Weeknotes: Lessons from Abroad Part 2

Kirsten Naudé
Nov 3 · 5 min read

In my last weeknotes, I shared the things I had learned from my masterclass ‘Shaking up Organisational Cultures’ at the IFC 2019 in Holland.

In Part 2, I’m going to share from one of the workshops I attended — which was extremely relevant and timely for a product line of immersive technology we have created at The Children’s Society. The workshop was entitled ‘Creating, testing, Funding and Spinning out a new start-up business’ delivered by Andrew Bathgate of Good Innovation and Charlotte Guiver from Versus Arthritis (VA). This workshop was great because Andrew and Charlotte actually shared from their own experiences of doing this — rather than a from stance of conjecture and concept. They shared the highs and lows of taking the charity and their trustees on the journey of investing in something that was very new and different. They’ve been through the pain of working through this themselves.

In this session we learned how Versus Arthritis have created, tested, won significant internal investment for, and then spun out a new venture designed to deliver both commercial income and help people living with arthritis. They took us through the result of two years of work which has resulted in VA putting up £5m of investment into the venture of a 4 year period, releasing £1m over a period of the first 18 months.

What was most interesting for me was the thinking behind why they decided to create a new startup company and spin the idea out rather than just treat it as another internal initiative. I suspected that this experience had a similar trajectory to The Children’s Society’s partnership with BGV and investment in social tech starts-ups to create greater impact for vulnerable young people. My hope was that I would learn something from their journey to take into our next phase of negotiations and plans for our Virtual Reality product helping young people to develop coping strategies to combat anxiety.

LEARNINGS

If you ask people which companies they admire, people quickly point to organizations like Uber, Ikea, Nordstrom, or Microsoft. Ask how many layers of management these companies have, though, or how they set strategy, and you’ll discover that few know or care. What people respect about the companies is not how they are structured or their specific approaches to management, but their capabilities — an ability to innovate, for example, or to respond to changing customer needs. Such organisational capabilities are key intangible assets. You can’t see or touch them, yet they can make all the difference in the world when it comes to market value.

Conducting an assets and capabilities audit as an organisation to explore of better understand commercial opportunities. VA shared how they audited their assets and capabilities to uncover the initial idea and what they did to scope it out. Doing this gives the exec team an opportunity to review — and also understand where the risk appetite lies. This covers:

  1. Things we own
  2. Things we have
  3. Things we do well
  4. Things we have expertise in

These capabilities — the collective skills, abilities, and expertise of an organisation — are the outcome of investments in staffing, training, compensation, communication, and other human resources areas. They represent the ways that people and resources are brought together to accomplish work. They form the identity and personality of the organisation by defining what it is good at doing and, in the end, what it is.

Selling your idea into decision makers

VA and Good Innovation also shared how they created a minimum viable product to test it in the real world to prove to their board that this had significant potential. Key things to think about:

  • Understand who holds the power in your organisation
  • It takes much longer than you think
  • Create moments for people to be a part of it
  • Think differently about how you would explain it

We need to do two things for decision makers:

  1. Prove some assumptions in the business model
  2. Change the approach of the decision makers which entails flipping the conversation to ‘Why not? Why should we not do this?”

Areas to consider when exploring a spin-out

  1. Leveraging the charity’s assets, which I have already touched on above.

2. How does this project fit in with the organisation? Here are the 4 models which they looked at for this venture:

3. How to recruit and incentivise a team. Here were some options shared about how this venture would be directed:

4. Trustees need to understand the difference between governing as a shareholder vs as trustee to an organisation. Governance structure set up for this venture is demonstrated in the diagram below:

5. Managing the brand and reputational risk. How closely should the brand of the spin-out link to your own brand as an organisation:

  1. One idea to brand is “<name> powered by <organisation name>”
  2. Enables the product / product line to stretch
  3. Needs to be compatible with other languages
  4. IP and trademark, needs to be seriously considered

6. All parties in the joint venture, like VersusArthritis and Good Innovation have to sign up to the a playbook which includes protocols in the following areas:

  • Use of brand
  • Co-marketing
  • Customer journeys
  • Information sharing
  • Data use
  • Reporting

TAKEAWAYS:

  • Buyer journey is: Awareness — Interest — Consider — Intent — Buy
  • Testing a suite of fake products is an important way to find out whether there is a demand for them
  • Take people all the way down the shopping process before telling them that its fake
  • People interviewed for jobs want to be commensurate the skills they have (big bad corporate) with a social purpose

Kirsten Naudé

Written by

Director of New Ventures at The Children’s Society. Director of KZN Consulting: Advisor to Charities, Social Enteprises & Commissioners

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