Posts filed under: H17 posts

On 22 June 2015, Daan Witteveen and Toonbranbergen gave a workshop on the Open Incubation model at LaunchBase, the incubator program of Maastricht Univeristy. Some 1o teams participated in the workshop. In the workshop the 5 main challenges that ventures teams face were discussed:

  1. How to start an open venture together with multiple co-founders and partners?
  2. How to find a balance between contribution & rewards of the venture team members?
  3. What types of contribution & rewards do we recognize?
  4. How to deal with he need for ventures to attract different skillsets both at the start and over time?
  5. How to combine an economical viable business model with social entrepreneurship?

To deal with those questions, the particpants learned how to apply the Open Incubation Contributon & Reward model and the Venture Governance framework. For an impression of the workshop, see the episode on Vidacle.

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With the increased popularity of entrepreneurship, lean, collaborative and open start-ups emerge. Everyday, thousands of new ventures embrace open source software development, common creative licensing, collaboration platforms, crowd sourcing, crowd funding and social entrepreneurship from the start. Technology start-ups have redefined competition. To stay in business, corporates increasingly realise the importance of innovation through venturing and ecosystems. Traditional ecosystems are primarily supply chain driven. In the new ecosystems, we see corporates, start-ups, universities, students and VC’s collaborate to develop new products and solutions. The venture economy is taking of.

Open Incubation

Starting-up of a new venture – commercial or social – is nowadays accessible to anyone wanting to cross the chasm[1]. Venturing platforms and forward thinking by Steve Blank, Eric Ries[2] and Alexander Osterwalder – to name a few – have shown us a new approach to entrepreneurship, venturing and business model design. However, in my conversations with founder teams, I came to realize that it is not only the venture methodology that is changing. The way ventures are being incubated – at the start – is changing as well. Contrary to the 20th century economic model, which was very focused on economic value creation, a new generation of entrepreneurs has started to think differently about the purpose of a venture, its values, organizational design and equity ownership. Thomas Malone describes in his book ‘The Future of Work’ the emergence of loose hierarchies[3]. Lean, open and collaborative venturing approach is what we defined as Open Incubation.

In progress: the Open Incubation Playbook

Lean, open and collaborative ventures need to develop a different perspective on venture governance. A new playbook is required to enable ventures to align the roles, contributions and rewards of their participants. Yancey Strickler, co-founder and CEO Kickstarter, said in an interview with Wired Magazine[4] that projects on Kickstarter “are often funding things on the bleeding edge, we’re tasked with thinking about how the future should be governed. We take this responsibility very seriously”.

In the Open Incubation Playbook, we want to address the challenges that lean, open and collaborative venture teams are facing: How to start an open venture together with multiple co-founders and partners?; How to find a balance between contribution and rewards & benefits of the venture team members?; What types of contribution and rewards & benefits do we recognize?; How to deal with he need for ventures to attract different skillsets both at the start and over time?, and; How to combine an economical viable business model with social entrepreneurship?

Interested? Take a look at the first draft of the Open Incubation Playbook paragraphs

See also the Open Incubation workshop at LaunchBase Maastricht

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Last year as part of the Growth Track program at Deloitte, we invited a number of thought leaders to share with us their view on the world in 2020. Although the speakers were experts in a variety of domains such as technology, social media, economics, life sciences and data analytics, they shared some of the same insights. Those insights covered the obvious and increasing importance of data, analytics and social networks. But also the impact of bio & nano validation and new emerging business and organization models that have to cope with increasing uncertainty and change. Although I had a fairly good understanding of the impact of technology on the way we live and work, it became crystal clear to me that it is the combination of all of those areas that makes it that the tipping point of the future is TODAY.

The tipping point is a concept that describes the moment that a previously unnoticed development has rooted so deep that it suddenly explodes with an overwhelming power. In mathematical terms it can be best explained through a pattern of exponential growth. If you double your results during each period, your performance is times 1000 by period 10 (1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024 …).

Exponential growth is counter intuitive as we typically frame series of events on a linear scale : for example 1,2,3,4,5,6,7,8,9,10. As exponential growth models are difficult to understand we typically we project linear growth in business. This is obviously not correct, as many happenings by nature have an exponential growth component. Moreover, our exposure to exponential growth is increasing as we further move in the hyper connected world. It works out two ways: In a positive sense, exponential network effects are one of the main drivers behind the success of ecommerce and social networking. On the down side , the same network effects are causing more and more black swans of unexpected and unforeseen risks. Our increasing exposure to exponential growth factors makes the search for resilient organizations and business models more relevant than ever ..

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Traditional media companies manage diversified portfolios of newspapers, magazines, Internet, radio and TV channels. As a result of decreasing (print) volumes and a shift of advertising spend from print to Internet, mobile and TV, profit margins are diminishing year over year. Despite the economic down turn, the main reason for the decline is the ‘end game’ which traditional media are experiencing in most of its activities. This accounts for newspapers and magazines but it happens even so for 1.0 websites often acquired by media conglomerates in the late zeros.

Unfortunately, no best practices have been developed in the media sector that show case a new future with a sustainable business model. Where this is true for individual, mostly traditional media companies, a new media model is emerging following the ‘open incubation’ principles based on open innovation and distributed entrepreneurship. I call this ‘platform publishing’ a development that traditional media companies should embrace, but ignored so far …

Platform publishing

Contrary to vertically integrated, non-collaborative media companies, platform publishing is an ecosystem whereby platform based service providers enable the emergence of new innovative micro-publishing models. Platform publishers offer media initiatives, start-ups, bloggers, app developers and content owners access to all services required to develop, manage and exploit a media proposition.

A successful platform publishing provider is WordPress. WordPress, founded in 2003, enables bloggers to easily develop a blog or website. Yet, WordPress would not have been the most successful platform publisher if it had stuck to the provisioning of a blogging platform only. Today, WordPress has developed into the largest ecosystem of bloggers, service providers and ventures that offer thousands of services helping us to develop a blog into a – all strings attached – media or e-commerce company. The third party services are provided through the WordPress (app-)store and range from hosting, advertising optimisation tools, design, site analytics to (micro) payment services.

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Key activities become available ‘… as a Service’ for micro-publishers

Successful platform publishers break down the key activities of media companies into parts and offer these ‘… as a service’ to micro-publishers, ventures, and increasingly large enterprises. As such platform publishing resembles much to the successful franchise model in retail developed in the eighties of the last century. Typical ‘… as a Service’ provided functionalities by platform publishers such as Zanox (affiliate marketing), Facebook, eBay and Amazon are managed hosting, social media tools, (micro) payments solutions, administration, content and editorial tools, reach (access to readers, users and potential clients), advertising, design and functional tools. For sure this list is not limitative as more services are provided day and night …PP3

Platform publishing is democratising venturing

Platform publishing is more than the provisioning of services to micro publishers. Platform publishing is enabling the lean start-up approach introduced by Eric Ries. In the past there was as high barrier to entry for start-ups due to large front-loaded investments in server capacity and software licenses. Today, platform publishers and cloud services are providing similar services much cheaper and based on usage (OPEX). Together with open source software, free content and open licenses (i.e. Creative Commons) hacking a minimal viable product (MVP) can be done in weeks rather than months. As a result, venturing no longer requires large investments (CAPEX) funded by venture capital.

With less money needed a new venture industry is emerging funded by serial entrepreneurs, informal investors and crowd funding platforms. It is only recently that globally the number of (micro) technology start-ups has skyrocketed. Thousands of new start-ups are building new layers of functionality and services based on smartphone sensor technology and existing publishing platforms, again adding new features and services in the field of mobile, social, video and gaming. Platform publishers and cloud services are making entrepreneurship accessible for everyone.

Yin & yang: together expanding the ecosystem

Platform publishers and mirco publishers have developed a ‘yin & yang’ relationship where collaboration has overtaken the zero-sum competition that used to be the default mode in media. Jointly they create a web of ventures and micro publishers that will further expand the ecosystem. The more platforms and ventures, the more new innovation and start-ups will arise. In a formula:

1+1 = 2 (+1) = 3 (+2) = 5 (+2) ….

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Platform publishing will guide media companies to explore new business  models

After years of declining volume and margin, the media industry still is in the first and second phase of transformation.

Traditional media companies have responded to the innovative start-up movement by starting to invest in start-ups through their corporate investment arms (second phase of transformation). Although I believe this a good step forward for media companies to embrace innovation, it does not make their core business such as newspapers, magazines and Internet part of the expanding and democratising platform publishing ecosystems. An active contribution to the emerging platform publishing ecosystems (third phase of transformation) is needed to let media companies create a new future.

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Media companies do not have to start from scratch; instead, the only thing media companies have to do is to make as many as possible internal yet value adding activities available to third parties. Activities that qualify for the platform-publishing model could be sales advertising, administration, content (first look etc.), journalists, editing, printing, profiling, promotion and hosting. It speaks for itself that these services need to be top quality and scalable benefiting both the third party clients and the own media titles.

A radical review of core and non-core activities is needed

Whereas I believe that platform publishing will teach media companies to explore new business models, most media companies consider the above-mentioned activities as non-core. Many activities such as printing, distribution and administration have already been outsourced. A radical review of core and non-core activities is needed for media companies to become a platform publisher. If media companies succeed to become a platform publisher, I expect that, with exception of the main titles and brands, the ‘slope of the tale’ titles will become micro companies (created through buy-outs) using the platform services provided by the media company. If successful the platform services will be noticed by new media ventures and – previously unheard of – competitors …

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For decades governments and business leaders are trying to understand the venturing ecosystem in Silicon Valley. With over 30,000 start-ups, a world leading venture capital industry and continuously emerging high growth technology companies, the Bay Area is the most admirable and innovative ecosystem in the world. Not surprisingly, the Silicon Valley is seen as a best practice for business regions around the world. Many attempts have been made to copy the Silicon Valley model into other places. Yet, despite these efforts, the Bay Area ecosystem remains the single unique place for talent and ideas to unfold. Notably, the valley has several times transformed its ecosystem entirely in the past 40 years. From silicon in the seventies, software in the eighties, internet in the nineties and social in the zeros, the Silicon Valley managed to quickly develop the winners in emerging industries. And again, the Bay Area is in the midst of a transformation refocusing on the maker industry, a movement that is expected to disrupt entire traditional product industries.

In this blog I will share my view on the main differences between the Silicon Valley ecosystem and those we see in the rest of the world. What is required for corporations to become successful in venturing? How to embed (corporate) venturing in the traditional, control based organizations? And how to engage ecosystems in a successful venturing strategy? Before addressing these questions, I will first shortly discuss a key distinguishing factor in the success of the Bay Area. This seldom-discussed factor is the operating model of most Bay Area companies.

The Silicon Valley operating model – designed for growth

In a previous blog on the Future of Business Incubation and Venture Funding, I provided an overview of innovative venture platforms and methodologies that are being developed at the tail of the venture industry. More than ever, starting a start-up is accessible to everyone with a vision, team and drive. New ventures build upon a new breed of venture innovations such as the lean start-up model, cloud services, collaboration platforms, accelerators, crowd funding and micro venture capital. Yet, even though the scale of the venturing industry in the valley is a league of its own, this is not what sets the Silicon Valley apart. In my view – and in addition to the scale of the venturing industry – the secret of the success is to be found in the operating model of the leading tech companies in the Bay Area.

Traditional ecosystems are primarily ‘value chain’ driven where suppliers and knowledge institutions collaborate in the field of production and product development. These collaborations are driven from the ‘core’ of the business. In more advanced ecosystems, players apply an open innovation approach to collaborate on research & development. The value chain collaboration model exists in the Bay Area too, though the main technology players such as Google, Facebook, Twitter, Airbnb, Cisco and Apple follow a different operating model which is critical to the success of the valley. Rather than efficiency driven value chain optimization, the Bay Area operating model is designed to enable growth for both the leading tech players as well as the start-ups. A ‘what is good for you is good for us’ philosophy.

The Silicon Valley operating model consists op three building blocks:

  1. The first component in the operating model is ‘employee mobility’.
  2. The second building block is what I call ‘scaling the core through ‘moon shot’ thinking and living the brand’.
  3. The third component is the continuous focus in the valley on developing platforms and interfaces’.

I      Employee mobility

The number of start-ups in the Bay Area is overwhelming. According to Wired Magazine,  51 new tech companies are launched every month in the San Francisco Bay area.  The majority of these start-ups are struggling to survive and find it hard to raise capital or worse to find clients. While most start-ups fail or will be ‘team hired’ by a larger player, only a smallish percentage of start-ups manage to raise venture capital required to build a company at scale.

In traditional economies such a high failure rate could have serious social and economical side effects, but not so in the Valley. Due to a high employee turnover – in the Bay Area it is very common to change jobs every 2 years – and consequently high employee mobility between established companies and start-ups, the cost of failure is no more than the loss of income in a given time. Entrepreneurial attempts – success or failure – are very positively perceived during job interviews. It speaks for itself that a positive side effect of high employee mobility is the sharing of best practices and learning.

II    Scaling the core through ‘moon shot’ thinking and living the brand

Most tech companies in the valley set audacious goals and a global ambition with a mission to make the world better. At Google this is called ‘moonshot thinking’. Stretching your ambition ‘10x’ requires you to reconsider your underlying business assumptions. As a result new approaches and unexpected solutions may come along your path. Working on a good cause is naturally connected with moonshot thinking. It demands for a system approach rather than a product-only focus. Most tech companies apply design thinking to connect the higher purpose with product development.

On a day-to-day basis, all Silicon Valley companies follow an agile development approach. This in contrast to the ‘waterfall’ development method – in use by most traditional companies – requiring detailed business planning and tight control mechanisms. In this blog I will not describe in detail the agile development approach. The point I want to make is that agile companies have a different view on leadership, organization and empowerment. Traditional management skills and controls are not equipped to deal with instant decision making let alone a culture of experimentation through MVP’s (Minimum Viable Products) and A/B testing. How do Silicon Valley companies manage to align vision and growth with an agile development approach? How do employees and developers know what to do and how to handle issues as they arise? One of my observations during visits to the valley is that all tech companies, both start-up and established, pay a lot of attention to the ‘living of the brand’ in every detail and aspect of the business.

By ‘living the brand’, tech companies in the Bay Area set implicitly the direction for further development. Airbnb has dedicated almost an entire floor in its new office building in San Franco to showcase the brand evolution and the look and feel of rebuild lodges from most visited places across the world. ‘End-user focus’ and ‘details matter’ are the two most heard key messages that are amplified throughout the entire organization, best illustrated by the health food programs in place at all leading players.

‘Living the brand’ is a leadership philosophy that provides teams in high growth companies with guidance to do what they should do. It may seem a contradiction, but the more scalable the platform, the more soft leadership elements you will find in the Bay Area tech companies.

III   Platforms and interfaces

The third component of the Silicon Valley operating model is the ongoing focus of Bay Area tech companies on developing platforms and designing multi layer interfaces into their business model. Examples of platform companies are facebook, twitter, indiegogo, udemy and Android (Google). Examples of interfaces are API’s (Application Programming Interfaces) and App stores. Through developing platforms and API’s, big tech companies enable other companies – often new start-ups – to build new innovative services and product extensions on top the platform. This ‘plug & play’ approach makes it easier for other companies to collaborate. Often standardized governance and revenue share models are readily applicable. The objective of the platform & interface approach is without exception to increase customer value. Please note that this is a very different starting point to collaborate than the value chain oriented players focused on creating efficiencies through outsourcing and off shoring non-core activities.

Ecosystem strategies require corporations to change the operating model

In this blog, I shared a number of observations that I believe are fundamental to the success of the Silicon Valley ecosystem. Much effort has been put into establishing similar ecosystems elsewhere. Mostly, these attempts were focused on stimulating venture capital and entrepreneurship through incubators and entrepreneurship programs. However, with the emerging seed- and crowd funding and platforms – such as Angellist, Indiegogo, Y-combinator and 500 start-ups – seed capital is widely available. Furthermore, the lean start-up methodology advocated by Eric Ries provides a blue print for start-ups to develop an idea into a product, solution or company based on the same end-user orientation as common in Silicon Valley. The lean start-up approach can be applied anyplace and anywhere – not only by start-ups. The missing link in the development of venturing ecosystems is that leading aspirational ecosystem players need to change their operating model too.

Once leading ecosystem players accept employee mobility to be a driver for change, adopt a platform approach and start embedding third party interfaces into their business model, we will start to see flourishing Bay Area alike ecosystems. Further, a strong purpose and a ‘living the brand’ approach will create an environment where full empowerment becomes the norm, replacing top-down management and controls.

As a result, the Silicon Valley operating model enables low barrier collaboration between the leading players and emerging start-ups. Aspirational ecosystem players that adopt this model will increasingly see more growth opportunities through collaboration, investments or acquisitions. A side effect is that entrepreneurs will become less concerned about failure as they now have a fall back scenario to give their start-up learnings a second chance.

Corporate venturing: developing the edge and changing the core

Developing the edge of your business is the most heard goal of corporate venturing. To cope with the need for innovation and new business opportunities, corporate venturing and partnership creation are high priority areas at corporations. Corporate venturing drives connectedness between the corporation and the ecosystem. However, successful ecosystem strategies require the core-operating model of your company to adapt to the three building blocks as described in this blog. Only then corporate venturing will enable the development of new business on the edges of the core activities of today. In other words, aspirational ecosystem players should not only use corporate venturing to develop the edges of the business, it demands the core business to adapt to the needs of an ecosystem as well.

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In the industrial age, the GDP growth in the Western world had been funded by constantly increasing debt levels. Governments, companies and families were able to take on more loans through sofisticated financial instruments. Countries year after year funded deficits with newly issued obligations. As long as the debt in percentage of GDP remained constant, more debt was not considered an issue in the high growth Western economies of the last decades.

Not only governments used debt insruments to fuel growth of the economy. We all took on mortgages, personal loans and car leases. The impact of this loan explosion was twofold. It made us asset rich (inflated though ..) and it boosted the economy through higher spending. While we became richer in terms of assets, the dark side became apparent after the 2008 credit crunch. Many families that bought into the real estate market found that their assets no longer were ‘in the money’ as the value of their properties declined below the mortgage obligations. Incurring debt changes the nature of (legal) ownership into economic ownership of options.

Also companies gradually introduced debt funding as a key instrument to value creation. Whereas 50 years ago loans were occasionally used to fund capital expenditure or working capital, the leveraged buy out market was until 2008, driven by financial leverage capacity of up to 10x EBITDA. The consequent high company valuations created the perception of a bright future and wealth. Again resulting in higher spending and fueling the economy. Yet, similar to the mortgage market, the option (on value creation) became part of the nature of equity ownership. The claim of the equity holders is limitted to value creation (or loss) as the claims of the debt holders come first (interests and repayments). According to the Miller & Modigliani theory, financial leverage creates value as it lowers the cost of capital. Not unlimmitted though. The credit crunch illustrated clearly that the pay off of to much leverage is an increased risk profile and credit default risk…

Debt and oil fueled the industrial economy. It created wellfare and GDP growth. It made many of us wealthy. However, the flipside of the debt fueled economy is the following: legal ownership is not the same as economic ownership and these two types of ownership diverted more and more. Too much debt makes us vulnerable to risk. It is obvious that more debt is not an option. This is even more true as continuous innovation & industry disruption result in shorter Product Life Cycles’s with a shorter forecast horizon and increased risk.

So what is next? How to develop a new democratized and mindful economy? Open Incubation is building upon social & open innovation and distributed entrepreneurship. In this blog I will explore the concept op Open Incubation, provide cases and develop a framework.

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On 28 November, Deloitte announced the EMEA Deloitte Technology Fast500 winners in London. The technology industry is renowned for its innovation and disruptive business models. Over the past years highly successful tech exits and IPO’s became trending topics. I mention the recent IPO of twitter and the recently announced acquisition of the Israeli start-up PrimeSense (Fast50 Rising Star in 2011) by Apple.

In this blog, I will share three initial M&A observations of the Fast50 companies over the period 2008-2012. The observations are based on Deloitte research of the Fast50 programs in Continental Europe, Israel and Canada.

Observation 1 – Technology has become a very M&A active industry

In Q1 2013, the TMT (Technology, Media & Telecommunications) share of all transactions globally reached a stunning percentage 20%. Within the TMT industry, 2/3 of the deal volume is technology and internet. Not surprisingly, the US is leading with a TMT share of almost 25%, meaning that 1 of every 4 transactions in the US is within the TMT industry. In Europe the TMT share is 17%. Yet, in 2012, MergerMarket recorded 900 TMT deals in Europe versus 1000 TMT deals in the US. To illustrate the M&A activity of Fast50 companies: in the Benelux, roughly a third of all Fast50 companies have involved in an M&A or fund raising event over a period of 5 years.

Continuous innovation, internet platforms and connectivity result in shorter product life cycles. More than ever, TMT companies need to consciously and constantly ride the path from innovation to scalability to efficiency. The window of opportunity is short. Not surprisingly, we see a variety of M&A strategies within the TMT industry, but also within companies. This makes TMT industry unique from an M&A perspective

Large corporations in the TMT industry pursue three types of M&A strategies simultaneously:

  1. International consolidation, currently taking place in Telco and Media and driven by scale and (network) synergies
  2. Cross industry acquisitions of innovative and fast growing Technology players, e.g. Technology Fast50 winners
  3. The rebirth of Corporate Venturing. Corporate Venturing used to be in the late nineties a popular approach to build ‘options’ through investments in innovative start-ups. These days corporate venturing is much more focused on developing adjacent business areas or applications.

Observation 2 – ‘Buy & build’ is the dominant M&A strategy in the EMEA Deloitte Technology Fast500

As for the large TMT corporations, Deloitte research indicates the same variety of M&A strategies among the Fast50 companies in Continental Europe, Israel and Cananda. Clearly, venture capital is important with a share of 33% of all Fast50 transactions. Yet, exits only represent 10% the transactions and quite surprisingly, buy & build is the largest M&A strategy with a share of 39%. This means that Fast50 companies start doing ‘smart’ acquisitions early in its career.

The data shows a new perspective on venturing in Continental Europe. Fast50 companies actively pursue ‘smart’ acquisitions to realize growth and to develop new compentencies. Building companies to last is the mantra. My experience with Fast50 entrepreneurs is that an exit is not the primary objective unless the business opportunity requires so. The Continental European model clearly differs from the ‘blockbuster’ venture capital model renowned for Silicon Valley and Israel.

Observation 3 – M&A strategies vary significantly per country. This reflects the different nature of the technology ecosystems in Continental Europe

In our research, we have noticed significant differences in M&A strategies for Fast50 companies per country. In the Netherlands, with Amsterdam as the hub for internet & cloud start-ups and Eindhoven, Delft and Enschede focussed on technology and nano technology, all transaction types such as venture capital, growth capital, buy & build, MBO and exit are more or less evenly spread. In the CEE countries 50% of all Fast50 transactions are buy & build. The second largest category in the CEE countries is growth capital. Growth capital and buy & build strategies often go hand in hand. In Turkey buy & build accounts for 75% and Portugal leads with 82%.

The outliers are France and Israel. 2/3 of all Fast50 transactions in France were exits. In Israel 93% of all Fast50 transactions were venture capital. Clearly, the venture ecosystem in Israel shares the most characteristics with the Silicon Valley blockbuster start-up model.

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Innovation and entrepreneurship are hughly important to transform our economies. Not an easy undertaking these days. Yet, despite the financial crisis and increasing unemployment rates, I like to mention two disruptive developments that, in addition to crowd funding (see blog ‘OpenIncubation goes mainstream though crowd funding’) will boost exponential innovation and entrepreneurship to unprecedented levels. These developments are mobile payments and online collaboration platforms.

Mobile payments & micro businesses

The first disruptive development takes place in Africa where telecom operators provide mobile payment services to millions of people who previously had no banking account but did have a mobile phone. The widespread acceptance of mobile payments in Africa is spurring entrepreneurship, exponential innovation and business opportunities. Safaricom, the Kenyan mobile-phone operator who successfully introduced the mobile payments service M-PESA, now widens its mobile payments services to savings and loans. This way, micro-business financing becomes available to anyone with a mobile phone. M-PESA is already being used by almost 15 million people out of a population of 19 million adults.

 Safaricom

Open collaboration platforms

The second disruptive development to transform our economies comes from open innovation and collaboration platforms such as Odesk.com (collaboration platform for freelancers), Githup.com (open collaboration platform for coders), Kaggle.com (collaboration platform for data analytics) and Innocentive.com (collaboration platform for problem solvers). An increasing number of freelancers, entrepreneurs, students and corporate institutions participate on these distributed collaboration platforms to create unseen opportunities on a scale that was previously only achievable by multinational corporations.

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Entrance to the global economy

The combination of mobile payments and online collaboration platforms are the seeding ground for further exponential innovation in Africa. It provides the African workforce a non-barrier, very competitive entrance to the global economy. Not surprisingly, Kenya is seen as one of the most innovative regions in the world. In Europe, I expect that platform enabled entrepreneurship will become soon the alternative route to stimulate and transform our weak economies. Welcome to the Venture economy.

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Daan Witteveen is industry leader Technology Media & Telecom (TMT) at Deloitte with a passion for technology enabled business models, innovation and venturing. When asked what human nature is to him in his field, Daan replies: “Human nature is to initiate what’s important at any time while taking ownership and responsibility over the execution of the idea: also called ‘distributed entrepreneurship’. Entrepreneurship that is accessible to everyone.” According to Daan technology developments enables this, spreading innovation quickly.

The future of innovation and entrepreneurship

In the industrial economy, small companies were mainly active on a local scale while the global market place was for large multinationals. In the last decade however, new technology is rapidly changing the business landscape enabling innovation and boosting entrepreneurship in both multinationals as well as through thousands of start-ups.

IT systems such as ERP and CRM are supporting the primary activities of a company. Yet, in the digital age these primary activities are becoming digitized as well. Digital companies create competitive advantage through real time (big) data analytics resulting in continuous improvement of the primary activities. “Large data will have a huge impact on innovation, venturing and collaboration”, according to Daan. “Or to put it in other words, the way we run our business, we collaborate and how we organize ourselves will be thrown in the coming years.” Daan sees three emerging trends:

Cloud as a platform for business, innovation and venturing

As traditional enterprise applications are moving to the cloud and software is provided ‘as a service’, it is the business owner and no longer the IT department that decides on which software to deploy. Ever more of these applications truly focus on enabling innovative and adaptive business models. Not only multinationals and large institutions benefit from cloud solutions, Daan says. Due to sharp declining IT development costs through cloud solutions and open source software, new venture models arise such as lean ventures and start-up boot camps. “In the near future I expect the emergence of a few highly successful technology driven business platforms in the likes of Amazon, Facebook, Salesforce.com, Innocentive and eBay.”

The company ‘as a service’ fostering distributed entrepreneurship

Think of the world consisting of platforms available ‘as a service’. Governments make rules and regulations to create frameworks for collaboration. Roads, railways, power and data networks are available as a utility or ‘infrastructure as a service’. Note that it was not long ago that many of these services were considered proprietary for the happy few.  However, once available for everybody these platforms, provided ‘as a service’, boosted our economic growth and welfare. The importance of the railways in the 19th century on the US economy is in essence not different from the tremendous impact the 2G and 3G mobile networks had on the European economy.

Daan asks us to imagine that ultimately everything will become available ‘as a service’, i.e. proprietary ownership is no longer relevant. “Would it be possible for entrepreneurs to start a venture? A venture whereby the key building blocks of the required corporation become available ‘as a service’?” Daan believes that ultimately cloud computing, technology enabled services and open source software applications will take away all barriers to start an organization of any kind. Collaboration tools support systems for bookkeeping and invoicing and whatever you can think of will sooner or later become available as a service. Mostly available for free or pay as you go, no upfront costs. The company as a utility or ‘as a service’ may turn every idea, plan or dream into a venture. In this new world entrepreneurship is not only possible within the walls of the corporation. Distributed entrepreneurship is just a few clicks away …

Technology platforms and applications ‘as a service’ will replace outsourcing

Traditional outsourcing is about taking over entire business processes by third parties. While business process outsourcing made companies more efficient and cost effective, the benefits are mainly achieved on a macro level. On a micro level the opposite is happening. Due to strict service level agreements (SLA’s), innovation and entrepreneurship were only allowed within the existing SLA frameworks and objectives. No surprise that insourcing is in the rebound. This is not only because innovation is limited by the principal-agent relationship formalities, but also because more and more traditionally outsourced solutions become available ‘as a service’. It puts the principal back in control over the entire process, realizing the same efficiency in a more adaptive manner. Good examples are found in the banking, insurance and mortgage industry in the field of claim handling, fraud detection and online banking. What is your core business in the future?

POSTED BY LIEKE VOERMANS ON NOV 15, 2011 on http://www.tedxamsterdam.com/2011/human-nature-forecast-daan-witteveen-on-innovation/

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Open Incubation builds upon open innovation and distributed entrepreneurship. Open Incubation is a game changing development in innovation and venturing. It captures concepts such as lean, agile, collaboration, openness, social and sharing. Open Incubation is an invitation to participate in the creation of a new democratized and mindful economy.

OpenIncubation.com will explore the concept of Open Incubation, provide case material and develop a framework. The quadrant in this post will be used in an article on Open Incubation which will be published in a few weeks. We welcome comments and suggestions.

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