As a CTO I have been fortunate to work in a multitude of organizations, small start ups that went on to become medium sized businesses before completing an IPO to grow even further, and large enterprise organizations where stability was favored over growth. There is a correlation between organization size and the ability to execute and absorb change and the level of risk that is acceptable in any new venture proposal that responds to change. In general the larger the organization the slower it is to change direction and the higher the aversion to risk. I say in general because there are always exceptions, Microsoft and it's response to the Internet comes to mind as an exception to this rule. It's important in my job to understand these dynamics in order to successfully propose and execute changes in direction and manage to an acceptable level of risk in the process. In larger organizations venture activities generally take two forms:
- Business Case
The most common form is putting together a business case for a venture.
Let's say you work for a media company that is very slow to change, in fact in the last 2 years they have come to the conclusion that they have to come up with a strategy for the Internet. Most of their content is currently delivered in print or online in text formats. You have market data showing that 75% of your customer base will retire in the next 10 years to be replaced by prospects (hopefully to be customers as well) coming from the XY Generation. These prospects have a very different relationship to technology, they live and breathe it, and they are accustomed to information being delivered in multimedia formats. What is needed here is a new venture to move the companies products to the next generation technology. This will be a significant investment and involve many touch entrenched and slow to change members of the organization. This fits the business case profile, where a positive ROI will have to be demonstrated to many stakeholders in the organization. You should expect the business case process to take some time.
First the appropriate business case has to be developed, than the decision makers / stake holders have to be identified. The value proposition, or the specific highlighted value proposition, may change depending on the stake holder(s) audience.
Second the funding source needs to be identified. Even though the stake holders have been identified, or perhaps there is an Investment Committee that serves as the stake holders, the funding source may be a different set of people. In large organizations the funding source isn't necessarily an account sitting at the bank with a stack of cash in it, it may be a business unit whose investment in the venture comes at the expense of the bottom line, with the organization as a whole sanctioning the investment by relieving the requirements for budgeted profit contributions. A prototype and market verification is usually required, especially in risk averse organizations. This will necessarily be a limited, fraction of the final investment but will drive risks associated with the venture to the lowest level possible.
Finally, attention should be given to budget cycles. Large organizations rarely take on unbudgeted investments during the year, waiting instead until the next budget cycle to include them. This could mean failure for ventures relying on time to market and sales windows with defined calendar cycles. Even though the prototype and market verification are a resounding success and prospects are beating down your door with preorders, if you are out of the budget cycle you may have to wait until next year to request the funds. During the funding of the prototype it's always good practice to request an earmark in the budget for the full funding should the market react positively to the prototype.
This from Wikipedia - Skunkworks is a term used in engineering and technical fields to describe a group within an organization given a high degree of autonomy and unhampered by bureaucracy, tasked with working on advanced or secret projects.
Or alternatively a skunkworks is a team that works on a project in a way that maybe outside the rules and maybe under the radar of management, they do it by leveraging their expertise to achieve success for the company for which they work. A good example of a skunkworks that had a huge impact on a large organization can be found in an excerpt from the book Inside Out , a book written by and for Microsoft employees that highlights the products, people and culture that transformed Bill Gates' and Paul Allen's vision for personal computing into reality. In this excerpt titled ""I Found a Cool Little Problem That I Just Couldn't Resist Solving", David Weise, Project Leader, Microsoft Research recounts the skunkworks project that led to the ground breaking introduction of Windows Protected Mode. As he puts it "...putting Windows into protect mode was more of a personal project. Hey, it was Bill and Steve's company, and if they had wanted a protect-mode Windows, they'd have asked for it. But they didn't. My scheme was to get it running, then tell Steve, and if he wanted to kill it, he would."
Skunkworks projects don't necessarily circumvent all of the bureaucracy that causes large organizations to change direction so slowly, but it does jump start the process and acts as a catalyst for change, moving the ball much farther down the field than if the venture were proposed in the business case approach.
"When you are finished changing, your finished", Benjamin Franklin
Post a Comment