Vision & Execution’s Weblog

Creative Destruction to Ensure Value Creation

visionandexecution — Wed, 11 Jan 2012 04:41:58 +0000

Despite the pipeline of 60 venture-backed companies currently in registration for IPO in 2012, M&A is still the most common exit for most startups. And prognosticators forecast an improving M&A market after the slowdown in the 2^nd half of 2011. So how do companies who position themselves for acquisition and those who acquire them deliver on the value they anticipate. Industry data reminds us time and again that the failure rate for mergers and acquisitions hovers between 70% and 90% despite the annual $2 trillion spent every year.

A key criterion for success when acquiring for innovation’s sake, as opposed to scale economies, is laying the foundation for fundamental change in both the business model and the organizational culture. Buying what could be considered disruptive or bleeding edge IP or products means that business as usual doesn’t cut it. Few companies who go on buying sprees soften the beachhead internally for the degree of change required. Incentives and other management metrics are not aligned in advance with the potential of the new technology so old and new management are caught in the crossfire while making important strategic decisions about budget and other business priorities.

Achieving the potential business value of an acquisition means losing the emotional attachment to the cash cow business(es) that enabled the acquisition in the first place. It requires a clear understanding of where the creative destruction within the organization should occur and puts incentives in place for the organization to create a new business from the ashes.

Let Vision & Execution work with your teams to facilitate decisive action around new business models and product roadmaps as you plan for or seek to integrate innovative acquisitions.

Will Consumer Sentiment Support Your Growth Goals?

visionandexecution — Fri, 23 Dec 2011 04:32:36 +0000

Despite the bearish predictions for the economy from 2012 prognosticators, according to the December Economic Conditions Snapshot research sponsored by McKinsey, executives are more optimistic than they were in September. Although not as optimistic as they were in June, the majority of North America executives expect corporate profits to rise; other regions are more conservative. Concerns over low consumer demand appear to have executives holding off on M&A activities and capital investments.

Consumer demand presents greatest concern for economic growth

If concerns about low consumer demand hold true where will companies achieve their growth? Market share! Companies who better understand customer needs and deliver their solutions more effectively will stand to gain from their competitors. While an obvious statement, it’s amazingly difficult to execute. Systems, internal folklore, and politics all get in the way of staying focused on customers and meeting or exceeding their expectations. As you think about your New Year’s resolutions, why not resolve to break down one of these barriers to growth?

Vision & Execution specializes in identifying how to address the customer needs that will propel your business forward.

The missing funding phase or the Commercialization Valley of Death

visionandexecution — Tue, 06 Dec 2011 04:10:36 +0000

I recently attended a conference on Financing Innovation sponsored by the Financial Times and the Stanford Graduate School of Business. A missing topic was the funding of technology commercialization – or moving inventions out of the lab and prepping them for market readiness. A brave soul stood up and asked the question and got the pat response “There’s too much risk, and in this economy who wants more risk?”

The public sector, and the occasional foundation, have striven to fill the void between research projects and startups poised to generate cash flow. Securing funding from the public sector, however, is an arduous and expensive activity. How does the average research team or startup find the funds to move out of the lab and prepare for market entry? Even with these government and university funds there is still a significant gap in funding technology demonstrations — from proof of concept prototypes to commercially viable prototypes that could prove the business case for the new technology –leaving many wonderful innovations stuck in no man’s land. Most of these are technology commercialization programs are university based but in some states there are organization designed to support inventors through the process of securing SBIR and other government grants to help advance research projects to market ready products.

It seems we need some innovation in helping to fund the more capital intensive research and inventions. In the meantime, here’s what’s happening in your state to try to bridge the funding gap.

Let Vision & Execution help you identify the potential market opportunities your research represents to facilitate your ability to raise the additional funds you need.

Optimism by retrenchment? Where are the strategies for sustainable growth?

visionandexecution — Wed, 15 Jun 2011 17:30:52 +0000

The June 2011 McKinsey Global Survey on Economic Conditions suggests that executives expect to achieve corporate profitability despite lower expectations for their national economies to rebound. It appears that despite no growth in capital expenditures and stable or decreasing workforces that companies will increase their profitability. Well profitability yes, perhaps, but not top line revenue – fewer expenditures plus expectations for a reduced risk for inflation should keep costs in check.

In a separate piece of analysis by McKinsey – Sustaining top-line growth: The real picture – their data showed how tough it is to beat the market. Exhibit 2 shows that corporate revenues, on average, tracked neatly with overall market conditions. So how will your company beat the market, or are you content to ride the wave?

If you’re looking to beat the market, please contact Vision & Execution to hear about our many tools and services to help your drive strategic growth.

Vision & Execution helps companies align your marketing and sales initiatives with customer value to achieve your sales goals. We delivers the insights you need to leverage marketplace realities to drive higher sales with greater profit margins. We provide you with the strategic and tactical plans to achieve your growth objectives. Our broad business and technical acumen put you on track to realize your full revenue potential.

Top 2011 trends

visionandexecution — Sat, 15 Jan 2011 15:57:29 +0000

Happy New Year from Vision & Execution! We hope 2010 exceeded your expectations and that 2011 looks even better.

What do the prognosticators say about 2011? Will it be better or worse than 2010? What industries and, for that matter countries, are expected to prevail? It was quite interesting to take a survey of 2011 predictions…the topics of the predictions were generally more insightful than the predictions themselves. Some recurring themes…

Here are some interesting sites to check out for more detailed predictions:

On the economy:

On innovation

On social media

On technology

CNN Tech
Trend Hunter
Infoworld
McKinsey (from August 2010 but still relevant)

On cleantech

On mobile

On business analytics

Perhaps the most interesting report about 2011 predictions were those made 70 years ago by seven 1931 Visionaries.

What trends or predictions will impact your business? And, how can we help?

How do you innovate your process for sourcing innovation?

visionandexecution — Thu, 21 Oct 2010 23:48:39 +0000

McKinsey & Company released their latest Global Survey – this one focused on Innovation and Commercialization. There were many significant highlights from their research. Below are a few that stood out for me.

50% of businesses expect to achieve growth outside of their core business – 32% by growing beyond the boundaries of the core business and 16% by growing as a result of adjacent opportunities. In either case half of the companies surveyed are looking outside their comfort zone for growth. What is problematic with this goal is that most companies don’t change their process for inputs. Or, in other words, companies don’t change how they generate innovative ideas and collect data about the likelihood for market success for new innovations. It’s the same one day fly in – brainstorm – prioritze – fly out process that regurgitates all the projects that were previously killed. Garbage in, bad products out.

Over 60% of companies acknowledged that they are not good at commercializing new products or services. The challenge McKinsey identified appears to be in handing off ideas to those who would convert these ideas to commercially viable products. Companies appear to have a significant talent gap in finding folks who can translate vision into reality…that’s not surprising since most folks are good at one or the other. But it may also be a factor of garbage in, bad products out.

Another issue associated with the successful handoff of new ideas to market reality is picking the winners; 43% said their top challenge was choosing which ideas to move forward. Not surprisingly 40% use an ad hoc process to make these commercialization decisions and 77% do not address these decisions at corporate leadership meetings as a regular agenda item. New ideas don’t just surface during the annual strategic planning process – this needs to be well-funded ongoing initiative.

Vision & Execution has experience helping companies improve their inputs. We run innovation workshops that help shake up corporate mythology about what business a company is really in. When you rethink the way you define the business you’re in, you increase your clarity about where to expand your business. We also help companies use the plethora of web-based solutions designed to actively engage customers and innovators outside the organization to vet or enhance new ideas. And lastly, we help companies implement expedient ways of sizing and categorizing market opportunities to help senior management prioritize which products or pieces of a product to bring to market first.

Where’s the funding for Basic Research?

visionandexecution — Wed, 09 Jun 2010 14:05:58 +0000

After attending Nordic Green II and Building Innovation Bridges between US and Europe, I became curious about just how much the US spends on basic research and where does it go. Turns out our government publishes this data and it’s really quite interesting.

From the National Science Board’s 2010 Digest on Key Science and Engineering Indicators, I found the following fascinating facts:

Basic vs. Applied Research Funding Sources

In the US, unlike most other countries, industry is responsible for the bulk of R&D investment and has been since 1980. In 2008, 67% of the estimated total was sponsored by industry followed by 26% from the federal government and the remaining 7% from educational institutions and other non-profits. The majority of the industry funds (78%) are for applied research and development while basic research gets 60% of its funding from the federal government.

Volume vs. Intensity vs. Velocity

Globally, the US in sheer dollar value, spends the most on R&D estimated at $398 billion in 2008. The rapidly growing R&D expenditures of the Asia-8 economies (China, India, Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand) surpassed those of the EU-27 in 2003.

When it comes to R&D intensity – how much of a country’s economic activity (gross domestic product) it reinvests – Asia takes the lead. The Asia-8 have increased their intensity with South Korea committing 3.5% of its GDP followed closely by Japan at 3.4% of its GDP. Both the EU-27 and the US have remained steady and well below the 3% mark.

The Asia -8 economies growth rates for R&D often exceeded 10% and in China’s case, 20%, annually over the period 1996–2007. Comparable R&D growth rates for the United States and the EU-27 averaged single digits — 5%–6%. Surprisingly, only 5% of China’s R&D is in Basic Research

Why is this significant?

As noted in the Proceedings of the Sino-US Forum on Basic Science for the Next Fifteen Years, numerous economic studies have indicated that up to 50 percent of economic growth can be attributed to research and development (R&D), with basic research as the driving force. These analyses also indicate that the social rate of return on investments in basic research is twice the private rate of return, suggesting that government is more likely to invest in basic research than private industry, and also that government investments leverage substantial research investments from other sources, primarily industry. Basic research is also essential in teaching new generations of scientists and engineers about the detailed assumptions and processes of science, no matter what their ultimate career choices turn out to be. In particular, individuals who have received basic research experience at the PhD level constitute a key resource for translating scientific results into economic growth.

It’s interesting to note that Obama’s 2011 budget plans for a 3.5% decrease in applied research funds while it increases basic research by 4.1%…assuming the budget gets passed. The total amount has remained relatively stable despite multiple administrations, with the exception of the 2009 blip for the American Recovery and Reinvestment Act. This is not the way the US will remain competitive in the global economy.

US/European Innovation Bridges Exist but Where’s the Traffic?

visionandexecution — Thu, 03 Jun 2010 15:20:41 +0000

In Silicon Valley we have a plethora of international trade organizations ensconced to help facilitate business among US companies and investors with foreign companies wishing to enter the US market. I’ve noted that the longer the trade organization has a had presence in Silicon Valley the greater success they’ve had in transferring knowledge back to the home country for the benefit of their local entrepreneurs. Yet, no one has been able to replicate the success of Silicon Valley and the relative ease with which successful new companies are created in the US. There are many cultural reasons why Silicon Valley exists and remains the largest entrepreneurial ecosystem in the world. Risk-taking is a major factor…the US is more tolerant of failure than most other countries and more importantly there is significantly more upside to taking risks through better exit opportunities in the US. But what are the advantages for US companies to go outside their home country? What can these trade organizations offer to US entrepreneurs that can facilitate knowledge transfer…teaching entrepreneurialism to the home country while transferring technology knowledge to the US companies? Many of these countries function as venture capitalists but are they proactively drawing the best US entrepreneurs to partner with local companies or research institutes to fund rapid commercialization of new technologies? How do we facilitate two way traffic to enrich entrepreneurs in every country? And if they were to succeed how long would Silicon Valley sustain its competitive advantage?

In cleantech, every solution needs to solve more than one problem…

visionandexecution — Tue, 18 May 2010 12:50:10 +0000

When asked to define Cleantech I usually count off using my fingers to make sure I’ve listed the myriad of industries captured under this umbrella term. Each industry is redefining business as usual to reduce its impact to the environment. Despite sharing a common moniker these industries mostly work in isolation from each other – much to our disadvantage. At Nordic Green II there was broad representation from each of cleantech’s subcategories as companies, commissions and experts updated us on the progress being made by Scandinavian countries. The need for synergy among these industries was identified and well illustrated by Sweden’s Energy Agency in a fun simulation game called SymBioCity. As a mayor for the day you gain an appreciation of how challenging it can be to integrate these industries, and what trade-offs you need to make to increase energy efficiency and optimize utilization of other natural resources all while reducing the carbon footprint of this make-believe city.

While the event kicked off with this holistic view, the numerous presenters seemed to be developing very exciting cleantech innovations in isolation from broader resource or climate affecting issues. Unfortunately I cannot point to any good examples of synergies among cleantech industries outside of Sweden. Can you?

Who takes the risks? The payoff in social responsibility…

visionandexecution — Tue, 11 May 2010 12:41:03 +0000

The nearly 40 year lead that the Nordic countries have on the US in clean technology is a direct outcome of a socially responsible decision by national governments which drove investment in basic research. At Nordic Green II, it was striking how advanced the Nordic countries are when it comes to clean technology innovation. The results are compelling. While the US is hard at work to make up the difference, and we bring many resources to bear on the issues at hand, it will be a costly exercise to match the Nordic success.

What is the cost of playing catch up?
• Korea: “Green New Deal” ? $46 billion over 5 years
• Japan: invests $63 billion over 5 years
• US: plans to invest $172 billion over 5 years
• China: invests $440 billion over 10 years

Fortunately for the US, industry is playing a critical role in funding cleantech ventures: the US represented 21% of 2009 VC investments as compared to China at 14% and India at 6%.

What are other risks we should be taking now? In cleantech? In healthcare? Or In education? Where are the next disruptive ideas for socially responsible innovations?