Peter Christo

I get regular requests for two things, a buisness plan template, which I warn people may be a poison challice, and the screening framework we use at Christo Partners. I am very selective to whom I pass on out Business Plan template, but if you would like the screening framework, here it is.

Note that the tool doesn’t work by it self; the user needs to do the thinking, ask the right questions, and change the questions to suit the situation.

Enjoy

Peter

The fundamental challenge in innovation is the underpinning framework within which we engage opportunities. It is similar to the underpinning framework of something like contract law. Contract law underpins our commercial ecosystem that allows us to manage our risk and assure ourselves of the various inputs to our business.

Similarly a corporate innovation framework needs to:

o Promote innovation

o Allow for risk to be taken in line with appetite for that risk

o Compensate the innovator and the business fairly

o Allows the business to capitalise on the opportunity at a level that is appropriate:

§ The business at large

§ In the areas and departments that stand the most to gain.

§ External interests and partners

o Be transparent and accountable to the business, and deliver measurable results.

Commercialisation Management Framework Alpha.

This is a simple framework based on a project or program management office methodology (also used in software development, taught to me by Project Management Office [PMO] specialist, Steve Collard).

The framework has three simple stages, each with three sub stages. It should be noted, that while a program manager may liaise with a PMO re delivery of these projects (depending on their size), it should not be managed by the PMO. PMO’s processes would stall any innovation possibilities.

A word of caution: The following should not be read in isolation. The broader activities and issues related to innovation management should be considered when implementing this framework.

Evaluation –>Execution –>Exit.

Each stage has three sub stages, they are as follows:

Each sub stage has templates and processes but, the key is that once something enters evaluation, it may or may not move onto the execution stage until it is committed to. Commitment (stage) will be determined by the qualification details. One of the qualification factors is of course the time and cost associated with the execution phase.

Example: Someone has an idea for ‘new software’, and while their idea to just build it may be rejected for lack of research stage (at commitment stage), it could however get the ok to spend half a day researching (thus moving to execution). Originators then have to exit and start the next run through with as much of a scope and business argument to get the ‘sign off’ again. Our software developer may get the ok to review some competing software and create a function list.

Some detail about the stages:

Evaluation

Registration - Registration can take the funnel of business ideas and idea creation initiatives and database them into a simple (intranet based) database of ideas (DBI). Nothing more is required of the idea originators, however there is no real scrutiny here, except that the registration (even incomplete) is made by the originator.

The mere act of naming an idea and placing it on a database is a powerful catalyst for developing an innovation culture.

The format can be designed by the business, and should keep in mind that all layers of the organisation should be able to use it.

The registration should include an indication on whether the originator intends to move to the qualification stage in the framework. As a metric generator, this database is a great baseline for ideas bubbling up through the organisation.

Qualification

This is the most misunderstood stage of the process. This stage does not include ‘the doing’, it is not even planning the doing, this is the qualifying the undertaking with enough information so a commitment can be made to move onto the execution stage (part of which may be scoping/planning).

Qualification can be made using a template business argument, and tested against a screening tool (a series of relevant questions that are scored from 1-10). So, even a big idea would be evaluated only on the details of the next stage, rather than the viability of a fully formed business venture. The nest stage might be undertaking the research or prototyping for the business case (which would be a separate project again).

If an idea doesn’t get a Guernsey (ie moves to Qual Stage), it can stay in registration phase while the thinking develops.

The structure of a qualification template would need some thinking, and there is no one size fits all. I have a screening framework which I am happy to share, just comment on here, and ask for the Eval Screen.

Commitment

This is where the ok is given for the next stage. If the qualification has been done properly, this should be straight forward, if however the originator or the team committing to the project has confused the two stages, then it will become bogged down. The idea is to take a baby step forward, in line with the businesses appetite and enthusiasm, and of course the originators skills and resources.

Execution

Scope

This stage could take three minutes or three weeks depending on the project. It is good business practice to plan your work in any field, before you embark on building it. So a event a market research exercise needs to be planned, before it is undertake and reported on. Similarly, the building of a house needs some planning and forethought, nothing new here.

Build

Self explanatory. This is where the work is done. The trick here is not to do more than was scoped.

Deploy

This may mean presenting the report, the beta software, the business case etc. It also means collecting feedback to put into the next run through at qualification stage.

Exit

Exit/Harvest

If this was a venture, the harvest is the bit where someone buys it, or your risk is zero and reward is maximized. In smaller projects, it’s the bit where you complete the job, and have it signed off, even by yourself. Mentally this is important. Each battle won gets closer to winning the war (arguably).

Learn/Educate

The business should be able to share its learning experiences via a range of methods. Training and mentoring, knowledge bases, wiki’s, debriefs etc. Nor making the same errors in the future and accessing tacit knowledge is a powerful capability.

Archive

Drop the documented material somewhere where people can access it in the future.

What Now?

This cyclic approach will generate a venture pipeline which can be made visible against KPI’s to management. Originators need to have their efforts rewarded, and the business needs to include equity and profit sharing in their thinking.

Advice should be sought by commercialisation consultants on the pipeline projects and these should be contrast on external opportunities and synergies the business is involved in.

Good luck!

Peter Christo

Corporations are creating a new executive role as a way to foster innovation, undertake corporate venturing and create a competitive advantage for themselves as part of their operations. Say hello to the Innovation Manager!

Innovation Managers come from everywhere, inside and out of the organisation, from HR, Marketing, Sales and even operations and supply chain management. But, who are these people? And how do they add value to the organisation?

Of course we can all see the world is changing, and it is doing so at an accelerating rate. This is happening in all aspects of our lives, from politics, to personal values to economics, climate and, consequently, in businesses who produce products and services. The innovation manager is (in part at least) a result of firms looking for that competitive edge in this new landscape. However, the approach to corporate innovation in most western businesses has a way to go before it can be effective in delivering true, measurable and accountable value to the organisation.

The ‘current state’ of corporate innovation being implemented is mainly through a range of training programs and workshops. While training is a necessary part of achieving desired outcomes, currently measurable positive outcomes are random at best. The Innovation & Commercialisation function needs to justify its existence and be as accountable as any other department otherwise it will never be taken seriously by the rest of the organisation.

The issue rests with the fact that there are little or no frameworks developed that are suited to the task, in fact, any that do exist, misunderstand the task. The issues are many, but part of the problem rests in frameworks that don’t foster innovation, in fact stifle it. What I call the ‘One No!’ problem, where just one ‘No’ from a manager kills the idea in its tracks.

If there is any doubt regarding my claim, ask yourself why innovative businesses continue to appear and compete with the established players, when these established businesses are already in the market and have all the money needed to invest in new innovations to release new products and services? Innovations mainly occur outside the enterprise (like Google’s slaying of Microsoft’s dominance and Aussie Yellow Pages inability to respond to the new business landscape, but to name a few)!

Until now, it’s very rare to find real innovation occurring inside large businesses. I suggest that there are new, educated and progressive innovation managers that are poised to change this, if they can grasp and respond to the challenges.

If you are the innovation manager for your organisation and want to help your business create a proactive and professional culture and engagement with the business on an operational and strategic level, consider the following recommendations;

1. Agree on where and how the innovation role fits into the organisation, and how it contributes to the goals of the business. This should be documented and endorsed by management. You should also include a statement of purpose not only for your role, but the activity of ‘corporate venturing’ within which innovation falls.

2. Take a portfolio and investment view of the ventures your business gets behind, taking into account yield, risk and exit and other factors relevant to the business strategy. A portfolio view means that you as the innovation manager need to be working with the strategy manager (unless you have that role too) to gauge the appetite of the business (directors) for risk.

3. Work with the Marketing department to get visibility on the changing landscape of the market and customer (ie: research). Your role needs to morph into both educator and seller of ventures that have bubbled up through your department.

4. The business needs to determine the investment amount that it has earmarked for innovation and corporate ventures. This should be separate to the operational expenditure associated with running the innovation team. There needs to be no doubt that money is available and allocated for this activity.

5. Learn to Pitch. As the innovation manager, you will need to both scrutinise opportunities for the business and Pitch them to the top table. If you can’t get excited, you need to ask yourself what your motivation for the job is.

6. Look both inside and outside the corporation for ideas and opportunities. Think head hunters, but for innovations and opportunities. Have your spy’s out there looking for you. This can be done formally and informally. Think about working with the top table to determine what constitutes a good opportunity for the business; you’ll be surprised to see that not all the directors agree.

7. The nature of corporations is to manage, control and measure rather than accepting that innovation needs time to experiment, morph, gestate and learning to occur. Your program needs to be multi dimensional, where you instil an innovation culture, skills, and KPI’s to deliver results.

8. Innovation programs need to be tied into programs that dovetail into a broader framework that rewards all stages of the process, that allows for experimentation, and can utilise the internal market forces of the business to get its opportunity ‘up’. Even the corporate suggestion box is a source of inspiration.

9. In many cases there is confusion between what is a prospective innovation (that is a commercial opportunity for the business), and what is incremental improvement, and part of business as usual BAU. Set some guidelines and clear this up with management. Don’t confuse the two.

10. Consider managers (your peers) middle to senior, are trained to minimise risk, not seek it. Also remember that one persons appetite for risk should not determine the future of an opportunity. Your innovation framework should cater for this (Say No to ‘One-No’).

11. Innovation (ie generating or identifying ideas that lead to products, services and business models that are commercialised by the corporation), is in many cases confused with R&D. If you have an R&D department, work with them as a service, not for them. If anything, the R&D department should report to the Innovation manager.

12. Finally, get some training either formal or informal. The body of knowledge in corporate innovation, entrepreneurship and innovation is evolving and interesting things are happening in academia and other firms. You should be across that as part of your role.

Looks like Pitch Club is in for a shake up next year.  We’ll be launching more than 10 chapters nation wide. Big stuff!  If you have had the Pitch Club experience and would like to be a Chapter Pesident (or at least find out more), zap me an email.

On another matter, Arion Program, spawned in Christo Partners in 2005, is now Pitch Club’s own internal education workshops where we choose topics and subject matter experts to deliver their knowledge to you in a workshop type environment (syndicated education). FYI Arion currently delivers;

1. Pitching 101 – The foundation of Pitch Club and what we do as entrepreneurs.

2. Opportunity Evaluation – How big is big, and what is it really worth.

3. Economics & Finance for Entrepreneurs.

4. Negotiation & Legal Documentation for Entrepreneurs (formerly execution).

5. Marketing for Start-ups.

Next week we are running: Negotiation & Legal Documentation for Entrepreneurs.

Legal’s for Entrepreneurs, presented by Mr Bart Janouski, from Goshawk Law (see link on this page). Bart will take attendees through the key legal issues facing entrepreneurs, and what you can do yourself and what you should not. He will cover, assembling and negotiating heads of agreements that will stand legal scrutiny and save you money on contracts and unnecessary legal opinion.

Key topics covered are;

· Negotiating an Agreement
· How I Became a Better Negotiator
· Drafting a Heads of Agreement
· Instructing a Lawyer
· Understanding Lawyers’ Cost Structures
· Contemporary Debate in the Legal Industry about Costs
· What Does it Really Cost Today?
· Doing It Yourself – Is it an option?
· Business Structures Basics
· Capital Raising Basics
· Contract Basics
· Intellectual Property Basics

Register: https://pitchclub.wufoo.com/forms/pitch-club-campus-registration/

I have entered into a collaborative deal with RMIT’s Bachelor of Business Entrepreneurship to “kill two birds with one stone”.  Students need for experience, and new ventures need for commercial evaluation, strategy and planning.

I am inviting new venture and startup business opportunity owners to nominate their ventures as prospective projects for the Entrepreneurial Venture Class under My and Nathan Wakeford’s guidance (Somage Fine Foods).

We have a limit to how many we can take, and this will close end of July 2009.  Click here if interested.

Hope to see ya’ll at Pitch Club Thursday night!

It’s been a while since I posted, which is symptomatic of high activity (in this case) rather than low.

After enduring the startup years between 2006 and 2008 with Christo Partners, I have managed to create a vortex of ventures which is keeping me very busy and forcing the business to grow as the commercialization advisory and consultancy it originally was intended to be.  In fact, that description does not really tell the story of what CP does. It is now as much an investment business, as we have some sort of stake (equity or options) in most clients we deal with.

You’ll recall Pitch Club was spawned in 2007 in collaboration with BSB Australia and Anthill.  That business continues to go from strength to strength having been recently profiled in AFR and now has its own offspring in Pitch Club Campus, a business dedicated to educating entrepreneurs and business angels.  If you are not aware, Pitch Club has its next Melbourne event on the 25th of June at Docklands.  I assure you it’s going to be big, and probably a sell out, so if you want to take advantage of some early bird deals go to the web site (www.pitchclub.com).

The next exciting adventure is of course Melbourne Coffee Review (MCR).  From its humble start as a blog in 2004, MCR now has about 800 unique visits a day, and about 20 reviewers worldwide.  I flicked it into a business after much deliberation, as a foody type review business will quickly become irrelevant if there is a conflict of interest evident (real or perceived). Other than the reviews, MCR offers a Job board for café owners, hotshot listings (mini web sites for cafes).  The business has a part time staff of 6 and is rapidly becoming my main focus (for a while anyway). We recently committed to deploy the MCR café Guide for 2010 (a real hard copy publication), and review the top 100 cafes.  The ex sub editor of Epicure Leanne Tolra has joined us on this journey along with 20 Melbourne based writers/reviewers.  It’s a pretty funky project, (www.melbournecoffeereview.com).

Some of the more notable client projects that are going well are the Watch My Numbers business (www.watchmynumbers.com), and Medical Media (www.medicalmedia.com.au).

I’m still doing a part time lecturing gig at RMIT (call it an addiction) in 2nd Semester and am pushing into corporate commercialization advice.  All in all, pretty good given this GFC thingy.

What I have learned is that it is very important to be organised, delegate, and manage people (not micro manage).

Peter

Hedge Funds and the Global Economic Meltdown from Judd Bagley on Vimeo.

Business principles that facilitate the development of strategies which result in a competitive advantage and therefore increased chances of business success are probably the most overlooked and least understood business activity.

A well thought out strategy should underpin your business plan.  In other words, the plan should go beyond being a detailed account of just how you plan to work.  Rather, it becomes a detailed road map to success.  The strategy (aka; how we plan to win) should be as crystal clear in your head as your own name.  Its merit and chances of success should also be obvious.  If someone commercially astute were to read it, and then was still not clear on how you pan to execute and compete successfully, you best stop right there.

8 Steps to a winning strategy .

I offer eight main steps in developing a sound strategy like this.
1.    Determine the demand driver for your customer and in the B2B case, your customers customer.
2.    Determine the value chain of the industry and identify where you fit in the process.
3.    Identify what all the value propositions are in each segment you represent.
4.    Rate each item in the value proposition as to whether you:

• Do it well
• Should do it well and thus need training
• No need to do it yourself and thus can outsource

5.    Identify what market your competition is targeting
6.    Identify what your competition is communicating in terms of a VP to that market.
7.    Determine a better mix or alternative VP (it could be the business model remember)
8.    Communicate this VP in everyway possible to the market.

Demand Driver
Fundamentally, every industry and therefore every business, is underpinned by a demand driver.   For example, the fishing industry is underpinned by the demand driver – hunger for fish.  That is something that is undeniable. People want and will continue to want to eat fish, drives a while industry.  The telecommunications industry is underpinned by the demand driver around the need for us to communicate with each other, and the superannuation industry is underpinned by the need to protect, grow and get an income from our savings/investments.
If you are in a business to business  (B2B) organisation, then your demand drivers are simple.  In fact every business has the same demand drivers.  They are:

• Generate revenue, the more the better.
• Minimise costs, the less the better.
• Manage any risks that could affect the above two.

It flows that to effectively service a business in the B2B space you need to know your customers customer also and their demand drivers.
The question you need to ask is what drives demand in my industry and/or for my clients?
Value Chain Development
All industries have three main stages.  Going back to our fishing industry example; these are the capture stage, where the fish are actually netted and end up at a processing plant, the second stage, to be categorised, canned, filleted etc. and then the third distribution stage, where the fish ends up in its new form at the shops, supermarkets, restaurants, wholesalers etc.

If you think that this framework doesn’t apply to your industry, then think again.  The resource for the industry that catches motorists speeding is of course the speeding drivers (not all get caught).  The net is the camera and the production is about undertaking the activities necessary to comply with the law and issue the infringement to the speeding motorists.  Collecting the money is merely delivering the result.  Demand is driven by you and me, as the people of the state who want safety on the roads and for our kids crossing the roads for that matter.

A final example is the financial services industry which is underpinned by us all wanting to protect, grow and get an annuity from our nest eggs.  The list goes on, but I guarantee you every single industry and business fits into this framework.

Resource –> Capture –> Process –> Deliver –> Consumer
Value Proposition Identification and development
This part is hard work.  A value proposition is best described as “the benefits to your customer.  For example; low cost is a value proposition, as is quality, and is the way one can pay, how fast they will get their product etc.  Having access to information easily say via a 1300 number is also a value proposition.

Using our fish guy again, the VP from the fisherman to the production guy is what?  Fresh fish (maybe a specific fish, like Snapper) delivered by 11am, at a great price, and guaranteed (ie: no poingt in doing it once and a while, business needs consistent supply).
In most businesses, the VP between segments could number in the dozens.

Rating the VP’s
Focus is the key here.  The underpinning principle is that you don’t waste effort on non core activities.  Core must be delivered with exceptional quality and effectiveness.
Go through the VP list and choose which items you offer as part of your own business VP. Rate each one as core or non core, and determine your level of competency as a business in each one.
Eg:

1. Fishing – core (10/10)
2. Navigation – core (6/10)
3. Knowledge of snapper core - (7/10)
4. Boat cleaning – non core – (2/10).

I would, maintain 1, do some training on 2 and 3, and outsource 4.

Competition’s Market
Look at the type of consumer your competition is going for.  Are they twenty something’s?  Are they full next stage 1 (with young kids) or empty nesters.  To be super strategic, use Mazlow’s hierarchy of needs to identify what the need the message is targeting (is it communicating at a sustenance level or at an esteem level?) and where in the ‘normal’ life stage they are.  Obviously don’t forget the pink market, DINK by choice.

Competition VP
Look at your competition and determine what VP their marketing communications are claiming.  If they simply claim to be the cheapest, and they actually are, then don’t compete on that unless you know you can beat them.  Identify up to three of your most obvious competition and map where each has positioned itself.  Ideally, you position away from them and add dimensions to your VP that they can’t deliver on.

Communicating your VP to the market
Now that you know how well thought out or not your competitions message and VP is, you can structure your business service, message and collateral accordingly.  In the fishing example, Pete’s Fishing fleet could be an “on-time, specialist at delivering snapper to the market at a great price”.  Develop your message in an appropriate way as to avoid the competition and extend the VP.  Make yourself untouchable.  Your VP could relate to the service or product, or how they pay (the business model) or where the product can be found (easy to access).

As for delivering the message, given you have done most of the work now, leave this to the pros.  But if you have to do it yourself, keep it succinct and clear.

This process is not just for entrepreneurs.  This is a great process for established big and medium businesses and it  applies whether you are an entrepreneur or a CEO or even a manager dovetailing your department’s services into the broader business (eg: HR, IT, Marketing etc).

Now you that you have this done, you can start writing your business plan.