Why Corporations Are Turning to Digital Accelerators For Leadership & Innovation

Why Corporations Are Turning to Digital
Accelerators For Leadership & Innovation
NUS-ISS Digital Leadership & Innovation Conference 20 November 2015
Hugh Mason, CEO, JFDI.Asia Pte Ltd hugh@jfdi.asia http://jfdi.asia

JFDI.Asia URL: jfdi.asia
Blk71 Ayer Rajah Crescent #05-16
Coming Up
Introducing JFDI
1. The Startups Are Coming
2. Making Sense of The New Reality
3. So How?

Introducing JFDI
● Founded in 2010 by Hugh Mason (49, PR)
and Wong Meng Weng (39, Citizen)
● First ASEAN startup accelerator, backed
by IIPL, Fenox VC, Family Offices, HNWI’s
● Attracted over 2,000 startup teams
from 80+ countries. Supported 250 teams
via MOOC at pre-accelerator stage,
● USD2m pre-seed capital deployed into
69 startups, >50% raised median USD550k
● Over 300 jobs created, >50% of which are
in Singapore and >50% filled by SCPRs. JFDI’s own staff of 16 split Singapore-Philippines.
● No exits yet but 48% IRR (unrealized). However initial equity-only model limits value
capture and time to realize value is too long for operational sustainability.
● Now raising capital to a) build on learning, b) pivot to new model yielding fees + equity
+ options through co-creation with industry partners and c) reduce costs by offshoring.

JFDI Clients, Investors & Partners

1
The Startups Are Coming

OMG Startups Can!!!!

All Hype?

Leaders Grieving for a Golden Age?

Heroes to Zeroes?

Schadenfreude

Something Has Broken
Short Term: How to keep telling an innovative story to the analysts when the numbers are flatlining?
Mid Term: How to start shaping, acquiring or getting in on innovation at a reasonable price?
Long Term: How to avoid getting disrupted, change culture to a future orientation and stay relevant?

Corporations Are Fading, Faster Than Ever
Average lifespan has decreased from 61 years in 1958 to 18 years today

Financial Services are Unbundling

Healthcare Too

The Startups Are Coming

Unbundling Hits Products Too

The New Reality
Founded: 1916
Market Cap Today: $99.37B
Culture: Minimise Risk
Innovation Style: Incremental
Founded: 2003
Market Cap Today: $28.95B
Culture: Maximise Opportunity
Innovation Style: Disruptive

“After This, There is no Turning Back”
"You take the blue pill, the story ends. You wake up in your bed and believe whatever
you want to believe. You take the red pill, you stay in wonderland,
and I show you how deep the rabbit hole goes."

2
Making Sense
of The New Reality

“A startup is a temporary
organization designed to search for
a repeatable and scalable business
model”
- Steve Blank
“A fixed-term, cohort-based program,
including mentorship and educational
components, that culminates in a public
pitch event or demo-day”
- Susan Cohen
Some Definitions

Trend 1: It’s Cheap to Try Out Tech Ideas
Cost to launch a Tech Startup Source: Upfront Ventures

Trend 2: There’s a New “Science of Startups”

JFDI
Discover
JFDI
Validate
JFDI
Accelerate
Individuals
Teams
Problem
Statement
Minimum
Viable
Prototype
Traction
Seed Stage
Startup
Series A
Stage SME
Startup Weekends, Hackathons
Product Development
Customer Discovery
Growth Hacking
Demo Day

1. Discover 2. Validate 3. Accelerate

Trend 3: We Can Accelerate Success & Failure

Trend 4: New Mindset
● Design Thinking
● Lean Startup
● Agile Methods
● Launch and Learn v Plan
and Perfect

Trend 5: Tech2Market or Market2Tech?MarketRisk-Shoulditbedone?
Technology Risk - Could it be done?LOW HIGH
HIGH

Trend 5: Tech2Market or Market2Tech?MarketRisk-Shoulditbedone?
Technology Risk - Could it be done?LOW HIGH
HIGH
“Teams that … took the Lean Launchpad
class ... had a 60% success rate”
(Blank 2013)

3
So How?

In Five Years It Will Probably Seem Obvious
Conceptualization Iteration Implementation
Startups
Agile, Nimble, Fail Fast
Corporations
Scale, Leverage, Distribution, Can’t Fail

1. Denial
2. Arousal
3. Infatuation
4. Over -
Confidence
6. Acceptance
“What’s a startup?”
“My CEO read about startups in Forbes.”
“We should set up a fund.”
“People will give us valuable IP for nothing!”
“Let’s sponsor a hackathon!”
“This is so much more fun than work.”
“Look, analysts ... shiny things!”
“This looks easy. Let’s do it in-house.”
“Our middle managers can all be mentors.”
“Order more post-its and disruptive T-shirts!”
“You can be an ‘intrapreneur’ too!”
“Until it makes $50m it doesn’t move my needle.”
“The operating units aren’t interested.”
“This all needs tightening up. Bring in PwC.”
“We have a role and startups have theirs.”
“We need a mature engagement model.”
“Maybe we don’t need to dominate this process.”
5. Disappointment
Six Stages of Innovation Awakening

Corporate Innovation Starting Points
JFDI Delivers
● New Product &
Service Startup
Businesses
● Capital growth
● Pre-emptive
investment rights
● Early access to a
diverse portfolio
● A more innovative
company culture
● Brand affiliation with
innovation
● Innovative talent
identified / acquired
● Deeper staff, client
channel engagement
JFDI Solutions
● Themed accelerators
● Venture building
● Venture scouting
● Fast follower labs
● Mentoring
● Sponsorship
● Innovation events
● Innovation showcase
● Co-locating staff &
startups
● Collaborative
Innovation events
● Innovative client
experiences
Problem: How to ...
● Get Access to Digital
Investment options?
● Outsource innovation
to generate new kinds
of value?
● Inspire internal
innovation?
● Do Professional Staff
Development?
● Demonstrate an
innovative culture?
● Farm speculative
investments?
● Expand scope of
products & services?
● Pay it forward?

Execution is All

“Start with the end in mind” - Steven Covey
● Customer - Supplier
Corporate sources products or services from a startup to enable
efficiency or to extend functionality of its own processes, products and
services
● Distribution Partnership
Corporate leverages its partners and networks to offer distribution to a
startup for its products and services
● Development Partnership
Corporate and the startup co-operate to execute R&D
● Joint Venture
Corporate and the startup develop a new project together based on the
expertise and interests of both parties
● Direct Investment
Corporate takes shares in a startup still under development
Many Possible Ways To Co-Create Value

Model 1: The Skunkworks
● Lockheed Martin, 3M,
Intel, AWS
● Waterfall style- slow to
market
● Not conducive to
disruptive innovation
● Insufficient for
unpredictable market
shifts and competition

Model 2: Inspiring Intrapreneurship
● Aims to commercialize employee ideas
● Widely publicized to boost employee
morale and promote innovation
● Waterfall style- slow to market
● Tend to be driven by existing business
units rather than disruptive innovation
● Internal politics may be an issue
● Qualcomm Venture Fest
● Employees didn’t know how to move
projects forward

Model 3: Internal Innovation Labs
● “Start-up style” for salaried
employees
● Not equipped to scale their
successes
● Mercy at the quarterly budgets
● Budgetary and political pressure
for promising projects
● Xero PARC

Model 4: Hackathons
● Events
● Morale-booster
● Short term
● No real products

Model 5: Innovation Colonies
● Corporate accelerators
● Separate locations
● Lean (small) budgets
● Fast to ship
● Market Valuation
● Skin in the game
(equity)
Source: Lean Enterprise by Trevor Owen

Model 6: Co-Creation
Theme
Selection
Session
Discovering
Problem
Statements
Ideation
Workshop
with Partners
Acceleration
Definition of targets
Technological
domains aligned with
Sponsor focus areas
Validation
1 day 1 month 2 months2 x Workshops 3 months or more
Identification of 25
problem / market
needs statements by
JFDI
Problem statements
are field of ideation
and will be agreed
with Sponsor
Ideation between Sponsor,
JFDI and further partners
Workshop is facilitated by
JFDI
Partners to participate are
agreed with Sponsor
Sponsor represents about
20% of participants
Participants will sign
in with resources for
market validation
Validation focuses
on market and
technical hypothesis
critical for success
Participants to sign in
with resources for the
acceleration phase
Validated ideas will be
selected for acceleration
Lead
IP N/A N/A Held in Escrow by JFDI Held in Escrow by JFDI Assigned by JFDI to
Participants

JFDI’s Response
JFDI doesn’t just deliver PowerPoints and
concept prototypes. In two quarters we
source or create, validate and accelerate
new businesses, complete with paying
customers. As investors ourselves, we aim
to create companies that will generate
value repeatably, profitably and scalably.
Time to market
Hands-on
execution
Shared financial and
market risks
In Asia for Asia
JFDI was created in
Asia for Asia. We and
our partners
understand the
culture, challenges
and opportunities
unique to our region.
JFDI shares risk and
reward and aligns with
clients’ long-term
interests through co-
investment.
The aim: Asia scale
USD250m+ exits

@hughmason hugh@jfdi.asia
“I didn't say it would be easy, Neo.
I just said it would be the truth”

Why Corporations Are Turning to Digital Accelerators For Leadership & Innovation

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