In our recent webcast on new venture failure, Diego Rodriguez and Tom Eisenmann share what corporate innovators can learn from the startup world about dodging failure.
During the call, the pair also explore:
- A post-mortem of Jibo, the world’s first social robot
- What corporate innovators can learn from venture capitalists about building a portfolio
- Survey data about the factors that lead to to new venture failure
Rodriguez is the former Chief Product & Design Officer at Intuit. Tom Eisenmann is a Professor of Entrepreneurship at Harvard Business School and author of the new book Why Startups Fail. This conversation was moderated by Scott Kirsner, CEO of InnoLead.
Why The World’s First Social Robot Failed
During the conversation, Eisenmann and Rodriguez dove deep into Jibo, a failed attempt at a social robot. Designed to have the personality of a helpful 10-year-old, the Jibo robot could make jokes, remember user stories, and provide a sense of companionship. After a long production cycle and marketing the product at a loss, Jibo shut down in 2018.
“A robot friend in your kitchen who’s going to talk to you [and going to initiate a conversation is a spectacularly ambitious engineering and technological challenge,” Eisenmann said. The lesson, he explains: Moonshot are incredibly difficult, and not every company can do them well. Eisenmann points to Tesla, SpaceX, and the launch of FedEx as successful moonshot ideas.
“But these moonshots, in particular, require vision, require patience, and especially a spectacular amount of capital and patient investors,” Eisenmann says.
Rodriguez explains why Amazon’s Echo — though lacking Jibo’s social elements — succeeded while Jibo failed. “The real question is, ‘How do you want to innovate? Why are you innovating? And how does it fit with your overall strategy?'” Rodriguez said. “In the case of Amazon, you had this incredible fit between the Echo and the rest of everything they’ve been building on their platform.” Meanwhile, Jibo had an ambitious idea but the path to achieve the team’s vision was long and arduous.
“When you’re sitting in a big company, you really need to be asking yourself: ‘What do I want to do and why?’ Then create their right kind of innovation system to get there,” Rodriguez said. “You want to be like a good startup, not a bad startup, and not every startup is really set out to win or to succeed.”
Learning from Venture Capitalists
In the venture capital world, Rodriguez said, successful funds develop investment a thesis which help them find promising opportunities. Large companies can use similar theses to guide their innovation work.
“When it comes to creating new types of ventures at Horizon 3…what you’ll see is that [successful companies] have an articulated innovation strategy,” Rodriguez said. According to Rodriguez that also means teams can have discussions about short-term budgets to keep projects alive and long-term budgets that account for several generations of the product.
“When you don’t have a product roadmap that spans multiple years and generations of products, you will have the temptation to go all in on that first generation,” Rodriguez said. “The beautiful thing about being in a large organization is you can afford to say, ‘Hey, let’s create a very elemental offering to start, and start learning. Let’s get in the market early. And we know we can create more complexity and breadth over time.'”
Eisenmann said that corporate innovators can also benefit from focusing on staged investing. “Contrast that to corporate resource allocation, where for new ventures of the type we’ve been talking about, we’ll budget on an annual cycle and [give] the venture a year’s worth of funding,” Eisenmann said. “I think that if you truly could follow the staged investing approach, that would be a huge benefit to corporations exploring new ventures.”