Business Model Innovation

Should you try Google’s famous “20% time” experiment to encourage innovation? We tried this at Duolingo years ago. It didn’t work. It wasn’t enough time for people to start meaningful projects, and very few people took advantage of it because the framework was pretty vague. I knew there had to be other ways to drive innovation at the company. So, here are 3 other initiatives we’ve tried, what we’ve learned from each, and what we're going to try next. 💡 Innovation Awards: Annual recognition for those who move the needle with boundary-pushing projects. The upside: These awards make our commitment to innovation clear, and offer a well-deserved incentive to those who have done remarkable work. The downside: It’s given to individuals, but we want to incentivize team work. What’s more, it’s not necessarily a framework for coming up with the next big thing. 💻 Hackathon: This is a good framework, and lots of companies do it. Everyone (not just engineers) can take two days to collaborate on and present anything that excites them, as long as it advances our mission or addresses a key business need. The upside: Some of our biggest features grew out of hackathon projects, from the Duolingo English Test (born at our first hackathon in 2013) to our avatar builder. The downside: Other than the time/resource constraint, projects rarely align with our current priorities. The ones that take off hit the elusive combo of right time + a problem that no other team could tackle. 💥 Special Projects: Knowing that ideal equation, we started a new program for fostering innovation, playfully dubbed DARPA (Duolingo Advanced Research Project Agency). The idea: anyone can pitch an idea at any time. If they get consensus on it and if it’s not in the purview of another team, a cross-functional group is formed to bring the project to fruition. The most creative work tends to happen when a problem is not in the clear purview of a particular team; this program creates a path for bringing these kinds of interdisciplinary ideas to life. Our Duo and Lily mascot suits (featured often on our social accounts) came from this, as did our Duo plushie and the merch store. (And if this photo doesn't show why we needed to innovate for new suits, I don't know what will!) The biggest challenge: figuring out how to transition ownership of a successful project after the strike team’s work is done. 👀 What’s next? We’re working on a program that proactively identifies big picture, unassigned problems that we haven’t figured out yet and then incentivizes people to create proposals for solving them. How that will work is still to be determined, but we know there is a lot of fertile ground for it to take root. How does your company create an environment of creativity that encourages true innovation? I'm interested to hear what's worked for you, so please feel free to share in the comments! #duolingo #innovation #hackathon #creativity #bigideas

Most change initiatives don't fail because of the change that's happening, they fail because of how the change is communicated. I've watched brilliant restructurings collapse and transformative acquisitions unravel… Not because the plan was flawed, but because leaders were more focused on explaining the "what" and "why" than on how they were addressing the fears and concerns of the people on their team. People don't resist change because they don't understand it. They resist because they haven't been given a compelling story about their role in it. This is where the Venture Scape framework becomes invaluable. The framework maps your team's journey through five distinct stages of change: The Dream - When you envision something better and need to spark belief The Leap - When you commit to action and need to build confidence The Fight - When you face resistance and need to inspire bravery The Climb - When progress feels slow and you need to fuel endurance The Arrival - When you achieve success and need to honor the journey The key is knowing exactly where your team is in this journey and tailoring your communication accordingly. If you're announcing a merger during the Leap stage, don't deliver a message about endurance. Your team needs a moment of commitment–stories and symbols that anchor them in the decision and clarify the values that remain unchanged. You can’t know where your team is on this spectrum without talking to them. Don’t just guess. Have real conversations. Listen to their specific concerns. Then craft messages that speak directly to those fears while calling on their courage. Your job isn't just to announce change, but to walk beside your team and help your team understand what role they play in the story at each stage. #LeadershipCommunication #Illuminate

Scaling from 50 to 100 employees almost killed our company. Until we discovered a simple org structure that unlocked $100M+ in annual revenue. In my 10+ years of experience as a founder, one of the biggest challenges I faced in scaling was bridging the organizational gap between startup and enterprise. We hit that wall at around 100~ employees. What worked beautifully with a small team suddenly became our biggest obstacle to growth. The problem was our functional org structure: Engineers reporting to engineering, product to product, business to business. This created a complex dependency web: • Planning took weeks • No clear ownership  • Business threw Jira tickets over the fence and prayed for them to get completed • Engineers didn’t understand priorities and worked on problems that didn’t align with customer needs That was when I studied Amazon's Single-Threaded Owner (STO) model, in which dedicated GMs run independent business units with their own cross-functional teams and manage P&L It looked great for Amazon's scale but felt impossible for growing companies like ours. These 2 critical barriers made it impractical for our scale: 1. Engineering Squad Requirements: True STO demands complete engineering teams (including managers) reporting to a single owner. At our size, we couldn't justify full engineering squads for each business unit. To make it work, we would have to quadruple our engineering headcount. 2. P&L Owner Complexity: STO leaders need unicorn-level skills: deep business acumen and P&L management experience. Not only are these leaders rare and expensive, but requiring all these skills in one person would have limited our talent pool and slowed our ability to launch new initiatives. What we needed was a model that captured STO's focus and accountability but worked for our size and growth needs. That's when we created Mission-Aligned Teams (MATs), a hybrid model that changed our execution (for good) Key principles: • Each team owns a specific mission (e.g., improving customer service, optimizing payment flow) • Teams are cross-functional and self-sufficient,  • Leaders can be anyone (engineer, PM, marketer) who's good at execution • People still report functionally for career development • Leaders focus on execution, not people management The results exceeded our highest expectations: New MAT leads launched new products, each generating $5-10M in revenue within a year with under 10 person teams. Planning became streamlined. Ownership became clear. But it's NOT for everyone (like STO wasn’t for us) If you're under 50 people, the overhead probably isn't worth it. If you're Amazon-scale, pure STO might be better. MAT works best in the messy middle: when you're too big for everyone to be in one room but too small for a full enterprise structure. image courtesy of Manu Cornet ------ If you liked this, follow me Henry Shi as I share insights from my journey of building and scaling a  $1B/year business.

In 2012, when I joined ZoomInfo as the VP Product, Growth & Strategy, they were stuck at $9M ARR. When I left 5 years later, we were at over $80M ARR. Here’s the 5-step GTM playbook we used to get unstuck and build the foundation to scale: Step 1: Develop contrarian products that satisfy unmet demand - Most companies can't convince themselves to radically innovate - In 2012, data companies were selling CSVs, no one was investing in product - We took massive risk and doubled down on building products to streamline data delivery - We started to "look different" from the space - Sometimes it's better to "look different" than "be better" Step 2: Focus on SMB or lower end of the market - Market disruption always happens at the low end - As a small company, it’s difficult to compete for your competitor’s best customers - Instead aim your efforts at the customers your competitors would give up without a fight - We focused on the SMB and lower mid market with a self-serve product at a low price - Everyone else was fighting for the more lucrative enterprise customers Step 3: Increase Prices, Decrease Churn, Add Features Rapidly - We rapidly developed features that gave GTM teams ammo for upgrades - With new products, we could add a new line item in the invoice and post growth with relative ease - New features also gave us the reason to reach out to customers to talk about upsell - All this was predicated on our ability to develop a sustained product roadmap with a strong understanding of the impact on GTM and our ability to attach growth initiatives to every small feature release Step 4: Intentionally Design Market Expansion for Virality - Nonlinear growth comes from getting the inbound engine started early - At first, we went after the spray and pray approach with some automation, which worked well - However, our revenues exploded when we started getting strategic with TAM and went after market niches, especially the ones that were ignored by other B2B data vendors - This allowed us to dominate multiple small verticals and as we got popular within those verticals it resulted in word of mouth - virality, inbound inquiries and increased retention contributing to the non linear growth Step 5: Cultivate a Leader's Mindset - Startups are often fighting just to stay afloat - this creates chaos, panic & unrest in organizations - By switching the mental model from a survival mindset to a leader's mindset, you can switch from a perpetual struggle for revenue growth to attempting to decimate competitors - You switch from being a price follower to becoming a price setter in the long run - This mindset provides a purpose, a better decision making framework, and results in a much healthier business and work culture TAKEAWAY: Markets are always evolving, and every market can be disrupted. Any business can get unstuck. The specific plays required to disrupt the B2B data market would be different today, but the ZoomInfo playbook's principles are timeless.

Deep Dive #3 for “Some of My Learnings” Learning #3: Try to create a business model disruption where the incumbent doesn’t have any incentive to respond to you. This was a great learning I was first exposed to in the book that’s a must read called 7 Powers by Hamilton Helmer. Most disruptions tend to be business model disruptions. Here’s a great explanation of the concept that they refer to in the book called Counter Positioning. Basically it is a business strategy where a new entrant in a market establishes a competitive advantage by developing a new business model that is radically different from, and incompatible with, the existing models of the industry leaders. This new model gives customers unique benefits that the incumbents cannot replicate without compromising their existing business. A great example discussed in the book was around why Blockbuster didn’t have an incentive to respond to Netflix because 50% of their revenue was late fees and Netflix with a subscription business model just did without late fees. This lack of motivation to respond to a disruptive attack creates an inherent advantage for the disruptor and the incumbent tends to erode its strategic relevance. Btw, a common myth is that the role of a disruptor is limited to startups. It’s not. It’s limited to mindsets. Great incumbents disrupt themselves and others in the market all the time. Apple is a great example of this. So are many others like Amazon. The cloud transition with AWS was also very similar and materially disrupted compute and storage vendors. This is so important because this asymmetrical shift of value completely alters the customer’s mindset, where they redefine success for themselves. What starts as an intriguing idea for customers eventually becomes a concept that simply can’t be ignored because of the strategic importance of the business model transformation. So every time you think of being in a competitive market, think of business model differentiations where competitors can’t afford to respond to you in kind so they keep debating why your business model is the wrong one. These disruptions are much longer lasting than feature based advantages, that are extremely short-lived if at all. But there is one more important thing here. When you start enjoying a business at a healthy margin and scale, that also becomes exciting for others to run a counter positioning play on you. So if you find yourself in a healthy state, get paranoid about being disrupted and ideally run that play on yourself. If your business is not going well, that means someone disrupted you and you have to think of the next disruption. The cardinal lesson to learn here is that disruption is inevitable. But, it is much better to get self-disrupted than be disrupted by someone else. Don’t be afraid of the fights internally. Be afraid of the attacks externally.

Too often, I’ve been in a meeting where everyone agreed collaboration was essential—yet when it came to execution, things stalled. Silos persisted, friction rose, and progress felt painfully slow. A recent Harvard Business Review article highlights a frustrating truth: even the best-intentioned leaders struggle to work across functions. Why? Because traditional leadership development focuses on vertical leadership (managing teams) rather than lateral leadership (influencing peers across the business). The best cross-functional leaders operate differently. They don’t just lead their teams—they master LATERAL AGILITY: the ability to move side to side, collaborate effectively, and drive results without authority. The article suggests three strategies on how to do this: (1) Think Enterprise-First. Instead of fighting for their department, top leaders prioritize company-wide success. They ask: “What does the business need from our collaboration?” rather than “How does this benefit my team?” (2) Use "Paradoxical Questions" to Avoid Stalemates. Instead of arguing over priorities, they find a way to win together by asking: “How can we achieve my objective AND help you meet yours?” This shifts the conversation from turf battles to solutions. (3) “Make Purple” Instead of Pushing a Plan. One leader in the article put it best: “I bring red, you bring blue, and together we create purple.” The best collaborators don’t show up with a fully baked plan—they co-create with others to build trust and alignment. In my research, I’ve found that curiosity is so helpful in breaking down silos. Leaders who ask more questions—genuinely, not just performatively—build deeper trust, uncover hidden constraints, and unlock creative solutions. - Instead of assuming resistance, ask: “What constraints are you facing?” - Instead of pushing a plan, ask: “How might we build this together?” - Instead of guarding your function’s priorities, ask: “What’s the bigger picture we’re missing?” Great collaboration isn’t about power—it’s about perspective. And the leaders who master it create workplaces where innovation thrives. Which of these strategies resonates with you most? #collaboration #leadership #learning #skills https://lnkd.in/esC4cfjS

I was deeply disappointed to see the news that meati™, a mycelium protein company, is preparing to sell its business for $4 million in a “fire sale” process, which is a substantial discount to the roughly $450 million it raised. I first encountered Meati over 5 years ago when I got to taste its breaded chicken sandwich with Tyler Huggins, the company's co-founder, which I thought was the best future protein that I had eaten at that time. I was not the only one who thought that Meati was a premium product in the future protein sector as the company gained market traction with consumers at Whole Foods and other retailers. The reason that Meati ended in a fire sale, which is a similar story to other FoodTech companies, is that they raised too much capital at too high a valuation and failed to execute on their business plan. Although Meati had initial success with its products, it seems that its eyes were bigger than its customers’ stomachs, leading it to overbuild its production capabilities far in excess of product demand. In assessing the Meati situation, there are two key business-model questions that need to be discussed: 1)     Should companies pursue B-to-C or B-to-B business models? This is a tough question and the answer will differ for each company. However, I think many companies underestimate how challenging it is to take a new product to market, likely because of the initial success achieved by Beyond Meat and Impossible Foods following their launches at grocery stores at the beginning of this decade. 2)     Should companies build their own production capabilities or outsource production to a CMO or CDMO? Many companies believe that there is value to proprietary production, rather than outsourcing, due to cost or complexity. However, today, capital efficiency seems to be paramount, and figuring how to achieve commercial scale using less capital is essential. While many of Meati’s issues can be linked to its overbuild and/or B-to-C strategy, the company also had bad luck in late February, when its lender swept away two-thirds of its cash reserves due to a technical default relating to a breach of financial covenants. This should be a teachable moment for many entrepreneurs who treat debt, typically venture debt, as “free” money. However, the reality is that for companies which are not cash-flow positive, taking on debt can be very dangerous, unless they are 100% sure that their investors will pay off the debt, either when the debt needs to be refinanced or if a default occurs. Meati will not be the last FoodTech company that goes bankrupt in the near term, but hopefully, other companies can learn from its experience and not make the same mistakes. https://lnkd.in/gb7zbFZt #foodtech; #mycelium; #alternativeproteins EcoTech Capital Cy Obert

Here’s a new, highly-timely way to classify innovations: FLEXIBLE vs. INFLEXIBLE. When chaos abounds, prioritize the FLEXIBLE. Yet companies usually spend most money and time on what’s INFLEXIBLE. Six ways to change the balance are: 1️⃣ Map your innovation portfolio How have you spread your bets along axes such as time horizon, type of risk taken, and ability to change course? Know where your portfolio is currently at, and what profile you wish to move toward. 2️⃣ Create options What are inexpensive bets you can place on ways your world might shift? Consider, for instance, low-cost products that might be embraced by customers feeling acute economic pressures. Perhaps these bets have a relatively large probability of not paying off – that’s OK if they’re taken inexpensively, keeping your financial risk small. 3️⃣ Think platforms, not products Platforms create flexibility to change what you offer customers, while retaining a sticky customer relationship. They often have a software component, even in the world of physical goods. 4️⃣ Stay focused on your customers’ constants We can be certain that today’s chaotic environment won’t settle down soon. But your customers’ Jobs to be Done stay fairly constant. Know those very well and concentrate on them. 5️⃣ Prioritize business model and service innovations Product innovation often takes time and multi-year planning. Business model and service innovations are much more flexible (and cheaper), yet oftentimes companies lack clear mechanisms to pursue these. Fix that. 6️⃣ Pursue Costovation You can concentrate some of the less flexible portions of your portfolio on cost innovation (Costovation), because your costs are often more controllable than your revenues. Use the tools of innovation to radically re-think your costs. The innovation literature has many classifications: disruptive vs. sustaining, existing vs. new market, etc. But it’s been rare to classify flexible vs. inflexible. Now’s the time to change that. When everything seems to be swirling, focus on what’s FLEXIBLE.

When you're launching something new, you want to be sure it's going to work. Running in-market experiments prior to launch confirms hypotheses before you commit resources. Just as important,  experiments can often prevent big missteps. Here are four rules of thumb that make for powerful experimentation: 1. Test more than one concept or proposition with more than one target market segment. Sure, you can test just one concept with just one target, but you'll only learn if it succeeded or failed. If you test several concepts in parallel with more than one target, you can compare performance by audience and start to understand the drivers of success across concepts. 2. Make sure that tested concepts are distinct and differentiated. Each concept should be unique because the goal is to learn as much as possible. If you only test three shades of blue, you'll never learn that people actually want red. 3. Test more than once. As you see 'hot spots' form between concept and audience, test variations of your winning concept. Let’s say, for example, that you test three distinct versions of your new product concept—let’s call them Red, Yellow, and Blue. In the first experiment, Red tests well with all three of your target audience segments. In the next experiment, test three versions of Red with all three segments. This next experiment might explore value propositions or particular features or positioning. It’s a way to generate additional learning about strategy: →What problem does Red solve for customers? →Which features drive interest in Red? →Which positioning helps to interest people in Red? 4. Be aware of your testing environment and how it creates bias (or not) for your experiment. I prefer real-life in-market experiments, with just enough exposure to generate statistically valid results; others prefer ‘lab-based’ testing. Either way, think about how representative your environment is of your eventual launch. The next time you’re making a big move, remember: experiments are a powerful way to reduce risk, whether you are launching a new product, repositioning a brand, or prioritizing a product pipeline. Happy experimenting! #LIPostingDayJune

I'd like to discuss using Customer Feedback for more focused product iteration. One of the most direct ways to understand customers needs and desires is through feedback. Leveraging tools like surveys, user testing, and even social media can offer invaluable insights. But don't underestimate the power of simple direct communication – be it through emails, chats, or interviews. However, while gathering feedback is essential, ensuring its quality is even more crucial. Start by setting clear feedback objectives and favor open-ended questions that allow for comprehensive answers. It's also pivotal to ensure a diversity in your feedback sources to avoid any inherent biases. But here's a caveat – not all feedback will be relevant to every customer. That's why it's essential to segment the feedback, identify common themes, and use statistical methods to validate its wider applicability. Once you've sorted and prioritised the feedback, the next step is actioning it. This involves cross-functional collaboration, translating feedback into product requirements, and setting milestones for implementation. Lastly, once changes are implemented, the cycle doesn't end. Use methods like A/B testing to gauge the direct impact of the changes. And always, always return to your customers for follow-up feedback to ensure you're on the right track. In the bustling world of tech startups, startups that listen, iterate, and refine based on customer feedback truly thrive. #startups #entrepreneurship #customer #pmf #product