Lean Case: Qualcomm

Qualcomm

 

Qualcomm has revolutionized mobile communications through ever smaller, cheaper, more efficient processors for mobile devices. But Qualcomm executives also recognize the need to foster disruptive innovation. As senior director of business development at Qualcomm through much of the 2000s, Ricardo dos Santos turned the company’s suggestion box into an engine for developing business models outside the company’s core competency.
Between 2006 and 2011, he created a full-bore intrapreneurship program, including a three-month boot camp, seed investment, and a handoff to existing business units. His pioneering effort anticipated the vogue for corporate intrapreneurship programs and innovation labs and blazed a trail toward effective enterprise innovation.

 

How did you get involved with Qualcomm Venture Fest?

 

I was at Qualcomm from 2003 to 2012. In 2006, the CEO said, “Other people have ideas here. How do we create a system to hear from just about anybody?” I thought, this is an opportunity to do open innovation from within.

 

How did the program work?

 

It started as a crowdsourced web site. Employees would send ideas over the fence and the executives would decide which ones they liked. But then we needed a way to move them forward. So I decided to take an entrepreneurial angle. For version 2.0, I realized that I needed both an idea and a champion, an entrepreneur type of person who would be willing to fight for their idea. When I was at MIT, I’d observed business plan competitions where they got business students working with engineering students to put together a pitch. That was my starting point, and the idea jelled over time. We received ideas from all over the company and selected the ones we thought were most interesting. The people who submitted those ideas were invited to form a small team and attend a boot camp where they were trained, coached, and mentored, so they’d have a better shot of getting their ideas heard. Finally, we put on a pitch week for the executives. At point, we hoped, a business unit would commit the bucks to let the teams move forward with more support. I figured we could propose radically different kinds of things, even technical ideas that started as university research. We could license patents, buy startups, and we wouldn’t be dependent on whatever R&D project we had underway. Let R&D take its course; here’s a slew of other possibilities.

 

What role did lean startup techniques play?

 

I wanted to take these amateurs and turn them into professionals. I needed a way to prepare them, so I started looking for techniques. I found the lean startup method. At the end of the day, what we were doing was similar to what startups do, trying to get investors to give them money. You don’t know if you’ve got something until you start iterating. So I told them to pretend they were startups and taught them the basic principles. They still had day jobs, but they formed small teams and got an education in how to discover opportunities, do quick validation, and build prototypes. So the people who raised their hands saying, “I’ll work on an idea on a part-time basis at Qualcomm,” became the recipients of the lean startup teaching. We brought in Ideo, Steve Blank, Brant Cooper, and others to show them how to do it.

 

How did the executives react?

 

They were highly impressed. They never expected to hear well put together presentations and demos and actual feedback from the market.

 

How about the business units? Did they pick up the best ideas?

 

Being a business guy, I was most interested in pushing the envelope not only on technology but also business models. Be careful what you ask for! The company wasn’t ready.
Here comes a barrage of proposals every year, some of them asking the business units to bend over backwards, at a time when they were still very successful at what they had been doing. Then the antibodies come out. Wait a minute! What are these ideas? You think R&D is chopped liver? You know, political issues. It’s hard to switch to business models on a dime, and it’s hard to accept ideas that didn’t come from your own department. I was getting too much attention for my rank, and that created some jealousy.

 

Did you change your approach?

 

I was pruning and perfecting as I went along. I started making sure the ideas were more strategically aligned, started involving other people who eventually would have to get behind the ideas. Some things trickled through and were adopted by the company.

 

Tell us about the biggest successes.

 

There was Zeebo, a low-cost game console intended for sale in developing countries. It was spun off as a joint venture with another company. The employee who proposed it was able to join and he became CEO eventually. Unfortunately, it eventually closed. It did produce and sell some product, but they couldn’t make it as disruptive as it needed to be. Maybe it was an execution issue, maybe it was a flawed concept. But they tried. They put a lot of money behind it, and they learned a lot about the gaming market and making cell phone platforms into other types of appliances. But my favorite example is Blur, which became Vuforia, Qualcomm’s mobile-based augmented reality platform. Qualcomm has put a lot of effort into it, and now it has a huge arsenal of computer-vision algorithms that are optimized for cellular platforms where power consumption is an issue. Now it’s looking for further ways to monetize and grow the business.
Beyond those products, the CEO learned about new markets he wouldn’t have encountered any other way. These projects, even if they lived for only a few months months, were interesting enough. It was like, instead of paying consulting firm for a research report, his employees gave him a research report. The CEO was like, “I didn’t know cars were communicating with one another via the DSRC protocol. I have to pay more attention to what’s happening in the car p2p space.”
The other benefit of Venture Fest was that it stirred the pot. It put R&D on the alert: You’d better step up your innovation efforts, because otherwise we’re going to lean toward these amateurs. Lo and behold, over the years, the R&D guys started coming up with some cooler, newer things.

 

Why did Qualcomm close the program in 2011?

 

At the end of the day, CEO said, “let’s give the program to R&D, let them own it and see if things get smoother.” That erased the political issue. Now they’ve rebranded as ImpaQt.
They do a couple of rounds a year and they emphasize high-level challenges that the head of R&D proposes. The R&D department follows through more readily because it owns the program instead of this independent, alien, corporate thing that I started. The danger is that they can’t think outside the box or entertain business model ideas. But it’s still open to anyone in the company, there’s still a prep period, the executives still get to see presentations. So Qualcomm hasn’t given up on asking employees for ideas. They ask employees to step forward, and they understand that it needs to be more than a suggestion in a paragraph, that they need a system where employees get to work on the early stage of the idea before it’s presented for funding. Those premises remain.

 

How do you evaluate the program’s financial success?

 

We did Venture Fest for five years, and we wrote a report every year to the executives, asking them continue to sponsor us. By my reckoning, we put hundreds of millions into projects with easily over $1 billion in value created for the company. But it’s difficult. I had budget to farm ideas, develop pitches, and do a little follow-up work with the prize money.
After that, somebody else owned the ideas and put in their money, so it was hard for me to track. Vuforia took twists and turns, and other people added to it, so it was dangerous for me to claim credit. I needed to use these things as marketing for the next year’s program, but I had to learn not to say, “That’s me! I came up with that!”

 

What lessons did the experience leave you with?

 

Ideation by itself is worthless. Ideation plus acceleration is not worthless, because at least people learn a process and something of value about new opportunities. To give the best ideas a good chance of being launched, though, there needs to be an infrastructure for incubation. This can be done in a dedicated incubator, in which case you can expect not-invented-here issues when you make a handoff, or within existing business units, in which case it needs a different set of management skills and tolerance for these types of projects. The execution stage seems straightforward, but that can be complicated unless its part of the company’s strategy to diversify into new things.

Ricardo dos Santos, former senior director of business development

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