. It means the new operation will have the flexibility of a genuine start-up, with the room to grow in a way that suits the new product and its market, instead of having to conform with existing corporate formats. It can also minimise the potential for discontent in that the individual or team who came up with the idea will have a financial stake in its development, and at the same time the parent company won’t have to worry about complaints from other staff that the entrepreneurs are getting special treatment.
A third benefit is that “you are incentivising innovation within your company”, said Hege. “It means employees know you will not stand in their way if that is not in the idea’s best interests.” That motivates people and encourages them to share their ideas with the company, instead of leaving to set up on their own. Even if they do not take the idea with them when they go, it is less likely to succeed without their involvement. So giving them entrepreneurial freedom while maintaining a capital stake can be the best option, said Hege.
More big businesses are beginning to see things this way, according to Jason Goodman, chief executive of Albion, a marketing services firm that has supported a number of start-ups born in big companies. “Often, separate businesses are set up if the idea could compete with or disrupt the main business in some way,” he said. “It’s also a recognition of the fact that start-ups need momentum to succeed and that big companies just don’t move fast.”
Companies use a variety of structures in these situations, from wholly owned subsidiary to independent businesses in which they are just one of a number of investors, said Goodman. “Our view is that . . . you need to give [the new operation] responsibility for making its own business decisions with virtually no approval required from the corporate centre.” The parent should have roughly the same level of involvement as a venture capital fund would with the businesses in which it invests, he added.
Over-involvement in the start-up can almost defeat the purpose of setting it up in the first place.
“Parents naturally want to retain some interest in the spin-out, such as minority share ownership, royalties on the transferred intellectual property or opportunities to be a supplier to the new business,” said Rick Eagar, a partner at Arthur D Little, the management consultancy. “These are all reasonable and normal, and perfectly sensible if done carefully. But too much ownership and interference in the spin-out’s operations, heavy initial royalties — choking the spin-out’s cash flow — and tight restrictions on its freedom to choose other suppliers . . . are all good ways to ensure early failure.”
Even without these mistakes, the approach can come with costs. “If a spin-out is created, key expertise usually goes with it and is lost to the parent — hence the difficulty of running a technology consulting service for clients alongside new business creation,” said Eagar.
“[And] some new ideas have the potential to significantly disrupt or cannibalise a company’s core business, [so] companies may wish to keep them under control until the time is right.”
Simon Jones, a business coach and consultant, added: “There is a trade-off of keeping ideas in-house if they need lots of financial and other support. Spinning them off could starve them of the resources needed to accelerate, and then they will have to find their own channels to market . . . which might be readily available in-house.”

Copy the Xerox strategy

Attempting to keep innovation focused on specific business sectors or aligned with corporate strategy does not really work, according to Monica Beltrametti, chief services research officer at Xerox. “You can’t restrict research into specific verticals,” she said. “If research is successful it will be very broad. It is a matter then of looking for applications.”
It is at this point that companies need to decide whether to develop ideas themselves. Xerox patents all its inventions and then assesses whether they fit into one of its core business areas. Those that do not are licensed to other companies. “We licensed a number of patents to Apple and Google,” said Beltrametti.
Others are licensed to employees who leave to develop the technology through standalone companies. “We encourage it because it means they have a tight relationship with Xerox. They might license some [more] of Xerox’s technology, or we could license some of theirs.”
She advised companies to develop formal guidelines. “The natural tendency is to hang on to ideas . . . so there has to be a strategy.”

Diamond News - Newsletter from Realising Ambition

Diamond News

Results driven by people

Welcome to Diamond News - the newsletter from Realising Ambition, the elite leadership development and training company.

Below we offer highlights of our recent activities:
  • Creating high performance teams
  • Launching our Leadership Academy
  • Diagnostics and effective team development
  • Characteristics of a well-functioning team
  • Effective communication and collaboration via TetraMaps
See how everything we do is informed by our Diamond Performance Principles at:

Best wishes,

Simon and Stephen.


Transformational Results Achieved at Churchill College Workshop

In November 2013, Realising Ambition gathered together 20+ business leaders to run a workshop entitled Creating High Performance Organisations and Teams.  The event showcased how what truly world-class teams can achieve through facilitating a business simulation that was are highly interactive, fun, practical and challenging

Quotes from Attendees:

“Very professional, dynamic and a fun way to get across an important business message in a comfortable lively environment with like-minded people”

“The evening provided you with a chance to think out of the box and focus on a simple business simulation and have some fun as well”

“High energy – it was amazing to see how the teams were galvanised into action in the achievement of their ever-increasing targets”

“Quite a few people lingered after the event, possibly in a desire to keep the flow of adrenalin and endorphins going!”

To run this event for your team find out more here

Master Your Business Challenges – The Realising Ambition Leadership Academy Launches May 2014.

The Academy provides a collaborative, dynamic learning environment to drive and sustain elite leadership behaviours and performance in a real-world business context.  This unique environment combines 3 core elements that result in effective leadership development:
  • Peer and collaborative learning
  • Real-world experience
  • Leadership theory
And will cover:

To investigate how this can help you and your team click here


Discover What Makes You and Your Team Tick – Diagnostic tools

Realising Ambition tailors training programmes using a set of bespoke diagnostic tools and frameworks to ensure our interventions address the key areas of improvement.  They have the added benefit of allowing participants to actively shape the agendas of the training they then undertake.
One of our most effective diagnostic tools is the “What do you need to do to get the best out of you and your team”.

You can download this from our web-site here

View from Stephen - A Focused Team

When the team resources are focused and members are all working to accomplish the same purpose, teamwork can be very rewarding and productive. This is best accomplished when team members use a proactive approach rather than a reactive approach to accomplish their the rest of Stephen's blog post here

World-class Communication and Collaboration Transforms Team Performance

Tetramaps are a proven model to help teams lift sales and service performance, devise a fresh vision, plan strategy and agree key objectives.

What combination of elements are you and what does this mean for how you lead and for those you work with? Find out more here

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Boundary Invests in Fast-Growing Data Recovery SaaS Company

1st April 2014
Boundary Capital has today announced its investment in Infinity Wireless Limited, a Birmingham based company providing data recovery software. The software can retrieve deleted files from smartphones and tablets even when backup software has not been installed or fully backed up. This means that accidental or deliberately deleted files need not cause business or personal anguish, and the retrieval process is easy and swift.
Infinity Wireless is moving its software entirely to Software-as-a-Service (“SaaS”) to enable an even easier user experience and also to open up the capability as a pay-as-you-go service via mobile operators and other channel partners to be able to add more value to their customer experience.
“We are delighted to be investing in this innovative and fast growing business” said Richard Leaver, Investment Director at Boundary Capital. “They have approached this huge problem in an easy and intuitive way. We are also privileged to have such an experienced Venturer as Simon Jones co-investing with us and helping to assist the management team”.
Boundary Capital and the Venturer are investing between them £205,000 initially to support growth and product development.
We are also excited about their roadmap with many more innovative products to come”.
Lee Parry the CEO and Founder of Infinity Wireless said: “we are truly excited about this next phase of growth and delighted to have this support – financial and human – to help us on our journey. We have many products for the future too that we believe will be as disruptive as our current offerings”
Boundary Capital is a hands-on venture capital company providing investment alongside Venturers who are all co-investing experiences executives to help nurture and develop the businesses it invests in. For more information contact:
Sheila Roberto
Boundary Capital
Capital Tower
91 Waterloo Road
London - SE1 8RT

Tel:   +44 (0)20 7060 3773

Tuesday 18 March 2014

Innovation exploitation

  • How close it to existing solutions offered customers, can they see the fit, does it add differentiation and ability to ask a premium price - if it is incremental value then absolutely fine to be in-house and a function of sales and marketing strategy to put the benefits across
  • If more disruptive - addressing totally new needs, even new client sectors and the company does not ready have the skills to exploit then some separation should be considered
    • Options include separate divisions, joint ventures and genuine spin-offs when the parent company may or may not retain an equity stake
    • For example, telecoms operators set up venture divisions that we almost shadow VC operations but within the existing corporate structure - these were used for experimentation with new ideas, technologies etc that they did not know how they would impact on existing customer relationships, their own operations etc and wanted to limit the downside risk if things went wrong.  This enabled BT for example to play around with various dot com concepts to learn which ones would work best, which ones should be brought in-house and which let go - BT Openzone was a great example of something that went through this process and then became mainstream for BT
  • When ideas are let go, it is very difficult for the originating company to keep a constructive collaboration going and it this has to be evaluated in terms of financial outcomes.  Why let ideas go that are fundamental to the future of the business and the sector if you would have to "re-invent" the solution to fulfil your own customer needs in future - how do you know whether you are giving away the very innovations that will make the difference between success and failure
  • A lot also depends on the people involved - what is the organisation structure that would work best for the team that has created the innovation in the first place - what are their motivations and drivers, what support do they need, how entrepreneurial are they, what structure is needed to attract the right skills in to exploit the innovation, how close to the current businesses CEO field of expertise is it - apply the rule that companies should not extend themselves too far beyond the ability of the existing management team to understand.  Bringing in new leadership takes longer to settle down than it takes for the window for innovation exploitation to close on any new ideas.  Better to spin something off and retain some interest rather than lose the innovation altogether by trying to hold to ideas, demotivate people so they leave anyway
  • There is a trade-off of keeping ideas in-house if they need lots of financial and other support - spinning them off could starve them of the resources needed to accelerate and then they have to find their own channels to market, sales forces etc that might be readily available in-house.  However, this depends on how flexible and innovative the culture is in the first place to adapt to new ideas and not resist them
  • For it is not about in or out of house but the vision of the leaders, the culture of the organisation and talent pool in the company
  • Another issue is how companies are actually outsourcing innovation - being part of incubators, accelerators etc to spot what innovations are happening that could be valuable to them.  They then can decide whether to invest, acquire or support in other ways like sales and marketing.  Unilever, Bosch, Barclays are examples of this in the UK
  • Smaller companies are good role models to see how this innovation exploitation can work - they don't have the luxury of enough resources to decide often on whether to keep things in-house so have to set up creative structures to exploit their innovations: venture units, equity for innovation teams, licensing to bigger companies etc

Thursday 13 March 2014

The importance of Intellectual Property in any business

  • Intellectual Property is vital in any business - underpins value propositions, provides the sustainable and non-replicate basis of competitive differentiation (the "unfair advantage" every company needs)
  • It is the unique way that particular company goes about satisfying its customers needs in ways that others cannot - often known as the crown jewels
  • I have always seen it this way - I have always been involved in knowledge-based businesses and the way you develop and package expertise is the only way you compete and survive: if you don't know something that someone doesn't then why are you in that business?
  • Companies that lose focus on IP development, and hence lose focus on innovation, become commoditised and easily drift out of experience: like road-runner they can hold their position for so long and then collapse to the ground after a dramatic and unnatural pause.  No difference here between the cotton mills of the 19th century and predictive analytics businesses of the 21st century
  • Protecting IP is also crucial but in knowledge-based businesses is not about patents - it is about trade marks (crucial), copyright (crucial), culture and process, ensuring IP is productised in ways that ensure it does not walk out of the door in peoples' heads but the company retains it, creating customer-based methods that mean individuals cannot replicate the IP and process around it in other companies that do not have the same approach and mentality of the company where it was created
  • Staff retention, incentives, motivation and knowledge-management systems are then very important to ensure the company and brand benefit from the IP created by its staff
  • How do you know you have IP in a knowledge-based business - it can be an idea/method/approach/product that you sell multiple times that you can say you invented and multiple clients knock your door down to access the IP and gain value from it for their businesses
  • IP is in the intelligence but also the way it is applied and that is where uniqueness is built
  • As a CEO who has bought and sold consulting and publishing businesses - IP is what I look out for most.  Having lots of IP doesn't necessarily mean that you get astonishing value but it does mean you are saleable
    • By being able to show we had a process that could reliably generate 3 to 5 "£1m" products every year over a number of years to underpin revenue forecasts was a big factor in how we sold our consulting company
  • It is also the way you attract the best people to your business - appearing vanilla does not attract the mavericks, the thought leaders, the inventors and innovators
  • As a more recent technology investor then I have been surprised about how little importance is paid to patents - the nervousness over revealing your invention to the outside world and the difficulty in enforcing patent rights reduces their impact on investment attractiveness
  • However, the fact that you have invented something that you cannot see anyone else has invented is of immense value - at least lets investors know that there might be something unique in there and it is all about speed of execution - protection through action not through the courts
  • Many investors do like to see patents as a way of giving them insolvency protection - at least there might be assets to sell if everything goes wrong and they then have a chance of rescuing some value out of the deal
  • In the software world, trademarking and copyrighting is far more important than patents 
    • I have used trademarks to force companies to either change their brands, company name and also avoid competing with us in some geographic markets
    • These threats are credible as you can easily prove that there is client confusion and that the "copycat" company was imitating you as they started afterwards - difficult to prove they were not copying you
      • This has worked for me in the US, Europe and China
    • Copyrighting is similar protection and all credible and meaningful evidence with which to support your differentiation claims with clients - not necessarily to sue imitators: no-one in the SME space really has the inclination or resources to fight such things in court

Camdata Spring 2014 Newsletter

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Camdata - Electronics product design and turnkey development

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Newsletter | 2014 #1

Future proof and field upgradeable: an ideal solution to meet the requirements of RFID applications
The JETT RFID+ is ideally suited for a variety of markets, such as warehousing, fleet management, transportation, mobile payment, field service, meter reading, time & attendance, machine & inventory control [read more...]
The 'Connected Home': The future of living?
How will technology and connectivity influence our homes and the way we live in the future? We take a look at the growing trend towards home automation, where household appliances and accessories are connected to the internet, and feature some examples of what might exist in the homes of tomorrow [read more...]
Considering the crowd: Should you use crowdfunding for your technology project?
Crowdfunding is currently a hot topic. Our founder was recently featured in the Investors Chronicle magazine discussing the subject. Peter considers the different options that exist for crowdfunding your technology projects [read more...]
Camdata has expertise across sensing, monitoring, micro-processing and control, embedded software, RFID, device management and operator interfaces. Contact us if you have a product idea, a design brief or an obsolete product that needs replacing. For more information visit our website or that of our specialist sites Traffic signal terminalsMicroscribeMeLock or RFIDCam.
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Leadership in the smart analytics world

  • The analytics approach has the ability to fit into whatever leadership culture the company has
  • It informs the top-down discussion better as the leader will have better intelligence to use in their interaction with staff - they will be able to build credibility better, focus on the key drivers of performance better, motivate their staff better during those discussions and make far better use of face time with staff
  • The main challenge for leaders of this type is that predictive analytics has the potential to automate many of those discussions and this can be a threat to leaders - either they will see it as making elements of what they do as redundant hence a threat to their jobs or that they will have to change their way of working that has held them in good stead for all their career - why risk their status, bonus and basis of power now?
  • Psychologically, predictive analytics cuts through a lot of unnecessary noise and deliberation as it strips out the predictable patterns of human behaviour - the homogeneity that we struggle to accept - and focus not the smaller number of true differentiators that lead to elite performance
  • There are fewer hiding places for those leaders who have progressed up the ladder due to their political abilities - their performance is more transparent and that can be scary for people
  • In this world, top-down leaders have to adapt to having to genuinely understand the behaviour and preferences of their staff to motivate them and influence their behaviour
  • The enlightened leaders then fully understand how to leverage this new data and intelligence as part of the coaching relationship with their staff, comfortable that they are not the font of all answers anymore and their success is derived from how their staff behave and perform
  • This is related to the all important innovation discussion - leaders are responsible for influencing the efficiency, effectiveness and competitive advantage of their companies and teams: predictive analytics gives them unprecedented ability to work on the 3rd of those: moving them ahead of their competitors
  • I think there is also something in here about the outcomes of predictive analytics being a unifying theme that can tie together all the different elements of a leaders job - recruitment, training, coaching, performance management etc, tying the external and internal views that gives them the widest understanding of how to add value to their companies
  • Those leaders that excel at providing strategic vision, exercising their judgement to make decisions that will truly and positively impact on stakeholder outcomes will excel in this environment
  • As in all technological innovation cycles - previously highly valued skills  become commoditised and then this creates the opportunities for new skills to develop and flourish.  Unfortunately, it is not typically the same people that succeed in the old and new environments and that is why people get worried about this change.  Predictive analytics is different than other change - it gives leaders the tools with which they can control their own destiny
  • So what replaces the top-down style then:
    • Through predictive analytics and the ability to feed performance data back to staff in real-time lots of what top-down managers and leaders used to have to do can now be automated and information given to staff that they can use themselves to improve and build up their capabilities
    • Leaders now can be "present" during their staff's day in ways that they could not before without any sense of being big brother like
    • The art of delegation is about how to ensure that people do what you want when you are not there - predictive analytics allows you both to know what it is you should be doing as well as then immersing your staff in this world without having to constantly monitor, coerce, cajole, instruct, review etc
  • And, an even more important point, is that leaders often struggle when the world moves from around or under them - the basis of competitive advantage shifts, technical disruption hits their business, their staff are increasing from Generation Z etc - the methods they used before don't work anymore and their customers have moved on too
    • Big data analytics learns over time as the context changes and picks up what success looks like now and in the immediate future - helps leaders staff fresh and avoid obsolescence
  • A slightly weaker point but relevant nevertheless, is that leadership excellence is often seen as a scarce resource and difficult to scale: headhunters earn a fortune claiming to fill this gap
    • Smart analytics helps identify better the key drivers of leadership success by organisation and hence making it easier to find more of them and reduce perceived growth bottlenecks by having confidence that you have the right people to exploit new market opportunities

Predictive analytics and risk management

Using predictive analytics you can evaluate (in a more accurate forward looking way than snapshot assessments/surveys etc):

  • Retention risk: you can pick-up behaviours that give you a strong indication who is likely to leave and when with suggested actions on how to influence whether they leave or not
    • You can focus this on elite performers and those who have the skills you need for the future and differentiate between them and those who are less strategical critical
  • Client churn risk: same issue really
  • CEO impact risk: there is quite a big issue there about monitoring what CEOs of big companies are up to - how can you predict when they might be about to do something not in the interests of stakehold

Wednesday 12 March 2014

How the M2M world and the Internet of Things is evolving

With the number of networked connections increasing by 30% per year, are we any clearer on what the world according to connected devices, aka Internet of Things, actually is and means?

Towards the end of 2013, I attended a Cambridge Wireless event aimed at shedding more light on this and looking at what opportunities will exist for technologies in this area in 2014 and beyond.  Here I list out some key headlines and themes.

First question is what M2M/IoT is aiming to do - things have moved on from using M2M as a mechanism to improve operating efficiency and reducing costs to more as an enabler of new services.  It is a platform for innovation, disrupting existing processes and generating incremental revenues.  To this players in the area need to understand how to integrate their devices/sensors etc with IT and how to coordinate with the various partners in the value chai.  Success now could well have more to do with vertical sector integration than a horizontal piece of technology or expertise that others then integrate into their own solutions to meet specific needs.  To gain full value from IoT investments companies need to be expert at information sharing - development and engineering, with operations, billing, product marketing, CRM and sales.

The central theme becomes how to harness value in the networked marketplace to bring value to the consumer:
  • Data becomes mission critical in terms of driving revenue growth
  • Optimisation is based on real-time data and not estimations or last night batch run
  • The data and information is more important than the connectivity
  • IoT provides the "industrial internet" - the glue behind all enterprise activities
  • Human relationships still the key - survival of the fittest in terms of those able to adapt to change

Let's take the example of the connected toaster - what is seemingly a trivial application of sophisticated technology as toast is toast, can actually reveal lots of interesting information about energy usage, family behaviour, safety, health, assisted living etc.  Take smart cities - transport becomes an integrated element within the overall system not a standalone function.

What technological innovations will drive the IoT:

  • Direct inter-device networking creating their own clouds
  • Sensor miniaturisation - external, wearable, detachable, implanted
  • Integration of the real and virtual worlds, e.g., active contact lenses
  • Cheap displays

There are some interesting challenges facing the IoT ecosystem if it is to become mainstream:
  • How to provide data assurance in the cloud - protection against disappearing cloud providers?
  • How to aggregate data and information and people to pay for things they don't necessarily enjoy, e.g., insurance, energy and the smart home?
  • What to do with information that you weren't expecting to get - real issue in the smart health market and early diagnostics of serious conditions where diagnosis runs ahead of cure?
  • How to integrate with solutions for constituencies that will always attract spending, i.e., pets and children?
  • Will areas of market failure provide the impetus to wider scale adoption, e.g., energy in Africa where, for example, two thirds of Nigeria is off grid?
  • Will mobile operators dominate given they have a unique ability to manage the IoT from end to end and can benefit from increasing average subscriptions?