Unlocking the Potential for Successful Technology Transfer

Technology Transfer is defined as “the process of transferring technology from its origination to a wider distribution among more people and places.” Various communities such as business, academia and government are routinely involved in these initiatives including across international borders, both formally and informally.

The primary desire is to share expertise, knowledge, technologies, methodologies, facilities, and capabilities among governments or universities and other institutions to ensure that scientific and technological developments are accessible to users who can then pursue development, robustification, design for manufacturability and exploit the technology into new products, processes, applications, materials or services. There are several types of returns. First, for the stakeholder’s investment in the research itself. Second, for creation of new job opportunities.  Lastly, for a new product or service that is likely to impact the health and viability on a global scale.

The U.S. government invests some $135B each year to advance science and technology (S&T) as the basis for breakthrough knowledge development and new innovations, of which around 20 to 30 percent is invested in successful Technology Transfer. The federal S&T budget is a sizeable sum. In fact, the federal laboratory ecosystem provides a home to several hundred thousand scientists and engineers working to solve some of the most significant scientific challenges on a national and global scale. The national laboratories alone annually produce 11,000 peer reviewed publications and over 1,700 reported inventionsand 6,000 active technology license agreements. However, the primary mission of the federal laboratory ecosystem is to perform basic research for scientific discovery to, support national defense and other missions, and to perform research and development in spaces where industry is not yet ready to lead.

Unlike both public and private commercial companies, the federal laboratories perform R&D with neither specific products nor services directly in mind. Most work in the public interest, and are often trusted advisors of the government. They understand the mission space, the requirements, and the gaps that need to be closed to improve safety and security of the nation.

The primary customers of the output from federal laboratory research and development efforts are often the federal agencies directly funding the work, since commercial transfer brings private funds to bear to bring products to market with government funded intellectual property inside. It is also an expectation as part of the charter of federal laboratories in 1986 that successful commercial outcomes are resultant benefits of the high-performance research programs.

What are the perceived barriers of Technology Transfer?

There are several constructs that impact success of Technology Transfer, and not least the uniqueness of the Intellectual Property (IP) involved, for example:

  • Is it leading-edge and breakthrough?
  • Is it disruptive?
  • Is it easily “copied”?
  • Are there competing technologies?
  • Is there a work-around?

All these factors contribute to the ultimate value positioning opportunity for transfer. In addition, federal laboratories are not evaluated directly by their sponsors on the commercial impacts of their research initiatives, and are in many cases discouraged from “picking winners and losers” in their effort to remain the unbiased and trusted advisors of the government. Due to the nature of their funding, federal laboratory research outputs are atypically complete product solutions and are most often in the early stage of development.  Companies to which the outcomes are transitioned must provide additional resources to develop research results into commercial, robust, sustainable products and services, and in the case of any environmental or medical technologies, seek appropriate regulatory approvals and often conduct clinical trials, if necessary.

These additional steps consume further investment dollars, can dilute internal company efforts, and seriously hinder the attractiveness of the transfer opportunity. Furthermore, most successful products combine multiple innovations from a variety of sources to meet customer needs.  A single technology license rarely provides a complete solution. These circumstances are especially true for the output from federal programs. The ability to deliver a final product is rare, and outputs are routinely seen as components ready for embedding into other more complex offerings.

Other issues that present barriers, in the case of federal R&D, is that the initiatives emanating from the federal laboratories are perceived to be difficult for companies to access. This is due largely because researchers must obtain funding for all their labor hours, and relatively few resources are available to support sustained collaborations with companies unless they are negotiated within the license agreement itself. Frequently, early stage companies pursuing technology transfer opportunities require assistance and mentorship not available at federal laboratories.

The hope is that some of the newly created and established accelerators and incubators with associated mentoring and guidance make for a more seamless transition route. Often good ideas resulting from the discovery phase at the federal labs are touted as moments away from widespread distribution, yet it rarely turns out to be the case. There is still a good deal of additional development, robustification, design for manufacturability, and even market positioning necessary before an “idea” evolves into a fully-fledged commercial opportunity. To streamline this process, encouraging entrepreneurs, investors and IP licensors to communicate a more perfect set of requirements necessary for “go-to-market” opportunities would eliminate the mismatch of expectations between the research and the commercial communities.

Many existing reports, white papers and articles outline the barriers to successful Technology Transfer, and they inevitably focus on the existence of the “valley of death”  defined as the phase directly after discovery yet before commercialization. Many articles describe the “push” perspective as the process by which technology moves from research to commercialization. However, the Technology Scouts, now a common formal position in many established companies, spend most of their time searching for technology in a market “pull” process to enhance and supplement a competitive, long-term company business strategy.

Photo Credit: The MITRE Corporation

Conditions for success

There are three conditions that must be met for successful Technology Transfer. Perhaps it would be insightful to list these “pull” conditions, so that those frustrated by perceived barriers on the “push” side reassess approaches to improve and increase yields for successful transfers. The conditions are as follows:

  • Alignment of Mission: The technology must enhance, simplify, and supplement the mission and the strategy being pursued by the “scout.” It must be the answer to a problem that the scout is charged with solving by his or her stakeholders. When technology “pushers” try to convince scouts that they should be solving a different problem, the pushers, and the deal, will fail!
  • Resources and Time to Market: The cost to innovate is immediate and certain, yet the value of the innovation is future and uncertain. There is an entire industry dedicated to predicting the value of future innovation, yet it is not an exact science and the elusiveness of the return and when it will be seen can be a killer!
  • Company Exclusivity: Technology companies (and their owners) scale quickly when they have a superior value proposition and a sustainable competitive advantage. IP is a critical element in building a sustainable competitive advantage. For technology providers, this exclusivity model is not always good business since investment in IP has a return if and only when an exclusive partner successfully commercializes and scales; if it does not occur, the upfront costs for innovation are not recovered.

What needs to change to improve Technology Transfer outcomes?

Important in the process of Technology Transfer is the need for companies and the federal laboratory scientists to have a shared understanding of the resources provided by federal laboratories. The federal laboratories are tremendous sources of innovation and technical expertise, yet they cannot provide everything a company will need to develop and commercialize a product or technology offering.

Programs exist to help companies access the capabilities of the federal laboratories.  Notably, Cooperative Research and Development Agreements (CRADAs) provide mechanisms for companies to collaborate with national laboratories, and Strategic Partnership Projects (SPP) enable companies to sponsor research and development at national laboratories directly.

Both programs require companies to invest private resources, either as in-kind contributions to collaborations or as direct project funding.

One overarching opportunity, then, is for increased federal investment in collaborations with private sector partners to make the laboratories more accessible to companies with limited financial resources. The Argonne National Laboratory, for example, has supported a realization of this situation by implementing their Executive in Residence Program, where a company employed scientists working in close proximity at the federal lab during the later stages of technical development. The opportunity is then readily positioned for “spinning off” into its own entity—or to support future strategic initiatives in a well-established company.

Additionally, there are other programs that offer extension or expansion pilot programs to support Technology Transfer, such as the Small Business Voucher Program (SBV), the Technology Commercialization Fund (TCF) and the various Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR)  programs. These programs target collaborations with federal laboratories that enable increased access to the laboratories and facilitate joint projects that can result in new products and subsequently the creation of new jobs. Expansion of other programs, such as the DOE Energy Investor Center and the DHS Transition to Practice (TTP) program, increase the visibility of the innovations and capabilities of the federal laboratories. At the same time, they help raise awareness of the commercialization opportunities that exist in the federal laboratories.

Photo Credit: The MITRE Corporation

Viewing the start-up realistically

If a project is pitched as perfection but delivers great, the project fails. If the project is pitched as good but delivers great, the project succeeds. Start-ups need to reign in how much perfection-pitching they perform. Investors, partners and acquirers need to view start-ups more realistically than their perception of a start-up’s ability to make overnight transformations. 

Aligning definitions of success and support at the stages of technology progression is critical to achieving positive outcomes. Mission alignment needs to continually improve. An increasing amount of research is being performed by universities and government so, as a result, there needs to be a protocol developed upfront to allow for alignment with established companies and any start-ups that ultimately commercialize the technology and discover marketing positioning for an output product.

Terms and agreements are also critical components for Technology Transfer because with investment in research, costs occur immediately yet revenue is future and uncertain. Any licensing terms need to share this inevitable risk, and provide the freedom for the licensor to pursue other licensees in cases where a commercialization effort does not meet certain financial goals.

What kind of regulatory/mandatory changes need to take place?

Federal laboratory scientists are often willing to help companies adopt their technologies, as evidenced by the success of the Argonne Laboratory’s Executive in Residence Program, as well as MITRE’s first-hand experience of partnering with them to develop and nurture opportunities. It takes a team to deliver Technology Transfer successfully.

However, federal labs have limited funding available to support engagements with private sector companies unless incorporated directly into the license itself. Mandating availability of increased funding of this kind, as well as reducing the administrative burden associated with accessing those funds, would drive greater private sector engagement with the federal laboratories, and thereby increase the commercial impacts of federal laboratory research and development.

In terms of mandatory changes to facilitate the delivery of and derive benefits from new innovative products in healthcare, for example, supported by a connected Digital IT architecture, investment in a standard interoperability framework would be highly significant. Currently, the landscape is diverse, and pointedly so in healthcare, where hospitals each operate individually with different system installations that limit the ability to interface seamlessly across institutions. Under these circumstances, it is impossible for any new innovations to be easily accessible by all points of the domain due to lack of an interoperability mindset. In addition, encouraging a more patient-centered architecture would lead to an increasingly robust innovation environment for healthcare. In fact, it has been shown that having patients involved in their healthcare improves results and lowers costs.

What can government agencies do to enhance opportunities?

Federal laboratories are ultimately driven by the goals and objectives of their funding agencies and offices, and they remain the bedrock for delivering outcomes for national defense as well as national safety and security. Technology Transfer Offices can help companies access the innovations and capabilities of the federal laboratories by increasing the programmatic value they place on such engagements, and actively encourage or support the interactions. In effect, this approach will benefit their needs, too, by making a product or service readily available, in a robust way, at economically viable price points.

There are also more likely to be further and future advancements of the technology available in due course driven by the product development efforts of the commercial company. This outcome would undoubtedly reduce sustainability costs for the agency as their needs would continue to be serviced directly from private funds. As noted earlier, extending and expanding programs such as SBV and TCF would likely increase private sector engagement with the federal laboratories.

Government agencies also can help with mission alignment. A good example of this approach was the space race in the 1960s. There are also several other examples where the government has been the catalyst for successful technologies that generate commercial breakthrough opportunities. Agencies should be setting goals and metrics and providing financial incentives for academia, federal labs, and the private sector to work together to meet these goals. Nevertheless, the government needs to avoid picking winners and losers because only the market can determine the future value of any technology. Once the “macro” level goals are set for alignment, individuals (scientists, innovators and engineers) need to be trained on the behavioral science of how better to understand the “micro”’ level needs of the others in the chain.

The NSF (National Science Foundation) I-Corps and the Fed-Tech program deliver value by helping innovators and entrepreneurs understand product market fit through experiential training in discovering needs. Similar programs, designed to align fundamental research to commercialization, would go a long way towards improving the situation. The Innovation Research Interchange (formerly known as the Industrial Research Institute) is helping to support match-making initiatives through its Federal Laboratory Activity Group (FLAG). Specific areas of focus are: Energy/Sustainability, Advanced Materials/Manufacturing, Cyber Security/Data Analytics and Robotics/Automation.

The government makes a good partner because it is a natural convener of new discoveries, can sustain much longer term strategies compared with industry, and is not under the demands of shareholders. Rather, it is often neutral and can enable even typically competitive organizations to collaborate for the greater good of society. While governments are not expected to over-regulate, their ambiguous guidelines can sometimes lead to fragmentation if the industry does not reach consensus, as evidenced by the lack of interoperability in the healthcare segment. If the government actively engages industry, then further fragmentation would be avoided and the associated longer term problems likely minimized.

What can and how can we help entrepreneurs to aid the process to success?

To support the entrepreneurial process, federal laboratories are encouraged to focus on some new approaches, namely:

  • Increase visibility of their capabilities and ensure innovations are readily available
  • Provide clearer guidance on what the laboratories can provide and, equally important, what they cannot provide
  • Host a series of technology focused workshops to raise awareness of available programs and opportunities
  • Award grants to entrepreneurs to support their programs
  • Create more opportunities for innovation bridges, so that challenges are solved together from the onset

Supporting entrepreneurs to quickly achieve a “Yes/Go” or “No/Go” pitch to future investment is critical. For example, a start-up entity often has 12 to 18 months of runway, during which time it needs to quickly succeed or fail (and pivot, if appropriate). With limited resources, the team is unable to spread itself thinly and therefore must remain focused on its target goal. A “maybe” response is a killer; it results in burning resources and does not help entrepreneurs to understand clearly if their product is providing true value. Being harsh but factually quantitative enables a better outcome for all.

Entrepreneurs themselves fall into distinct groups as determined by their efforts. Entrepreneurs focus on target-market fit and sustainable advantages of their products to attract investors. They need exclusivity yet have limited funds for licensing. For many start-ups, future equity is their only currency, so they need financial resources to help solve the problem.

What can well-established companies do to improve interaction, integration and chances of success?

Investing time with the federal laboratories to learn more about ongoing research activities and outputs is one way to improve outcomes. Most research results are complex and are “works in progress.”  While it is relatively rare to find a nearly commercially-ready technology solution in the laboratories, the laboratories have deep expertise and capabilities and can help companies quickly solve complex challenges.

Additionally, there is the need to resist the urge to negotiate the terms and conditions of collaboration agreements with federal laboratories.  Most laboratories can quickly implement standard agreements, yet must seek multiple levels of federal approval for non-standard agreements, significantly increasing the time required to put an agreement in place.  Furthermore, federal laws and policies limit the extent to which partnering agreements can be substantively changed, so that lengthy negotiations rarely result in significant changes in agreement terms.

Defining success at the stages of discovery, development, deployment and distribution are key to having projects reach positive outcomes. Without this expectation setting, project timing will be misaligned and it will be challenging to realign the stage-appropriate support to achieve real business value. 

Again, the three conditions associated with barriers to success apply—namely, alignment of mission, resource needs and time to market, together with company exclusivity. However, where a start-up may be heavily dependent on IP as a sustainable competitive advantage, large companies have other factors contributing to that competitive advantage, for example, brand, supply chain, scale, and channels. Large corporations will tend to “engineer” around patents in their commercialization process. Acquisition of IP will occur through licensing if it is core and foundational, and they cannot overcome the barrier. They will also only buy/license IP in times of disruption or transition. Generally, this outcome is achieved by acquiring a start-up that has commercialized a proven product market fit. In effect, established corporations are looking for products, not research, when they need technology.

How can the VC communities and start-ups take advantage of outcomes from federally funded programs?

Interactions between venture capital (VC) communities and start-ups present several areas for improvement. For example, enabling them to interface and work routinely with universities and other programs would increase their familiarity and comfort level with federally funded initiatives. However, it is also important to note that writing a successful grant application is very different than preparing a strong business pitch deck.

Encouraging portfolio companies to visit and engage with the federal laboratories to learn about available technologies and collaboration opportunities would certainly drive enhanced relationships leading to technology transfer. Allied Minds is one such company that routinely interfaces with several federal entities with the primary objective of accessing and gaining exposure to early stage IP. In the main, Technology Transfer offices are always happy to coordinate visits from prospective collaborators.

VCs are essentially risk managers and are unlikely to accept more risk to increase the flow of IP. VCs need to see their investments explode—or fail fast. Return on investment from Technology Transfer extracted from federal labs would undoubtedly increase if the lab can define the path to commercialization, even if they cannot execute that path due to their mission. Quantified data linking research to customer will attract VCs. As such, NSF I-Corps, Fed-Corp and DHS TTP initiatives are helpful programs. If technology has an assessed product market fit through a customer discovery process using scientific methods, in addition to the science of the invention, there is less risk. VCs will take advantage of this type of program in their investment decisions.


There is currently a mass of untapped technical potential and IP sitting on shelves within the federal laboratory ecosystem that has been funded by federal agencies. We know that those concepts which do make it to market, such as laser technology from the 1960s, have compelling impacts, solve national and global problems, provide a catalyst for greater success by industry alone, and drive the economy and GDP of the country. The laser is only one such technology, the Internet is another—it started life at the Stanford Research Institute (SRI). And there are also many technologies we rely on today that emanated from the space race.

The results of all these programs are generally clearly visible, as compared with private investment where only those making the investment typically benefit and the outcomes are less visible to society. The advancement and discoveries of industry, therefore, have only limited impact as a result, compared with when the outcomes are delivered from government funded programs. Recommendations to further support unlocking the potential from federally funded R&D are as follows:

  • Increase funding to support the transition of technology to entrepreneurs
  • Enable federal laboratories to better understand business world needs
  • Engage teams with market positioning early on so that modifications can be built in accordingly
  • Create more programs like DHS and TPP to showcase early, impactful technologies
  • Encourage and find ways to showcase opportunities at all of the federal labs

With these modifications and implemented changes, there will likely be:

  • Increased technology transition to entrepreneurial and well-established companies
  • New opportunities generated for discoveries that make an impact on the national and global landscape
  • Economical and viable options delivered to support widespread government use of a technology
  • Technology advancement at private expense that will be available to government
  • A return on the initial investment by enabling economic development from growth of a new industry


What, Exactly, Is Business Development?

Few times in history have more ambiguous words been spoken.  Ask ten “VPs of Business Development” or similarly business card-ed folks what is business development, and you’re like to get just as many answers.

“Business development is sales,” some will say, concisely.

“Business development is partnerships,” others will say, vaguely.

“Business development is hustling,” the startup folks will say, evasively.

The assortment of varied and often contradictory responses to the basic question of “what, exactly, is business development” reminds me of the way physicists seek to explain what, exactly, is the universe.  With conflicting theories on the nature of black holes and bosons, the ultimate goal for those scientists is a Grand Unified Theory, a single definition that can elegantly explain how the universe itself operates at every level.

Lacking any concise explanation of what business development is all about, I sought to unite the varied forces of business development into one comprehensive framework. And eureka, for I have found it – the Grand Unified Theory of business development:

Business development is the creation of long-term value for an organization from customers, markets, and relationships.

There is elegance in simplicity, but perhaps this definition leaves you wanting more.  At its heart, business development is all about figuring out how the interactions of those forces combine together to create opportunities for growth.  But a theorem requires a proper proof, so let’s break that statement down:

Long-Term Value

First, what do I mean by “long-term value?”  In its simplest form, “value” is cash, money, the lifeblood of any business (but it can also be access, prestige, or anything else a company seeks in order to grow).  And there are plenty of ways to make a quick buck for you or your company.  But business development is not about get-rich-quick schemes and I-win-you-lose tactics that create value that’s gone tomorrow as easily as it came today.  It’s about creating opportunities for that value to persist over the long-term, to keep the floodgates open so that value can flow indefinitely.  Thinking about business development as a means to creating long-term value is the only true way to succeed in consistently growing an organization.


The “customers” portion of the definition may be slightly more obvious – customers pay the bills.  They are the people who pay you for your products and services, and without them you won’t have any business to develop.  But not everyone is a natural customer for your business. Maybe your product doesn’t have the features I’m looking for.  Maybe your product is perfect, but I don’t even know your company sells it.  Or maybe you’re not reaching me because you’re not knocking on my door.


That’s because customers “live” in specific markets.  One way to understand markets is by geography – if I only focus on selling in the U.S. but you reside in London,  then you are currently unavailable to me as a customer as I do not currently reach the European market.  But customers also „live“ in markets that are defined by their demographics, lifestyles, and buying mindset.  Identifying opportunities to reach new customers by entering into new markets is one important gateway to unlocking long-term value.

Take for example the Pet Owners market.  The customers who live there, of course, are people who own cats, dogs, fish, etc.  Petco is a company that clearly sells to customers who live in the Pet Owners market.  I, on the other hand, do not have a pet.  I don’t live in the Pet Owner market. So what if Petco wanted to sell something to me? Then they’d need to find a way to enter into a market where I do live.  For example, I have red-hair and pale skin and as such, I am prone to spontaneously combusting when exposed to the sun.  Therefore, one market that I „live“ in is the Sunscreen Buyers market.  If Petco wanted to sell something to me, perhaps they can find a way to enter into that market by offering sunscreen, hats, or sun-reflecting aluminum foil suits.  Now, determining whether that’s a good idea or not for Petco to do so is a job for the business development team – and another story for another blog post.


And then there were “relationships.”  Just as the planets and stars rely on gravity to keep them in orbit, any successful business development effort relies on an underlying foundation of strong relationships.  Building, managing, and leveraging relationships that are based on trust, respect, and a mutual appreciation of each other’s value is fundamental to enabling the flow of value for the long-term.  Relationships with partners, customers, employees, the press, etc. are all critical to the success of any business development effort and as such they demand a bold-faced spot in any comprehensive definition of the term.

So, is business development actually sales?  Is it partnerships?  Is it all about hustling? Well, frankly, yes.  It’s all of the above and as we’ll see in future posts, it’s much more.  It’s a complicated and fascinating discipline that deserves a clear understanding, so that we can marvel at the beauty of a well-done deal as much as the stars.


8 Essential Qualities That Define Great Leadership

Company leaders are facing a crisis. Nearly one-third of employees don’t trust management. In addition to this, employers now have to cater to the needs of the millennial generation. On average, after graduating from college, a millennial will change jobs four times before they are 32. Most of them also don’t feel empowered on their current jobs.

It’s clear that many leaders are failing to foster a sense of trust and loyalty in their employees. Fortunately, that doesn’t have to be the case. Managers who show great leadership qualities can inspire their teams to accomplish amazing things, according to Daniel Wang, the creator of Loopring Protocol and founder of the Loopring Foundation. Loopring is a decentralized automated execution system that trades across the crypto-token exchanges. The platform reduces the cost of trading and shields users from counterparty risk. I’ve distilled my conversation with Wang to eight of the most essential qualities that make a great leader.


1. Sincere enthusiasm

True enthusiasm for a business, its products, and its mission cannot be faked. Employees can recognize insincere cheerleading from a mile away. However, when leaders are sincerely enthusiastic and passionate, that’s contagious. For instance, someone who worked with Elon Musk on the early stages of his SpaceX project said that the true driver behind the success of the project was Musk’s enthusiasm for space travel.

Wang says being enthusiastic helps a leader identify existing key problems in his industry. “Any innovation starts from these problems and ends with products and services, with some of the key issues resolved,” he said.

2. Integrity

Whether it’s giving proper credit for accomplishments, acknowledging mistakes, or putting safety and quality first, great leaders exhibit integrity at all times. They do what’s right, even if that isn’t the best thing for the current project or even the bottom line.

“When people see evidence that leaders lack integrity, that can be nearly impossible to recover from,” Wang said. “Trust lost is difficult to get back.”

3. Great communication skills

Leaders must motivate, instruct and discipline the people they are in charge of. They can accomplish none of these things if they aren’t very skilled communicators. Not only that, poor communication can lead to poor outcomes. Leaders who fail to develop these skills are often perceived as being weak and mealy-mouthed, according to Wang. It’s also important to remember that listening is an integral part of communication.

4. Loyalty

The best leaders understand that true loyalty is reciprocal. Because of this, they express that loyalty in tangible ways that benefit the member of their teams. True loyalty is ensuring that all team members have the training and resources to do their jobs. It’s standing up for team members in crisis and conflict.

“Great leaders see themselves as being in a position of service to their team members,” Wang said. “Employees who believe leadership is loyal to them are much more likely to show their own loyalty when it matters.”

5. Decisiveness

A good leader isn’t simply empowered to make decisions due to their position. They are willing to take on the risk of decision making. They make these decisions and take risks knowing that if things don’t work out, they’ll need to hold themselves accountable first and foremost.

Further, bosses who aren’t decisive are often ineffective. Too much effort working on consensus building can have a negative effect. Rather than simply making a decision, many leaders allow debate to continue, and then create a piecemeal decision that satisfies no one.

6. Managerial competence

Too many organizations try to create leaders from people who are simply good at their jobs. To be clear, those who emerge as being very good workers often have important qualities. They are the ones who have a strong understanding of the company’s products and services. They understand company goals, processes, and procedures. All of these are important.

On the other hand, being good at one’s job doesn’t prove that someone possesses the other competencies they need. For example, can they inspire, motivate, mentor and direct? Wang illustrates with major league baseball. While nearly all coaches have backgrounds as major league players, the most winning players aren’t necessarily the most successful coaches.

7. Empowerment

A good leader has faith in their ability to train and develop the employees under them. Because of this, they have the willingness to empower those they lead to act autonomously. Wang says this comes from trusting that their team members are fully up to any challenges they face. When employees are empowered, they are more likely to make decisions that are in the best interest of the company and the customer as well. This is true, even if it means allowing workers to go a bit off script.

8. Charisma

Simply put, people are more likely to follow the lead of those they like. The best leaders are well-spoken, approachable and friendly. They show sincere care for others.

“People at all levels of an organization find it easy to relate to them and follow their lead,” Wang concluded.

Every one of these qualities is absolutely essential to great leadership. Without them, leaders cannot live up to their full potential. As a result, their employees will never perform as well as they can either. Because of this, organizations must learn the best ways to identify and also to develop these necessary traits in existing and emerging leaders.



6 Tips For Growing With An Entrepreneurial Mindset

Much of the conversation about entrepreneurial growth narrows in on sales objectives, hiring the right talent and other similar objectives. The importance of the entrepreneurial mindset is often missing from these conversations.

The entrepreneurial mindset is about a certain way of thinking – it is about the way in which you approach challenges and mistakes. It is about an inherent need to improve your skill set and to try and try again.

But why is this important?

The entrepreneurial mindset is what you need to propel yourself forward. This mindset can dim as you get entrenched in the daily grind of entrepreneurship. But by making an effort to embody this mindset, you position yourself to meet everyday challenges and experience growth.

Revisit Your Vision On A Daily Basis

Much of the entrepreneurial mindset involves a steadfast commitment to a very narrow vision. This drive allows entrepreneurs to carry out the necessary steps to accomplish that vision. The problem is that the demands of the day can get in your way, creating a space where your vision recedes. This leaves room for frustration and doubt, which can lead to stagnation or worse.

That’s why it’s so important to make an effort to set aside a specific time every single day to focus upon your vision and your goals – to bring your vision to the forefront. You don’t need to set aside hours to remind yourself of why you’re doing what you’re doing. Even 10 minutes can be enough to create the energy needed to refocus your efforts and propel you to work a little harder the next day. The key, however, is to actually make this commitment concrete. Write it in your planner if you have to. Set a reminder on your phone at the end of every night. Over time, it will become a habit. 

Put Yourself In Challenging Situations 

As an entrepreneur, you will naturally face new challenges every day. Just because obstacles arise doesn’t mean you should be afraid of making mistakes. If you want to cultivate an entrepreneurial mindset, you have to embrace challenges. You have to seek them out.

It all comes down to basic psychology. The more that you put yourself in challenging situations, the more you will find that you not only equip yourself with the skills to handle those very challenges but also the confidence of knowing that you were able to succeed. So, make an effort to put yourself in challenging situations every single day – even in your personal life. And don’t be afraid of making mistakes.

Much of the entrepreneurial life is about trial and error and mistakes are a natural byproduct of that. But more than this, mistakes are an opportunity for growth. Extract all of the value from them that you can.

Read On A Daily Basis

The best entrepreneurs out there are never content with the way things are. That’s exactly what drives them to create in the first place. This also applies to their own skill set. Simply put, entrepreneurs are always looking to improve themselves in some way. This could be adding to their skills or reading motivational quotes to inspire them to take action.

If you want to get into the entrepreneurial mindset, you have to act like an entrepreneur. You have to commit to becoming a better version of yourself. This means nourishing your brain by reading on a daily basis. Learn new skills. Devour books about successful entrepreneurs. The more you read books like these, the more you’ll think like them as well.

Approach Problems From All Sides

If you read a lot about the entrepreneurial mindset, there is a common thread: the idea of approaching problems from all sides. Simply put, the entrepreneurial mindset is about thinking differently than the rest.

Again, the entrepreneurial life is about trial and error. That means that you have to learn to think differently and approach problems from a range of different angles if you expect to move forward. Chances are high that your first solution may not be the best one.

You can take this one step further by daring to do things differently each and every day. Even something as small as changing your environment or going on a walk (a Stanford study found that walking increases creativity by as much as 60%) can help you approach things differently.

Always Be In Motion: Provide Value

If entrepreneurs are not thinking about their vision then they are actually putting their vision into motion. Much of the entrepreneurial mindset is to simply do. They have discipline, which allows them to continually reach their goals. But there is a secondary component to this “doing.” The truest entrepreneurial mindset is about providing value. Entrepreneurs are on a quest to help the customer in some way and to continue to make their service better and better. They identify problems and solve them.

So, by treating tasks as problems to be solved – and thinking about how you can provide value at every single turn – you can continually put the entrepreneurial mindset into practice. 

Above all, the entrepreneurial mindset is about being committed to your vision regardless of the challenges and obstacles along the way. It is about seeing mistakes as an opportunity for growth and not as something to be feared. It is about approaching problems from a range of different ways. By embodying all of the above, you can strengthen your mindset and equip yourself with one of the most important tools that an entrepreneur can have.



10 Ways Entrepreneurs Think Differently

Entrepreneurs are a unique breed of people. While some people sit and fantasize about the glamor of being their own boss and creating their own business, those in the thick of business ownership understand that even considering all its rewards, entrepreneurship is a difficult and complicated path.

The world’s most successful entrepreneurs aren’t the ones who impulsively quit their jobs to chase a get-rich-quick idea. They are the ones with an entrepreneurial mindset – a set of perspectives and values that allow them to achieve greatness.

These 10 perspectives are differentiators you’ll need to have or develop if you’re going to be a successful business owner.

1. Challenges are opportunities. Setbacks, obstacles and challenges are painfully common elements of entrepreneurship. Most people react to these hurdles with stress and pessimism, with an attitude that obstacles are negative experiences that only hinder progress. As an entrepreneur, you encounter so many challenges you simply can’t afford to react this way.

Instead, successful entrepreneurs view challenges as opportunities. Each challenge or setback reveals a key opportunity to grow – either to improve upon an existing weakness or take measures to avoid experiencing a similar setback in the future.

2. Competitors are research subjects. Rather than viewing competitors as a threat, like most people would, entrepreneurs see competitors as enriching opportunities to learn more about their industry and target market. By looking at your competitors’ business models, you can learn what makes yours unique and embellish that uniqueness in your branding and marketing efforts. Studying your competitors’ emphasis on customer experience can teach you how to make yours better.

Your competitors are doing you a favor – they’ve already gathered tons of valuable information. Entrepreneurs realize that it’s up to them to take advantage of it.

3. Everything requires effort. Entrepreneurship is multifaceted and constantly demanding, and there’s no shortage of pitfalls that could disrupt or destroy your business. Successful entrepreneurs are aware of this, and they’re aware that everything – from product development, sales and marketing – requires significant effort to achieve success. Instead of looking for shortcuts, they’re pouring effort into their business at every opportunity, and when they reach one goal, they’re already busy planning another.

4. Perfection is the enemy of progress. It’s a familiar aphorism that nobody understands better than entrepreneurs. Young or inexperienced entrepreneurs might get caught up in chasing their original vision, because original visions are almost invariably “perfect.” But perfection isn’t necessary to run a successful, profitable business.

In fact, perfection is often what stalls progress. The time you spend trying to hammer down those last few details is likely going to end up as time wasted. Instead, spend your efforts on the big picture, and make sure it’s solid.

5. Big things are made from small components. This works for problems as well as solutions. For example, instead of seeing a content-marketing campaign as a quick way to get traffic and new business, entrepreneurs see content marketing in terms of its individual components (blogging, social-media marketing, link building, etc.), each of which has its own advantages and disadvantages. Successful entrepreneurs can break down massive projects, problems and campaigns into smaller, more manageable pieces.

6. Mistakes are healthy. The popular vision of massively successful entrepreneurs such as Steve Jobs or Jeff Bezos illustrates them as infallible leaders. This couldn’t be further from the truth. Successful entrepreneurs, even the rock stars among them, make mistakes often. Furthermore, they aren’t afraid to make mistakes, and they know how to learn from them.

Making mistakes is healthy and normal, and the sooner entrepreneurs realize that, the better. Don’t waste time doing everything you can to avoid mistakes or beat yourself up after making one. Acknowledge your mistakes, figure out what you can do to make up for them, and move on.

7. There is no magic. The super-rich entrepreneurs you read about in the news usually didn’t get there because they randomly stumbled upon a great idea. They got there because they poured years of effort and passion into a good idea, and eventually their efforts paid off.

You can’t become an entrepreneur expecting there to be a miracle, or some kind of instant, magical rise to the top because your idea was revolutionary. Even the best ideas in the world require patience, skill and endless effort to earn that level of success. The world’s best entrepreneurs realize this. Waiting for your idea to do the work on its own, or waiting for some unseen element to carry you to success can only result in disaster.

8. Outside perspective is invaluable. Entrepreneurs need to be good communicators, and that means actively listening to those with different ideas and opinions. It’s easy for us to get trapped in one mode of thinking.

Many business owners keep their business models and directives too rigid, ultimately restricting their ability to grow and leading to failure. Successful entrepreneurs, on the other hand, are constantly searching for individuals and experiences that will challenge their way of thinking and lead them to see things from a new perspective.

9. Discipline is a prerequisite. To most people, discipline is something extra. It takes extra thought and effort to exercise, wake up on time or do anything other than spend leisure time. To successful entrepreneurs, discipline is normal. It’s a prerequisite that carries into all aspects of their lives.

You don’t have to be a regimented military-style leader to be disciplined, but you do have to know what you want and be prepared to do whatever it takes to get it.

10. Entrepreneurship is a lifestyle. Entrepreneurs wake up as entrepreneurs, go to work as entrepreneurs, come home as entrepreneurs and go to bed as entrepreneurs. There is no nine to five. There is no “work life” and “home life.”

The advantage of this is that you have total control over your business and your professional choices, including what you do for it. The (possible) disadvantage of this is that you carry your business with you everywhere you go. Entrepreneurship becomes your work and your life, and you need to be prepared for that if you’re going to survive the lifestyle.

Being a successful entrepreneur isn’t about being born with a specific mindset, it’s about being prepared for the challenges that await you.


Eight Ways To Transform Your Company’s Innovation Culture

With the world changing rapidly most corporate executives are starting to feel the pressure. There is a realization that beyond cost-cutting and operational efficiency, companies must also invest in developing their innovation pipeline. At the beginning, corporate leaders often reach for easy solutions or low hanging fruit. They focus on the training and improving the capabilities of product teams. There are now quite a few organizations offering training in design thinking, lean startup and agile product development. While these grassroots movements are well and good, it is also starting to dawn on most executives that lean startup training is not enough.

The rhythms and ways of working for innovation are different from the rhythms and ways of working in most large companies. While we may be able to build up the capabilities of our innovation teams, the culture of the organizations within which they work will continue stifle their efforts to innovate. As such, every company must build an innovation ecosystem;which is a repeatable and scalable process for turning creative ideas into profitable business models.

This is not easy work. There is a lot of political inertia in large companies and any efforts at transformation will trigger resistance. In my enthusiasm for change, I have made a lot of mistakes in my work with large companies. I have learned that organizational transformation must be approached carefully using incremental steps that allow for learning and iteration. Below are eight things that all innovators working to transform their company’s innovation culture must consider.

• Focus On Why: An organization cannot be successfully transformed without some clarity as to the reasons why change is necessary. Transformation is a painful process that requires executive level commitment to push it through. As such, it falls on leadership to identify with clarity the reasons for the transformation. It is key to avoid generic statements about wanting to become to a more innovative company blah blah blah. Leadership have to be clear about the how the world in changing, key trends that are affecting their business and how they plan to use innovation to respond. This thesis will then serve as the true north of the innovation culture transformation work.

• Begin With Discovery: There are a lot of great innovation frameworks in the world (e.g. Running Lean, Design Thinking, Lean Startup and Customer Development). There are also some great case studies of companies that do innovation really well (e.g. 3M, Amazon, Apple and Intuit). However, we must resist the allure of implementing standard frameworks or what has worked in other companies within our own organization. Most standard frameworks break when they face the reality and complexity of large companies.  As such, we have to begin with discovery. What are the unique challenges within our company? What has worked successfully before? What initiatives have failed and why did they fail? Where are the roadblocks and resistance to innovation? Such discovery work will also uncover key allies and champions that we will need as our transformation work begins.

• Get Air-Cover: Without executive buy-in any efforts at innovation culture transformation will be dead on arrival. We must never forget that a company’s culture is determined by what its leaders reward, celebrate and punish. An example with innovation culture is the idea that companies have to celebrate failure. The people in charge of this celebration are the executives! I have been part of guerrilla movements that tried to change a company’s culture via the grassroots. This almost never works until a key executives is convinced of the value of change and becomes its champion.

• Executive Buy In Is Not Enough: Although it is an essential component and you will fail without it, executive buy-in is not enough. While executives set the overall strategic direction of the company, the people that actually run the company day-to-day are the middle management. These people are often referred to as permafrost; the place where all innovative initiatives go to die. The mistake most innovators make is that they often mock middle managers as ignorant MBAs. Innovators then try to bypass middle management by going straight to the C-Level executives. But even if you get C-Level support, you are still going to need some help from middle management to implement your project. While they may not actively resist you, the passive resistance via procedural delays will eventually kill your project. As such, you have to work hard to find allies within the ranks of the middle management.

• Work With Early Adopters: There is an impatient energy among innovators and entrepreneurs that can be admirable. However, this energy can also cause problems when we try to transform a large company all at once, in one big bang. I have never seen this work well. What seems to work is when we systematically identify early adopter business units and begin our work with them. Within every large company there are pockets of leaders that get it. They understand how the world is changing and what needs to be done. Working with these leaders first means that our transformation agenda will not face too much resistance while it is still in its nascent stages. This is why it is important to begin with discovery because this will help us find our early adopters. As we succeed with early adopters, other business leaders will then be attracted to our transformation agenda.

• Get An Early Win: A key mistake I have made with the teams I have worked with is to spend a lot of time preaching to company leaders. However, as they look at our track record within their company, we have no examples of success. We are just talking. This makes it easy for them to dismiss us as just another group of crazy consultants who will soon be out of their business. As such, before we begin preaching, we have to make sure we get an early win. Working with early adopters helps with this. We should select a high profile and important project within our early adopter business unit and work quickly to demonstrate that lean innovation and design thinking methods work. We should document this early win with data and begin celebrating it widely within the company. Such an early win buys us goodwill and the time we need to systematically implement our transformation programme.

• Be Tough On Principles, But Loose on Tactics: Principles trump tactics. Rather than rigidly focus on the tactics of our transformation plan, we should keep a laser focus on the principles that underlie lean innovation and why transformation is necessary. All other aspects of our work will be emergent.  As much as we plan, the organization will also be changing at its own pace; and sometimes in different directions. To paraphrase Steve Blank, our transformation plans will never survive first contact with the organization.  As such, we have to be prepared to be responsive; tough on principles but flexible on our tactics.

• It’s A Battle For Hearts (And Minds): Nobody likes a know-it-all! As much as we may feel we are on the right path with our ideas for transforming our company, we have to recognize that change is scary for a lot of people. So while the logic of transformation makes sense, this is a battle for hearts as well as minds. Getting buy-in from our colleagues will result in a culture change that sticks. We have to do the hard work of reaching out to our most resistant colleagues to find common ground.

These are some lessons that i have learned in my work with large organizations. Organizational transformation is brutal work. It is not for the faint-hearted. It is one step forward — two steps back, everyday gut-checking work. But when done well, the results are truly rewarding. We are now beyond the realm of makeshift innovation solutions for large companies. The world is changing so quickly that we need a paradigm shift in how we manage innovation. This shift requires us to transform our organizations and create successful innovation ecosystems.


How To Build A Culture Of Innovation And Turn Every Employee into an Innovation Powerhouse

Nothing will propel a company further than a culture of innovation: an atmosphere that inspires employees, every hour they’re at work, to seek out innovative opportunities.  I make it a priority to establish such a mindset through my work as a company culture consultant focused on culture change.

Here’s why: Although innovative leaps do sometimes come directly from the CEO, this is less common than business profiles and biographies make it seem. More commonly, successful leaders drive innovation via their people: by inspiring and sustaining their employees in ways that promote this essential discipline.

Though I’ve spelled out my principles for driving innovation before in these pages, I haven’t hit directly on how to spread these principles companywide. I’d like to remedy that now with a look at how my principles of innovation can lead to a company culture where every employee can be an innovation powerhouse.


1. Encourage innovation in non-obvious areas. Your employees’ mental picture of innovation is probably limited to the market-facing innovative leaps that grab all the headlines. (Elon Musk’s rocket flights, Alexa, etc.) Getting employees to expand this definition is essential, so you should explicitly spell out for them the three distinct areas that are ripe for innovation–product, process and business model–and let them know you’re looking for contributions in any of the three. (Product is what you sell or make; process is how you make it and how you sell it; business model is how your company is conceptualized and organized.)


2. Encourage the search for accidental innovation. Not all innovation is intentional. If you can get your employees to be on the lookout for innovation potential in mistakes they’ve made and happy accidents the observe, it can pay off handily. If not, they’ll continue to ignore the accidental leaps that occur–or, worse, bury these accidental improvements as being evidence of their, or their co-workers’, errors.

3. Encourage an attitude of dissatisfaction. This negative-sounding dictum (which no doubt violates the teachings of spiritual leaders and self-help gurus alike) can mean the difference for a company between life and death. Before your product or product line becomes the victim of the next wave of Uberization or Amazonization in your industry, encourage employees to look at what’s missing in your company offerings themselves, even if means questioning what they may think are sacred, untouchable cows.

4. Strive to build a blame-free culture. This is one of my better-known principles for improvement of all types, and it’s particularly important if you want to encourage innovation. Employees universally feel safer going with the status quo than attempting innovation, because it’s less likely to lead to visible errors (and thus, at many companies, blame). So if you want employees to experiment, they have to know that their innovative efforts will be free from repercussions. (It may be obvious, but I’m not talking about doing away with blame or judgment in cases of ethical lapses, safety violations, and the like.)


Five measures of growth that are better than GDP

GDP is like a speedometer: it tells you whether your economy is going faster or slower. As in cars, a speedometer is useful but doesn’t tell you everything you want to know. For example, it won’t tell you whether you are overheating, or about to run out of fuel.

Above all, the speedometer doesn’t tell you whether or not you’re going in the right direction. If you suggest to a car driver that you might be on the wrong road, and the response is “then we must go faster”, you might think that’s pretty stupid. Yet this is what happens whenever complaints about the state of the economy elicit a commitment to boost growth.

So what is the right direction for a modern economy? That’s a relatively easy question to answer: when you ask people, they say much the same things. A good economy meets everyone’s basic needs. It means people are healthy and happy with life. It avoids storing up potential sources of long-term trouble, such as extreme inequality and environmental collapse.

It is, of course, entirely possible for an economy to go faster and faster without getting closer to meeting these goals – indeed while heading in the opposite direction.

Now the trickier part. What would be the economic equivalent of a compass? We need to measure the direction of economic travel in a way that’s comparable to how GDP measures its speed – easy to communicate, and amenable to being influenced by policy decisions.

The New Economics Foundation (NEF), where I was the Executive Director until December 2015, proposed five indicators in an October 2015 report. Imagine them arrayed like dials on a dashboard that you can glance at for an overall picture, as well as study in more detail if you want. Why five? It’s hard to capture everything that matters in one metric, and psychological research demonstrates that people struggle to hold more than five things in their heads at once.

1. Good jobs. Employment statistics tell us what proportion of people have jobs. They don’t tell us what proportion of those with jobs are paid too little to afford a decent standard of living or worry about whether they’ll still have work next month.

According to UK government figures, 94% of people were in work in 2014 – up nearly two percentage points in four years. However, the NEF calculated that only 61% were insecure jobs paying a living wage – down a similar amount in the same period.

2. Wellbeing. A growing economy is not an end in itself – it’s a means of improving people’s lives. Few would disagree that the ultimate aim of public policy is wellbeing; we care about GDP because we assume it means more wellbeing. So why not also measure wellbeing directly?

The validity of research into measuring wellbeing, by asking people about their life satisfaction, is now widely accepted. Such measures capture a range of things that people care about and that policies can influence – from income and health to housing and social connections.

Some governments do measure life satisfaction, including the UK (it increased from 7.4 to 7.6, on a scale of 0-10, in the four years to 2014). However, it remains at the margins of policymaking.

3. Environment. The NEF propose a national indicator of lifestyle-related carbon emissions, relative to an allocation calculated from global targets for avoiding dangerous levels of climate change.

In four years, the UK’s position deteriorated from using 91% of its allocation to 98%. As climate is a global problem, this indicator is effectively a measure of responsible global citizenship.

4) Fairness. Research increasingly shows that high-income inequality has negative social consequences while casting doubt on the idea that it incentivizes hard work.

Comparing the average incomes of the top and bottom 10%, inequality in the UK has been worsening by an average of 0.8% a year for the last four years.

5) Health. The NEF proposes “avoidable deaths” as a simple, easily-understandable measure that captures the quality of health interventions – not only treatment but also prevention.

Here, the UK shows a positive trend, but with plenty of room for further improvement – the latest figures suggest 23% of deaths need not have happened.

Image: New Economics Foundation (NEF)

The NEF designed these measures with the United Kingdom in mind, working with the UK’s Office of National Statistics. But they are, in principle, just as meaningful for other countries.

The shortcomings of GDP, as a measure of what we want from an economy, are not a new discovery. The NEF and others have been making the case for years. But while various proposals for alternatives have engaged the interest of policymakers and technocrats, they have not yet taken hold among politicians.

That’s understandable: any politician who suggests new ways to judge their performance is also creating new ways to fail, and many policies that will pay long-term dividends on these indicators will also impose short-term costs.

More broadly, there remains a reluctance to move away from viewing economics as a hard, mathematical science, and accept the need to incorporate more of a social science mindset. In effect, we need another value shift in economics, comparable to those that shaped the last century – Kenyesianism and neoliberalism.

However, while the problems with the current economic system are increasingly widely appreciated, we still lack a compelling, coherent, simple alternative narrative. I hope these indicators can help that narrative to develop.


What is Corporate Venturing and Corporate Venture Capital?

Corporate venturing (also known as corporate venture capital) is the practice of directly investing corporate funds into external startup companies. This is usually done by large companies who wish to invest in small but innovative startup firms. They do so through joint venture agreements and acquisition of equity stakes. The investing company may also provide the startup with management and marketing expertise, strategic direction, and/or a line of credit.

How Corporate Venturing Came About

As a subset of Venture Capital, Corporate Venture Capital (CVC) was started due to the vast emergence of startup companies in the technology field.  The main goal of CVC is to gain a competitive advantage and/or access to new, innovative companies which may become potential competitors in the future.

CVC does not use third-party investment firms and does not own the startup companies it is investing in, as compared to pure Venture Capital investments.

Some of the biggest Corporate Venture Capital players are:

There are other industries that CVCs are popular in as well, such as biotechnology and telecommunication companies. Currently, CVC has a fast-growing market influence, boasting over 475 new funds and 1100 veteran funds.

What are the Objectives of Corporate Venture Capital?

Unlike Venture Capital, Corporate Venture Capital strives to achieve goals both strategically and financially. A strategically driven CVC primarily aims to directly or indirectly increase the sales and profits of the venturing company by making deals with startups that use new technologies, entering new markets, identifying acquisition targets, and accessing new resources, while financially driven CVCs invest in new companies for leverage.

This is often achieved through investment exits, such as initial public offerings or the sale of a company’s stakes to interested parties. Both strategic and financial objectives are often combined to bring higher financial returns to investors.


What Stages of a Startup do CVC Firms Specialize In?

Corporate Venturing Corporations may invest in startup companies in the following stages of a company’s growth and development:

#1 Early-Stage Financing

Startup companies which are able to begin operations yet not at the stage of commercial production and sales. At this stage, a startup consumes a big amount of cash for product development and initial marketing.

#2 Seed Capital Funding

Initial capital or money used to cover initial operating expenses and to attract venture capitalists. The amount of funding is usually small at first and more often is exchanged for an equity stake in the business. Investors view this seed capital as risky, which is why some want to wait until the business has been established before infusing large capital investments.

#3 Expansion Financing

Capital provided to companies that are greatly expanding through launching new products, physical plant expansion, product improvement, or marketing.

#4 Initial Public Offering

This is the ideal stage that most CVCs are trying to reach in the long run. When the startup company’s stocks become available to the public, the investing company will sell their investments to earn significant returns. Earnings will then be reinvested in new ventures where future returns are expected.

#5 Mergers and Acquisitions

This involves financing a startup company’s acquisitions through an investment fund, as well as aligning the startup with a complimentary product or business line which will project a similar brand for both companies. When an interested firm decides to buy the startup, the investing company will take the chance to cash in by selling their stakes. Mergers also benefit the investing company by sharing resources, processes, and technologies with the startup company. This will bring some advantages, such as cost savings, liquidity, and market positioning.

What are the Value-Added Benefits of CVCs to Startups?

A startup firm can enjoy the large investing company’s industry expertise, prestigious name brand, stable financial standing, a network of connections, and ecosystem of developed products. This relationship can even lead to a partnership between the CVC and its parent firm, which, in turn, can instantly boost a company’s value.

For investing companies, CVCs serve as a gateway for the possible acquisition of smaller, innovative startups.  With CVCs strategically and financially driven objectives, these capitalists can maintain their position as a market leader, even if there are small companies stealing the scene and overtaking the pioneering giants. One example of this is Snapchat and Instagram, which are now owned by Facebook.



Everything You Need to Know About Open Innovation

This is a blog devoted to problems of managing innovation generally and open innovation in particular.  Before I define that term, let me introduce myself.  I’m a professor at UC Berkeley’s Haas Business School, and a former manager in the computer disk drive industry in Silicon Valley.  When I worked in the Valley, I distinctly recall feeling frustrated that there weren’t more useful ideas and advice from academia.   It seemed like the concerns of professors and the concerns of managers like me were far, far apart. Later, I decided to enter into a Ph.D. program to become a professor and do what I could to reduce this gap between the academy and industry.  I taught at Harvard Business School from 1997 to 2003, and have been at Berkeley ever since.

Open innovation is a concept I originated that falls directly in that gap between business and academe.  Conceptually, it is a more distributed, more participatory, more decentralized approach to innovation, based on the observed fact that useful knowledge today is widely distributed, and no company, no matter how capable or how big, could innovate effectively on its own.  Yet at the same time, there is a critical role for an overarching architecture that connects these seemingly disparate activities together. And the business model (which itself can be innovated) determines what companies look to bring inside the firm and allow to go outside the firm.   So open innovation supplies a lot for academics to study, and there have been literally hundreds of academic papers written now on this topic in the past 8 years. For business, open innovation is a more profitable way to innovate, because it can reduce costs, accelerate time to market, increase differentiation in the market, and create new revenue streams for the company.  So there’s a lot of opportunity for business to profit from open innovation. Hundreds of companies around the world now have executives with the job title, Manager of Open Innovation.  And there are now dozens of software companies, intermediaries, and consultants providing products and services in open innovation.  If nothing else, the presence of these newly-founded open innovation providers suggests that the concept has met a market test.

So what is open innovation?  My definition is more nuanced than that of many people.  Open innovation is “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.”  Open innovation can be understood as the antithesis of the traditional vertical integration approach where internal R&D activities lead to internally developed products that are then distributed by the firm.  As my definition suggests, there are two facets to open innovation.  One is the “outside in” aspect, where external ideas and technologies are brought into the firm’s own innovation process.  This is the most commonly recognized feature of open innovation.  The other, less commonly recognized aspect is the “inside out” part, where un- and under-utilized ideas and technologies in the firm are allowed to go outside to be incorporated into others’ innovation processes.

How do you know what to look for outside, and what to let go to the outside?  Your business model determines the answer to these questions.  You look for ideas and technologies that fit with your business model.  And your internal ideas and technologies that don’t fit are logical candidates to go to the outside.  So the business model is another key element of the open innovation concept.

There are other ways some people define open innovation, just as Eskimos have dozens of words for “snow”.  Some claim it works just like open source software.  It doesn’t.  The business model for innovation is a key part of open innovation.  Others think that it is just supply chain management.  It isn’t.  Open innovation involves many other actors that fall far outside traditional supply chains (such as universities or individuals), and these participants in open innovation can be influenced, but often are not actually directed or managed.  Some claim it is user innovation.  It’s not.  The user is certainly very important to open innovation, but so are universities, startups, corporate R&D and venture capital.

Why take my definition over someone else’s?  In this case, I literally “wrote the book” on the topic.  I published my first book, Open Innovation, back in early 2003. At that time, I did a Google search on the term.  I got back about 200 links, most of the variety “firm X announced the opening of its innovation center at location Y”.  My book turned out to be pretty popular, and within a couple of years, open innovation started getting more attention.  By the summer of 2010, when I did the same search on the same term, I got back over 13 million links.  And these were almost all expressing the concept of a new model of industrial innovation.  For this reason, Wikipedia credits me with originating the term. So I really am the father of open innovation.

In this blog, I will continue to work to reduce the gap between business and business schools.  Business schools need to understand businesses better than they do today, and they also need to translate their research findings in ways that are accessible to industry managers.  And businesses may be pleasantly surprised to discover that there is some very useful stuff going on in the halls of the academy if they take the time to find it.  This blog is a place where some of that exchange can go on.

Henry Chesbrough is a professor at the Haas Business School, UC Berkeley, and the author of Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business Press). His new book is Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era (Jossey-Bass). Follow him at @OpenInno or at