C Baradello - SC Tech Products - 2018

Modelos organizacionales
de gestión de la TT
Carlos S. Baradello, PhD
General Partner, Alaya Capital Partners
Managing Partner, Sausalito Ventures
Professor of Global Innovation & Entrepreneurship
Conversation Themes
 Personal Introduction
 Corporate Entrepreneurship (CE)
why? – MOTIVATIONS
 Innovation: Incremental vs. Radical
 Implementation Models of CE
 How to Organize/Manage CE?
 Closing Reflection
Managing Partner, Professor of Social Innovation &
Carlos S. Baradello, PhD Sausalito ventures Global Entrepreneurship
Hult International Business School
Managing Partner, Professor of Social Innovation &
Carlos S. Baradello, PhD Sausalito ventures Global Entrepreneurship
Hult International Business School
What makes an Established
Firm successful?
• Predictability
• Protect the brand
• Limit risk taking
• Well established repetitive processes
• Fewer products very successful
• Specialization => Over-Specialization
• Mastery of the Product/Market they serve
>> Comfort zone
…in other words, minimize risk taking,
because they have too much to lose!
What makes an Established
Firm successful?
• Predictability
• Protect the brand
• Limit risk taking
• Well established repetitive processes
• Fewer products very successful
• Specialization => Over-Specialization
• Comfort zone
…in other words, minimize risk because they
have too much to lose!
Business Life Cycle
Incubation
&
Acceleration
Value Creation Value Destruction

Business Life Cycle:
Time compression
Business Life Cycle:
Time compression
Business Life Cycle of a Firm
Can the corporation enjoy
sustained periods of continuous
Regeneration?
Sales
Consolidation Maturity
$Growth$
Survival Renewal
Inception & New
Regeneration Entrepreneurial
stage needed ?
Time
Business Life Cycle of a Firm
Can the corporation enjoy
sustained periods of continuous
Regeneration?
Sales
Consolidation Maturity
$Growth$
Survival Renewal
Inception & New
Regeneration Entrepreneurial
stage needed ?
Time
Ten Key enabling characteristics of
Disruptive Innovations
Silicon Valley (SV) propelling new
ventures(1)?
1. Favorable rules of the game -- pro-business formation.
2. Knowledge intensity -- pro new ideas.
3. A high-quality and mobile work force.
4. Results-oriented meritocracy -- Talent and skills are king.
5. A climate that rewards risk-taking and tolerates failure.
6. Open business environment -- win-win exchanges of
knowledge.
7. Universities and research institutes that interact with industry.
8. Collaborations among business, government, and nonprofits.
9. High quality of life -- a beautiful place to work, live and play.
10. Specialized business infrastructure: Financial, Legal,
Headhunters, Accounting, Consultants, etc.
(1) The Silicon Valley Edge, Edited by Chong-Moon Lee, William F. Miller, M. Gong Hancock, and Henry S. Rowen, Stanford University Press, 2000.
S-Curve of Technology Performance
Is the Firm able to develop

the next Technology? Timely?
Is the Firm playing defense

Or offense?
Corporate Entrepreneurship
CREATING NEW OPTIONS

Markets/
Customers
New Market
Markets Development NEW
Strategy VENTURES
BUSINESS
Market
Extensions
ESTABLISHED Product
Existing CORPORATION
CURRENT Development
Strategy
Market(s) BUSINESS
Existing Product(s) New Products/

Product(s) Extensions Product(s) Technologies
Greinger’s Model: The Firm Journey
Illustrative
# of 5 - 50 50 - 100 100 - 500 500 - 1000 < 5000 < 10000
employees
Manager vs. Leader vs. Entrepreneur
Manager vs. Leader vs. Entrepreneur
Change
Efficiencies
Operational
Innovation
Efficiencies
Efficiencies
Becoming an Entrepreneur
Managing Firm’s Innovation Process
TECHNOLOGICAL CHANGE
Semi-radical Radical
NEW
Innovation Innovation
SIMILAR
Incremental Semi-radical
SIMILAR NEW
BUSINESS MODEL/MARKETING CHANGE
Market Driven vs. Technology Driven Firms:
Disrupting the Established Firm
Technology
Driven
NEW
SIMILAR
Market
Innovation Driven
Innovation
SIMILAR NEW
BUSINESSBUSINESS
MODEL/MARKETING
MODEL CHANGECHANGE
Known vs. Unknown:
Comfort vs. Discomfort Managing the
TECHNOLOGICAL CHANGE “Unknown-
Knowledge”
NEW
SIMILAR
Managing the SIMILAR NEW
“Known-
Knowledge” BUS MODEL/MARKETING CHANGE
Incremental vs. Radical vs. Disruptive
Low Cost New Market
Threats Niche Threats Unrest
History Lesson: Successful
Firms can die FAST!
… and this is just the beginning!
Remember if there is an asymmetry, there is an

opportunity…
Summary: why successful/established
companies fail?
 Technological changes
 Market needs
 Societal aspirations
 Consumer trends
 Regulatory changes
 Domestic crisis/recessions
 International crisis/wars
 Geo-political changes
 …..
 And more ….
The bottom line is that change can come from
anywhere?
Yet… There are companies
able to sustain their ability to
innovate…
Large Established Firms can Leverage many
Corporate Assets in Innovation Activities!
Corporate Asset Characteristics
Trends, source of value,
Market Intimacy
competitors, global, etc.
Culture, internal, external
Processes
suppliers, partnerships, etc.
Own, acquisition, partnerships,
Technology Base
global, etc.
Access, availability, timely
Information Systems
decisions, corporate memory,..
Business Models Ability to change, adapt, evolve,

Corporate Entrepreneurship
CREATING NEW OPTIONS

Markets/
Customers
New Market
Markets Development NEW
Strategy VENTURES
BUSINESS
Market
Extensions
ESTABLISHED Product
Existing CORPORATION
CURRENT Development
Strategy
Market(s) BUSINESS
Existing Product(s) New Products/

Product(s) Extensions Product(s) Technologies
Managing your Product Portfolio
Strategically – Short/Med/Long Term
Market NEW
Creation(2) INDUSTRY
New NEW
Market(1) BUSINESS
Market BUSINESS
Extensions EXTENSIONS
Existing EXISTING
Markets BUSINESSES
New
Existing Product New
(1) New to the Industry(2)
Product Extension Product(1)
firm Entry
(2) New to the In In In
and/or
world Current Current Current
Industry
Industry Industry Industry
creation
Battle Lines
Towards a Product Management Portfolio
Create
Market NewNEW
Creation(2) INDUSTRY
Options
(10%)
New NEW
Market(1) Develop BUSINESS
New
Market BUSINESS
Businesses
Extensions EXTENSIONS
(20%)
Existing EXISTING
Markets BUSINESSES
Extend and
Protect New
Existing Product New
(1) Core
New to the Business Industry(2)
Product Extension Product(1)
firm (70%)In Entry
(2) New to the In In
and/or
world Current Current Current
Industry
Industry Industry Industry
creation
Battle Lines
NEW
SIMILAR
SIMILAR NEW
BUSINESS MODEL/MARKETING CHANGE
Market Driven vs. Technology Driven Firms:
Disrupting the Established Firm
Technology
Driven
NEW
SIMILAR
Market
Innovation Driven
Innovation
SIMILAR NEW
BUSINESSBUSINESS
MODEL/MARKETING
MODEL CHANGECHANGE
Known vs. Unknown:
Comfort vs. Discomfort Managing the
TECHNOLOGICAL CHANGE “Unknown-
Knowledge”
NEW
SIMILAR
Managing the SIMILAR NEW
“Known-
Knowledge” BUS MODEL/MARKETING CHANGE
Closed vs. Open Innovation
Other firm´s
Market
License, Spin- Our New

out, Divestiture Markets
Internal Technology Base
Internal/External Our Current

Venture Handling Market
External Technology
External Technology Base Insourcing
Innovation Refinement and Elimination Funnel
Value Phases and Gates: Risk Management
Creation
0
1
Commercialization
2
3
4
5
1
Innovation
9 4 2 Prd/Svc1 Development
600 5 5
0
Platform 0 5 Platform
5
0
Ideas Value
Generation Capturing
Product/Service Innovation
Higher
Degree of Innovation
 New-to-the-world products/services
Degree of Risk
 New-to-the-firm products/services
 Additions to product/service lines
 Product improvements/revisions
 New applications for existing
products/services
 Repositioning of existing products/services
 Cost reduction for existing products/services
Lower
Source/Type of the Innovation
Seeing the Unseen, or Connecting the invisible
dots and optimizing the
“…the eureka moment…” value creation opportunity
Scientific Discovery Technological Innovation
New Market insight Market/Retail Innovation
New Production/Process insight Supply Chain Innovation
New Business/Financial insight Business Model Innovation
Human Capital Management
New HR Policies
Innovation
New Social/Ecological insight Social Innovation
Regulatory/Legislative Change Business/Marketing Innovation
Directions for Innovation
MARKETS
T Existing New
P S
E
R E Existing Diversified
C
O R Existing Product/ Market
H Market Space Space
D V
N
U I
O
C C Diversified Diversified
L Product Product/
T E
O New Space Market Space
S S
G
/ /
Y
The Portfolio Management Model
10%
30%
70%
Process Innovation
Higher
Innovation
 Major new process
Degree of
Degree of
Risk
 Minor new process
 Significant revision of existing
process
 Modest improvement of
existing process
Lower
Process Innovation
Where can innovation happen?
 Administrative systems
 Service delivery/logistical systems
 Production methods
 Financing methods
 Marketing or sales approaches
 Procurement techniques
 Compensation methods
 Supply chain management
 And more ….
The bottom line is that Innovation can happen

anywhere!!
Markets Time Compression
Markets Time Compression
Exponential Growth of the
Technology Adoption Rates
Time for a Technology to reach 150MM users is

Exponentially decreasing. Source ITF Advisors
Using Google as an example
How leading companies innovate?
Recent Google Innovations
(made public)
A Mandate for Corporate Innovation
and New Business Creation!
Peter Ferdinand Drucker (1909 -- 2005) business professor,
writer, senior executive advisor, often considered as the
father of modern management
New business creation must be
considered the most important task
of senior executives in the existing
enterprise, especially the larger one.
Without it the enterprise is unlikely

to survive. Let alone do well in a
period of rapid transition such as
the one we live in and are likely to live
in for the foreseeable future…
What makes an Established Firms
fail in entrepreneurial endeavors?
1. Difficulties in the B2B successful companies in their transition to become B2C
due to lack of expertise, brand, market positioning, etc.
2. Brand elasticity: corporations don't realize their brand has limits (Colgate, KFC)
to extend into new markets. The challenge of being an iconic brand in one
market is the difficulty to be seen as a brand that can be relevant in another
market.
3. MVP that is too limited: corporations launch MVPs that don't have
competitive features, assuming they can add features in the next revision of
the product. But most corporations don't have the patience for a V2 of a failed
V1. They stop the project altogether, losing confidence in the market
opportunity and the team. The concept of lean innovation (MVP-pivot-etc) is
difficult for corporations to execute successfully, in part, because the cost is
high (e.g. development/launch costs; brand costs)
4. First to market is difficult: many examples where companies launched products
far in advance of market readiness. Corporations rushed to market with
technology/product, only to find an unwilling customer.
5. Lack of expertise: in several cases, we saw a lack of expertise in the target
market (e.g. LeEco entering the US smartphone market). Corporations must
have core competencies in both the technology and the market to ensure a
strong product-market fit..
What makes an Established Firms
fail in entrepreneurial endeavors?
6. Partner to win: corporations often assume they should create the new product
themselves to enter a new market opportunity. Making it yourself requires valuable
and scarce resources are taken off core projects, increasing the 'cost' of the project
and shortening executive patience. Instead, corporations could work with startups via
a partnership model until they have experience to make the full commitment to the
new endeavor. Apple did this with the smartphone, first partnering with Motorola on
the Motorola Rokr phone for three years before Apple had learned enough to make its
own phone.
7. Geo expansion is difficult: similar to #5, but Nestle and LeEco are good examples
where understanding local markets better could have avoided costly errors.
8. Buy a 'sinking ship': we saw several examples of corporations buying distressed assets
for reasons that were not clear. Why? Improper due diligence? Fear of missing out?
Lack of expertise?
9. FOMO: corporations often make stupid decisions out of Fear of Missing Out. They rush
products to market, or make poor M&A decisions to 'catch up' to competitors who
seem to be moving faster and doing everything right.
10. Need for volume: corporations often experiment in new market areas, only to stop the
project too soon. One explanation is that the growth projections don't contribute
significantly to the corporations' need for both revenue and profit growth, it doesn't
'move the needle'. And so, after a few years of trying to create the next large growth
opportunity, the project is cancelled. Executives have run out of patience and/or
money.
OK! Let’s be Honest
Corporations during the past many decades have
Benefited from knowledge and Access Asymmetries:
 To access to key government and decision makers,
 To access to knowledge & Information.
And,
Benefitted from Incumbent Power: (position inherited from before)

 Preferential treatment from large buyers:
governments and other large firms, enabling them
to:
 Long and expensive product development cycle
 Slow market adoption
OK! Let’s be Honest…
Is this be the best way to organize
knowledge workers?
OK! Let’s be Honest…
Is this be the best way to organize
knowledge workers?
Vs.
Aligning Job Complexity to the Environment
Environment
Stable Changing
Hierarchical with
matrix sub-
Complex organizations Organic
adhering to structure
established
protocols
Task
Hierarchical with
matrix sub-
Machine organizations &
Simple bureaucracy considerable
discretion
THE ENTREPRENEURIAL ENVIRONMENT

Yes! Successful today…
But for how long?
 Enjoyed 30-50+ years corporate success
(ATT, IBM, DuPont, Bayer, etc.)
 Their unique “monopolistic” advantage
shortening because:
 Acceleration of new technologies,
 Market empowerment: consumer is king,
 Market enlargement: due to the middle class
growth in emerging markets,
 Disruptive businesses: innovation driven,
 Entry of global participants.
Yes! Successful today…
But for how long?
 Enjoyed 30-50+ years corporate success
(ATT, IBM, DuPont, Bayer, etc.)
 Their unique “monopolies” have a shorter
life because:
 Technological acceleration,
 Market empowerment: consumer is king,
 Market enlargement: due to the middle class
growth in emerging markets,
 Disruptive businesses: innovation driven,
 Entry of global participants.
BARRIERS to Innovate (or change):
Inside the Successful Established Firm
• Corporate Culture • Punish risk-taking

• Hierarchical structure • Lack of motivation
• Bureaucratic/slow • Inappropriate reward
management style systems
• Difficulty in managing • Turf wars/politics
mavericks (a.k.a.
innovators – change
agents)
BARRIERS to Innovate (or change):
Inside the Successful Established Firm
• Corporate Culture • Punish risk-taking

• Hierarchical structure • Lack of motivation
• Bureaucratic/slow • Inappropriate reward
management style systems
• Difficulty in managing • Turf wars/politics
mavericks (a.k.a.
innovators – change
agents)
Silicon Valley/San Francisco Bay
Area holds a position of privilege
Why? It is more about…
Social experimentation,
Digital culture, and plenty of global talent and
diverse skills,
Barriers to Startup decreasing dramatically!
Captures imagination of global millennials,
Fear free environment (of failure, humiliation,
being different, etc.)
No limits, out-of-the-box is the norm
Silicon Valley is unique!

 Use of corporate name  Use of top management
 Use of board of directors as mentors
 Use of purchasing power  Use of corporate network
 Use of marketing clout  Use of corporate
infrastructure
 Use of internal financing
 Use of staff support
 Use of technology
 Product/Service to
 Use of corporate assets market quickly
 Use of production and  Win/win for corporation
manufacturing and employee
 Use of corporate name  Use of top management
 Use of board of directors as mentors
 Use of purchasing power  Use of corporate network
 Use of marketing clout  Use of corporate
infrastructure
 Use of internal financing
 Use of staff support
 Use of technology
 Product/Service to
 Use of corporate assets market quickly
 Use of production and  Win/win for corporation
manufacturing and employee
Expected Gains from Innovation Investments
 Exposure to possible  Efficiently utilize plant

new markets space, time and people
 Add new products to  Integrate activities of
existing markets multiple departments
 Develop antennae for  A platform for mangmnt.
new technologies development
 Add new products/  Ownership position in
services to the firm new companies (minority
 Generate capital gains possible acquisition
(reward for future targets)
performance)  Renewal and recharging of
personnel
Expected Gains from Innovation Investments
 Exposure to possible  Efficiently utilize plant

new markets space, time and people
 Add new products to  Integrate activities of
existing markets multiple departments
 Develop antennae for  A platform for mangmnt.
new technologies development
 Add new products/  Ownership position in
services to the firm new companies (minority
 Generate capital gains possible acquisition
(reward for future targets)
performance)  Renewal and recharging of
personnel
What is the answer?
Anticipated growth of large
firms over the next 5 years
Global Corporations Face Today
Great Challenges
Global Corporations Face Today
Great Challenges
Why Innovate?
Growth
Imperative
Re-Invent Innovation
Management Differentiation
Imperative Process Imperative
Disruption
Imperative
Why Innovate?
Growth
Imperative
Re-Invent Innovation
Management Differentiation
Imperative Process Imperative
Disruption
Imperative
Innovation Management Process
Corporate Entrepreneurship – Areas of Activities
The Firm and its relationship to other Market Actors
Joint External
Spin Venture Environment
External
Along Co.
Internal Suppliers
Merger venture
Contractors
Acquisition The FIRM
Spin In
Buy
Customers
Spin Out stake
Take
Apps.
Developers stake
Corporate Entrepreneurship – Possible Implementation Models
Impact on the
Business of an Innovation
Spin-Offs/ Value Chain Ntwk

Non Outsource Cluster
“Circle of Development
Core OUT Friends”
Intrapreneurship Corp. Venturing Re-
Definition
Core IN JV’s “strategic of the
Bets” Firm
Internal External Source of the

Innovation
Impact on the

Non Outsource
Kodak
DOW of
“Circle
Core OUT
AT&T
Friends”
Intrapreneurship Corp. Venturing
Core P&G JV’s Intel
“strategic
IN Capital
3M Bets”

Innovation
Impact on the

Non Outsource
“Circle of
Core OUT Friends”
The Corporation
as a Business
Incubator
Core IN JV’s “strategic
Bets”

Innovation
Impact on the

Non Outsource Coop
“Circle
it! of
Core OUT Friends”
Corporate
Incubator
Core Create
IN Buy it!
JV’s “strategic
it! Outs”
Buy/
Nurture it! Internal External Source of the
Innovation
Corporate Incubator
Spin-Offs/ Corp. Venturing

Equity Corporate “strategic
Spin-Outs Bets w/ $$”
The Corporation
as a Business
Start-up Program
Start-up Program
Incubator
Non-Equity Multiple “strategic
revenue Bets w/o $”
streams
Internal-Out External-In Direction of
Innovation flow
Four Models of Corporate Entrepreneurship
Motorola
(1) The Four Models of CE, R.C. Wolcott and M.J. Lippitz
Four Models of Corporate Entrepreneurship
“Five Essentials” of
Innovative Enterprises
Leading Innovative Enterprises develop their own “home-
brewed” models, which share these characteristics
Big Vision Top Talent
External Orientation Learning Networks Will To Innovate

Setting an innovative Barriers to an innovative
environment entails… culture include…
 Envision the future  Too much focus on the present

 Create a sense of urgency  Not understanding innovation
processes
 Expect calculated risk-
taking  Fear of and resistance to
change
 Encourage experimentation
 Punishing failure
 Develop incentives
 Top-down management
 Focus on customer needs
 Seek feedback from
stakeholders
Cultures & Learning
Enhances learning Inhibits learning

Balances interests of Tasks more important than
stakeholders people
Focuses on people Focus on systems
Empowers people & makes Allows change only when
them believe necessary
Makes time for learning Preoccupied with short term
Takes holistic approach to Compartmentalises
problem solving problem solving
Encourages open Restricts information &
communication communication
Believes in teamwork Believes in individual competition
Has approachable leaders Has controlling leaders
Setting an innovative Barriers to an innovative
environment entails… culture include…
 Envision the future  Too much focus on the present

 Create a sense of urgency  Not understanding innovation
processes
 Expect calculated risk-
taking  Fear of and resistance to
change
 Encourage experimentation
 Punishing failure
 Develop incentives
 Top-down management
 Focus on customer needs
 Seek feedback from
stakeholders
The 10 Commandments of the
Corporate Entrepreneur
1. Come to work each day willing to be fired!
2. Circumvent any order aimed to stop your dream!
3. Do any job regardless of the job description, to make your project
work!
4. Build a support network of good people to help you
5. Developed spirited team. Choose to work with the best w/humor!
6. Work underground as long as you can: Publicity triggers the
“corporate antibodies”
7. Be thoroughly engaged, take ownership, and persevere.
8. Remember it is always easier to ask for forgiveness than permission
9. Be true to your goals but realistic about the ways to achieve them
10. Be honest and truthful to your sponsor!
And finally…..
The person who says

it cannot be done
should not interrupt
the person doing it.
- Chinese Proverb
MEET U.S.
No new business is worth starting in
these times unless it can go global.
— Richard Branson, Virgin Empire
DARE
more than others think it is WISE
EXPECT
more than others think it is PRACTICAL
RISK
more than others think it is SAFE
DREAM
more than others think it is POSSIBLE
DREAM IT!
BELIEVE IN IT!
RISK FOR IT!
INVENT YOUR OWN FUTURE!

Tel. +1 (415) 342-6663
E-mail: carlos@sausalitoventures.com
Blog: www.carlosbaradello.com
FAREWELL
Firm: www.SausalitoVentures.com
until our paths cross again!

Cell: +1 415 342 6663
E-mail: carlos@sausalitoventures.com
www.SausalitoVentures.com
Firms: www.Alaya-Capital.com
www.Hult.edu
Blog: www.CarlosBaradello.com
More References
Sausalito Ventures presentation:
http://prezi.com/lz3xhnhyye5k/sv-global-scaling/
C Baradello Presentation of “DNA of an Entrepreneur”:

http://prezi.com/smagwjn_7eqt/?utm_campaign=share&utm_medium=copy&rc=ex0shar
e
C Baradello Presentation “Top 10 Requirements for Foreign Entrepreneurs”

http://prezi.com/zf0vg6_rhuci/top-10-rules-for-foreign-entrepreneurs/
C Baradello video of the presentation “Success Favors the Prepared Mind”:

https://www.youtube.com/watch?v=BmFhJLEUtHo

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Modelos organizacionales

Value Creation Value Destruction

Is the Firm able to develop

Is the Firm playing defense

CREATING NEW OPTIONS

Existing Product(s) New Products/

… and this is just the beginning!

Remember if there is an asymmetry, there is an

Business Models Ability to change, adapt, evolve,

CREATING NEW OPTIONS

Existing Product(s) New Products/

License, Spin- Our New

Internal/External Our Current

The bottom line is that Innovation can happen

Time for a Technology to reach 150MM users is

Without it the enterprise is unlikely

Benefitted from Incumbent Power: (position inherited from before)

THE ENTREPRENEURIAL ENVIRONMENT

• Corporate Culture • Punish risk-taking

• Corporate Culture • Punish risk-taking

Silicon Valley is unique!

 Exposure to possible  Efficiently utilize plant

 Exposure to possible  Efficiently utilize plant

The Firm and its relationship to other Market Actors

Spin-Offs/ Value Chain Ntwk

Internal External Source of the

Spin-Offs/ Value Chain Ntwk

Internal External Source of the

Spin-Offs/ Value Chain Ntwk

Internal External Source of the

Spin-Offs/ Value Chain Ntwk

Spin-Offs/ Corp. Venturing

Big Vision Top Talent

External Orientation Learning Networks Will To Innovate

 Envision the future  Too much focus on the present

Enhances learning Inhibits learning

 Envision the future  Too much focus on the present

The person who says

RISK FOR IT!

INVENT YOUR OWN FUTURE!

until our paths cross again!

C Baradello Presentation of “DNA of an Entrepreneur”:

C Baradello Presentation “Top 10 Requirements for Foreign Entrepreneurs”

C Baradello video of the presentation “Success Favors the Prepared Mind”:

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