Incentives Don’t Work?

Just watched a great TED video by Daniel Pink. Mr. Pink makes a compelling argument that incentives (primarily monetary ones) don’t work for businesses and reduce the performance of employees.  I highly recommend this video

Here is a summary of his argument:

There is a mismatch between what science knows and what business does

1) Incentives do work but for a surprisingly small band of circumstances, (primarily mechanical in nature not cognitive).

2) Rewards force people to focus exclusively on the task ahead, destroying creativity.

3) The secret to high performance isn’t rewards and punishment – but intrinsic drive

yet2.com Deal-Making Workshop at CoDev 2011 Conference

yet2.com is excited to announce its participation in the 10th Annual PDMA/MRT Congress on Open Innovation and Co-Development, CoDev 2011: Accessing Networks and Knowledge to Create Business Value (http://www.codevpd.org/) to be held January 24 – 26, 2011 in Scottsdale, Arizona. CoDev2011 is considered the leading (and longest-running) forum on open innovation and co-development; sharing cutting-edge insights on current practices, lessons learned, and future trends. This year the discussions and case presentations will focus on tools, methods, and processes to:   Determine what the optimal organizational structure is to support and grow your company’s open innovation capabilities Evolve your company culture to embrace innovation Implement the types of rewards and incentives that are necessary to drive open innovation performance Advance open innovation efforts through early supplier involvement Expand your open innovation processes across multiple business functions and levels Manage multiple open innovation partners on a single open innovation initiative yet2.com will be instructing a half-day workshop on the topic of Deal Making 101: Tools, Methods and Approaches for Win/Win Negotiations at the CoDev conference and will be joining a stellar faculty of innovation leaders from Colgate-Palmolive, Heinz, HP Labs, Siemens, Clorox, LG Electronics, Kellogg, Microsoft, Kraft Foods, Shell International, GlaxoSmithKline, Campbell Soup Company, Pepisco, ConocoPhilips, Intuit, Merck, Tesco and more. CoDev 2011 will offer multiple opportunities within the conference to connect with faculty and other participants to expand your innovation network and connect with possible new partners of choice. Friends of yet2.com will receive a special $200 discount by listing Y2 as your priority code when registering online. For more information and to reserve your seat, call 1.800.338.2223/781.891.8080 or reserve online at: http://www.codevpd.org/

yet2.com and ideaken.com partnership aims to place Asia onto the Innovation World Map

There are 3 fun things about working at yet2.com; 1) we work with breathtaking new technology that is about to be commercialized, 2) we work with fascinating people that develop this great technology; 3) we work globally.  Our partnership with ideaken facilitates all 3! – Ben

yet2.com and ideaken.com partnership aims to place Asia onto the Innovation World Map

India / USA 21 Oct 2010 – yet2.com and ideaken.com today announced a partnership to jointly scout innovative solutions from individuals and technology SMEs for their enterprise clients.

Open innovation and Co-creation is the fastest emerging way to procure & supply innovation in a world of diminishing boundaries. This partnership will help both yet2.com and ideaken.com to expand their innovator solver base and get faster and better solutions for their enterprise clients. This partnership will also provide a greater opportunity for individual innovators and technology SMEs to access bigger market of innovation seekers from around the world.

Head quartered in US, yet2.com is world’s largest intellectual property exchange. ideaken.com is a leading open innovation intermediary and co-creation platform provider in Asia.

Dr. Eugene Buff, Vice President of Consulting for yet2.com, said, “Asia is a developing powerhouse of innovation that is of immense importance to the rest of the world. It’s also one of the world’s great markets for technology. yet2.com is very happy to be partnering with an organization of ideaken’s stature.”

“We look forward to a long partnership with ideaken,” said Ben DuPont, president and co-founder of yet2.com. “Innovation is not regional. Developments from Bangalore or Delhi can easily find their way to the shelves of New York or Tokyo, just as innovations from Berlin or Johannesburg may help companies in Bangalore. Organizations like ideaken and yet2.com exist to make these connections happen.”

Jayesh Badani, Founder and CEO of ideaken said “yet2.com and ideaken.com are in the business of tapping into innovative technology providers who are somewhere out there. It makes lot of sense to join forces and create a larger community of innovation seekers and innovation solvers, everybody wins this way. We help our clients collaborate to innovate; this partnership is about applying this principle to ourselves!”

Entrepreneur Enthusiasm & Trustworthiness

Richard Sudek wrote an interesting article in 2007 on  “How Entrepreneur Enthusiasm, Trustworthiness and Venture Attributes Affect Angel Investment Decision Processes”. Dissertation – Claremont Graduate University

This is an interesting topic for me, because I believe trust is the currency of business. I wrote a blog on the topic. A key learning for me after 11 years at yet2.com is people are more important than technology in deal-making.   This study supports that view.

This article is a dissertation of 121 pages including survey results from other scholars. The author points out that entrepreneur’s enthusiasm and trustworthiness are placed as top criteria used by angels in their funding decision. Sudek emphasizes the importance of trustworthiness for the success of the entrepreneur. Whether an angel likes the entrepreneur is also very important. Sudek comments that the entrepreneur is the most significant factor that influences angels and VC’s to finance the new venture.

The author also considered age, gender and experience of the entrepreneur as potential factors that can influence finding decisions, but he didn’t find significant trends and correlations.

Factors for successful business pitches:

 Enthusiasm and passion of the entrepreneur (coupled with extraversion)

 Trustworthiness of the entrepreneur

 Entrepreneurs demonstrate ability to manage the new venture

 Entrepreneurs demonstrate that there is a market need for their product

 The entrepreneur demonstrates expertise

 Entrepreneurs are skillful in ingratiating themselves during meetings with VC’s

 Entrepreneur conveys honesty in his/her presentation

Do Deal-makers Evaluate ‘Live’ Presentations Like They Evaluate Written Ones?

On my long flights I get a chance to do some interesting reading – this time on the subect of the clarity of a presentation and how this might impact a technology deal or venture capital funding.  I came across Some very interesting research on this subject done by: Denis Gregoire, Alice Koning and Ben Oviatt on the impact of an in person pitch vs a submitted business plan or technology brief.

The research presents a study on the venture capitalists’ real-time opinions on entrepreneurs’ presentations. The authors base their analysis on real time responses submitted by 25 venture capitalists using dynamic response devices while the VC’s are evaluating 18 presentations at a real venture financing event. The authors compare the submitted responses with the particular moment in the entrepreneur’s presentation and identify what information venture capitalists considered influential for their decision to fund the venture.

The study revealed that presenters who were casually dressed and yet talked about their high experience, received negative ratings from the venture capitalists. In all other cases, highlighting of the entrepreneurs’ experience did not have any major impact on the VC’s.

Factors for Successful Business Pitches:

• Entrepreneurs are dressed formally and look professional
• The presentation is well organized and consistent – there are few leaps from one category to the other
• Clearly articulated purpose of the venture – how the venture will address the problems of the customers
• Entrepreneur focuses on a narrow and niche markets/industries
• Entrepreneurs have patents for their products
• The presentation is not longer than the time limit

Factors that have little impact on VC’s funding decisions (all entrepreneurs highlight these– so there is no differentiation)

• Entrepreneurs have long experience in the industry
• Highlighting of the capacity and abilities of the management team
• Size of the market and potential growth of the venture
• The position of the presenter (whether he/she is the founder, a hired executive or technology specialist)

Gregoire, Denis. Koning, Alice. Oviatt, Benjamin. 2008. “Do VC’s Evaluate ‘Live’ Presentations Like They Evaluate Business Plans?”. Frontiers of Entrepreneurship Research. Vol (28), No (3), Pp 1-15

yet2.com Portfolio Company to Put More Clean Energy on the Grid

Portland, Oregon – Iberdrola Renewables, the Bonneville Power Administration (BPA), Constellation Energy Control & Dispatch and software provider Versify Solutions today announced the launch of a new pilot program that could significantly expand cost-effective use of Pacific Northwest wind energy. The project also holds promise for lowering costs while increasing the environmental benefits of wind energy in the region.

The initiative, called Customer Supplied Generation Imbalance or “self supply,” brings together hydro, wind and natural gas-fired energy to reliably and cost-effectively integrate wind generation into the electricity grid and reduce use of coal-fired generation.

Wind power is the fastest-growing form of energy in the world, and the U.S. is the fastest-growing market. The Pacific Northwest has been at the forefront of that growth, zooming from zero megawatts to more than 5,000 megawatts in operation in 12 years. Currently, more than 3,000 megawatts – almost three times Seattle’s average power use – are connected to the BPA transmission system. Since the wind doesn’t blow continuously, the actual energy output of regional wind farms is about 30 percent.

Because wind is an intermittent resource, it must be backed up by reserves. Currently, wind generation is backed exclusively with energy from federal hydropower marketed by BPA. Wind power’s significant growth in the Northwest threatens to exhaust the federal dams’ capacity to alone provide wind balancing services and meet its other obligations.

The self-supply pilot enables wind generators to procure their own balancing resources, freeing up federal hydropower. This will increase hydro-system flexibility, which would help add more renewable resources to the electricity grid.

Passion: What is its role in achieving VC funding?

A commonly held belief is that passion is highly influential in receiving funding.  Is this true? Sort of.

In a scientifically conducted study, a VC was no more likely to invest in a company with a passionate pitcher, then one with out. In other words passion alone has no statistical impact on investment in a new venture.

How could this be true?  Well the study suggest that passion is typically paired with preparation.  Preparation in a business plan and pitch is positively related to VC funding.

Big Picture: If you’re pitching VCs be as prepared for the conversation as possible.  The more prepared you are, the better your chances of getting funding are.  Passion of course, never hurts.

Source: ENTREPRENEUR PASSION AND PREPAREDNESS IN BUSINESS PLAN PRESENTATIONS: A PERSUASION ANALYSIS OF VENTURE CAPITALISTS’ FUNDING DECISIONS. XIAO-PING CHEN- University of Washington, XIN YAO- Wichita State University, SURESH KOTHA- University of Washington