Last week I was in NYC and had an amazing meeting with Anand Sanwal, CEO of CB Insights. If you’ve never heard of CB Insights, you should definitely check them out. They are a next-gen industry analyst that has built software that tracks startup data and sells this data (alongside research and workflow tools) to large corporations that are looking to build, buy, or partner with emerging tech companies. We met at his new office and it looked like they’re outgrowing it already.
CB Insights has done some research in the Construction and Real Estate space. When we discussed the sector, Anand mentioned that relative to other massive industries, the urgency around digital transformation in CRE is still lower but is intensifying. I agree that the market is immature. So, being an engineer, I decided to develop a maturity model. A maturity model is a tool for evaluating how effective a person or group is at the current moment and showing them what capabilities should be developed next. Without further ado:
The Built Environment Maturity Model for Digital Transformation: a corporate innovator’s guide to coming out ahead.
Gather Knowledge: Reading, listening to podcasts, and attending conferences are great ways to build a base understanding of what’s happening in your market. You should also develop a position on what your partners and competitors are doing in digital transformation. The motive here is highly personal. Your company may or may not pay for you to spend the resources to learn. If they won’t, you should do it on your own dime, because there’s a chance that your company may not be around in 10 years.
Build a Brand: Once you have a base level of knowledge, focus on a few areas and go deep. Whether it’s a technology or a new business model, build a position and get out there and test it. The best way to do that is to start speaking and being on panels. A blog can be useful too, but that’s supplementary. Sponsoring conferences is a good way to get your name or your firm’s name out in the marketplace. See if your company will spend $15K to sponsor a conference and get the firm name out in the innovation community; it’s a great first “test” as to whether your firm is being supportive. It also begins to drive some ROI on your efforts to date. Your customer wants to work with an innovative company, and this is a great way to build social proof.
Learn from Others: When a market is in the early innings of digital transformation, building a peer group is very important. By now your company may have added “innovation” to your title, but you likely don’t have internal teams that you can learn from at your company. You’re a department of one, and it’s time to find “your people.” Hopefully, you met some people at conferences and networking events and you can start building your community.
Deliver Strategic Results: By now your company is probably tired of you talking about innovation; they want to see some results. Delivering early wins is very important. Developing a corporate challenge, building problem statements, and creating a project is probably a great next step. It is time to design and build an innovation lab and start testing your point of view. You are now moving beyond social proof and creating a platform for digital transformation. This is the next big test for your company. You are starting to spend real money.
Monetize Innovation: Like I said, early wins are important to a company undergoing digital transformation. While your executive team has been supporting you, there are people who like things the way they are and are ready for you to fail. The best way to combat the naysayers is to hand your boss a big fat check. This is also a test of whether your company is “doing innovation” for marketing purposes or whether they truly believe that this is important. I’ve also seen a lot of people make a career move to a different company at this point. The internal selling of the idea of making the company more money should be simple, but you’re also asking for real investment dollars. This is where the rubber meets the road.
Scale Returns: You’ve built knowledge, a brand, and a platform. You’ve delivered returns. Now it is time to scale. Scaling your innovation platform has a limit. Hopefully, you have continued to create a community and have great external opportunities ahead of you. It is time to start thinking like a venture capitalist. You are leveraging your operational experiences to date and now need to learn how to invest in companies. This has a steep learning curve, and you will not have internal credibility within your company. The best move here is to invest in an existing venture fund or two. Not only is this a major test for your company, but it also gives you a partner to work with and learn the investing business from. At Shadow, we limit our strategic investors to about half of our fund because we are focused on financial returns. Some funds have all strategic investors because the bar is pretty low for financial gains. The challenge in this scenario is timing. Funds operate on investment cycles, so build early relationships.
Build a Strategic Portfolio: You’ve been learning from your new venture capital friends about due diligence, risk, and portfolio creation. It is now time to create your own portfolio. The reality is that a venture firm is not going to invest in startups that only meet your strategic objectives; they invest in a diverse group to build a balanced portfolio. This portfolio aligns with the venture firm’s objectives, but maybe not your company’s strategic objectives. So start investing directly. Chances are, you’re probably not still at the company where you started this innovation journey. But your career is probably in a fantastic place.
Venture Capitalist: You have built credibility by delivering returns on your individual investments. It is now time to create a venture fund. This will allow you to have a level of autonomy from your company. When you’re running an investment opportunity through your company, the approval process can be slow and exhausting. Venture capital requires speed. Also, this becomes an opportunity for you to leverage your company’s capital with outside capital. The new skill to learn here is fundraising. The good news is that you have been doing it internally for a while now, and you’ve built a great community to approach. Go be a VC!
The timeline for this journey can vary wildly. It is highly dependent upon whether you can go through this process while at one company or whether you need to make five job changes along the way. As always, I am here to help.