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Integrating Sustainability and Corporate Strategy

Integration of sustainability commitments into a company’s competitive strategy plan will increase the likelihood of ongoing funding.

More and more Fortune Global 500 companies are following this approach. Ben Packard, VP of global responsibility at Starbucks described his company’s rationale like this:

At Starbucks, sustainability and strategy are now integrated at the strategic planning level. The global responsibility strategy is driven at the enterprise, strategic planning, and annual operating planning level. One reason we do this is because the bigger costs of driving changes in our supply chain occur outside of the global responsibility budget.

The road to sustainability integration into competitive strategy is difficult. But companies such as Starbucks, UPS, Centrica, and Hitachi are employing three common steps to create “sustainability infused competitive strategies.” These steps include:

Seek natural ways to tie sustainability and strategy together

Connect sustainability to opportunity

Integrate materiality issues into competitive strategy

Good examples of how leading companies are ensuring corporate sustainability initiatives provide value and do not get marginalized.

Bombay v New York

Photo series by Nisha Sondhe on the two cities, via @ethanz.

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Nishasondhe

 

 

Engineering Serendipity with Kris Krug

Kris Krug is a photographer extraordinaire, social media documentarian, and global nomad who splits time between Vancouver, nearby Galiano Island, and the rest of the world. He was most recently in the South Pacific, documenting videographer Chris Jordan’s film on plastic pollution in the oceans, Midway. We met up on one of the rare days when KK is actually in Vancouver, and had a conversation about life on the web and life on the road, and how he connects with interesting people and projects wherever he goes.

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I was interested in his perspective as input to my projects RedRovr — a site for fans to request artists, speakers, and performers to come to their city — and 99speakers, a site for finding and booking long tail speakers. But the more we spoke, the more universal his advice seemed.

I’ve condensed our conversation into four principles from Kris Krug for “engineering serendipity” in your life and work — a guide to stacking the odds of good luck in your favor.

1. Send out a signal

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KK makes a living documenting others with his photography, but he is also a pro at documenting his own life, activities, and work. He attributes this near-constant stream of tweets, location updates, blog posts, and photos with landing photography gigs, meeting up with friends old and new, receiving referrals from friends orienting him to opportunities or people in the area. KK lives more online than most people, but the principle remains — you need to communicate about what you are up to and interested in in order to be found.

2. Scan the horizon

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KK doesn’t just send out his own signal, but makes sure to maintain an awareness of what people in his orbit are up to — “persistent scanning of infinite noise.” This scanning is an opportunity for pattern recognition — whether that is seeing an emergent idea, person, or thing, or noticing that different people are looking for or talking about complementary things.

3. Reach out to people

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The flip side of scanning is actually acting on the patterns you see — reaching out to people you know as well as people you don’t — someone who is visiting your city, connecting people who don’t know each other, amplifying someone’s call for assistance, etc. KK is nonstop with this, which is a key ingredient to his success.

4. Give more than you take

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This principle underlies all the others — giving more than you take from any given situation. KK talks about going camping as a kid, where his dad would advise them to leave the campsite better than they had found it, whether tidying up a tent site or replacing a rock in a fire ring. KK extends this idea to relationships and projects, and tries to use any media attention or time he has in the spotlight to shine light on other folks doing great work. Beyond specific actions, it’s an attitude he tries to bring into all his interactions.

Despite all this advice, serendipity remains largely resistant to our efforts to engineer it — this is one of the qualities of serendipity. However, some have said good luck is what happens when preparation meets opportunity — and Kris Krug’s four principles are an excellent way of making sure you are prepared.

Thanks KK for a great conversation.

Why innovation resists codification

The latest book on [design thinking] is Designing for Growth, a “design thinking toolkit for managers” and it provides a pretty good snapshot of how people are thinking about the discipline right now. Namely, that the reins of design thinking lie firmly in the hands of executives. In this world, design thinking is shorthand for the process implemented in a more creatively driven type of workshop, one involving visual thinking, iteration and prototyping. In this world, you don’t have to be a designer to be a design thinker, and the process has been codified as a repeatable, reusable business framework.

This is all, arguably, fine. But mostly it unwittingly highlights the true tension at the heart of the design thinking debate. A codified, repeatable, reusable practice contradicts the nature of innovation, which requires difficult, uncomfortable work to challenge the status quo of an industry or, at the very least, an organization. Executives are understandably looking for tidy ways to guarantee their innovation efforts — but they’d be better off coming to terms with the fact that there aren’t any.

Helen Walters of Doblin on the challenges of integrating design thinking into business.

Associating. Questioning. Observing. Networking. Experimenting.

Clay Christensen and coauthors write in The Innovator’s DNA about “what makes innovators different.” They point to five skills or behaviors:

First and foremost, innovators count on a cognitive skill that we call “associational thinking” or simply “associating.” Associating happens as the brain tries to synthesize and make sense of novel inputs. It helps innovators discover new directions by making connections across seemingly unrelated questions, problems, or ideas. Innovative breakthroughs often happen at the intersection of diverse disciplines and fields. Author Frans Johanssen described this phenomenon as “the Medici effect,” referring to the creative explosion in Florence when the Medici family brought together creators from a wide range of disciplines—sculptors, scientist, poets, philosophers, painters, and architects. As these individuals connected, they created new ideas at the intersection of their respective fields, thereby spawning the Renaissance, one of the most innovative eras in history. Put simply, innovative thinkers connect fields, problems, or ideas that others find unrelated.

The other four discovery skills trigger associational thinking by helping innovators increase their stock of building-block ideas from which innovative ideas spring. Specifically, innovators engage the following behavioral skills more frequently:

Questioning. Innovators are consummate questioners who show a passion for inquiry. Their queries frequently challenge the status quo, just as [Apple Inc. co-founder Steve] Jobs did when he asked, “Why does a computer need a fan?” They love to ask, “If we tried this, what would happen?” Innovators, like Jobs, ask questions to understand how things really are today, why they are that way, and how they might be changed or disrupted. Collectively, their questions provoke new insights, connections, possibilities, and directions. We found that innovators consistently demonstrate a high Q/A ratio, where questions (Q) not only outnumber answers (A) in a typical conversation, but are valued at least as highly as good answers.

Observing. Innovators are also intense observers. They carefully watch the world around them—including customers, products, services, technologies, and companies—and the observations help them gain insights into and ideas for new ways of doing things. Jobs’s observation trip to Xerox PARC provided the germ of insight that was the catalyst for both the Macintosh’s innovative operating system and mouse, and Apple’s current OSX operating system.

Networking. Innovators spend a lot of time and energy finding and testing ideas through a diverse network of individuals who vary wildly in their backgrounds and perspectives. Rather than simply doing social networking or networking for resources, they actively search for new ideas by talking to people who may offer a radically different view of things. For example, Jobs talked with an Apple Fellow named Alan Kay, who told him to “go visit these crazy guys up in San Rafael, California.” The crazy guys were Ed Catmull and Alvy Ray, who headed up a small computer graphics operation called Industrial Light & Magic (the group created special effects for George Lucas’s movies). Fascinated by their operation, Jobs bought Industrial Light & Magic for $10 million, renamed it Pixar, and eventually took it public for $1 billion. Had he never chatted with Kay, he would never have wound up purchasing Pixar, and the world might never have thrilled to wonderful animated films like Toy Story,WALL-E, and Up.

Experimenting. Finally, innovators are constantly trying out new experiences and piloting new ideas. Experimenters unceasingly explore the world intellectually and experientially, holding convictions at bay and testing hypotheses along the way. They visit new places, try new things, seek new information, and experiment to learn new things. Jobs, for example, has tried new experiences all his life—from meditation and living in an ashram in India to dropping in on a calligraphy class at Reed College. All these varied experiences would later trigger ideas for innovations at Apple Computer. Collectively, these discovery skills—the cognitive skill of associating and the behavioral skills of questioning, observing, networking, and experimenting—constitute what we call the innovator’s DNA, or the code for generating innovative business ideas.

 

A Few Key People

I keep coming back to Mark Suster’s Techcrunch/BothSides article — just great advice about new venture management and jumpstarting regional technology ecosystems. I finally decided to just reproduce the whole thing here for my own easy reference.

Editor’s Note: This is a guest post by Mark Suster (@msuster), a 2x entrepreneur, now VC at GRP Partners. Read more about Suster at Bothsidesofthetable

I’m in Seattle this week.

People keep asking me if I’ve “seen anything interesting.” Of course I have. I’m an entrepreneur at heart so I’m always inspired when I hear stories about innovation.

I really liked BigDoor, MediaPiston, OpsCode, BuddyTV, SEOMoz and much more. Can’t list them all.

But I’m not here trolling for deals. I’m here to build long-term, stable relationships that I hope will pay off over a decade, not a week.  I’m looking to turn dots into lines over time.

I’m inspired by the enthusiasm of the young, emerging startup ecosystem that is here. It has all of the components for success: a steady inflow of smart, CS graduates from UW who prefer to stay local if they could, a smattering of local VCs & angels, some “patron” companies like Microsoft and Amazon who provide new talent as well as the opportunity for company-defining partnerships and it has “elder statesmen” like Bill Gates and Jeff Bezos.

The ingredients are all here. Seattle should be the envy of any non-Silicon-Valley tech community in the country. Great lifestyle, great cost of living, motivated people and only the crap weather on the negative side. They have their successes; yet somehow all of the neurons don’t yet seem to be firing as powerfully as they need to be.

As I gear up to give a keynote at the annual Seattle 2.0 awards dinner on Thursday night I started to reflect on what it would take to “change the trajectory” for Seattle or for any regional market, really. It really wouldn’t take much to turn a great technology ecosystem into a truly electric one.

And I think about the “Seattle issue” as a metaphor for startups and business in general. I’ve always been a big believer that just a couple of key individuals make all of the difference in a company’s success. It’s why my investment philosophy is called, “the entrepreneur thesis.”

I was meeting with a first-time CEO of a very promising young startup recently and offering my advice on what his priorities should be. He listed all of the product releases that were upcoming, the customers that were in the pipeline and where he saw his competition moving. I gave him the same advice I give nearly all over-worked, control-freak, do-everything-yourself startup founders:

“Your number one priority isn’t any of these things. Your highest priority right now is hiring the 1 or 2 people that are going to join your company and make a difference. There’s you and your killer CTO co-founder. But who else is going to get out there and close your big biz dev deals with you? Who’s going to help you with improving your marketing / positioning to become a clear platform category leader like Twilio?

Are you going to do all of this? Evidence over the past year would suggest otherwise. You have too much on your plate.

A few key people really can make a huge difference.”

Him:

“I know, I know. I will start recruiting soon. But I need to get our next release out the door. I need to take some VC meetings. I just don’t have enough time to focus on it right now. It will be a bit easier when we have a little more progress to show.”

Me:

“Bullshit. It never gets easier. There are always the next 20 tasks. The reason you’re not getting to the next level is that you’re not prioritizing the precise thing that could take you to the next level. I would say recruiting at least one superstar would be your priorities 1,2 & 3.”

I don’t care if you’re a 10-person organization, a 1,000 person organization or a multinational corporation – often it is the few key players that change the dimensions. Imagine Apple without Steve Jobs. Or less obvious, imagine Facebook without Sheryl Sandberg.

So entrepreneurs need to think the same way some VCs do – because markets change, competition changes, innovation & technology cycles move so fast that only by having a few truly outstanding leaders in your company can you sustain any sort of advantage.

And that is precisely my thoughts for Seattle and what I plan to deliver on Thursday night: Which few key community leaders are going to step up and get those neurons properly firing and connected?

My recipe for Seattle or your community:

1. Community Leaders + Organizers
You need a good mixture of both.

Look at what Brad Feld has done for Boulder. I know it’s not single-handed as he has both fantastic partners at Foundry Group and many other community leaders. But he has helped put Boulder on the consciousness of so many young, aspiring entrepreneurs in search of somewhere other than the San Francisco Bay Area to work & live. It is possible and he’s showing people that.

David Cohen deserves much credit for building TechStars into an internationally recognized brand name for innovation. If you can attract people to Boulder for a session to be part of the magical mix of people at TechStars then some will naturally stay put afterward.  But it did take Brad as a public spokesman, consummate networker and successful VC to help create legitimacy to let David’s ideas flourish.

It takes both to build a community. The business leaders need to do their parts. The people with the time, energy & creativity to build organizations like TechStars need to bring their ideas to fruition.

I see this emerging in Seattle and the passion of “a few key individuals” who can help shift the game. Chris Devore & Andy Sack have created Founder’s Coop with the goal of funding, incubating & launching more early-stage ventures in Seattle. If you could convince a few young “wantrepreneurs” that there is a community that can support them & a safe landing if they’re not immediately successful you might have your next Amazon in the works. It’s a very cool vibe at Founder’s Coop. These two guys are part of the recipe for Seattle’s growth.

2. Passionate Entrepreneurs & Ambassadors
Stating the obvious but you can’t will a region into success. You need to have passionate tech entrepreneurs who want to build businesses locally. They have the same trade-off decisions that you do about packing up and moving to Silicon Valley vs. staying and building locally. The answer seems obvious (to move) but it’s not. When you account for competition for talent, the difficulty of retention, the cost of living and the difficulty of rising above the noise – there are many advantages of staying put. The advantages of moving are more obvious.

So you need Dave Schappell who is building an interesting business in Seattle called TeachStreet, a local-community initiative to connect teachers & students. Dave is ex-Amazon and is a tireless advocate for the Seattle community. He’s been steadily emailing me for the past 18 months with ideas for local entrepreneurs I “have to meet” and has been egging me on to spend more time in Seattle. He’s why I came this week.

Dave Schappell & Daryn Nakhuda rally the troops

He helped me organize a set of meetings with high-potential individuals and a dinner where we all debating how to increase entrepreneurial velocity. I re-connected with Andy Liu the founder & CEO of BuddyTV – the largest destination for social TV enthusiasts on the web. When I saw what BuddyTV is working on and how long they’ve been the market (since 2005) I realized that this has huge potential to help disrupt the television market. They haven’t launched their next gen product – watch this space. No Dave S. = no knowledge of what BuddyTV is up to for me.

Every community needs their “ambassadors” who build relationships with leaders from other communities, who convince these people to come visit the community, who help organize events with local teams to get the cross-city interactions and who create awareness for the local talent.

Dave is a potential key ingredient in the recipe for Seattle’s success.

3. Patron Companies
Seattle has something that many communities don’t have. It’s what I call “patron companies” and the local giants are Microsoft & Amazon. When you think about the success that is Silicon Valley, the unfair advantage is not just the huge amounts of available venture capital. When you start a company in the Bay Area you can often get your first biz dev deal done with Google, Facebook, Salesforce.com, eBay, Yahoo! or the countless other successful startup firms.

A key deal not only helps you raise venture capital but it can help attract employees, garner press attention, help with product focus & importantly drive customer adoption and/or revenue.

In Los Angeles we don’t have “patron technology companies” that are big enough to matter – we’re still hoping to see them emerge. But every time I talk with senior executives a the big studios or talent agencies I tell the same story,

“You know that your industry is being disrupted. What industry isn’t these days. You can be part of the creative destruction. You can help local entrepreneurs get their first deal done and the innovation ought to benefit you.

Sure, it might mean some of your employees or colleagues go to join the barbarians at the gate, but would you rather that innovation happen in your home town where you can play to your strengths or do you want your entire future industry to shift to Silicon Valley?”

This message is surprisingly well received. People do want to help. They just need a few key individuals who are willing to go out on a limb, take some actions and make things happen for them. They need somebody bending their ears. They can then direct staff, allocate budgets, talk to the press, connect you with politicians and attend events. A few key people really can make a difference.

And that is what is most disappointing about the feedback I’m getting about Seattle. It has the dual technology patrons and yet the consistent story I get is that they’re not actively out embracing the startup community, helping local successes emerge, getting comfortable with the symbiotic benefits of some employees going to startups that innovate at a different pace and then buying up local teams, talent & IP. They’re doing stuff – just not enough.

Seattle has its patrons. The neurons aren’t connecting to the startups. Somebody needs to make this happen.

4. Elder Statesmen
This is where I think the action on connecting neurons has to come from. Jeff Bezos (and executive team) have to recognize that it’s in their best interest to see the community thrive and the benefits to Amazon (not to mention Seattle) are far greater than any negatives of employee flow. Steve Ballmer, Bill Gates and other senior teams from Microsoft need to want to promote local startups. These kinds of connections seldom emerge from middle management who view the immediate threats more than the long-run benefits.

But Jeff, Bill, Steve and well as Howard Schultz, the executive team at CostCo, etc. are not likely to spearhead this movement. They’re too busy running their companies and literally changing the world. Who from Seattle has their ears? Who can get help get access to their capital? Who can get them to communicate the bigger picture message top-down to their teams to embrace the startup community and unleash local partnerships?

Without this – it’s a totally wasted patronage. Who will step up the way that Steve Case (founder of AOL) has done with Startup America to promote this initiative to politicians, business leaders and the press. Actually, who will get Steve Case to spend time in Seattle helping communicate the message to local leaders? It’s clear that America has a vested interest in promoting entrepreneurship in many regions in the country to stimulate innovation & job creation.

Who will be those key leaders who will step up and make a difference?

5. Playing to Your Advantages
Every region has its advantages and while not limiting innovation to local themes it seems to make sense to at least consider local advantages. It’s no big surprise that I spend a larger portion of my time in LA working on: disruption of television, performance-based marketing, games & mobile. We have unique skills, teams, experience and regional assets that give us a better chance of success than other regions.

In no expert in Seattle but when I look around I see: enterprise software (Microsoft), the market leader in cloud services (Amazon AWS), games (Xbox), some of the most innovative retailers in the country (CostCo, Starbucks, REI) and what is left of Boeing (HQ moved to Chicago). I’m sure there’s much more.

I’m not sure it makes too much sense to have check-in applications for restaurants here. That seems likely to be dominated by a more urban startup from NYC or from San Francisco. But who know? I’m just saying’ … what local assets do you have that load dice in your favor?

6. Marketing Muscle
It’s great to see an initiative like Seattle 2.0 because every community needs its local tech press to report on companies and run conference. Consider just how much exposure the Austin community gets every year due to SXSW. It’s awesome.

I’ve often talked about the NY advantage of having the NY Times, WSJ, Silicon Alley Insider, New York Magazine and even the editor of TechCrunch based there. Not to mention every major agency, many PR firms, etc. There is no question NY startups get disproportionate press.  That’s natural. Not to mention they have the highest profile VC / blogger Fred Wilson of AVC.

It was great to hear that in Seattle John Cook and company are solving this at GeekWire.  Every region needs its local media & events. In LA we have SoCalTech, for which I am grateful. It’s an awesome source of regional news. I’d LOVE to see it become more of a national vehicle. How do we make that happen?

I’m now getting about 400,000 views / month at BothSidesoftheTable. I don’t write about LA but I write from LA. It’s important. A few key people can really make a huge difference.

7. Local Angel Community / Recycled Capital
Fred Wilson wrote an eloquent piece on his blog about “recycling capital,” which every regional community should read. The magic that is Silicon Valley is that every tech entrepreneur who has made a bit of money chooses to “recycle” it by investing back into the startup community. There is a long tradition of these and it’s what formed the original angel network groups.

As I look at LA I see a lot of this reinvestment going on. There are great entrepreneurs like Evan Rifkin, Tom McInerney, Paige Craig, Diego Berdakin, Brett Brewer, Kamran Pourzanjani, Jarl Mohn and many, many more who have done several local Los Angeles tech investments. There are several “club deals” where you see the same sets of people “passing the hat” around on deals.

I know from all of my private conversation that they aren’t seeing this as a “get rich quick scheme” – they’re giving back to the community. And the truth is that they know $25-50k from them on a deal that they can help influence returns on is a lot better than handing it over to a money manager who is parking your cash in a vehicle you don’t understand.

I have done the same. I had the good fortune of doing one small deal that returned 6x in a year. So it was newfound capital I wasn’t expecting. I plowed it back into 9 deals. I prefer not to do any angel investments because I focus on my VC funds but it was gratifying to write some small checks to support local teams.

I know there’s tons of money in Seattle. Perhaps somebody needs to organize it a bit better to go into more angel deals. I know that Founder’s Coop has a fund as does TechStars Seattle. That’s one model. Perhaps some experienced tech entrepreneurs could formalize more of the Amazon / Microsoft money into a higher velocity of angel deals.

8. Venture Capital
And of course you need a mature venture capital industry. There are several local firms in Seattle like Madrona, Maveron, Ignition and others. But the consistent message I heard was “there’s not enough.” That’s why more VCs ought to be spending time in Seattle. It’s similar to LA in that there are a highly motivated cadre of tech savvy entrepreneurs wanting to create companies and a lack of funding. I’d bet if one is disciplined about investing here you’d see significantly better pricing than chasing deals in the overly competitive Bay Area corridors.

It’s not an either / or but both / and. But as I look at the GRP Partners returns we’ve made a lot of money investing in companies in New York, Chicago, Baltimore, Las Vegas, Arizona and Seattle. We won’t rush into the market but we’re very open to finding teams with the ambition to build big businesses. We know it can be done.

9. Foreign Direct Investment (FDI)
The other message I delivered to the room of entrepreneurs & investors at dinner the other night was that you need to think about equity from outside the region the same way that countries think about foreign direct investment. The inflow of capital can be transformative.

But what is often not talked about is that those investments lead to 8-10 board meetings every year of which it would be hoped that the “outside the region” VC would attend 6-8 of them in person. I think a series of brand ambassadors should find out when these VCs will be in town and organize evening events for them the night before so they don’t do a fly-in, fly-out visit.

Imagine if the ambassadors from Seattle organized a dinner with 8 entrepreneurs, the CTO of Amazon, the head of Xbox and the head of marketing for Starbucks. You mean to tell me that the VC wouldn’t fly in early for that?

With VC FDI the community gets more than money. They get time, commitment & attention. One deal begets more deals. If you’re already on a plane to Seattle 8 times a year picking up a second investment there is trivial. Get them over that first hurdle.

10. Time
And finally, it’s clear that to really build a regional community you need time. LA and Seattle are in the second (or third) major wave of technology innovation. We have all of the 2nd-time entrepreneurs from Overture, CitySearch, MySpace, etc. on to their next companies and that produced Demand Media, a public company who even with a slight recent reduction in share price is still trading at $1.3 billion.

Over the past 15 years Seattle has built one of the most interesting technology companies in the world. I’m still amazed at how forward thinking Amazon has been in cloud services – years ahead of Google, Salesforce.com, IBM, HP, Oracle or the countless other companies that should have been strong in this space.

It’s a shame that hasn’t translated into more local break-out successes, but if a few key people really wanted to put in the effort to make it happen I’m confident that Seattle could be a major force in the decade to come. That will be “the decade of the cloud” where it really starts to become a truly connect resource that continues to accelerate innovation.

Who’s in?

Adapt

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Tim Harford is a Financial Times columnist and the presenter of Radio 4’s More or Less, which won the Royal Statistical Society’s 2010 award for statistical excellence in broadcast journalism. He is also the author of several books, including The Undercover Economist. His latest is Adapt: Why Success Always Starts with Failure.

Cory Doctorow: First of all, some context — what’s the thesis of Adapt, and how does it refine, extend or improve upon The Undercover Economist?

Tim Harford: The Undercover Economist was a book about the economic principles behind everyday life, from the way Starbucks prices drinks to the rise of China. Adapt isn’t primarily an economics book at all — it’s a book about how complex problems are solved. (If ideas from economics help, great. But sometimes they don’t.)

That said, the two books start from a very similar place: describing the amazing complexity of the economy that produces the everyday objects which surround us. In Undercover it was a cappuccino, and in Adapt I describe a memorable project in which a student called Thomas Thwaites attempts to build a simple toaster from scratch. But in Adapt this complexity isn’t just a cause for a “wow, cool” moment — it’s a headache, because it’s a measure of the obstacles facing anyone who wants to solve problems in this very intricate, interconnected world.

Ultimately Adapt argues that the only way forward is experimentation, which can either be formal or ad hoc. Whether we’re talking about poverty in Nigeria or innovation in Boston, solutions tend to evolve rather than be designed in some burst of awesome genius. And then the question is — what do we need to encourage those experiments?

via boingboing.net

The two most effective incentives for crowdsourced work

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From a recent study looking at the most effective incentives for increasing answer quality from crowdsourced Mechanical Turk workers: both of the top two incentives relied on getting workers to think about what others’ answers would be:

Punishment Agreement (financial)
“After this HIT has been completed, we will review the answers for at least one of the following five questions. For each of the questions we review, we will penalize you if you disagree with the majority of other workers who complete this HIT. The penalty will be a deduction of 10% from the total bonus you could have earned if your answer had agreed with the majority.”

Bayesian Truth Serum or BTS (financial)
“For the following five questions, we will also ask you to predict the re- sponses of other workers who complete this task. There is no incentive to misreport what you truly believe to be your answers as well as others’ answers. You will have a higher probability of winning a lottery (bonus payment) if you submit answers that are more surprisingly common than collectively predicted.”

Read the full paper here. [PDF]

via boingboing.net

Prehype helps companies execute on “20% projects”

Prehype aims to come into a company and identify its “intrapreneurs.” Then, they will host the employee or employees a la Google’s 20% time, building a new company outside of the original company. Another way it works is if an employee has an idea and seeks out Prehype. Prehype will then help them convince their company it’s a good idea. If successful, they will spend the first four weeks planning and fleshing out the idea. In either case, the goal is to build something magnificent and sell it back to the bigger company.

“When we set out, we have this concept of an intrapreneur. It’s pretty easy to spot them. It’s the person who’s been there for a couple of years. The person in the meeting who raises their voice and has ideas that people listen to. They feel comfortable about asking the slightly silly questions and making sure everyone is on board,” says Prehype’s Philip Petersen.

Prehype spends a total of 12-14 weeks building the company, leveraging an external network of developers and designers. The idea can be big or small. Prehype only cares about it being successful. After the project has been greenlighted, they start building and Prehype ensures that the project is managed well for the engineers. Like any startup, pivoting is expected, but Prehype tries to keep it to a 3 month-long schedule, which forces the entrepreneur to limit his or her idea.

“It’s a lot about the process rather than the actual product. A lot of people think we’re an agency when we get into the corporation. So, we use the American Idol metaphor, in that it’s partly the process that helps create the winner. It’s a notion of going through a process where we have an idea of what the product will be but also leaves room for growth, as with any startup out there, we expect a healthy amount of pivoting based on feedback from real users before the end product is born,” says Petersen.

While it’s completely project dependent, if the company buys or spins out the new company, Prehype generally gives 20% of the money back to the entrepreneur(s) and the rest is split amongst Prehype’s partners and the developer and designer pool accordingly. Prehype doesn’t charge for the production, other than a flat management fee that is normally around $25,000 per month.

Interesting model — companies outsource the development and execution of innovative Google-style “20% projects” to Prehype for a fixed fee, ownership is shared after launch. Having clear and friendly ownership terms seems crucial here — I will be curious if this version holds: “If the company buys or spins out the new company, Prehype generally gives 20% of the money back to the entrepreneur(s) and the rest is split amongst Prehype’s partners and the developer and designer pool accordingly.”

Building companies on top of tech infrastructure

The East Coast tech-scene is booming because we are going through a phase where experience design, clever new business models and distribution is becoming as important as the technology itself. The new East Coast growth companies are standing on the shoulders of the tech platforms that the West Coast has built over the past decade such as easy-to-use infrastructures like Amazon, discovery tools like Google and Facebook’s social graph. While companies like Esty, Groupon and Gilt Groupe are considered technology companies, they are really just smart, new innovative companies – built on top of technology. I imagine that New York’s access to talented designers, marketers and business developers will continue this trend.

Insightful quote from Henrik Werdelin, founder of Prehype, on the rush of innovation happening in consumer-focused web startups in New York.

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