 Okay, good morning from my side And welcome to city university. I don't have to do a sales page. I'll do it for me Focus on the topic that I wanted to discuss today with you. The first one is scaling You know, most of you are developers your Makers you have your own companies and at one point in your life. You would like to grow your business And I'm one of these professors who actually go boxing goes back in time when I'm saying no devices in my class And you know how, you know Wonderful the students take this kind of remark. They hate me for this kind of thing And I say guys if we're going to do it, we have to be here. We have to be present We have to look at each other. This is the most important thing And why am I saying this because learning it's about being here No, you can do the learning in your laptop short, you know devices when you go back home So what I would like to actually touch upon very briefly because Alex told me that I have 45 minutes So I have to stick in of the schedule. It's about scaling up and the problems that come with the scaling up Everybody, you know things that it's great to scale up. It's great, you know, but nobody actually considers the problems So this is something that I would like to talk the first one is what are the problems when we're scaling and then how do we remain? innovative because as you may be have Imagine or maybe have experienced as we're doing older. What happens as the company grows older? What happens? More problems more problems as the company grows in size. What happens? Bigger problems as the company becomes more successful. What happens bigger problem? Absolutely, I'll tell you what normally destroys companies success age and size Success age and size Why success because success may turn into Yeah, that's the outcome, but what is the mechanism to reach failure? I'm successful. What am I doing when I'm successful? complacency Yes, so whatever attacks have become like Midas, I think in my mind whatever attacks is going to become So it will become gold that's the first thing so it's complacency It's arrogance and actually I'm one of these weird academic when I'm saying we're cutting what I mean I spent a lot of time in companies I don't spend a lot of time in my office. I have a very nice office without the window But I don't spend a lot of time on it. I spent a lot of time in the field This is where you learn spending time in the field. So the first thing is success. The second one is age What happens what we grow older? What happens as the common is grow older? Yes Get stuck in Yes What happens when the company grows in terms of the number of employees that we have number of stuff So most probably you have seen all these manuals, you know So what is the problem there the problem again? It's about how long it takes for information how the culture is changing by the way in terms of age It's something interesting because I'm working on the project currently on curiosity curiosity drops with age A four-year-old daughter asked their mother 400 questions per day How many questions do you ask per day? So it's a mess and as Alex said I'm based here I'm cast and professor of innovation in the pre-nurship. I'm also an associate for Entrepreneurship. We spend a lot of time on this. I was born in the 70s for people who are trying to calculate my age I'm going to save you the company the power and 46. Okay, so When I was a kid I was a thinker What what does it mean? My friend was my other screw driver. I was destroying everything my parents at one point stopped buying me stuff Because I had the room full of junk My problem was that I wanted to see how things were working. This is fine But my problem was to put it back This is the time where I realized that knowledge is important So it's interesting to have this and it's interesting to keep this because this is how we actually learn by uncovering by Definitely different to subjects now doing the same thing with theories or what I'm doing in terms of working with companies Yes, I said this I'm also an advisor in a company that offers Hatching solution what is the hedging how they can hedge commodities Currencies and everything else. So this is the company that was started by two ex-hedge fund managers. It's very customized. It's very Mathematically driven to have their own algorithms and their own formulas and every client which is a big corporate in the world their own solution They pray the problems remain It's always about people and money and it's always about what happens when you're growing that you're losing something I'm going to give you more examples I'm also part of the fund that we have here. So we have a venture capital fund City of cast companies and it's interesting because one of the portfolio companies came and They were talking about the strategy and then the CEO thought that the company is not working or it will improve by buying another company The company doesn't work and they are going to solve a problem by adding another complex problem Which is buying and integrating another entity. Okay, so this is something that I want us to discuss what happens when you're going to grow and Since I was saying that I like everything that you know with the screwdriver. I guess I like everyone has feet that gives me No, they are generally rats Normally like a thing don't die They die from boredom. So you need to find something else to counter balance for instance the border So this is something that I'm doing Today I would like to talk about three things very quickly. It's a mess when you grow and you have to realize this Okay, and I'm sure I'm not the first one who says this I'm going to maybe repeat some of the things that you have heard in the past. The most important thing is how do we remain our How do we keep our creativity? How do we keep our innovation while we're growing because again, we are losing it and The first thing is the mess leadership You're growing You have more people What happens what normally happens is people want to add things What normally doesn't happen is people. They don't want to get rid of stuff So what do you end up having a lot of stuff? So the Hamburg is two pages of the first a couple of Moms then to become five or two hundred and Wikipedia so what is the problem here? What do you have to do it? You have to stay Focus on something. So if you had five rules again, what do I mean? You have to deduct you have to deduct Don't add get get rid of stuff. A lot of people are adding and they are saying but why are we doing this or Why don't we get rid of this because there's buckets? We used to do this So because we used to do it. We have to keep it Do I have to keep it? Okay, so there is an emotional attachment in it. Basically what we are doing is that we are hoarders No, it's hoarding stuff. Okay. This is very bad And that's why I'm raising this from the beginning. So stick to something which is rules very few that's friend of myself It's very important that everybody knows Everybody knows what is happening. So what is your role while you are growing the business? You have to do the business which makes your life very difficult and the same time you have to talk And you have to be seen that what you are saying is also is also what you are doing You cannot be contradictory if I contradict myself. Nobody cares because it's cost us But if you contradict yourself Everybody cares What do you say and how you say then how you respond to some situations? It's under the spotlight. You know, it's a magnifier So it's very important to do this. That's what the team Against it is something that I noticed Bigger things bigger teams you go to meetings. You don't know other people You don't know why you're in the meeting. You don't know how you plan to contribute to that meeting How your knowledge is relevant and you still go and I have a lot of people who are saying to me As an advisor or as a consultant we don't have time and I said, of course, you don't have time because your weight We are going to all these unnecessary meetings Unnecessary meetings. Is this true? How many times have you been to meetings where you had no idea what I mean? Thank you very much for your honesty Me too and then I did something very radical. I never went back So I said this is not for me. I'm not qualified to do this. I'm not coming again Okay, five people who are qualified to do this kind of thing What kind of size of things do you think it's good how many people For the five four to five yes, it's around 25 So everyone could like know each other's name. Yeah, it's more like a it's more like a studio mentality So you need to know everybody so a lot of companies that have a lot of people they create those studios So everybody knows each other but in terms of work, it's four to five and the best teams are the teams of two And why is that because you cannot hide? I have been into meetings where there are four or five six people you do a brainstorming session And you know what brainstorming you have heard of this right and you know what happens How do you know when people are lazy in brainstorming sessions they repeat other people's? ideas Okay, so again, this tells you something you require people to speak their minds of course sense of an Accountability I own the place A bit of a company in Silicon Valley because I'm doing a lot of research in Silicon Valley And when you enter their lobby they have a very nice green Let's say wall and everybody all the employees have signed in that wall All the employees so it's part of we are it's our identity Pure meetings. This is what I was saying. I hate meeting and I wrote something about this. It was very nicely received and So we have to deal with it then as you're growing you have to actually hire more people I will give you to let's say bios. This is the first one and I then I would like you to tell me which one you would hire Don't ask me for the job for which job you can decide. I'm going to give you to This one read this one first Resume let's say or a buy or send signals what kind of signals do you get from this? Who's behind this? I'll give you another one, but before You're reading this. What are the signals that you're getting about this individual? What are they choose self-motivated? Yes smart great You remember this I'm going to show you another one. This is you I wish By the way, both of them are real people Okay, so I didn't make up stuff Which one would you? Offer the job or would you like to have another meeting to learn more about? How many of you would you would like to have another meeting with the first one? Oh Figure out the job create one job. It doesn't matter and it's not for the job How many would go for this one How many would like to learn more about this one And there are some who are undecisive Decisive they haven't made up their minds yet because I know it's right. It's very early. You need time. Okay The first one is dead bounty Dead money, so you know that money is the serial killer very So the political let's say affiliation aspirations. It wasn't only his only problem Was that he was The second one is called John Hunter with a Scotsman and he's Referred to as the father of modern surgery Okay, so it's interesting how things are when we have to make a decision Which means that you have to make decisions quickly When you are doing those kind of things and sometimes you don't even make the decisions Somebody else is making decisions for your let's say for your behalf So we have a team we have the leadership then what do we have we have the recruiting? We need to find people who are good but serious leaders This is that for the model of the story and then the incentives. Who is getting rewarded? What do you reward good performance amazing? What should you be rewarding good performers as well as people who help each other? Okay, team players you are growing you don't want prima donnas You know the expression right you don't want equal standard individuals What do you want individuals who are very good in what they do and who are also going to help other people? We're going to support other people people for me because I have worked with a lot of top management teams from startles He loves large organizations and I'm not saying this because of an academic the best leaders are the ones who want to educate Want to develop their teams and why am I saying this because this spreads like a virus? So the people in your team are going to do this with their own teams. So there people are going to do with their own things So it spreads So what am I recommending just to finish this let's say section. Do I pre-mortem? Not the post-mortem post-mortem is too late Do a pre-mortem. So what does it mean try to anticipate different scenarios as a narrow that you know growth plans are working And the company successful and try to see, you know, what is working, but also do the opposite The company will be failing Then you take some steps backwards. So what have we done in order for us to fail or what can we do differently? So why am I saying this because a lot of times we have to anticipate I'm a big believer of Losing on paper. What do I mean? You get your team and you start creating some plans No money. Just your thoughts and your team members. Okay, your colleagues and try to create a plan Okay, of how things may be working out. So this is extremely important But also think of why things may not work out Why am I saying this? Why am I recommending this? There is an optimism as we grow our business because we're successful. We have more investors We have clients or customers who loves us So what does it mean? We live in a bubble Exactly, so we have to challenge our assumption. We have to challenge our knowledge So it's important for us to actually do this. What may go wrong? I may be believer of thinking of the worst case scenario or what will happen because by the way, most of the time It does happen. Okay, the worst case scenario. So how do you have what is the problem with scale-ups or large organizations? Or, you know scale-ups for me to organize with expanding to try and there they are losing something These are products from Apple. Newton was the first tablet The pencil that's why Steve Jobs created the pencil because this was a club There was a camera that This is a camera. Did you know about this? Some of you may know some of you Just learning to take. So all these are the products that Apple used to have. Well, they were growing And this is from Blackberry. A tablet, Blackberry. Do you remember this company? Devices with the keyboard, do you remember this? Okay, I'm excited to make a point. Blackberry was not a mediocre company Blackberry was an Amazing company. It was a leading company. Okay, so it wasn't an average company. How many of you used to have a Blackberry? How many of you still have a Blackberry? Don't raise your hand But you understand what I'm saying here is that things do change quickly or the form from Amazon Okay, they still get it wrong. Okay, so why are Why large companies have problems? This is something that I started talking about a little bit earlier First of all, most of them do not understand what Hit them. So how the situation how the landscape is changing. So that's the first thing Let's assume that you understand what is happening. It's very difficult to Change to navigate differently the Titanic because what you are doing is not you're not having a rib Okay, a very small boat, but you're having is the Titanic. It's very difficult to change this So some of them cannot see how the landscape is changing, but some of them who can actually see they find it very hard to Reallocate resources. Yeah, so that's the first thing leadership again. It's problematic most of the times Structures is something that was saying earlier structures Now people become very With what we're doing, they would like to remain the status of all they don't want to be to be challenged they don't want somebody else to come and say you're doing this wrong and Because they're afraid that they're going to lose power. So this again something that acts as a stabilizing force and The other one is that they don't attract innovator There's a difference between invention and innovation Okay, and we can explain this but for me innovations about commercializing it's applying invention So for instance, I did an interesting research on Xerox Park. Have you heard of that company Xerox Park? Because there are a deal up of Xerox. They were based in Palo Alto and they have been painted a lot of interesting things such as the Ethernet the graphic user interface and and other stuff. It's very interesting because it didn't manage to make a lot of money from it somebody else Licensed stick stole license their technology. So they managed to get this So in a way what they're trying to hire is people who are interested in power in politics They want to avoid let's say risk and they want to do the traditional way I'm not against this, but I'm saying this is not the only the only solution and They will have the first set of inventors people to do stuff But they wouldn't have a first set of innovators people to commercialize stuff. So that's the difference and Do you recognize this? Kota Kota actually invented digital photography. This is the guy who invented he went to the board and then he said I'm very good You know the digital photography break the digital camera great. It was something like a toaster and two kilos The resolution of the digital photograph was zero point zero zero zero something doesn't matter But then the board said this is a lousy idea Because analog photography, it's a much appear which is by the way through Okay, and they said that you know how much money we make from theorems Do you know how much money we make from camera? So the business model doesn't work So what did they say? No, how do they make money now by licensing their technology to other companies such as Auburn and HTC and the rest the same time a blockbuster Netflix went to blockbuster. Did you know about this? Netflix went to blockbuster and they said can you help us with your off with our flying presents? We can help you in the online presence. So synergy Synergistically, can we work and we work together can we collaborate and the big guy said no Who will actually, you know, get those kind of Everybody wants to go to the offline stores Because they also get other stuff such as ice creams and soft drinks and the rest so the business model again It was a very interesting For me the activities the first thing is about generating ideas and innovation is about the implementation execution Okay, a lot of people are asking about innovation. I like this But I also like another definition which is the recombination of existing knowledge Apple is an amazing let's say example of innovation is the recombination of existing knowledge So you don't have to actually come up with something. What do you have to do? You need to have your antennas on scan the environment and try to see how you can to combine whatever it's out there and So incrementally something which is interesting. You see the first I called and then what you see is iterations So the phases that you see there. They're very incremental. So what does it change? Maybe the size of the dry maybe you know the color something like this They break through is when you have blackberry and then you have the phone without the keyboard Resets emotion which is behind blackberry. So that's most of the same, but who is going to buy, you know a phone without the keyboard Professional So again, it talks about how difficult it is for some people to realize where it's going It's not about but I think it's about what the market wants. Okay, that's that's the difference So break through it's very difficult But it's better for startups. Why because they have they're very few people And most most of the time they have a hypothesis to test if it doesn't work. It's fine. Then we're going to do another test something else and I don't care if it doesn't work Not just you care because they're going to lose a lot of money It doesn't work and of course they're R and D Which is quite small because I'm very close to let's say the market So I know a lot of entrepreneurs were very close. I'm also teaching executives from my companies and Had the CMO it's if marketing officer from a big company and I asked them, you know Who is your client and say the response was we get a very nice report from my market research agency So and you lose touch with reality. That's the problem. So they're not Now To go back to what I was saying earlier How can you stimulate back through innovation while you're growing and you can work internally or you can get some help externally? So the first study is that to do it yourself and then to go to the market So the first thing is you need to carry on putting stretch goals destroying city property So you need to do stuff to stretch the goals again You know if you say to people let's increase our sales by 2% loser Who's going to do it? It's not ambitious enough. You don't change how you think but if you say we have to if you give them Let's say a very difficult of course. I'm saying not over well with but more challenging one then people start thinking differently so What are the problems that we have identified? Is there a trend? So a lot of companies, what do they do? They follow trends AI for instance For me it's very good the words to use in your business plan on your pitch deck to increase your valuation For other cases it means business. So these guys know what they're talking about But most of your time says is that something that we haven't anticipated yet and then is there a trend to actually let's say follow Yeah, what's an interesting toy, but not a revolution Swat's executive I'll share with you a very little and dirty secret When you read statements about new technologies new products new services and people use the word toy These are the things that are going to become mainstream Whenever because the same thing I have read from a reporter in 95 was it exactly the same thing about the Internet The Internet is a toy Exactly the same thing VR a lot of people are saying VR is for kids Augmented reality is for kids Whenever you hear those comments that is for kids. It's a toy get involved with that technology Okay, so it's very important for you to know this everybody actually saying this What use of this company make of an electrical toy toy toy kids kids that what do they want to do? They want to read the cure the new technology they want to add there appreciate that the rest in mate And of course us what do we do we actually listen to this So the second thing is you need to have more creative in all the people people are going to break the rules So we have a guy who was working in a large organization He came to actually upset a little bit of the system then he said we needed to go to these conferences We need to actually start developing these products And then he asked is there a budget for the things and then the controller said no Do we have a code for this thing? No, so what did he do? He developed his own code And he started putting all the expenses into this particular code Two three years nobody knew about this code. Is this legal? I doubt it Is it account in terms of accounting correct? I doubt it again But they did it help him to actually let's see if his goals Yes, and after two years that he actually showed what he has done everybody was okay Now we have to sort of the accounting mess, okay But what is the interesting thing is that you want people and I'm not recommending for you to start playing those games but what I'm saying is that You have to figure out ways to Think in a different manner, so it's important to get this kind of people Also designed for others for customers. You don't have at the moment. So what are your customers that you don't currently have? Who do you anticipate entering, you know this particular space? What would they need to be so a person invested in the company that Has created cards for kids because a friend of mine. I know them quite well So if this is a market, which is was not covered by traditional banks It's a couple of startups were doing those kind of things So it's interesting to know that these kids were having these credit cards Of course, we could It's not like Illimited you have to load the money and then they can use the money that you put into the car But these customers are going to actually become your own customers if you are a bank for instance So the banks haven't thought about this because they haven't thought of kids as the primary target segment And that's the car The third thing is the grow labor labs I'm in favor of doing this That's giving a budget What a lot of money I'm a big believer. I'm not saying this because I'm an academic and I'm a risk a best Which I am and is because if you're waiting for a long time to innovate Then you have to spend a lot of time a lot of money time and it will either work out for you or not So what am I saying? In plain English is that you have to take a big gun So I'm not in favor of big gambles. I'm in favor of a little test Don't get in order to see how it works. Of course Google has Google X We are all familiar with doing all these crazy things some of those who are going to be Maintain same as I was saying earlier idea markets a lot of suggestion books Bottom-up ideas and I've been to a lot of meetings when I'm senior manager is saying we have only the ideas They're sitting in there very nice office or in the meeting room, you know closed doors and they're saying we have with the ideas Okay, I what I would like you to think is put back the solution box and for all these kind of things to go What a map from employees to senior management teams more sign projects are interesting process that are happened after work Okay, and Google 3m used to have the 20% rule that 20% of their time people could actually use it for things that They cared about but they were also relevant to the company then Google actually adopted this and Was a little bit of a mess Critical let's say detail, but it's very critical is Fund them separately because what happens if you put the money to one pot And then something happens. Do you know what is going to happen? But if you have it somewhere else this money always stays somewhere else you don't touch it So you either have to do it physically and I'm saying physically don't hide it under the bill but physically in terms of you know this or And mentally you know culturally you have to set the side most of the times if you put the one pot it's gone And it will never go back And the other thing is that is something I have been working for 15 years become a bit dexterous Who's an unbeat dexterous individual you are Never met an unbeat dexterous individual You can use both hands with it We use it metaphorically in terms of organizations and there are In terms of how you can exploit current markets with current products as well as explore new markets with new products What is the difficulty about this when we talk about exploitation? We're talking about efficiency Minimizing costs not taking risks when we talk about exploration We're talking about imagination taking the risk and getting and investing a lot of money So what does it mean the one contradicts the other so the goal they're always you know into war about this So and you have to deal with this now normally what happens is that you have these two units So for instance, this is like the imagine that you are up so these people are doing for instance the computers And these people are doing the new things the app store the iTunes you name it the tablets So first of good Are you with me? When I shout you know what happens. I want the response a very nice positive response But so what happens here there is a problem though because these people have to talk to these people And sometimes it doesn't work So this has to be because these products that are created here at one point they will become The money that we will be making the extra money from here. They're going to feed new products So this is a Europe that never ends Now the contextual is the three of that I was saying and let me say you another story When I started doing my PhD I Long time ago I'm entering a particular company a design studio here in London very famous So what are they doing? They're doing corporate identity in plain English brands for big corporates How much do they charge have a million a million to million for one logo? And then they said if we actually hire People from strategic consultancy Mackenzie, Buzalen, BCG, then what we could do is we can charge more If we actually if you actually hire these consultants from from strategy from Mathematical salcancies, then we can charge more and they can understand better the client Okay, I said that's fine. It works in in my head, but then we have to see it in practice You know to say it in action. So I ended for instance The the field the first day which is the company and something interesting Structuring is that on the ground floor. They have a very nice reception meeting rooms conference room A very nice cafeteria that offers breakfast lunch and dinner for obvious reasons And on the first floor is the designers You see this The designers used to be there and on the second floor. They have the newly hired strategical consultants Along with the top management team. I Was very young Not short very young again. I was very young so and very naive. I have to say so Yeah, that makes sense blah blah blah so I start interviewing and because I'm doing a PhD in business I'm giving an office a space with the strategy consultants on the second floor of the top management team So I'm starting to interview them and do observations and then at one point I asked the strategy consultant one of them I said I said to him I think that I have enough information from here and I think I need to talk more to the designers and The guy next to me says, yeah, that's great. I think you're absolutely right You have done a lot with us. What would you start exploring them? But I have one advice for you don't go downstairs after six o'clock because they get together and they do drugs I'm 24 fascinated by the whole thing for the whole night. I cannot sleep I cannot sleep. I can think myself forbs magazine fortune the first academic who is going to write about the drug consumption and abuse in the workplace I Would be paid, you know hefty fees to talk to companies. I will become a star Okay, this is what I'm thinking the following day comes and because I'm a cheeky quick I do my thing and then I go after six o'clock in my biggest disappointment. Most of them are gone some of them are, you know finalizing the drawings or tidying up and The others you know are still working in teams. So Disappointed no money. No fortune magazine. No Forbes. No fame. No speaking fish. No drugs. No drugs Nothing biggest disappointment of my life. That's why it's still remember this after how many years and Then I start interviewing the first designer the senior designer. He says to me, but do you do where you're from? What do you study blah blah blah and they said to me, what are you based? I'll say upstairs and then he tells me he says ah with the suits Because consultants were wearing suits. That was the difference Okay, I know that Alex is looking And I'm going to stop but for me. This is a very nice story to finish something which is while you're growing You have to actually deal with some things which are very uncomfortable And you have to prepare in order to go to the next level that particular example that I'm finishing today It's a good example to show you that this company was not prepared to get the new people This is what I was saying. Okay. Thank you We just need to reboot the system before Rasmus comes on to give his next tour But I don't know if you'd like to stand up there while we do the magic If anybody had any questions for cost us then please fire away. I know why you're missing those meetings Yes, yeah And the even the problem is extending the emails as well. Yes any questions for cost us Ah And there are studies and in the research about how you can scale excellence and they have done this for instance Serves With them because it's it's very difficult to scale, you know cooking or to scale is something that it's a that requires a little bit of Coffin ship But I think they go back to the point earlier is a lot of things are about behaviors So while you're growing you have to deal with behavioral issues So a lot of things have to be actually addressed before growing What am I trying to say so assuming that you go assuming that you start realizing that people start still From your company, what do you do? By the way still it doesn't happen in a way of you know money You know what happens they take pencils they take notebooks they take a photocopy paper for their Comprinter they start taking this stuff because studies have shown that people it's very unlikely for them to take money But it's very likely for them to take things which are very far removed from money, but they have a monetary value, right? So how do you deal with this thing? Do you allow this? By the way, do you allow this to actually happen as you are growing because what happens studies have shown that if I do something and nothing happens This becomes a norm So just to give you an example there was an experiment done in the US So what was the experiment with experiment was that they would try to figure out the cheating in exams And whether people will cheat so it's a I imagine it's a lecture room and they're giving a multiple choice questions The the person was doing the experiment realized that in order to do all the multiple choice They have to take 20 minutes after 20 minutes They will go to the to the to the academic and they will say I'm done and the academic will give the money. That was the experiment one Person in that particular group is an actor He's paid to actually act as a student and he's instructed to actually go to the invigilator The academic and give his script after 20 seconds Which means that he has actually cheated Okay, and what they wanted to do is to see whether others will follow Okay, the only difference is the hoodie that the actor is wearing What do I mean by this if the actor is wearing the hoodie of their own university then cheating goes up Because it becomes a norm when the actor is wearing the the hoodie or the let's say the jersey of the Competitive university cheating goes down. What does it mean? He's not one of us The other one he's one of us does he go on notice he does let's all of us do it then it becomes a norm So for me while you're growing the first thing that you have to realize that you have to change a lot of things at the Behavioral level if I'm answering your question Wonderful place to stop Anyway, thank you very much