M13 Co-founder Carter Reum joins Rishi Roongta of Bain Innovation Exchange (BIE) to discuss the pros and cons of enterprise partnerships, lessons learned through his joint venture with Procter & Gamble, and the latest trends impacting consumer brands. Rishi and Carter discuss how to successfully drive innovation and compare the studio model to a corporate environment.
The Bain Innovation Exchange (BIE) is a global ecosystem of change makers and thought leaders (including entrepreneurs, corporate business leaders, venture capitalists, and innovation experts) intent on forging mutually beneficial relationships to launch new ventures and collaborate with the right partners to capture growth opportunities.
Check out the highlights from the discussion:
On entrepreneurial opportunity
A 1% difference is now 1,000x better. The advent of advertising technology, coupled with so many companies having a direct relationship with their customers, has created an environment where entrepreneurs need to be top quartile in everything they do as the difference between a top quartile and a second quartile company over three years is 5x increase in revenue.
The world has never been so open-sourced, competitive, and fast-moving. In almost every category, there are multiple players trying to achieve the same idea or end goal so the margin between winning and losing has never been smaller.
The ability to connect the dots is a key differentiator for building great companies. These early unfair advantages can create step-change growth and create a flywheel of momentum from these companies and give them an outsized right to win versus their peers.
Image courtesy of Bain Innovation Exchange
Technology has allowed so many companies to disintermediate traditional distribution models and effectively have a direct relationship with the customer.
On studio models versus corporate venture capital
There isn’t a one-size-fits-all solution for anybody. When thinking about innovation, you have to think of it from a portfolio approach and consider what the objectives are, and how to accomplish that.
The advantage of a venture studio is how it takes the best of both incumbent companies and young startups to seamlessly build a brand outside of the incumbent’s typical “bullseye.”
The model leverages the large corporation’s robust IP and ability to scale, with a startup’s dynamic talent base and ability to quickly build products and inexpensively recover from mistakes.
Venture studios also shield the innovation process from the legal liability and typical profit/loss financial concerns that larger companies typically face.
No single decision moves the needle; it’s a series of decisions compounded over a long period of time.
On what’s accelerating right now
- Adaptation curves are accelerating at this time. Examples of this are online education, delivery services, and remote working tools.
- Businesses that were being held back by regulation or human psychology are having breakthroughs in their markets.
- It’s important that successful innovators identify the second and third waves of impact that macro events like COVID have on their industry e.g. while more people staying at home will mean a higher order volume on food delivery apps, consider what means for the restaurant whose tapped beer supply will now go to waste? What about the brewer who makes the beer or the farmer who supplies the wheat for that beer?
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Ideas are a dime a dozen. It all comes down to execution. And by coming down to execution, it really comes down to the team.