COVID-19 has served as a wake-up call to leaders everywhere.
Not only has it emphasised the importance of having cash at bank, and not being leveraged to the hilt, but it has also emphasised the importance of being adaptable.
So many companies are now being forced to do something that they previously neglected — explore new business models.
This applies to small business — 50% of which in the States can’t survive more than three months — as well as large corporations like Virgin Australia which might not see the other side of this pandemic.
I discussed the value of having a portfolio of both exploration of new business models, as well as exploitation of the existing, with leading management thinker, Alex Osterwalder, for an episode of the Future Squared podcast.
Episode #381: Alex Osterwalder on Building an Invincible Company
When you’re exploiting an existing business model, uncertainty is low, and therefore returns are predictable. We implement all sorts of measures to make us more efficient at execution — such as the literal and proverbial assembly line — but when the world changes, we find ourselves holding a hot potato — efficient at doing what nobody wants or is willing to pay for anymore.
Most innovation initiatives tend to fall under the banner of what Steve Blank calls ‘innovation theatre’ — maybe a one off accelerator program, perhaps a tiny investment portfolio of a handful of startups, or perhaps a central innovation team that explores several new business ideas a year.
But here’s the thing. The typical venture capital firm tracks several thousand startups a year, meets 2,000, invests in 20, and even despite all of this diligence, only one to two of these investments is likely to bear much fruit.
In fact, only 1% of venture backed startups ever get to unicorn status, and a good 75% of Series G startups — those that have raised hundreds of millions of dollars — fail to exit.
That’s the nature of innovation — it’s inherently uncertain, there are more things that can go wrong than go right, there are many unknown unknowns, too many factors outside your control and a rapidly evolving reality to deal with that can derail even the most promising of teams with the most promising of ideas.
As Osterwalder points out it in his new book, The Invincible Company, if we invest $100,000 into 250 projects, then based on typical performance, about 162 will fail, 87 will find some success, and only one will become a new growth engine.
This is precisely why venture capitalists cast a very wide net, and precisely why startups, SMEs and large corporations need to as well if they are serious about playing the long game, and surviving inevitable shocks that characterise the rapidly evolving business world.
At Collective Campus, we’ve been working on innovation with corporate executives and startup founders for over five years.
We’ve worked with the likes of Lufthansa, BNP Paribas, MetLife and Microsoft, and incubated over 125 startups that have collectively raised more than US$30M. Our core team is based in Australia, but we have clients all over the world, and in 2018 we were named one of Australia’s fastest growing companies by the Australian Financial Review, Australia’s Financial Times.
But here’s the thing…we don’t just preach this stuff. Our business is not immune, and so we practice it as best we can.
What worked yesterday might not work tomorrow. COVID-19 is a reminder of that. Many of the assumptions that underpinned our business model(s) before COVID-19 are now false, and a number of high profile engagements we had secured have either been postponed or canceled.
And that’s okay — because we’ve built a culture of ongoing experimentation and adaptation.
We’ve run hundreds, if not thousands of experiments across both product innovation, and business model innovation — the latter extending to the testing of numerous customer segments, marketing channels, distribution channels, profit models, ways of working and so on.
To celebrate our company turning five in April, I decided to take stock of many of the larger experiments we’ve run, and figured I may as well share this with the world, as it might be inspiring or useful for some.
For context, we’re a small company — a core team of less than ten people, with a few dozen hired-gun facilitators, consultants, designers, developers in different pockets of the world — from the Philippines and Serbia, to Philadelphia and Singapore.
We started life as a General Assembly knock-off, but quickly pivoted to innovation training for large corporations on topics like the lean startup, design thinking, agile, and corporate innovation fundamentals, we’ve had to innovate in and around that. This has been our core business ever since.
This culture of experimentation has baked resilience into our business, because if some chips should fall -as has been the case with COVID-19 — then others will remain standing. Should all chips fall, then that’s fine too. We’ll create some new ones.
Here’s a snapshot of just some of our larger experiments and what came of them.
After a year of running nothing but workshops and training courses, we learned that many organisations we were pitching to either couldn’t innovate internally without going through necessary systemic and cultural changes, but still wanted exposure to emerging technology and innovation in their sector.
With that, we approached and ended up developing an accelerator program for one such company, Mills Oakley — an Australian mid-tier law firm.
Law firm Mills Oakley funds $500,000 ‘Shark Tank’-style start-up accelerator
It was Asia-Pac’s first legal-tech startup accelerator, and it generated a ton of press for us. One of participating companies, Kobi.ai, was acquired by LawAdvisor, and the accelerator won Mills Oakley the 2017 ALPMA/LexisNexis Thought Leadership Awards.
The success of this program opened the door to additional accelerator programs with the likes of Charter Hall, Microsoft and Village Roadshow. We became a preferred provider of accelerator and incubator programs for the Australian Federal Government, and earned some significant funding as a result.
This fast became a new growth engine for us, accounting for about fifty percent of our company revenues for the next three years.
After two years of pitching and running accelerator programs, we learned that some organisations didn’t necessarily want to run accelerators which were mostly geared towards and attracted highly risky, early stage startups.
Instead, they wanted already funded and somewhat established startups and scale-ups to help them solve specific problems or tackle specific opportunities.
As a result, we took components of our accelerator programs — such as the marketing and recruitment piece — and developed a new product we call Startup Matching — connecting real problems with real solutions. It was essentially a form of business model innovation, as opposed to product innovation, requiring a shift in profit model and some of the key activities that underpinned our accelerators.
We’ve since run startup matching programs for NTUC Income (Singapore), Lufthansa (Philippines), Local Government (Australia) and BNZ (New Zealand), which has also opened the door to additional oppportunities with these organisations.
This, like startup accelerators, turned out to be a new growth driver for us, today accounting for about a third of our revenue.
DASA — short for ‘distributed autonomous startup accelerator’ was to be a blockchain-based startup accelerator, where companies were seeded with cryptocurrency to build applications atop of a decentralized platform we were to partner with.
However, the crypto market imploded and it no longer made economic sense for the platform to support the program.
Despite the cognitive energy that went into this, it ultimately amounted to nought, but hey, we learned a lot about blockchain — something that would come in handy.
Konkrete began life as a fractional property platform on the blockchain with the intention of making real estate more affordable to all Australians. It was born out of a collaboration with one of the startups incubated in the Charter Hall Accelerator program, Estate Baron.
We spun Konkrete off as a new entity, and managed to raise $700,000 to support its development.
It has since evolved into a blockchain-based invoice factoring service, and has recently secured several clients, and is more or less cashflow positive, as it looks to take the next step in its evolution.
Collective Campus maintains an equity position in the company, and a position on its advisory board.
Like experimentation, automation too is defining characteristic of our company culture.
If it’s a rudimentary, process-oriented and repeatable process, then it should probably be automated — a human should not be engaged in such drudgery. As such, we’ve developed a number of tools to help us free up time to focus only on high value items.
One such tool was a proposal development tool we developed that essentially generates client Powerpoint proposals, and saves us countless hours over the course of the year.
We figured other companies could use this too so we packaged it up under a brand called QuickProp, but despite our efforts it got no traction whatsoever.
Fortunately, setting up the experiment only took a few hours. The tool however is something that we continue to derive benefit from.
Back in 2017, buoyed on by a client’s idea, and the looming Christmas silly season threatening to send our revenues packing for a couple of months, and the absolute need for it, we decided to test a children’s entrepreneurship workshop over the school holidays.
We put together some event copy, posted it on Eventbrite, and used Facebook Ads to promote the workshop. Within a few days, the workshop was sold out.
Unbeknownst to us, one of Australia’s leading newspapers, The Age, caught wind of the workshop and decided to cover it. On the back of that, ABC television decided to cover it. On the back of that, I was invited to appear on Channel 7’s Weekend Sunrise.
Long story short, we’ve since delivered the workshop to over 1,000 kids across Sydney, Melbourne, Brisbane and Singapore, scored some grant funding, and since evolved it — on the back of an investment from an independent school — into an online platform.
This, thus far, has been a moderate success for us — not quite a home run, but more of a base hit with the potential to be something much bigger.
Given we have worked with over 100 startups, and have gained exposure to thousands more through our various programs, we found that we had unique insights and access to relationships that we should be capitalising on.
As a result, we established a boutique investment fund called Collective Venture Capital to make micro-investments of up to $50,000 in compelling startups. We’ve since taken equity positions in Konkrete, Ergogenic Health and are exploring post-COVID19 opportunities.
So many of our clients invest in innovation training but when they’re back at their desks, they lack the culture or step-by-step guidance required to take ideas further.
As Michael Dell said, “ideas are a commodity, execution of them is not”, and so Execute seemed like a fitting name for an end-to-end innovation tool that would help to take clients beyond the post-it notes that they might collect after a design sprint.
We explored client appetite in paying for us to build the tool (a ‘buy to build’ model we used for Lemonade Stand Online, which helps to de-risk a venture), and generated some initial interest. One such client — large multi-national FMCG — agreed, only to change course when a company restructure took hold.
It’s not a terrible idea, and variations of this are already doing quite well on the market. But we decided to can this in order to free up cognitive energy and resources for other projects.
Who knows, we might revisit it at some point…timing can be critical.
During the COVID-19 outbreak, we saw our revenues plummet and had to think quick to generate some new revenue sources.
One of our big marketing levers over the past few years has been content. I’v personally penned over 300 blogs, published 380 podcast episodes, 20 ebooks and five books during the past five years.
I had established myself as a published author for Wiley, and a regular Harvard Business Review contributor, and so with social proof in tow, and a wealth of content on myriad topics available, we started to explore whether organisations had any appetite in licensing our content to support their own content marketing efforts.
We found some that did. And it has replaced a good chunk of our missing revenue. Plus, we’re really enjoying this work.
And so Collective Content was born.
With the world in lockdown, and conferences like SXSW pulling the pin, we figured an online conference on navigating the challenges posed by COVID-19 might make sense.
Thanks to the relationships generated through the Future Squared podcast, I was able to recruit some high profile names to speak, such as Alex Osterwalder himself, Rand Fishkin, Scott Anthony, Maria Konnikova, Brad Stulberg, Nir Eyal and many others.
But despite this stellar lineup, two days of content, and a low $50 ticket price, we simply couldn’t get anywhere near the number of ticket sales required to push through with this.
The proliferation of free talks on IGTV, Zoom and Facebook Live during lockdown and the introduction of spending freezes at many companies didn’t help.
We were proud of how quickly we could turn this around, and took some learnings from it, but ultimately, it was not to be.
We’ve always experimented with different customer segments across B2C and B2B (industry, geography, company size and employee title).
One such experiment occurred in 2017, when three of the team booked a week in Singapore, and scheduled 50 customer discovery meetings with executives at large companies.
We powered through the 50 meetings, learned a ton about the opportunities in Singapore, capped off the week with celebratory drinks at Marina Bay Sands, and scored five new clients.
We’ve since established a legal presence on the ground in Singapore, and have gone on to work with many Singapore-based companies such as NTUC Income, FWD Insurance, Singapore Pools, BNP Paribas and Ascendas-Singbridge, among others.
We’ve replicated this experiment across other geographies wth varying success.
Given the face-to-face distribution channel for workshops was effectively rendered null and void by COVID-19, we decided to — unsurprisingly perhaps —shift a number of our courses online.
This is an ongoing experiment that may or may not bear fruit!
Aside from all of this, we’ve run thousands of business model, marketing and growth hacking experiments, most of which failed, but some of which opened the door to five and six figure deals, and new growth engines.
As Stephen Hawking is thought to have said, intelligence is the ability to adapt to change, and when world-shaking events like COVID-19 happen, to the adaptable go the spoils.
COVID19: Winners, Losers and New Business Opportunities
The WorkFlow podcast is hosted by Steve Glaveski with a mission to help you unlock your potential to do more great work in far less time, whether you're working as part of a team or flying solo, and to set you up for a richer life.
To help you avoid stepping into these all too common pitfalls, we’ve reflected on our five years as an organization working on corporate innovation programs across the globe, and have prepared 100 DOs and DON’Ts.