Big bets on big ideas


Big bets on big ideas – by philanthropists ‘Problem first, tool second’ is a maxim that is common among philanthropists, but far from common in the startup world.

We celebrate the fast growing entrepreneurial culture, but too many startups are ‘noddy projects’, built on exploiting little more than convenience or alacrity; often led by people with scant knowledge or experience of management or about the sector which they aim to enter and its customers.

Many fewer are the enterprises that start by identifying major needs or opportunities and building a business to fulfil them. Among these are the Young Foundation in the UK, which has long supported social enterprises, and Village Capital in New York, which has raised funds and then used them to bring experts to bear on major world problems.

But also there are individuals who have made millions and then sought to use their wealth to attack these problems, such as Bill Gates and Mark Zuckerberg. Do their approaches tell us anything about how we could address bigger issues and address them better?

What is common to most of them is that they aim to use the high level of their own expertise with which they have achieved their own success, and do so in wider, more beneficial fields where the returns are not necessarily financial.

Soon after Dustin Moskovitz, a Facebook co-founder, and his wife began their philanthropy five years go, they partnered with a charity research organisation called Give Well, that identifies projects that ‘provide outsize human benefits for the dollars invested’, through which they gave substantial sums, inter alia to a programme for distributing mosquito nets to reduce malaria, and to a programme that gives cash directly to poor people in Kenya and Uganda. More recently they have chosen to fund projects that mitigate potential global catastrophes, like an epidemic of a deadly disease, biological warfare and the dangers posed by artificial intelligence.

‘Tech people tend to be more interested in early-stage startups’, said one expert, ‘they typically support disruptive new ideas, get more involved in their giving and show a willingness to move quickly to another approach when one fails.’

Zuckerberg and his wife (who is a doctor) chose to invest funds in efforts to build basic tools to help the whole scientific community to make breakthroughs in research. A substantial sum went to create a new research institute in San Francisco – the ‘Biohub’, whose first project was to map all the cells in the body and set up a rapid strike force to tackle outbreaks of infectious diseases like Ebola and Zika viruses.

And they aim to advocate for more private money for this purpose, and will ‘likely take ownership stakes in for-profit companies doing promising work.’ Their multipronged approach – gifts, VC investments in businesses with social missions, and policy advocacy is described as ‘giving them maximum flexibility’.

Pierre Omidyar , founder of the eBay online auction and retail site, was an early pioneer of this concept. His philanthropic organisation focused on efforts to bring financial services to underserved populations. It financed a non-profit that makes microloans in Africa, Asia and Haiti; and it has invested in a peer-to-peer lender and in a company that provides insurance to low-income people in emerging markets. He participates in an advocacy group that partners with governments and others to encourage the distribution of money digitally instead of through cash handouts. ‘We have a motto here: problem first, tool second’, said the managing partner of his Foundation – an approach ‘widely adopted by the region’s philanthropists’.

The Omidyar Foundation which focuses on early-stage projects, also takes board seats and provides networking opportunities and training to the organisations it finances. ‘Half of the organisations report that our non-monetary assistance is as valuable as our monetary assistance’, says the managing partner.

Measuring success ‘is a bit of a fool’s errand’, he has said; but proactive, they are. At all events, principles like that of focusing on underfunded yet highly effective charities seem to remain paramount. So far we have rarely seen comparable individuals or organisations in the for-profit field.

Source: New York Times, 8.11.2016

John Whatmore, January, 2017


Speeding up corporate innovation


Speeding up corporate innovation
A major corporate innovation consultancy bemoans the fact that corporates readily experiment with the latest innovation practices but without clear ideas on what they want to achieve; and offers a more disciplined approach.
Upcoming: How can we marshal entrepreneurial initiative to address bigger issues?

Why is it that so many executives still claim that results are not what they expect and after a few years of trying, shut down innovation initiatives?’ they ask. They see corporates asking what to do to innovate and more specifically how to do it before addressing one other critical question; innovation to achieve what? As a result, many companies end up executing the hottest and latest approach in innovation they have heard or read about.

Many big companies use a venture arm (such as Google Ventures, Unilever Ventures , Distill Ventures, Santander Innoventures and GlaxoSmithKline’s SR-One) to seek out startups in which they can invest (and to which they can contribute) to see whether they will generate the innovation they seek. But the corporate world is reportedly sitting on vast cash piles rather than make investments, so should innovation be treated (as this article suggests) with the same disciplines as the rest of the business?

To deal with their concern – that many corporates play at innovation, the approach being proposed aims to engage a group of senior executives and stakeholders and to help them to align their perspectives and ambitions for innovation, and understand choices and tradeoffs they need to make before starting an innovation initiative. They need to ask “What is our vision of success for innovation in our business?” and “What should our innovation capability look like?”

The approach they suggest first asks these executives to look outside of the company and define what significant changes they see occurring around them now and in the future, what they believe the implications of such changes are for the company; and then to prioritise those that they can and should address with innovation.

Next they need to explore the scope for innovation: what types of opportunities at what stages of development will the work address, and how broad should participation be?

The conversations should of course be about delivering results – what results should be expected, not just financial results but other dimensions such as geographic footprint, category leadership, new ways of customer engagement, and/or establishment of new economic models. And how are they to measure the business outcomes they seek – in terms of inputs (resource view), throughputs (productivity view) and outputs (results view) of the innovation system.

They need to be able to describe the future state of the organisation itself: what should the organisation look and feel like in real terms, to deliver the chosen innovation scope? And how will transitions from the current state to the future state be achieved and what are the gaps that must be closed to develop the cultural and organizational capacity to innovate.

Identifying barriers and enablers for innovation helps in understanding what to amplify, leverage or overcome. Often, the most critical barriers are not tangible processes or resource constraints, but embedded beliefs about how the business should operate. These beliefs in turn influence so much of how the organisation operates.

Finally, the aim is to build a day-by-day plan of the required activities including how progress will be monitored and managed. Equally important is that the senior people in the organization have participated in the dialogue, have a shared vision of success for the “why” of innovation, and are far less likely simply to invest in the latest innovation “flavor of the month.”

In a disruptive world, you might of course well want to play wild games, but disciplined thinking always has its place.


John Whatmore
January 2017