Part
01
of one
Part
01
Please explain what processes SRI uses to spin-out startups like Nuance, Siri, etc.
Hi! Thank you for your request to research the processes that SRI Ventures implements to spin out start-ups such as Nuance and Siri among others.
The short version is SRI uses a 4 step model for creating ventures: (1) Venture Concept, (2) SRI Commercialization Board, (3) nVention Value Creation Forum, and (4) New License or Venture.
Below you will find a deep dive of my research along with methodology and description of results.
METHODOLOGY
To answer your query my colleague and I looked for company reports and presentations regarding SRI's process for launching startups. We also looked for interviews to explore the perspective of key people in SRI and add depth to our findings. Finally, we looked for graphs and illustrations that show SRI's systematic process of innovation and launch of startups. Please read on to see the results.
SRI SYSTEMATIC INNOVATION PROCESS
In its recent publication SRI Ventures Licenses 2016, SRI explains its model for creating ventures. The process unfolds in 4 steps. First, SRI identifies a disruptive market opportunity and need. It then develops a 'golden nugget' solution that possesses a sustainable competitive differentiation. Third, SRI creates a business plan to realize the value proposition. The last step is the actual launch of the new venture.
SRI differentiates ventures and licenses. For ventures, the center recruits an entrepreneur-in-residence, build the entrepreneurial team, lends a hand in raising venture investment, and then launches the new startup.
In case of licenses, SRI advances opportunities beyond patents by developing a chosen technology into a prototype or product. It then works to identify target customers and also assists in jump-starting the revenue stream.
In p.2 of the report, SRI illustrates the entire process broken down into four stages:
(1) Venture Concept
• Champion
• Productive Team
• Golden Nugget
• NABC (Needs, Approach, Benefits (per cost) and Competition)* Quantitative Value Proposition
• Value Creation Forums
• Funding to develop the concept
(2) SRI Commercialization Board
• Market analysis
- Space and opportunity
- Business model and positioning
- Investments needed
• Product concept
• Initial innovation plan
• Entrepreneur recruitment
• Seed funding
(3) nVention Value Creation Forum
• External review
• Detailed innovation plan
• Strategic partners
• Identifying additional team members
• Developing reference customers
• Road show
• Seed funding
(4) New License or Venture
• New company launch
• A-round funding
• Ongoing R&D
SRI also presents a graphic flowchart (p.2) of its business model from the Idea (from clients and marketplace, from SRI), to R&D (9 categories), and to 5 types of output including ventures and innovation programs.
INNOVATION CHAMPIONS
Part of SRI's innovation program processes are what it calls Innovation Champions and Innovation Teams.
Innovation Champions - if there's no Champion or passionate advocate to advance the value creation process, there will be no project.
Innovation Teams - teams that support the Champion of each project. SRI's team-based approach leverages the collective input of SRI, clients, and partners. The center also works to being together the best collaborators and ideas to develop a golden nugget solution for its clients.
In the book "The Five Disciplines for Creating What Customers Want" by SRI International President and chief executive Curt Carlson, he defines a Champion as a person at any level in the organization that gets and keeps a project going despite roadblocks. He also describes how to build and manage an Innovation team at SRI.
SIRI STORY
In this interview with Innovation, Curt Carlson talks about how long it took to spun off Siri and the process it went through before its launch.
Answering the question "How long did [Siri] take [to spin off]?" Carlson said: "This was going on for five years. It had 25 partners and several hundred million dollars. We started incubating possible ideas for the government and the commercial world. It is being used by the government in the Command Post of the Future, producing amazing results, helping make decisions about how to fight skirmishes or wars. It pulls out the right kind of information. We worked on that and the commercialization of it four years ago. We have a formal process to incubate with SRI Ventures, run by Norman Winarski. We figure out what do with a technology and hire an entrepreneur in residence, who will incubate it some more. We figure out an opportunity and get a world class team and form a company."
In p.8 of this report, SRI explains how it sought outside investment for Siri. The team approached a small number of venture capitalists familiar with SRI and were asked for advice on strategies and plans. After three weeks of discussion with the VCs, the terms for Round A investment were negotiated and the board assembled for the startup. The report adds: "The Siri product development took 18 months rather than the initial plan of 12 months because of the need to commercially harden the technology and to conclude contractual arrangements for web services. Siri grew over the next 18 months from 3 founders to 22 people, including 15 engineers."
In p.16 of the same report SRI shares the checklist used by the Commercialization Board to evaluate each proposed venture before its presentation. Major checkpoints include questions on Customer Need, Last Mile of Commercialization, Champions and Teams, Value Creation, and Organizational Alignment.
SRI INVESTMENT AND TIMELINE
In the same interview with Innovation Carlson responds to the question of how SRI invests and how big a program should be: "We have a continuous discussion about important customer needs. Here, it means that it has to be worth hundreds of millions of dollars or the best venture capitalists are not interested in it. In other places, people are happy to build $2 million companies. In research, we look for areas that will last a long time. Infectious disease. Millions of people die from it every year. We don’t have good solutions. Cancer. Cyber security. There is no good cyber security here."
In p.17 of this slide presentation by SRI, the innovation center shows a simple line graph of how innovations develop. It shows the value creation process tracing a jagged line towards the desired result overtime, which suggests that timelines for projects vary individually.
Finally, this separate slide presentation presents numerous graphs showing how technology is commercialized at SRI and other R&D institutions.
CONCLUSION
To wrap it up, SRI uses a 4 step model for creating ventures: (1) Venture Concept, (2) SRI Commercialization Board, (3) nVention Value Creation Forum, and (4) New License or Venture.
Thank you for using Wonder! Let us know if we can help you with anything else.