Produced by Harvard Business School's Forum for Growth and Innovation, The Disruptive Voice podcast explores the theories of disruptive innovation across a broad set of industries and circumstances with academics, researchers, and practitioners who have been inspired and taught by the late Harvard Business School Professor Clayton M. Christensen, the Kim B. Clark Professor of Business Administration and one of the world’s top experts on growth and innovation.

On the latest Disruptive Voice episode, High Alpha Innovation CEO Elliott Parker sat down with Anibha Singh, herself an Innosight alum and a current Research Associate at Harvard Business School, for a wide-ranging discussion on the future of innovation and venture capital.

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Listen to the full episode here:

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Episode transcript:

[Recorded Introduction] Clayton Christensen:
Hi, this is Clay Christensen and I want to welcome you to a podcast series we call The Disruptive Voice. In this podcast, we explore the theories that are featured in our course here at HBS, "Building and Sustaining a Successful Enterprise." In each episode, we'll talk to alumni of our course, and others who are trying to put these theories to use in their lives and in their organizations. It's great fun to hear from them. And I hope that you find these conversations inspiring and useful. If you have an idea about a topic or speaker that you'd like to hear more about, or if you'd like to comment on our work, please reach out to us here at the school.

Anibha Singh:
A warm welcome to our listeners. In this episode of The Disruptive Voice, I have the privilege of hosting Elliott Parker, CEO of High Alpha Innovation, an Indianapolis-based venture studio. Elliott is a serial entrepreneur and an astute innovator. We're excited to use this opportunity to learn about the venture studio model and to pick his brain about what's happening in the world of innovation at present. Welcome, Elliott. I'm thrilled to have the opportunity to host you on the podcast.

Elliott Parker:
Thanks, Anibha. It's great to be here.

AS:
So you've had quite a journey prior to joining High Alpha. Could you give us a quick snapshot of what that journey was like?

EP:
I've spent my career focused on trying to answer the question, "How do we help our large organizations and institutions be more effective in innovating?" I think it's actually one of the most important problems facing us as a society right now. We need our large institutions to be effective, and we need them to be trustworthy. We also need them to be capable. If you think about it, we're talking right now in a time of Covid, over laptops that could not have been manufactured and made very easily by individuals, certainly, or even small teams. These are things that corporations are uniquely qualified to do. And they need to be effective. And it's very, very hard for these organizations to innovate, change, learn and adapt. They're not designed to do that.

The last 20-plus years of my career has been focused on on answering that question, and Clay's theories have obviously played a big role. I'm very, very grateful to Clay and his thinking, which has enabled me to be able to do the things that I've done.

I started out my career focused on helping large organizations take their underused IP and figure out ways to commercialize those through joint ventures, startups, licensing deals, and so on. So my first job out of undergrad was working with large companies, taking a look at the patents in their portfolios. I was figuring out which of those had merit and value, prioritizing them, and then trying to figure out how we could monetize some of those inventions. So spent a lot of time working with inventors, taking some of these ideas and trying to figure out where they might fit. In the first deal I ever did, I took a technology component out of a defense company and licensed it to a player piano company. The end goal was figuring out how to enable someone playing a piano during a concert - in Austria, for example - to play in real time on your living room piano at home. Really, really fun and surprising.

I remember another early deal we did that I call the diaper summit. At the time, there were companies that were making adhesive diaper tabs, and another company - at least one - making hook and loop closures for diapers. One of my claims to fame early in my career was pulling the two companies together into a summit, ultimately deciding to make diaper tabs that were both adhesive and loop hook and loop closure. So every time I changed my kids' diapers after that, I was able to think about my impact on the world, bringing those parties together at least. When I went to business school, I started a couple companies and caught a bit of the bug for entrepreneurship. I then went into two corporate ventures, building new companies within a medical device firm. After that, I spent several years as an entrepreneur building startups, everything from software companies to restaurants.

As I became more familiar with Clay Christensen and his theories, I thought that if I ever had a chance to work anywhere in Clay's orbit, I would drop everything and do it. And the chance came back in 2011-2012, when I joined Innosight, the consulting firm that Clay helped found and shape, and I spent a number of years there working with some of the largest companies in the world. My time was spent trying to help them overcome the innovator's dilemma, and I learned a lot in that process over the course of six years. I think I worked with more than three dozen companies in 16 countries. Just a few years ago, I came together with my friends at their venture studio (we'll talk more about what that means) called High Alpha. I came on initially to help run the front end of our idea funnel, generating ideas for new startups we could create over time. We ended up spinning up a new company called High Alpha Innovation, that I now run, that is focused on helping make that venture studio model accessible to partners, including corporations and universities as a way to drive innovation.

AS:
That's awesome, Elliott - comprehensive explanation. And that story of the diaper is definitely going to stick with me. Definitely world changing!

EP:
Worth a thought next time you ever change a diaper!

AS:
So before we jump into High Alpha, I wanna take one step back and ask you: did you have any encounters with Clay during your time at Innosight, or any particular experiences that have been memorable and that have stayed with you?

EP:
I am a big admirer of Clay's, and we did have many opportunities to interact. There were times where I felt stuck on a particular project, and I would reach out to Clay, go over to his office, and sit down and try and think through the problem that we were we were facing together. Clay would often say, "If you're getting stuck, it's because you may not be getting categories right. We need to think through the categorization of the problem." Secondly, he would outline which theories apply. We'd go through and start to apply different theories, which was an amazing result of dropping by his office simply to say, "Hey, here's a challenge I'm currently working on."

I remember when we were we were looking at business models around helicopters, and there was not a lot of change in helicopters over the last 15 years. We were working on a project where, in the course of six to eight weeks (as is typical in consulting), we were trying to figure out how to how to invent new business models around vertical lift. I went in and laid out the the issues, and Clay's response was, "Elliott, I'm sure glad you're working on this - not me - because I don't know what to do. It's already said." And then immediately we go into thinking through the categorization and the application of different theories. I look back fondly on those those interactions. I remember another time when I was driving through Europe working on a project, and got I a call out of the blue from Clay, just to check in and catch up on the things we were working on. I'm a huge admirer of the man both for his thinking and for his character, and the the kind things he did for so many people.

AS:
It was great hearing those stories and spending that moment to reflect on your time with him. On that same note, given the theories you encounter during your time with Clay and afterwards, were there any particular ones that you've held on to or found yourself reaching for or alternatively, that have shaped your journey going forward?

EP:
Fundamentally, the question that Clay was trying to answer in all of his work was, "How do we enable these scaled enterprises and organizations to be more effective?" We are spending a lot of our time at High Alpha Innovation trying to figure out how to answer that question, too. But the theories that have been come out of that are hugely applicable. Obviously, there's the theory of disruptive innovation: we are working to build startups that are designed to tackle challenges in ways that are disruptive to the status quo; we're trying to find a way to enable big companies to benefit from that and to do it together in partnership with the startup jobs to be done theory, modularity. I could go on and on. It influences everything that we do and the way that we think about the world.

AS:
That's a great segue into High Alpha, actually. So before jumping into the specifics of High Alpha, I would love to take a moment to make sure all of our listeners are familiar with the the venture studio model, because it was a relatively new model to me. Could you please give us a quick overview of that?

EP:
Essentially, a venture studio is the combination of a build function with a source of capital. Another way to think about it is a venture capital fund that builds companies. In some ways, what we do harkens back to the early days of venture capital. 50 years ago, early venture capitalists investing in a startup company would also roll up their sleeves and get involved in working and helping to support that company over time as venture capital professionalized. I think the model moved away from that. In some ways, studios are going back to the early days where VCs were not only investing in companies - they were conceiving the ideas, spotting problems and jobs to be done out in the wild. With that fusion, we can design business models, recruit the teams who are working with entrepreneurs, and in some cases, not only build those businesses but also then support those companies through our own fund, as well as through a network of broader investors in the community that we work with. In a nutshell, that's a venture studio.

It's a model that I expect we will see a lot more of over the next decade: we've seen some recent success stories coming out of the venture studio approach. Certainly, it's been a model that's been applied for many years now in life sciences and biotech with a high degree of success. We're seeing more of it in software; you could argue, for example, the Snowflake IPO - it was this company that was incubated inside a venture fund. And they wouldn't call themselves a venture studio, of course, but it's a very similar model to what we do. That combination of coming up with the ideas, building the companies and then funding them internally: that's what a venture studio is. When we formed High Alpha five years ago, I don't think anybody was using the term venture studio. Now, as far as we can tell in last count, there are more than 560 venture studios or startup studios around the world. There's been an explosion. We've learned so much in the last few decades about how to effectively fund and create and design startup companies and to support those companies through scaling that it makes sense that we've seen this model evolve. And it's still early. We're learning a lot about the model, and it will be refined in some important ways to become a more familiar part of the overall venture ecosystem.

AS:
That was very helpful. And did particular insights from your prior experiences, whether at Innosight or even before that, lead you to this model?

EP:
Absolutely, yes. When I was looking to figure out what to do next, I kept looking back to the original question, "How do we enable our large institutions and organizations to be more effective at adapting, learning and innovating?" It's been over 20 years since Clay wrote the The Innovator's Dilemma now, and I think we've learned a lot collectively about the the application of the theory of disruptive innovation, what works and certainly about what doesn't work. It's a problem that's very sticky and hard to solve. The underlying premise that executives can do everything right in a company and ultimately that company will fail: it remains true even even when people are familiar with the underlying theory. And it is still hard to solve, isn't it? As I was looking after leaving Innosight, I was thinking about what was working. How have companies successfully adapted and transformed? Where are those examples of big transformations? And how did they pull it off?

If you go back over the last several decades, you know that the primary sources of transformation have been M&A, which remains a very valid approach to transforming a company on a large scale, and R&D. So often a technological innovation will come along inside a big company that enables that company to transform its business model and do something different. Now, the challenges, if you look at the last few decades, are that both M&a and R&D have become more expensive and harder to execute than they used to be. And there are really interesting reasons as to why that's true. That might be a discussion for another podcast, but it's fascinating to see. So the question over the last 20 years people have been grappling with is, "Well, what then what next?" "What should we be doing?" And we're seeing shrinking lifespans in companies. Competition is becoming more fierce; lifecycles of companies are getting shorter. It's harder than ever to compete. It's harder than ever to innovate. And you've got people working inside of big companies who are trying to drive this innovation, who feel increasingly like they're banging their head against the wall every day and wondering, "Is it me?" "Is it my organization?" And the answer is no, it's just harder.

Broadly over the last 20 years, the standard response to this problem has been, "Let's take a group of people in our organization, and we'll call them the innovation team. We will set them aside from the core business, and perhaps we'll give them separate funding and decision rights, and let them go pursue opportunities that they identify and spin up new ventures or products or services that could drive innovation within our company." That approach is a very good thing to do, and all scaled enterprises should be doing it because it's very good at driving incremental and adjacent types of innovation. The problem is that most companies think that their job to be done is transformation. And there are not very many - if any - good examples of companies that have successfully transformed their fundamental business model by deploying that approach. It's disheartening.

I wish that approach worked better than it did at driving transformation, because are left with the question of, "Now what do we do in this situation?" It's one of the things I look at with my background as an entrepreneur, thinking about startups and the value that they're able to create. I think a lot of us are looking at the market now and realizing that capital is more plentiful than ever before. For funding startups, technology enables people out there to become experts in new spaces. It's easier in many ways to launch a startup that can do big things than it's ever been before. And so we see startups out in the market, creating tremendous amounts of value, and doing so very quickly. And so you have a lot of CEOs of big companies looking at that saying, "Well, there's the answer: we should act more like a startup." For most skilled enterprises, this is actually a huge strategic error, because scaled enterprises are very good at certain things. They're not good at pretending to be a startup. And on top of that, most startups fail, right? You don't want your scaled enterprise to fail: you can't afford to do that.

As I was leaving Innosight, I started to think that there ought to be a way we could combine the the ability of these skilled enterprises to efficiently coordinate resources on vast scale with the learning ability of startups. Startups are designed to go learn; they're designed to run experiments. Is there a way that we combine those two that looks different from the standard approach? And so what I decided to think was, "Maybe what we could do is we could go raise a fund, we could have some some corporations involved, we could go start startups that solve specific problems these corporations face or we could invest in existing startups that address those problems." And along the way, right in touch with my friends at High Alpha, who had begun thinking about similar kinds of questions. And so we decided to team up; I joined High Alpha almost three years ago with the idea that our primary focus is building new startups.

We had a lot of corporations and scaled organizations coming to us saying, "Can you help us do what you do within your venture studio?" And so I came in with this dual role: let's figure out how to launch more companies, but let's also explore this opportunity to do so as a way to propel innovation for these larger organizations. That was about three years ago. Now at High Alpha, we've launched company 28, and company 29 will come off the assembly line here pretty soon in the next month or two. This year, our venture studio will have launched somewhere between 10 and 12 startups, which is amazing. I still think we can do more, though - I want to launch 100 to 200 startups a year. Figuring out how to do that is the question that we're trying to answer with High Alpha Innovation, and in a way, it's an application of Clay's theory.

AS:
You mentioned that the job for these large corporations is to undertake transformation. How exactly is it that High Alpha Innovation is creating value for them or serving their jobs?

EP:
Good question. We are, in a nutshell, trying to figure out how to marry the coordination ability and execution ability of the scaled enterprises with the learning ability and speed of the startups that we design. The theory is let's take problems that these skilled enterprises face or that their customers face, and let's go build a startup that addresses those problems. In many cases with a startup, it would be very hard to pursue internally inside the organization or scaled enterprise. And that might be because the path to execution is ambiguous. Or that the likely solution challenges the core business of the scaled enterprise in some way it might be cannibalistic. It might reprioritize the customers or the stakeholders in the space. In those instances, a startup is better positioned to go win and to get traction in the market quickly. So we're trying to use that vehicle - the startup - as a way to build optionality and learning for the scaled enterprises. If it's a critical area, a scaled enterprises is already developing things on its product roadmap; it's already looking at doing some acquisitions in that space. Rather, we're looking at spaces that are strategically interesting or important, but we're not sure where to think about them yet. At High Alpha Innovation, we tell our scaled enterprises that the best way to maximize returns and minimize risk in an environment of uncertainty is to go run as many experiments as you can, at the cheapest possible cost per experiment. Well, in the world of business, startups are a form of cheap experiments, right? They're designed as learning vehicles for the scaled enterprises.

Therefore, the idea becomes let's push that experimentation and innovation out to the periphery. Let's do it through this vehicle of external startups. If that startup fails, is not going to have a deleterious effect on the scaled enterprise. On the other hand, if it works, it provides all sorts of options to the scaled enterprise about what to do and how to, in the end, transform. So our goal is to go build a number of startups over the next few years in that space together. And we will set these up as venture bankable startups where the corporation and us might be partners on the cap table together, the entrepreneurs are incentivized, as they are in any venture backed startup, to go move quickly and succeed. Let's give these things all the support they can so they can move as fast as possible. And let's see what kind of value we can create.

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AS:
Within this model, is the relationship between this new company you're building and the scaled enterprise, where you're essentially identifying the problem that could be worth solving? In other words, High Alpha Innovation facilitates that relationship? I'm curious about how you engage both of those parties. Are the scaled enterprises involved on in the day-to-day decision making? Or is it a much more removed process?

EP:
It's ideally much more of a removed process, but there are some exceptions to that. If you think about what Clay wrote in The Innovator's Solution, the solution essentially is to innovate as far from your core as you can. What we're saying is that you can go even farther than you think, at least most of the time. We can build real external standalone startups to go solve these things. Typically, the role of the big company is certainly a seat on the board, they might be an investor in the company. And they might be a first customer or distribution partner. And here's where the magic happens, right? If we can build a startup, it might take us longer if we were building a startup with a corporation involved, of course. But if we launch a new startup together, where that corporation is either a first customer, or a distribution partner, or some other kind of helper to that startup, in theory, that startup should be able to get to scale and to bigger scale faster than it would if it were on its own. And that's the idea we want to build. Our goal is to build more companies and to build more valuable companies. We think this is a way that we're running experiment to test whether the hypothesis is true that doing it this way it works. So far, so good. We won't know for sure for another five to 10 years, but so far, so good.

AS:
Very nice. And I have a question about the back-end process for what you guys are doing at High Alpha Innovation: When you are going through a range of ideas and narrowing it down, that first broad range of ideas, where are they coming from? Are all of those coming from corporations? Or are you looking more broadly at other areas and other industries that are attractive, and then finding your corporate partners accordingly?

EP:
Our focus is primarily on enterprise software: B2B SaaS is where we found our sweet spot. That's the business model we know very well, and it's also a way to generate a lot of value, quickly benefit from network effects, and scale, by building those types of businesses. So everything that we look at is about these opportunities in terms of cloud, native margins, and software, and how that might come into play and help solve a problem. So we're focused first on software-based business models. Now, we benefit from the fact that every large company right now is thinking about digital transformation and what that means. Marc Andreessen years ago wisely said that software is "eating the world" and we're seeing that come true. Every business - sometimes even kicking and screaming - is becoming more of a software company than ever before. And so digital transformation comes into play there. We, of course, think that there's opportunity to go build startups to solve some of these digital challenges that the companies face.

AS:
Nice, then there's definitely a lot of kicking and screaming involved! But seriously, it's a great description. So I'd love to hear any insights from the early stages: you've mentioned that High Alpha Innovation has been around now for a little while. Have there been any early lessons or experiences that have shaped how you refine the model?

EP:
We've learned a lot since we spun High Alpha Innovation out of High Alpha about a year ago. It's still new: we're learning a lot along the way and experimenting quite a bit. But it's been a few years now that we've been partnering with large companies to launch startups. We've learned a lot about how to do this quickly. One of the things we've learned is that we can jump in at different spots along the journey. In some cases, we're starting with a broad strategic theme generating up to a few hundred business ideas, evaluating those ideas quickly and launching a startup. And in those scenarios, within three to four months - that is the best case scenario - we can go from a blank whiteboard to a launched startup complete with a team starting to build an MVP product and customers. And we can do that often for less money, surprisingly, than it might take for that scaled enterprise to go build a proof of concept with an existing startup. I wouldn't have expected that in the beginning. But the reason is that we're coming at it with a customer-led development approach; we're starting with a blank slate, whereas in an existing startup partnering with a large company, both are coming with different views of the world. And there's a first period of reconciliation and alignment to make that happen.

We've also learned that, to no surprise, the innovator's dilemma remains a challenging problem. And incentives are very, very sticky. Startups, when done correctly and when set up the right way, have the proper incentives and governance, the access to talent, and the processes in place to enable them to move quickly and learn much more so than a skilled enterprise does or could even hope to have. There are there certain types of situations where a startup is a better approach than trying to do something inside a big company. We find that when we're generating new business ideas, maybe only 20% of the ideas that we might generate fit this approach. Well, 80% of the ideas or things that companies should be doing internally, are already doing internally in some cases, are existing startups that they might go partner with to execute those on. So we've learned a lot about what types of ideas fit this model and what don't.

Clay also had the idea of the capitalist dilemma: financial metrics have an outsized impact on the way that we think about and our ability to execute innovation. A few months ago, we were having a conversation with an executive at a big company, and he said, "I finally understand what you're doing. You're enabling big companies to innovate from their balance sheet." Shame on us for not realizing this sooner, but he was exactly right, considering how much innovation in big companies is funded from the P&L. Even if it's implied, only these new ventures that are started have to achieve some of those metrics that are put place by which the P&L is managed. What does that look like? Building a spreadsheet that forecasts how this new venture is going to do? Well, you can't do that when you're operating in the world of a high-assumption, low-knowledge, early-stage startup. But these these new ventures are expected to produce a return quickly, to get to capital efficiency very, very quickly. And that's very difficult. If you look out in the wild and venture backed startups, one of the things that is remarkable about them is that they often don't seem to care very much about capital efficiency in the near term. And there's a reason for that. They don't have to be capital efficient in the near term. Eventually they need to become capital efficient, but they don't in the near term. These big companies that are competing against venture-backed startups are playing a very different game.

Big companies are trying to innovate from their P&L with all the implied metrics and governance that comes from what venture-backed startups are out in the wild: not worrying about capital efficiency. And what we do with our model is that we enable these big companies to play the same game that these venture backed startups are playing. This startup that we've created doesn't have to be capital efficient in the near term: it can focus on learning, and finding product market fit and getting there quickly. And we find that this unlocks the opportunity to pursue innovation that's more transformative. That financial structure that we see funding a lot of innovation inside of big companies is a real impediment. As Clay correctly pointed out, I think we're seeing that play out more and more.

AS:
That's a great framing overall. I'm curious: would you be able to share any particular tangible examples from High Alpha Innovation's first year?

EP:
We recently launched a company in cooperation with Silicon Valley Bank and some other early investors called Bolster. This is a good example because Silicon Valley Bank is an amazing company focused on providing banking services and other advice to companies and individuals in the venture backed-community. So venture funds, private equity funds, venture-backed startups: they've done a tremendous job over the last couple decades at building up a share in that space, and providing a great suite of services to companies operating in that sphere. And, looking at a company like that, they're so dominant in their space - you almost ask, "What could they do to innovate?" For one, they would benefit from a stronger ecosystem: if the ecosystem overall grows, Silicon Valley Bank benefits. If there were more people starting companies and more people investing in these companies, that creates more customers for Silicon Valley Bank in the end.

One of the things we started looking at together is how we could help the ecosystem in which they operate. And we we looked at some opportunities that were certainly outside of the core banking business for Silicon Valley Bank, including how to support these venture-backed startups that are early in their journey. We identified pretty quickly that a lot of these early-stage startups face talent gaps, where you can't afford to hire a CFO yet, for example. And so we came up with an idea: maybe there ought to be a way to to create a marketplace where you've got the people who are interested in providing that help, and help working with startups broadly. You've got startups that are in need of executive-level and board-level talent; perhaps we could build something to go between and to make those matches and provide the services enabled through their software to make that efficient. And so we ended up launching a company called Bolster that has gone on and evolved the model quite a bit since then. We brought in a an amazing leadership team to run that company. And they're fantastic. Other investors, Union Square Ventures and Costanoa Ventures, came on in the beginning with us to co-invest alongside High Alpha and Silicon Valley Bank to get that company up and running. I think we went from blank whiteboard to the company funded and up and running in less than six months. Bolster is out the market crushing it right now. In fact, listeners of this podcast may be interested in taking a look at Bolster and becoming either advisors or customers, which we at High Alpha Innovation did ourselves.

AS:
That's really impressive. I'm sure many people are out there listening are looking Bolster up on their phones right now! That helped contextualize exactly what's going on the back end; it's great to be able to visualize what's happening. Do you have any particular visions for where you want High Alpha Innovation to go within the next year?

EP:
We hope to continue to grow quickly. Over the last year, our team has grown five-fold, and we expect that growth to continue. Plus, we are just now starting to get the first crop of startups coming off the assembly line. In that vein, we expect to be launching more companies out of this this model over the next year. We're in the process of building one-off companies, as well as venture studios, with some of our partners. We recently, for example, launched a venture studio in cooperation with the University of Wisconsin focused on building high quality, venture-backable startups out of the university and the alumni community.

In thinking about the three components of High Alpha, we now have the core venture studio, which is about 40 people who are focused entirely on building and supporting early-stage startups. We have the capability to launch a new startup every four to five weeks. Next, we have a venture fund: that's the second part of High Alpha. The third part is High Alpha Innovation, where we're focused on making the studio model accessible to others. Within our core studio, we've launched 10 or 12 companies this year, but in High Alpha Innovation we're just getting started. And we've got a goal - a lofty goal - to launch 100 startups with partners over the next five years. The way we do that is by teaming up with corporations, universities, and organizations for one-off sprints to go build a company. It's a sort of experiment to see how that works in that context of that scaled enterprise. But ideally, we can go replicate the model and build new venture studios with partners, which we're in the process of doing now. We build a venture studio with a dedicated team that's focused on launching startups in partnership with the scaled enterprises as a way to kind of manage innovation very far outside the walls of the scaled enterprise.

AS:
Is there a reason for creating all these different, more fragmented venture studios, as opposed to creating one centralized function or centralized location?

EP:
I wouldn't say there is for now, because we're still learning so much about the model. I think about these each as experiments in their own right. In many ways, what we're doing at High Alpha Innovation is a form of addressing our own version of the innovator's dilemma within our venture studio at High Alpha. So we're five years old - we're new - but we face our own version of the innovator's dilemma. It's hard to innovate as fast as we would like to. We operate our core venture studio on funding cycles that last about three and a half years per fund, with investors involved currently. Every year, we look ahead to the next funder studio cycle that we're going to launch and we look at things we might do differently. By launching multiple venture studios experiments simultaneously out of High Alpha Innovation, we can explore different versions of the model, play with the levers, and determine how to make that model most effective. There are some big questions that the venture studio model faces. For example: How do we find enough co-founders to make this model scalable? It's a real challenge that we need to run more experiments in order to figure out. What should the cap table look like when a company is invested with a venture studio as an investor and co-founder in that business? We're still figuring that out, too. There are a lot of open questions about the model that can be answered through more rapid experimentation. That's part of the goal we're trying to accomplish right now.

AS:
That makes a lot of sense. And what about selecting your partners? Are there particular features you're looking at when deciding that? In other words, are you saying, "Yes, the University of Wisconsin is someone we want to start a venture studio with?"

EP:
Indeed - and not just based on the quality of the football team! There are four things we're looking for in in the partners that we work with. Number one: partners need to have senior leadership involvement in what we're doing, and they need to help both in removing roadblocks and making things move fast. Number two: there needs to be a strategic rationale to how venture-building supports the growth and future objectives of the company. That's a story that we can help the executives tell inside of scaled enterprises. I think we can tell it persuasively, but there must be a strategic rationale for venture-building as a path to innovation. Third: there needs to be a pathway to capital, meaning that there is capital available and there's a way to line up the capital to do that investment - typically from the balance sheet - to fund the startups that will result from this process. And sometimes when we begin working with a partner, they may have a corporate venture fund already, but they may not. And that's something that we can help define as we go as we get closer to launch of a new startup or two. We can figure out where the capital comes from to make that happen. And then fourth: the fourth thing is as kind of a willingness to be involved actively in the process with us.

What we found works best is expansive business model design onto these companies, quickly running through our playbook to then support these companies as they get off the ground. What our partners can do best is bring the right people: the subject matter experts and the customers into the room along the way - the executives, too. Bringing them in makes sure that these things that we're designing can move faster than they would otherwise. For those of you listening in the audience who have started a company before, you know that in the early days, just getting access to potential customers and helpers is one of the biggest challenges. And we think our partners can play a big role in accelerating that in the beginning.

AS:
And what about the specific ideas you're pursuing? I'm going to keep going with this example with the University of Wisconsin: is there a particular set of ideas you're focusing on? Do they all have to do with education or related issues that that corporate partner is focused on? Or is there another way of looking at it?

EP:
We are generally pursuing innovation within well-defined themes. One of the things we do in the very beginning of an engagement is defining those goals and boundaries, where we collectively have agreed we're going to go hunt for innovative opportunities. So it's always well-defined within a theme, but those themes evolve over time. And we might pick another theme the next time we run a three-to-four month sprint, but the themes are always focused. That's one of the keys to making this approach successful.

AS:
To wrap up, Elliott, it's always been a pleasure speaking with you, and especially today! It's enlightening talking to a practitioner who's trying to innovate on how we innovate, especially because this seems to be a problem where all of these organizations that encourage or preach innovation seem to be terrible at doing it themselves. So thank you so much for taking time to share your journey with us and to share your insights with us. And we wish you and your team all the best. I'm really excited to see both what High Alpha Innovation learns and what we learn from the organization.

EP:
Thanks so much Anibha. This has been a lot of fun - really enjoyed the conversation.

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