Horse, Rider, Trail: How to Keep Your Incubation Efforts Moseying Along

Readers of this blog know by now that, when it comes to incubating disruptive innovations inside an established enterprise, I strongly advocate you take a venture capitalist approach. Specifically, instead of funding innovation projects annually and hearing back from them once a year, I want you to fund them to the next milestone and check in with them once a month. Even more specifically, I want each milestone to represent a value-inflection point, a future state that is markedly more valuable than the current state, the sort of thing that would cause an incoming venture capitalist to invest at a much higher valuation. And finally, I want you to make any future funding of your projects is contingent upon them having achieved their current milestone by the date specified.

All this, however, begs a key question. What do you do when the team doesn’t? Let’s assume that the opportunity is still one you want to pursue—what do you do to get the effort back on track?

In many enterprises the response is to solicit a detailed explanation of why the milestone was missed to determine what went wrong and how best to go forward. This is accompanied by assurances that it was nobody’s fault really, and the inevitable companion request: Could we please have a little bit more money so we can get back to work?

Needless to say, that is not the VC way. What is, you ask? In this situation VCs take a page out of the old scripts for TV and movie Westerns. They sidle up to the would-be entrepreneur and say, “Well, Pardner, I’ll tell you what. Mebbe you can get some more funding, depending, but only if you swap out some part of your current plan. So, what’s it gonna be—the horse, the rider, or the trail?”

The horse, in this case, is the product. A lot of times when you create a Minimum Viable Product, the customer turns it down—it is just not something they want. Normally, however, because you went to all the effort of trying to invent something on their behalf, they will take the time to tell you what they would buy. This intelligence is invaluable. Indeed, getting it is really the whole point of building an MVP in the first place. So, if you got some good intelligence, enough to let you spec the right product next time out, all the while leveraging the skills and learning of the current team in place, then, by golly, this does warrant another round of funding.

Other times, however, it’s not the horse that is the problem. It’s the rider. Not everyone is a good entrepreneurial leader, regardless of how good their resume and their references. Indeed, that skill set is particularly scarce inside established enterprises. It should be no surprise, therefore, if the leader you put in place—someone with excellent technical skills, perhaps, and good domain expertise—simply does not have a gift for recruiting the right talent, creating the right sense of urgency, or holding people accountable to making their commitments. In this situation, to commit any further funding, you have to replace the leader. This is never an easy task. It is just not optional. If you really are not up for it, or if your culture won’t support such an action, you have to shut the project down.

Finally, sometimes you have a great rider and the team has built a pretty darn good product, but dang it, the more you engage with your target customers, the more you realize you are on the wrong trail. Here the team has to regroup, focus on a new use case, build out a new whole product, and identify a new set of target customers. Again, it’s not what we were hoping for, but if it is a product with breakthrough potential, it is definitely worth another shot, and hence another round of funding.

Horse, Rider, Trail. That’s all there is to it, folks. But before I say adieu, I’d like to give a little shout-out to my old pal, John Hamm, who taught me this formula many moons ago. You don’t want to work here out West without having some trusted compadres to watch your back.

That’s what I think. What do you think?

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Geoffrey Moore | Zone to Win | Geoffrey Moore Twitter | Geoffrey Moore YouTube