In this article, we share our top takeaways from New to Big: How Companies Can Create Like Entrepreneurs, Invest Like VCs, and Install a Permanent Operating System for Growth by David Kidder and Christina Wallace.
What is the core idea of New to Big?
When it comes to brainstorming new products, corporations typically start with their own pain points like:
- We’re losing market share.
- Our margins are shrinking.
- We have a technology now let’s go find a customer for it.
If you are thinking like this, Kidder warns that this is when “old school” downshifts into obsolescence.
Instead, you need to make sure that the product or service in development is addressing your customer’s problem, rather than solving your own problem. Market-making innovation isn’t about you. It’s about the problems or needs in the world that you are strategically positioned to address. Look outside your own walls and pay attention to the new behaviors, shifting market forces, and emerging technologies that will define both what you build and how you build it. You must reorient from “inside out” to “outside in” to discover growth. You’ll never find disruptive growth in internal, consensus-driven beliefs.
Companies can create like entrepreneurs by understanding and deploying the frameworks that startups use to succeed:
- Lean experimentation
- Design thinking
- Agile development
- Business model canvas
- Minimum Viable Product
- Risky assumption testing
Shift from Total Addressable Market (TAM) to Total Addressable Problem (TAP)
You are most likely familiar with what a Total Addressable Market (TAM) is. TAM addresses the question of how big a market is, and how large of a share a company can reasonably command. This is effective for markets that already exist, but ineffective for markets that have not been discovered yet.
Instead, focus on the Total Addressable Problem (TAP). The TAP allows you to
- Identify a significant customer problem
- Work backward from the outside in to define a solution
- Craft a business model for that solution
The TAP for mobile phones was literally the potential market size of “mobile communication”. The TAP approach is similar to bottom-up and value theory market sizing.
The New to Big Discovery Process
Assemble a small, designated team
Start by assembling a small team similar to the co-founders of a startup. This should include:
- Discovery Lead
- Financial Analyst
- Tech Expert from R&D
- Customer Insights Expert with ethnography skills
Pick a group of potential customers, listen, and observe
You are most likely looking to explore opportunities that are adjacent to your company’s core offering. Create a list of existing customers that you can have discovery calls with. If you are worried about talking to existing customers, feel free to start with potential customers that your company doesn’t already serve. Using a tool like User Interviews can help get you started.
Consider relevant new enablers that could serve their needs
Do an audit of the realm of possible for any specific issues you are exploring. An enabler could be a new trend or emerging technology - anything that is enabling a new way to address a need. Organize these enablers and business models into three buckets:
- Enablers and business models that could be used to address this specific issue
- Enablers and business models that our competitors are already using to address this issue
- Enablers and business models that are wicked cool but totally useless for this application
Understand the current and emerging business landscape, technology, roadmap, and startup/venture ecosystem
This is taking your audit from the previous step and diving deeper. Some key questions to ask:
- What are emerging trends in our industry that we need to understand and monitor?
- What type of impact will advances in technology play?
- Where are current trends and technology developments leading? How can we stay ahead of the curve?
- What startups are VCs funding in our area that we should monitor?
Combine all of these inputs to identify Opportunity Areas (OAs) and prioritize them
When prioritizing your Opportunity Areas (OAs), consider sizing, timing, and fit. Carefully answer the questions below to prioritize where you want to launch new businesses:
- Are they any blockers out there that would make pursuing this OA right now substantially more difficult?
- Why now? Does this make sense now and is this the right time?
- Is this OA a good fit for the company’s core competencies, aligned with its mission, and in a space that appeals?
- Who is the customer and what is their need?
- Does our solution actually meet that need?
- Is the business model we’re envisioning for the solution a viable one?
Set up your Growth Board (or Internal VC)
Now that you have your OAs prioritized, it is time to select which ones get funded. Start with small milestone-based investments so you can make a large volume of bets to find the right solution at the right time.
The Growth Board has three main responsibilities.
Set Growth Goals
- Revenue: Make how much revenue in what time period?
- Market: What markets are we looking to grow and move into?
- Organic/Inorganic: Invest in ideas in the company or ideas outside the company?
- Time horizon: Success in the near-term or long-term?
Manage Portfolio Health
- Focus: Do we have alignment on growth goals including core, adjacent, and disruptive opportunities and how they tie into the corporate vision?
- Size: Are we investing in a large volume of ideas?
- Quality: Do we have the right team, resources, and knowledge to move forward?
- Velocity: How fast are our bets moving?
Enable Growth capability
- The Company CEO must own the growth board and be a supporter.
- You cannot delegate growth. A CEO who is disconnected or uninterested from this initiative sends a clear message: This is something I want you all to do, but I am busy with more important things.
Who should read New to Big?
We recommend New to Big to anyone who is looking to drive innovation within a larger company. This could be:
- A CEO looking to disrupt themselves before a venture-backed startup eats their lunch.
- An intrapreneur looking to make a strong business case for innovation.
- A consultant looking to help companies install innovation frameworks into their operating system.