9 Diamond Framework: How to transform big companies of today into big companies of the future
Intro to the series
This is the first story in a series about a newly-developed hands-on approach to digital transformation for big firms. At oneUp, we call this approach 9 Diamond Framework. The 9 Diamond Framework is an action-driven structured process, for corporate innovation management and execution.
To be honest, we haven’t invented anything from scratch. Thanks to the thriving startup and innovation movement, there are already so many great theories, methods, and canvases, that you rather need a lot of experience when adapting them for real-life cases. And that’s exactly what we’ve done with the 9 Diamond Framework — a tangible action plan for corporate innovations, baked with the proven methodologies and years of own expertise.
Why is the 9 Diamond Framework good for you?
Based on a recent report from McKinsey, “80% of CEOs think that their business models are being disrupted.” In fact, we believe that the remaining 20% are just not aware of this fact yet.
So why exactly should you spend precious time reading this lengthy post about the 9 Diamond Framework? What is in it for you? Here are some reasons, my friend.
1. Avoid innovation creep, with a well-thought transformation vision
Let’s be honest, the thrive for radical and disruptive innovations within corporates is sometimes a FOMO syndrome, rather than a well-thought commitment. Well, starting an innovation game without a strategic vision won’t lead you anywhere nice. And that is the first thing we do when implementing the 9 Diamond Framework at big companies — define the role of innovations for business through a clear and focused vision.
2. Think about your innovation portfolio in a strategic way
The accelerator program and venture fund 500 Startups, has surveyed 100 corporate executives overseeing innovation in different industries. They’ve discovered that the vast majority of corporates see less than a quarter of their initial pilots scaling into solutions that can be taken to market. The usual reason mentioned for such a low rate is that corporate processes are meant to serve existing successful business models, rather than searching for new ones. For example, on average there are 10 departments involved in startup deals, which slows down the search process tremendously. On top of that, corporations are working with an insufficient number of startups, which lowers the chances of successful deals.
Both of the issues described above, speed and portfolio-thinking, are solvable and beatable within the 9 Diamond Framework.
3. Fast start with innovation processes, avoiding months of consultations
We’ve made sure that the framework is actionable, so that you can get started with it pretty much straight away. Avoiding months of standby and expensive consultancy. Here is how strategic vision, speed, portfolio-thinking, and action-plan are conceptualized in one diagram with the 9 Diamond Framework:
Above all the framework looks great on a napkin, it’s easy to draw and can be explained during a coffee break with partners :)
Meet your innovation machine: The 9 Diamond Framework at a glance
Let’s finally dive into the details of oneUp’s 9 Diamond Framework for corporate innovations.
Corporate structuring side
We start with a diamond that represents Core company (Core Co.). Core Co. runs and exploits all of the proven business models. According to Alexander Osterwalder, in order for a corporate to innovate in a radical and disruptive way, you need to add venture forces. Thus, the next diamond to the right represents a venture structure (New Co.). New Co. is busy with the exploration of new business models.
Core Co. is logically led by a CEO and New Co. is ideally led by a Chief Entrepreneur. It is important to grant a high level of independence to New Co., in order to avoid mixing its agenda with the one from Core Co. Both Core Co. and New Co. report to the Board, which assesses potential profitability of existing and future business models using the tools and frameworks provided by oneUp.
The heart of the framework
Let’s move on to the heart of the framework — the Radar. The Radar is the place for high potential innovation and transformation seeds, we call these sparks. Sparks can be in the form of ideas, ambassadors, talents, etc.
At any point in time, the Radar is filled with sparks that are related to one of your innovation themes. Each innovation theme defines your business model portfolio vision and you should aim to have 3 to 5 of them. The idea behind having more than 1 vision is risk-reduction. We avoid putting all bets into one area of focus and thus increase chances of success by diversifying on the level of visions. Visions are fully reviewed every three months.
Say, you defined 3–5 visions for the Radar. Now how do we actually populate it with sparks? The first source is your Core Co. The Radar is basically a melting pot for existing ideas and businesses. The second source for populating the Radar is partners. Partners can be presented by universities, accelerators, suppliers, clients and agencies. Finally, we populate the Radar with existing ventures in the form of external startups and scaleups.
When we have a richly populated Radar, we want to develop these opportunities further. We start by defining which ideas are worth building and investing in. The first diamond that is meant for fulfilling this purpose is the Sprint Center diamond. In the Sprint Center, we rapidly ideate, following the Design Sprint method developed by Google. Within 5 days of a design sprint, we go from a problem statement to an early validated idea. Instead of wasting months on prep work, within 5 days we gather enough evidence needed for less risky decision making.
Once graduated from the Sprint Center, an idea moves forward to the Validation Center diamond. Within the Validation Center ideas are being tested for 8 weeks. Validation is a well-defined process where we use existing concepts such as Lean Startup, Customer Development, Design Thinking and Service Design. The final goal of validation is to support data-driven decisions about whether to make, buy, partner or discontinue development of an idea.
In the case of a ‘make’ decision, the validated solution goes further to the actual Build stage, where it gets more substantial team and resources. Here starts the hunt for the Product-Market fit.
In the case of a ‘buy’ or ‘partner’ decision, either acquisition or collaboration teams are set up and supplied with resources.
And in the case of a ‘discontinue’ decision, the project is either fully terminated or temporarily frozen.
In all the cases learnings will be shared with the Core Co.
Now that you’ve gone through the exploration process, and gained a lot of learnings on the way — how do you make sure that all of this is transferred to the Core Co.? One way to achieve this is via education with rounds of training and workshops. Another way is by infiltrating and mentoring your intrapreneurs who are coming back from the New Co. to the Core Co. Together with their new skills they will further educate and mentor their colleagues.
Aside from the knowledge and mentality change, at this stage, we also support the internalization of new business models into the Core Co. Notice, that we are not aiming to turn Core Co. into a startup. Core Co. has more resources and better processes for exploiting the models that have been found and proven within the New Co.
You might be asking yourself, “How do I start with the framework?” The answer is in the last diamond on the diagram. We start by means of a Configuration sprint (Config Sprint). In just 5 days (1+3+1), following a series of brainstorms, fast learnings and ideations, we make a personalized map of your existing business. Looking into the gaps between the current state and desirable future, prioritising the gaps, we’ll define which of them have the highest potential to start with.
9 Diamond Framework Use Case
Don’t take our word about the power of these diamonds for granted. See how the 9 Diamond Framework has been implemented in order to drive innovations within the fashion industry.
Challenge: Establish an innovation process at one of the largest global apparel companies with operations across 40 countries. Solution: In 2018 together with oneUp, the well-known fashion company started implementing the 9 Diamond Framework to build their innovation vision. The new venture created for this purpose received its own independent team, as well as C-level support.
The first months action within the new venture was aimed at spreading the word and growing employees’ engagement at all levels. After a series of open events, such as educational talks from Google’s and Ikea’s innovation labs, the number of internal advocates for the initiative grew from 30 to 250 people.
To make sure that these brave innovation supporters could shape and share their disruptive ideas, we introduced highly-structured Ideation Sessions and an online Idea Platform. Properly formulated ideas collected votes on the platform and the pre-selected ones were invited to a Pitch Event every 3 months. At each event, idea owners presented their initiatives to the Innovation Board, formed by internal and external investors. Following the Board’s assessment, the selected initiatives received budget and a team that consisted of internal and external specialists.
The next steps were design sprint and validation. Validated ideas were moving to Minimal Viable Product (MVP) and pilot stages. In the end, solutions would either become stand-alone startups or be internalized by the organization. In all cases, oneUp facilitates knowledge and operations transfer.
In the first months of the new venture, more than 150 ideas were collected and assessed in the Idea Platform. Multiple Pitch Events were run, and various innovation initiatives were started. Innovations ranged from a 360°-tool for excellent B2B customer experience, to a solution improving brand interaction through conversational technology.
Theories and methodologies behind the 9 Diamond Framework
“CXOs are not searching in the darkness for a light to follow, but are rather blinded and paralyzed by an overwhelmingly bright light when it comes to digitalization.” Institute for Digital Transformation (2018)
We’ve mentioned above that the 9 Diamond Framework is based on existing theories and methodologies. To give you an idea, here are just some of the concepts that we’re using:
- For the overview: Business model portfolio by Alexander Osterwalder provides us with the approach to modeling the existing portfolio and the new portfolio.
- For the effort allocation: The three horizons of growth (h1, h2, h3) by McKinsey is used to explain the way of investments allocation in the business model portfolio.
- For the structure: Both dual transformation by Scott Anthony and others, and triple transformation by McKinsey are used to explain the relationships between the existing company, incremental innovations and disruptive innovations.
- For the execution: Lean Startup by Eric Ries, Customer Development by Steve Blank, Startup Thinking by oneUp, growth marketing by Sean Ellis, and others. These methodologies provide us with the structured, data-driven and predictable way of validating new ideas, building MVPs, and scaling.
- For the urge: Innovator’s dilemma by Clayton Christensen shows how focusing on current customers’ needs and neglecting lower-performing technological solutions can be detrimental for powerful companies.
- For the direction: the concepts of Problem-Solution Fit by Ash Maurya and Product-Market Fit by Marc Andreessen and Sean Ellis, set two important goals for any corporate startup initiative.
- For the mindset: Open Innovation by Henry Chesbrough and others supports our distributed innovation process, aimed at reducing the cost of innovation, sharing the risks and rewards of innovation, and accelerating the time required to deliver innovations to the market.
- And many others, including Design thinking by IDEO, Design sprint by Google, Lean manufacturing by Taiichi Ohno and Shigeo Shingo, Decision making and Risk aversion by Daniel Kahneman, and Amos Tversky, etc.
And that’s it for your intro to the 9 Diamond Framework. We will proceed with the series, where you’ll learn more about the hands-on stuff related to each of the diamonds. Make sure to follow us so you don’t miss out.
What do you think about the 9 Diamond Framework? Any comments, questions, likes and hates — we’d love to hear them all. Let’s start a discussion!
Ready to go?
Actually, by now you have enough knowledge about the framework to start acting. Need help? Give us a call at +31 84 876 333 6 or send an email to Floris Schoemakers, the oneUp’s COO, at email@example.com.