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STOKING THE FIRESPractical guide to creating your own Skunk Works & driving innovation from within

Nicholas L. Holland, Director of Product

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STORIES OF DISRUPTION ARE EVERYWHERE…

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MARKET MAKERSNOT JUST SHARE-TAKERS…

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TIRED OF PLAYING DEFENSEREADY FOR OFFENSE

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TECHNOLOGY EXPLOSION(specifically, digital…)

• Emerging solutions

• Evolving business models

• Changing customer behavior

• Erasing previous advantages

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TRANSFORMATION & REINVENTION TO EMBRACE DISRUPTIONThese aren’t scary words

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INNOVATORSDILEMMA(you can’t read this enough…)

Successful, established companies are

prisoners of their success. They can

neither withdraw from their profitable core

business nor are they able to assert

themselves in small, emerging markets

with uncertain prospects for success due

to their processes and structures

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I SENT HELPTHREE TIMES!… you weren’t listening

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INNOVATION IS A MEANS TO AN END...

“He who knows others is

wise; he who knows

himself is enlightened.”

― Lao Tzu

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• Diversify Revenue

• Explore business models

• Solidify your position

• Respond to competition

• Disrupt yourself

• Avoid disruption

• Provide fresh ideas

• Increase growth

• Attract & retain Talent

• Transform Culture

• Open up new markets

The many values of Innovation

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• Diversify Revenue (save / make)

• Explore business models (save / make)

• Solidify your position (save)

• Respond to competition (save)

• Disrupt yourself (save / make)

• Avoid disruption (save)

• Provide fresh ideas (save / make)

• Increase growth (make)

• Attract & retain Talent (save / make)

• Transform Culture (make)

• Open up new markets (make)

The many values of Innovation

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YOU SHOULD ESTIMATE THE COST OF NOT INNOVATING

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Avoid Innovation Theater

Unless you just want to feel better...

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“CORPORATIONS FOCUS SO MUCH ON EXECUTION THAT THEY FORGOT HOW TO INNOVATE”- Steve Blank

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SKUNK WORKS…Cool name for a Corporate

Innovations Lab

• Lockheed Martin

• 1943 - Today

• Secretive Projects

• Up to 4 Decades to develop

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SKUNK WORKS…Cool name for a Corporate

Innovations Lab

• Small Team

• Autonomous

• External to Bureaucracy

• Advanced mission

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CORE PRINCIPLES OF INNOVATION And knowing thy enemy

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SpeedRapid Iterations & Reactions

vs.methodical, stay the course until told otherwise

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AgilityMake & Act Upon Decisions Quickly

vs.run things past others, periodic planning/approval

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FearlessComfortable With Known Unknowns

vs.desire to de-risk, protectionism, avoiding failure

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ExperimentalRepeatedly Testing Hypothesis With Data

vs.stick to the plan the group agreed upon

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StreamlinedNo Bureaucracy Or Red Tape (more speed)

vs.hierarchy, CYA, check with legal / other departments

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EmpoweredPersonal Ownership, Speed Of Decisions

vs.seek consensus, get management blessing

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FocusedClear Definition Of Success (1-2 key metrics)

vs.whiplash to whatever the executives fear

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ConstrainedNecessity Is The Mother Of Invention

vs.“fat startup” with plenty of resources & no consequences

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“A STARTUP IS A COMPANY DESIGNED TO GROW FAST”-Paul Graham

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1. Don’t build services for money, but make money to build more services

2. It's not about you, it's about what you do for customers

3. Stop focusing on limits, focus on possibilities

4. Speed kills… The Quick Shall Inherit the Earth

5. Greatness & comfort rarely co-exist

6. 20/20 Vision - Short view + Long view

7. Disrupt yourself or someone else will

NOTHING FUNNY ABOUT STARTUP CULTURE

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BOTTOM LINECustomers don’t care if you’re a

startup or corporation. They only

care about the value you provide

to them

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SO LET’S RECAP(context before tactics)

● Recognize “Innovate or Die”

● Embrace Reinvention

● Place a value on Innovation

● Explore through Skunk Works

● Honor Innovation Core Values

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TACTICS… LET’S DO THIS!

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IF YOU DON’T HAVE A BIG GOAL YET, THEN START BY LEARNING & ASSESSINGChoose the mountain you want to climb

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INNOVATION OUTPOSTPhase 1: ‘Sense’ the market

• Learning & Exploring

• Located in Innovation Clusters

• Trends & Technologies

• Competitors

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INNOVATION OUTPOSTPhase 2: ‘Respond’ to

observations

• Invest

• Incubate

• Acquire

• Partner

• Invent

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“I HAVE NOT FAILED. I JUST FOUND 10,000 WAYS THAT WON’T WORK”- Thomas Edison

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LET’S BUILD SOMETHING

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1. Executive Support

2. Protected Budget

3. Small Team

4. Entrepreneurial Leader

5. Periodic Check-ins

6. Short term wins, Audacious Goals

CRITICAL ITEMS FOR KICK OFF

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You Need The CEO(Real support, not Lip Service)

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Make a Real Investment

(appropriate funds or all is lost)

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Small, Autonomous(Minimal Dependencies)

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THE TEAM IS CRITICAL (Game is won/lost here)

• Entrepreneurial

• Transformative

• Bold + Fearless

• Challengers

• Customer Obsessed

• High GSD Factor

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CAREFUL HOW YOU STRUCTURE COMPENSATION

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SCIENCE FAIRBi-monthly showcase for team to

show progress, discoveries, and

impact

Repeat the Mission

Identify the Pain

Demonstrate Solution

Show Customer Impact

Explain Corporate Impact

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IMAGINE IF YOU HAD NO MEETINGS HOW MUCH WORK YOU’D GET DONE…Meetings must die

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LEAN STARTUP METHODOLOGY(Ironically, Better for

Corporations)

• Problem

• Solution

• Key Metrics

• Unique Value Proposition

• Unfair Advantage

• Channels

• Customer Segments

• Cost Structure

• Revenue Streams

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Perfect is the Enemyof Done

(Plus, nobody is perfect)

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Always Be Shipping Iterate, Observe, Iterate (quickly)

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OODAThe faster you make this loop, the

faster you innovate & surpass the

competition

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MAKE HAMBURGERKill the Sacred Cows

Solve for the customer, not

the corporation!

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LET THE INNOVATION SEEP INTO YOUR LEADERS, THEN IT FLOWS THROUGH YOUR ORG

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ALL OF THIS IS REALLY HARDThe corporate forces that stifle

innovation will most likely kill your

Skunk Works by sucking it back into

machine

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You are too small(you can’t afford a separate team)

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Lack of Talent(wrong people, wrong internal development)

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Conflicting Missions(Avoid ‘default corporate winner’)

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BEWARE THE UNINSPIRED COMPROMISE… IT IS THE ROAD TO DEATH#1 reason to keep input circle small

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KEEP THE PRIORITY:CUSTOMER > EV > TEAM > ME

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MUTUALLY AGREED UPON EXPECTATIONS (Between Skunk Works & Execs)

• Goals

• Metrics

• Timeline

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MUTUALLY AGREED UPON EXPECTATIONS (Between Skunk Works & Execs)

• Disruption?

• Customer Solution?

• Indefinite?

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CAREFUL OF ‘THEM VS US’INNOVATION ISN’T A MONOPOLY

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1. Do we agree on honoring innovation while executing

2. Do we agree on the mission

3. Do we agree on the metrics

4. Do we agree on the budget & runway

5. Do we agree on the leader & team

6. Do we agree on how we extract value

INNOVATION ALIGNMENT

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• STREAMLINED

• EMPOWERED

• FOCUSED

• CONSTRAINED

TEAM CORE PRINCIPALS• SPEED

• AGILITY

• FEARLESS

• EXPERIMENTAL

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• Diversify Revenue (save / make)

• Explore business models (save / make)

• Solidify your position (save)

• Respond to competition (save)

• Disrupt yourself (save / make)

• Avoid disruption (save)

• Provide fresh ideas (save / make)

• Increase growth (make)

• Attract & retain Talent (save / make)

• Transform Culture (make)

• Open up new markets (make)

The many values of Innovation

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TRUE FAILURE COMES FROM LACK OF LEARNINGThere are so many ways to extract value from a Skunk Works beyond core mission

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THANK YOU.

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