Blog III: The Deployment Process

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.