March 18, 2021

Innovate Like an Entrepreneur

Commercialization Entrepreneur Innovation

7 minute read

We Need to be More Entrepreneurial
It’s one of the most common things we hear from Fortune 500 executives. Yet, it’s almost always followed with “but we struggle to make it happen within our current process.” We agree with the objective – innovating like an entrepreneur yields compelling advantages. We disagree, however, that “the process” is necessarily inhibiting entrepreneurial behaviors as we believe innovating like an entrepreneur can be done within a big company process. We know because we’ve done it – and we can help you do it too.

The Rise Of the Entrepreneur
In the world of innovation, the balance of power has shifted from big companies to entrepreneurs. In fact, 49% of the growth in Consumer Packaged goods since 2012 has come from Entrepreneurs and Small Companies, in sharp contrast to 3% coming from big companies.

Clearly, we are entering a new era – the rise of the entrepreneur. To better understand this profound market shift, let’s take a closer look at this specific category example:

Throughout the 20th century, consolidation driving for scale and cost savings resulted in a handful of similar mainstream brands. However, in the 21st century, we see the rise of the entrepreneur with a focus on delivering differentiated brands in areas that big companies viewed as niche, but that are growing BIG. This is one example, but this power shift to entrepreneurs is happening across categories… from energy drinks to movies-on-demand to Greek yogurt to hand soap… entrepreneurs are becoming the driving force in innovation.

So, what’s the common thread?

Entrepreneurs are launching businesses differently.
Most traditional Big Companies have a large scale “hit or miss” launch approach, with long planning cycles focused on a big launch behind a finalized concept and product. If everything goes right, the launch immediately leverages their scale advantages like broad distribution and 360° media planning/spending. Yet, if success isn’t found quickly, there are no 2nd chances, as making adjustments at scale is resource and cost prohibitive – the company simply moves on to the next initiative.

In contrast, the entrepreneur takes a small scale “iterative learning” approach. They start with a business model canvas, a rough idea of their plan, and launch with a minimally viable product with the expectation that both the product and business model will change. Once in market, they focus on understanding the revenue and profit drivers of the business and adapt to key learnings by making changes to how the interconnected pieces of the business can best be put together. They continue this iterative learn and adapt process until they find a way to successfully scale up the business.

The entrepreneur’s approach delivers three key benefits:

Flexibility: The small scale launch gives flexibility to try different approaches – without the time or expense of needing a “final” concept or product.
Profit Driver Understanding: Being in-market enables them to get beyond traditional tools that measure concept appeal or product acceptance and get to understanding the revenue and profit drivers of their business by using new and different learning tools.
Interconnectivity Understanding: Being able to iteratively learn enables them to better understand how the interconnected choices made across building blocks impacts profitability. Just like different types of genes can be assembled in a DNA strand to create different types of living things, different types of business building blocks can be assembled in different combinations to create different types of businesses. For example, the choice of shelving a beauty water in the water aisle could require a different package and price point than the packaging and pricing required to compete on the beauty shelf.

Ultimately, through small-scale, iterative learning entrepreneurs find the approach that maximizes an innovation’s value.

The Big Company Dilemma
Unfortunately, as appealing as the results may be, big companies simply aren’t built for small scale, iterative, in-market learning. Rather, and rightfully so, big companies are built for driving efficiency and leveraging scale advantages. Given this, how can a big company get the benefits of the small scale, iterative, in-market learning? That’s why we created Fast-Forward® – to deliver the benefits of the entrepreneur’s approach to big companies within their current process.

Fast-Forward®: Learn & Adapt Pre-Market
Fast-Forward® was built to replicate the entrepreneur’s small scale “learn and adapt” approach, but unlike the entrepreneur who learns and adapts sequentially, in-market, Fast-Forward® was built to enable a big company to learn and adapt concurrently, pre-market. Importantly, Fast-Forward injects the benefits of the entrepreneur’s approach in a way that fits into most big company innovation processes.

With Fast-Forward®, big companies are able to:

Better understand the revenue and profit drivers of a business. By supplementing traditional learning methods with revenue and profit-based learning methods from the entrepreneur’s tool set, big companies can not only get clarity on concept appeal and product fit, they can also get clarity on the profit drivers as well. A few of the entrepreneur’s tools are Value-Based Targeting (determining target markets by profit potential instead of simply on population size), Consumer Value Potential (judging concepts based upon the value of concept acceptors, not just on Top 2 Box appeal) and Concept Yield (measuring gross profits per 1,000 people aware, not just concept appeal).
Be flexible enough to iterate different approaches. In a traditional big company process, a business plan/case would be used to drive early alignment to allocating resources behind a single approach, but this approach can be long and difficult. In contrast, business blueprints give companies the flexibility to understand multiple approaches – since a blueprint delivers sufficient information to simulate business potential, but is still flexible enough to explore multiple approaches. This flexibility to explore multiple approaches energizes a team because different beliefs on the best way to commercialize a new innovation can be fully vetted and ultimately decisions can be made based on business potential – not the strongest opinion in the room.
Better understand the interconnectivity of building blocks, pre-market. By simulating multiple blueprints, teams can better understand how different interconnected combinations of business building blocks impact value, including volume, sales and profits. For example, would a beauty beverage that plays to a beverage company’s strengths (e.g. in a 24-pack of 12 oz plastic bottles shelved in the water aisle) generate more profit than one that better targets the desired consumer but plays in a new area for the company (e.g. 12-pack of 2 oz shots shelved in the beauty aisle).

Ultimately – just like the goal of the entrepreneur’s iterative learning launch is to find the highest-potential way to scale up a business, the goal of Fast-Forward® is to help companies find the “highest-potential” blueprint to scale up the business, which in turn enables faster alignment, funding and action focused on what matters most.

Key Points

In the world of innovation, the balance of power has shifted from big companies to entrepreneurs.
Entrepreneurs are launching businesses differently by taking a small scale “iterative in-market learning” approach.
While this approach is appealing to big companies, they aren’t built for iterative, in-market learning.
Nonetheless, big companies can replicate the benefits of the entrepreneurs approach by blueprinting, prototyping, and simulating different ways to turn an idea or technology into a successful business – before launching into market when it’s faster and cheaper.
This approach – which we call Fast-Forward® – injects the benefits of the entrepreneur’s approach in a way that fits into most big company innovation processes.