Lean Elephants is not the name of a weight loss program for pachyderms.

It’s Telefónica’s world renowned intrapreneurship program and it’s definitely making elephant sized waves in the world of business innovation.

Flashback to 2012. After applying Lean Startup methodologies to a couple of innovation projects and an ideation program, Telefónica completely redefined their innovation model, turning it inward and adopting the methodology as their core way of working. At the same time, they launched Innovation Calls, an intrapreneurship program that allowed their employees to submit their ideas and, if selected, enabled them to work full time on their ideas. This is how Lean Elephants was born.

We spoke with Susana Jurado Apruzzese, Head of Innovation Portfolio at Core Innovation, Telefónica, one of the leaders behind the program, in prep for her talk at Innov8rs Paris.

The program today

For starters, this is what Lean Elephants looks like today. This process is the result of several evolutions and looks nothing like it did in the beginning.

The pillars of the program are:

• Lean Startup defines the processes and the way of working, as well as the metrics with which they measure their progress.
• 5 Different Stages as well as stage gating process to move from one stage to the next in a very similar way to the financing rounds of the venture capital world.
• Innovation Calls nurture their innovation funnel. Employees submit their ideas for the opportunity areas identified for Telefónica. If selected, they are allowed to work full time on their ideas.
• To ensure a sustainable competitive advantage, Telefónica leverages on their assets but also creates differential technology.

Like any good innovation program, the Telefónica team evolved the program based on lessons learnt in testing, challenges, and needs they’ve identified over the years. Here’s a glimpse of that journey.

Lean Elephants has become a point of reference and a case study in the startup world because it has allowed us to work twice as fast, do more with less, minimize risk, and increase the probability of finding good ideas.

Lesson One – An end-to-end process

It is crucial to have an end-to-end innovation and idea incubation process in place. It is equally important to have the necessary resources allocated to nurture the process as well as investing in the resulting internal ventures. You don’t have to have everything in place up front, in fact, the best approach is putting thing in place gradually, as you are learning how to make it work within the context of your company.

The important thing is being ready to provide the means and tools needed when the time comes.

Another critical component is giving your employees time to work on their ideas. Telefónica has found success with their “10 Fridays” initiative, an ideation program where people submit ideas and get ten Fridays to work on them. This allows employees to explore and mature ideas, hence, improving their ideation process and, at the same time, giving employees the means to work on their ideas in a way that is compatible with their day-to-day jobs.

When you launch calls for ideas, it’s important to do it around the challenges, needs and opportunities you have identified and define your Innovation Thesis. This allows you to get ideas more focused on the company’s needs and inspires employees to increase their level of ambition by presenting them with a challenge. It is also key that the idea selection process be fair and objective. Include people from other areas and profiles to provide alternate points of view in both evaluation and decision making.

In order for any of this to work, it’s important that your employees be aware of this end-to-end process, the lay of the land, and how they can get involved.

Lesson Two – Minimize the risk of your bets

Companies are generally willing to invest in a given venture if the level of uncertainty correlates with the amount of investment you are requesting and the potential return on said investment makes the risk worthy.

It’s important to invest in your internal ventures incrementally. As ventures progress, with validated learnings and evidence from the market, the uncertainty decreases. This method of funding minimizes the resources and risk required for each venture.

In Telefónica’s case, they use a stage-gating process which functions similarly to the financing rounds of the venture capital world. Everything starts with pre-ideation, which includes: Innovation Calls and all initiatives around generation of new ideas; activities to identify new opportunity areas where Telefónica is well positioned; and the differential technology created by their teams.

From there, all innovation ventures go through a five-phase stage-gating process:

In all the stages, market validation is a must, as well as strong internal sponsorship. Each stage is designed to achieve maximum advance at minimum cost, ensuring that investment increases only as the venture progresses and minimizing the risk of their bets.

Telefónica clearly defines the questions the venture team must answer in each stage as well as the expected outcomes, evidence, and milestones. This allows them to manage the expectations of the stage gate committee members and sponsors, making sure everyone understands what’s expected from at every stage.

The stage gating process allows Telefónica to base decisions on evidence from the market, customer, and more mature stages of the project. It also allows decisions to be made quickly so the avoid the risk of the team losing momentum or burning the budget while spinning its wheels.

Lesson Three – Intrapreneurs and the right mindset

Good intrapreneurs share a lot of qualities with good entrepreneurs. Vision, focus, passion, initiative, risk taking, resilience, relationship building, and open mindedness are required for both roles. An intrapreneur, however, also needs additional qualities like a deep knowledge of the organization and processes of the company as well as extended network of contacts in within the enterprise. Intrapreneurs must find a place for their product in both the market and their company.

Before you start an intrapreneurship program in any large, established company, you must first understand that not everyone is interested in pursuing intrapreneurship.

That raises the question: How do you find the intrapreneurial talent within your company? For Telefónica, Innovation Calls have proven an excellent means to identify this talent as well as the willingness to pursue such endeavors.

Working like an intrapreneur requires the appropriate mindset. Telefónica starts with a crash course on their way of working and then holds a series of specialized workshops on customer interviews, analytics, market sizing, etc.

You also need mentors or coaches so that people are never left to fly solo. These teachers help teams change their mindset and way of working as well as supporting them in overcoming roadblocks they encounter along the way.

It is important to encourage cross functionality, identify the skills needed for the venture and strengthen the team with the skills missing. Ensuring your teams have the right combination of skills and profiles ensures more balanced results.

Motivating intrapreneurs also has its unique set of challenges as traditional rewards are not always as effective. They require intrinsic incentives, in particular, autonomy, mastery and purpose. That doesn’t mean intrapreneurs should never receive monetary benefits, in fact, they should be rewarded accordingly with the risks they are running. However, it is best if intrinsic incentives are the primary rewards for intrapreneurs. These incentives can then be combined with economic incentives for exceptional achievements such as getting product-market fit or break even.

Lesson Four – You need allies.

Intrapreneurship programs face many challenges. In order to succeed, you need three types of allies.

Top Management

Put simply, you cannot move forward innovation ventures within the company without top management. Start small, almost unnoticeable, at a low scale with controlled risks and consistent results. Bringing tangible results to the table will make leadership that much more willing to listen to you.

Human Resources

HR allows the company to leverage talent within its staff to create and shape the future of the company. They also train employees to work within agile, flexible methodologies, creating a workforce with the skill and mindset to be capable of working under great uncertainty.

The Rest of the Organization

It is critical that the venture has a clear and committed sponsor as well as stakeholders and a network of supporters and assessors to help push the venture forward.

People from any part of the organization can become your allies.

Sit down with people from various departments, strive to understand how they work, and explain to them what you need and why. At the same time, it’s important to help them find a way to balance doing their jobs with achieving their objectives.

Lesson Five – Setting the Right Environment

It is vital that you create an environment that gives your intrapreneurs the autonomy to make decisions. This doesn’t mean giving them absolute free reign, control points similar to those in venture capital/startup relationships are still important.

Experimenting is the key to creating a new growth engine for the company. You have to create an environment that not only allows experimenting, but also fosters it. Of course, that doesn’t mean throwing caution to the wind.  There are certain experiments that large companies cannot do without making some adjustments because you have an established brand, reputation, portfolio, processes and departments, to which you are beholden from the very first moment.

The good news is that there is always a method to test hypothesis in a way that works for you. You just have to be creative and find it.

Of course, being a large established company has significant advantages in the way of assets like Telefónica’s communications network. However, when experimentation relies on your existing assets, you must be careful to comply with legislation and not affect existing services.

Lesson Six – Strategy Alignment

Most companies understand that innovation is critical to their survival. Unfortunately, many of them have innovation strategies but no real commitment to motivation or clear objective as to what they want to achieve.

In order to succeed, you have to have an innovation strategy that both aligns with the company’s strategy and addresses the fundamental needs of the company. Without that alignment you’re just performing innovation theater; empty gestures with no substance or momentum.

Alignment with the company’s strategy will allow you to implement innovation waves where the new growth engines created through your ventures are absorbed in the medium or long term by the business units, without deviating the focus and the resources of these units from their current core business.

It is also important to focus your efforts in strategic areas that will bring the most impact for the company. As you do so, make sure to involve stakeholders, including them in the decision-making process from the beginning.

Lesson Seven – Global Portfolio Management

Usually, when we talk about portfolio management, we are referring to the balance between core, adjacent, and transformational innovation. It is also important to ensure you have a healthy funnel with ventures in different stages, addressing the right opportunities and correcting deviations.

One of the dimensions you should keep tabs on is products with different maturity levels. At Telefónica, their innovation funnel is being periodically fed through Innovation Calls which ensures the funnel is regularly replenished with new ideas.

This is harder than it sounds. As projects mature it’s tempting to devote all resources to those projects. Never stop testing new ideas and remember that maturing an idea takes time. If you aren’t regularly feeding your funnel, it will run dry quicker than you think.

Innovation often requires tough decisions. It is key to master the art of “killing” when a venture is not progressing as expected or showing promising results. Remember that by killing one venture, you open up the opportunity to test and pursue other promising ideas. You will never have 100% of certainty, but you can look for ways to bring more data to table in order to help with this decision-making.

Lesson Eight – Measuring the Impact

One of the biggest challenges large, established organizations face is the pressure to show the impact innovation has in the company, in the business, and the impact the innovation portfolio can also bring in the future because getting results from your internal ventures takes some time. This is why it is mission critical to clearly define metrics that measure the progress of each and every venture. These metrics allow you to monitor the health of your endeavor as well as giving you insight into what’s working and what’s not.

More complicated and difficult to track, but equally important, is objectively measuring the value you create in talent.

This comes in the form of people who have transferred departments as well as the knowledge, expertise, and skills they offer around the product, the market, the customer, and the business model. Participation in intrapreneurship initiatives also enhances employees’ flexibility and tolerance for uncertainty.

You must also measure the value creation and impact of your current portfolio of ventures in order to visualize what said portfolio can bring to the future of the company.

Lesson Nine – Scaling up, the second valley of death

Successful innovation ventures have one final, major challenge: scaling up; trying to find a way to grow innovative products and turn them into the next-generation core businesses. Usually this means transferring the product or service to the mothership so it can get access to the company resources needed to make it grow.

This is easier said than done.

New products and services are competing for resources with the rest of the portfolio and they have to show that they are both capable and worthy of becoming the new core business. It’s a precarious position at best.

Telefónica found seven “usual suspects” that make or break ventures at this level within their organization:

Sponsorship

Support from a sponsor of that could potentially commercialize the product/service.

Business opportunity size

A big enough business opportunity size where Telefónica is well positioned.

Feasibility

The right skills and resources, in both the internal venture and the BU where the product or service will end up.

Non-replicability

A sustainable advantage over our potential competitors.

Differential technology

A differential technology that allows us to have an aforementioned advantage.

Team leadership

A good intrapreneur has the qualities of a good entrepreneur but also needs to be an expert on the corporate world, know how to move in the company, and makes things happen.

Team

The right team in terms of skills, knowledge, and commitment.

One of the main things they have learned is that scaling up starts well before the actual scaling up phase is reached. Alignment with company strategy and fundamental company needs are absolutely crucial and require involving business units from the very beginning.

Lesson Ten – Start small and lead the change

By starting small, you can learn and minimize risks at the same time. Every change you make to your program must be careful, starting with small controlled risks, measuring the result, and figuring out how to do it right. This will simultaneously give you the confidence and experience you need to expand and gain the buy-in you’ll need from top management.

Never hesitate to ask for help from outside your company but remember that while others may have more expertise in intrapreneurship, you know your company best. You are the one who can adapt the experiences, advice, and expertise of others to the context and culture of your company.

The magic of putting an intrapreneurship program into place is that by doing something different, the company is changing. Just one team, one department, can kickstart enormous change.

Even an extremely mature innovation framework should never stop evolving. The world keeps changing around us and throwing out new challenges to innovation framework must be ready to adapt.

You must constantly evolve your program; it’s a never-ending process and the more sophisticated you get in the art of intrapreneurship, the more challenging the problems you face are. So, expect to keep learning all the way.

For an in-depth conversation around intrapreneurship at Telefónica, join Susana at Innov8rs Paris.

Source : https://innov8rs.co/news/intrapreneurship-10-lessons-from-the-trenches/