Introduction
I’ve just completed a consultation project with Njabini
Apparel. In order to improve Njabini Apparel’s revenues, my colleagues and I
decided to innovate its online sales experience. We discovered that Njabini
Apparel’s customers prefer to purchase items in person as opposed to online due
to the social recognition aspect of the former. We proposed a two-pronged
approach to address this issue: 1) a function allowing online customers to
“choose” which woman produces their item and 2) a function allowing customers
to “show off” their purchase to their social networks.
The above paragraph describes the innovation process. But
what comes next? How does this innovation concept translate into success for
Njabini Apparel? This post will focus on deployment, or the process by which
innovators with ideas transform into entrepreneurs with successful ventures.
I’ll use the innovation described above throughout this post to guide my
explanation of the deployment process, broken down as follows:
Figure A. The Deployment Process
Innovation
Companies need to continuously improve and expand their
product or service offerings in order to remain competitive in their respective
markets. Therefore, innovation across all aspects of the company is necessary.
Companies can encourage innovation through corporate venturing or external consulting.
Corporate Venturing
“Innovation is what the weekends are for.”(1) Companies like
Google challenge this notion by encouraging their employees to spend 20 percent
of their workweek pursuing projects outside their job description. (2) It is from
this initiative that Google has produced G-Chat, Google+ and various other
“Labs.” This is an example of corporate venturing whereby a company supports
innovation and new projects internally. On occasion, innovations resulting from
internal corporate venturing can be “spun out” of the company in the form of
separate businesses.
Some companies engage in external corporate venturing (ECV)
by investing in companies outside their own with the intent of gaining some
sort of competitive advantage. For example, Microsoft was an early investor in
HubSpot, which was recently integrated with the Microsoft’s Dynamics CRM
platform. This integration allows Microsoft Dyanmics to compete with Salesforce
in the CRM market. (3)
External Consulting
Njabini Apparel utilized us as consultants in order to
innovate its online sales platform. While our consultation has been of great
use to Njabini Apparel, we suggest that the company adopts its own practice
(like internal corporate venturing) to encourage and support innovation without
having to rely on external consultants.
Entrepreneurship
Our innovation has potential to improve Njabini Apparel’s
online sales. However, its implementation lies in the hands of Mike Behan,
founder and CEO of Njabini Apparel. Can we be sure that Mike will make the most
of our innovation concept?
An overarching concept in the study of entrepreneurship is
the individual-opportunity nexus. This concept suggests that the potential for success
of an entrepreneur cannot be determined solely through the analysis of the
individual or the economic potential of his or her innovation. Instead, it is
the relationship between the individual and the innovation that speaks to his
or her potential for success. Essentially, a bright person needs a bright idea (and
vice versa) to become a successful venture. (4)
Figure B. The Seven Types of Entrepreneurs (5)
The Individual
Mike Behan, CEO of Njabini Apparel, is a social entrepreneur
in that he uses his keen business sense to spark positive social change. With
knowledge he’s accumulated throughout his time in the D’Amore-McKim School of
Business, Mike has created a business that turns a profit while drastically
improving the livelihoods of the women his company employs.
The Opportunity
Mike Behan established Njabini Apparel in response to two
particular needs. First, women of Njabini were unemployed and could not support
themselves or their families, so Njabini Apparel provided them with jobs. Njabini
Apparel appeals to a second need or, rather, a market – the demand for socially
conscious products. The concept for Njabini Apparel is therefore defined as
demand-pull in that it was established in response to a particular need.
Commercialization
There are a number of ways to commercialize i.e. bring an idea
to market. The chart below provides the various options as to how to do so.
Figure C. Options for Commercialization (6)
Njabini Apparel itself is a (social) start up. The online
sales innovation, a product of internal corporate venturing meant to solve an
issue within the company, can be considered an in-company venture.
Protection
The online sales innovation, as explained above, is
considered an in-company venture. In the event that it brings Njabini Apparel
great success, other online retailers – perhaps even Njabini Apparel’s closest
competitors - may move to employ similar functions. In order to keep their idea
from being copied without their consent or benefit, Njabini Apparel must move
to protect its intellectual property. Below are four manners by which Njabini
Apparel could do so.
Figure D. Types of Intellectual Property
Njabini Apparel could copyright the code used to run its online
sales functions. It could also apply for utility and design patents, given that
their offering is original and has not yet been patented. Were Njabini Apparel to
secure these protections they would have the option of licensing out their
patented technology to other online retailers in exchange for royalties,
providing an additional revenue stream.
Financing
Entrepreneurs must secure funding to accelerate the
deployment of their innovation in the market. Entrepreneurs can finance their venture
by bootstrapping, turning to angel investors and/or venture capital firms.
Njabini Apparel has stayed afloat thanks to all three of these avenues for
financing.
Paricia Nolan Brown, the serial entrepreneur behind the
In-Sight Baby Mirror, swears by bootstrapping, whereby an entrepreneur starts a
company with personal finances or from operating revenues of his or her
company. Doing so allows the entrepreneur to maintain full control but at the
same time places unnecessary risk on the entrepreneur.
While both angel investors and venture capital firms may
invest in the same ventures, they usually enter during different stages in the
venture’s lifecycle and in different manners. The chart below highlights some
of the important distinctions between angel investors and venture capitalists.
Figure E. Angel Investors vs. Venture Capital Firms (7)
Angel investors often bridge the gap between bootstrapping
and venture capital. Not all venture capitals are as “cutthroat” as is the
above chart may suggest; for example, IDEA at Northeastern is a student-run
accelerator than invests in early stage ventures (like Njabini Apparel) without
taking an IP or equity stake in the company.
Adoption & Diffusion
Diffusion is a term used to explain how an innovation
spreads through a particular culture on a macro level. The rate of adoption is
the relative speed by which members of a culture adopt the innovation. There
are five categories of adopters, as shown in the S-Curve below.
Figure F. Rogers' Adoption Curve (8)
As Njabini Apparel was established to meet a particular
demand it’s more likely to be adopted quickly as opposed to, say, a technology
push innovation. However, as shown in the figure above, what comes up must come
down. Therefore, companies like Njabini Apparel, despite success with one S-Curve,
must constantly innovate to compensate for its inevitable fall.
Conclusion
Were I an employee at a large corporation utilizing the
above concepts I’d remain constantly vigilant of opportunities for innovation
within and outside the company. If I could identify and define an obvious issue
within the corporation, it’s likely I could convince one of my superiors to
support the innovation process and “champion” the deployment of my concept
within the organization. Were the corporation open to ECV I’d keep my eyes
peeled for up-and-comers in the market in which investment could yield great
benefit for the corporation. Corporations that utilize the lifecycle concepts
for innovation strategy allow for their continued growth and competition in the
market and are therefore always on the lookout for forward-thinking,
entrepreneurial employees.
