University of Dublin Trinity College

Leadership  &    Innova0on  Presenta)on  to  M.Sc.  classes  

Paul  Woods,  12th  March  2014  

Thank  You  •  Deeply  humbled  to  be  invited  to  present  again  this  year!  

  TCD,  a  fantas)c  ins)tu)on,  modeled  on  Oxford  and  Cambridge,  best-­‐in-­‐class!  

  The  Long  Room,  an  inspiring  place  to  ponder  how  you  are  going  to  change  the  world.  

Background  •  Commercial  experience.  

  Strategy  experience  across  start-­‐up,  corporate,  and  public  sector.  

  Successful  design,  launch,  and  scaling  of  many  products.    

  Led  winning  teams:  customer  service  and  ICT  team  of  the  year.  

  Integrated  Perlico  upon  successful  exit.    

  Established  Vodafone  branded  fixed  line  and  broadband  business.    

•  Technical  experience.  

  Strong  engineering  competence  including  product  and  process  design.    

  Managed  P&L  of  eircom’s  infrastructure  division.  

  Programmed  fault  tolerant  distributed  systems.    

  Evaluated  IPR  ranging  from  encryp)on,  early  cancer  detec)on  …  

Leadership  •  Leadership  and  management  differ.  

  Leaders  role  is  to  set  a  vision,  inspire  and  mo)vate  a  team  desire  to  execute.    

  Managers  role  is  to  plan,  organise,  and  coordinate.    

•  Leadership  skills  can  be  con)nuously  honed.  

  Develop  innate  knowledge  of  weaknesses.  

  Focus  on  personal  growth.  

•  How  do  leaders  you  admire  lead  and  behave?  

  What  values  do  they  hold?  

  How  do  they  start  and  finish  their  day?  

  Strategic  vision:  Amazon  versus  Apple?  

  How  do  they  maintain  energy?

Innova)on  •  Innova)on  comes  from  the  La)n  word  ‘innovare’,  meaning  “to  change.”  

  Passion  is  key  to  innova)on,  willingness  to  see  beyond  the  status  quo.    

  Lack  of  innova)on  can  quickly  damage  large  companies;  Microsob,  HP,  Dell  …  

•  Difficult  tradeoff  in  ensuring  business  focus  while  retaining  innova)on.  

  This  tradeoff  usually  provides  gaps  for  new  start-­‐ups.    

  Many  corporate  companies  allow  start-­‐ups  take  the  risk  and  acquire  if  successful.    

Successful  technology  management  •  Establish  clear  and  prac)cal  project  plans.  

  Place  emphasis  on  how  value-­‐add  is  created  for  customers.    

  Priori)se  core  over  nonessen)al  product  features.  

•  Map  resource  alloca)on  to  “value  add.”  

  Ensure  resource  alloca)on  acts  as  catalyst  for  opera)onal  momentum.  

  Treat  every  investment  decision  as  if  the  money  were  your  own,  even  when  it’s  not.  

•  Establish  crystal  clear  key  performance  indicators.  

  Monitor  execu)on  to  plan  daily,  especially  core  sales  and  opera)onal  metrics.    

•  Refuse  to  engage  in  discussions  around  how  well  things  are.  going!  

  Success  is  not  debatable,  focus  on  achieving    momentum.  

Understanding  value-­‐add  key  •  Problems  that  can  be  solved.  

  Iden)fying  new  markets  or  befer  products  /  services  for  exis)ng  markets.    

  Social  networks,  a  market  based  on  humanity’s  innate  social  dimension.  

  A  Kindle  allows  you  to  carry  thousands  of  books.    

•  Opera)ng  efficiency.  

  Lower  overhead  or  solu)on  that  allows  the  customer  reduce  cost.  

  A  drone  can  pull  a  higher  g  force,  fly  for  longer,  avoid  traffic,  …  

•  Ecosystem.  

  Keystone  strategy,  developing  an  ecosystem  that  acts  as  a  biosphere  for  growth.  

  Ensuring  clear  stable  incen)ves  to  join  ecosystem!

Start-­‐up  culture  /  team  •  Convex  lens  leadership.  

  Choreograph:  U)lise  team  as  a  super  composer  would  make  best  use  of  an  orchestra.  

  Darwinian  selec)on:  Limited  investment  and  )me,  respect  precious  resources.  

  Focus:  Do  not  erra)cally  pivot  unless  clear  and  well  thought  out  befer  path.    

•  Team.  

  Start-­‐up  environment  suited  to  high-­‐energy  individuals.    

  It’s  easy  to  find  a  good  idea,  pujng  in  place  a  great  team  is  hard.    

  Highly  incen)vise  team  for  success,  deal  with  underperformance  in  real  )me.  

•  Culture.  

  Culture  of  ‘demo  or  die’.  

  ‘Will  to  win’  needs  to  be  cul)vated  and  protected.  

Vectors of differentiation •  There  are  many  vectors  of  differen)a)on  including:  

  Ease  of  use.  

  Low  cost  (airlines).  

  Design  aesthe)cs  (Apple).  

  Free  to  customer  (Google).  

  Ecosystem  (Amazon  /  Facebook).  

  Improving  customers  produc)vity.  

  Unique  fundamental  capabili)es  (Kindle  versus  tablet).  

  Reducing  customers  total  cost  of  ownership  (cloud  compu)ng).  

•  Business  model  must  be  supported  by  coherent  focused  strategy  (Ryanair  –  cost  leadership).  

Thinking outside the box •  If  a  baby  incubator  cost  $25,000,  could  a  product  with  equivalent  benefit  be  made  for  $25?  

  Yes!  Engineer  insulated  infant  sleeping  bag  with  wax  hea)ng  module.    

Start-up strength: focused problem solving

•  CLV  for  the  customer  (i)  using  current  service  can  be  denoted  as:  

Where  

CFi,k  =  the  net  cash  flow  

D  =  discount  factor  

K  =  )me  period  

•  Time  period  (K)  =  Customer  length  of  service  (LOS)  

  Number  of  transac)ons  a  customer  will  make.  

  Impacted  by  contract  dura)on,  compe))veness  &  special  promo)ons.  

  Long  LOS  not  necessarily  correlated  to  higher  CLV.  

  Acquire  customers  when  CLV  >  customer  acquisi)on  costs.  

Understanding  customer  life)me  value  

•  Current  value  doesn’t  provide  insight  into  poten)al  value  via  up/cross  selling  of  add-­‐ons  or  new  products.  

•  Poten)al  customer  value  can  also  be  calculated  as:  

Where  

i  =  customer  who  uses  service  j  from  compe))ve  op)ons  available.  

ij  =  profit  company  can  make  from  customer  i.  

•  Decision  tree  can  be  used  to  evaluate  poten)al  value  for  distribu)on  of  customers,  taken  into  account  probability  of  up-­‐selling  op)ons.  

•  Acquisi)on  threshold:  weighted  poten)al  value  >  acquisi)on  costs.  

Understanding  poten)al  value  

•  Seeking  investment  rounds  too  early  can  compromise  discipline  and  flexibility.  

  Cri)cal  to  understand  cash  burn  and  ensure  it  is  mapped  to  high  value-­‐add  ac)vi)es.  

  Working  capital:  If  you  haven’t  got  cash  to  keep  you  business  moving,  it  will  die.  

•  Befer  a  company  manages  its  working  capital,  less  equity  it  needs  to  raise.    

  Amazon,  Walmart,  Dell,  all  examples  of  good  working  capital  management.    

•  Angel  investors  

  Worth  approaching,  especially  if  investor  has  exper)se  in  field  and  can  provide  advice.  

•  Venture  Capital  

  Seek  to  prove  business  model  early,  raise  funding  incrementally.  

  Demonstrate  clear  milestone  delivery,  seek  to  minimise  equity  dilu)on.    

Funding  

•  What  app  is  worth  $19  billion?    

  WhatsApp  $42  per  user,  based    on  growth  to  1  billion,  share  in  emerging  markets  ...  

  Several  other  ‘highly’  valued  compe)tors:  Kakao  Talk,  Line,  Viber  ….  

  Viber  was  acquired  by  Japanese  firm  Rakuten  for  $3  per  user.      

•  Valua)on  is  complex.  

  Value  as  source  of  cashflow?  

  Standalone  value?  

  Value  to  broader  porwolio  of  acquirer?  

  Strategic  value  (IPR,  market  dynamics  …)  

•  Ini)al  focus  should  be  on  standalone  value.  

Valua)on  

Super trends highlight opportunity ①  Popula)on  growth  and  aging.  

  New  healthcare  products  /  services  and  approaches  to  preventa)ve  care.  

②  Globalisa)on  and  urbanisa)on.  

  Smart  ci)es,  grids  &  water  management.  

  New  forms  of  ci)zen  protec)on,  ways  of  working  …  

③  Intelligence,  knowledge  and  innova)on.  

  Designing  and  interpre)ng  big  data.  

  Decision  support  tools  that  can  take  increasing  variety  of  inputs.      

④  Environmental  and  resource  strain.  

  New  technologies  to  op)mise  and  control  use  of  scarce  resources.  

Everything is possible!

Maria Leijerstam cycling South Pole

Conclusions •  Leadership  is  a  choice.  

  Many  are  born  with  leadership  traits,  but  skills  can  also  be  developed  /  honed.  

•  Innova)on  requires  passion.  

  Innovators  don’t  just  consider  rewards,  love  to  challenge  the  status  quo.    

•  Customer  value.  

  Consider  economics  of  customer  acquisi)on  and  prospec)ve  life)me  value.  

•  Super  trends.  

  Several  super  trends  emerging,  opening  up  opportuni)es  for  you  all!  

“A  man  who  dares  to  waste  one  hour  of  )me  has  not  discovered  the  value  of  life.”  Darwin.