Session Description: Large established companies are struggling to keep new ideas flowing as upstarts barge into every market. How are big companies innovating? How do the big work with the small?
An excerpt of the Innovation as Corporate Lifeblood panel is below, but the full transcript can be accessed here.
Kampel: We have Mike Monahan who’s the COO of Pitney Bowes, Max Furmanov from Accenture, Hari Hariharan from Celestica, and Slava Rubin from Indiegogo. Mike, I want to start with you, because many people here know Pitney Bowes for a lot of the legacy business, the historical meters, the postage. Talk a little about the state of Pitney Bowes, and how you’re making that transformation into this new digital world.
Monahan: Sure. All those great things about postage meters, the mailing machines, are still a very valuable part of our business. It’s only about 50% of our revenue today. We’re a $3.5 billion dollar global business. We’ve focused very recently on what we call digital commerce. We’ve been evolving new businesses that really leverage a number of the capabilities we have within Pitney Bowes but in the new economy. What a lot of people don’t know is about our location intelligence business. If you send a tweet, the location intelligence engine behind that is Pitney Bowes technology. If you ship globally as a seller on eBay, it’s Pitney Bowes technology managing that. We have a growing software and e-commerce business platform. Our e-commerce business has gone from $12 million, to over $400 million dollars in the last four years. We see real opportunities to take our capabilities, apply new technologies, and grow in this environment.
Kampel: Prior to your role as COO, I think it’s interesting. You were CFO.
Monahan: I was.
Kampel: When a lot of these organizations are thinking about investing in the future and making that an innovation, you were the one really evaluating and looking at the long-term goals of where to place those bets and make those investments. Has it shifted now that you’re out of the CFO role, into the COO role, how you are evaluating different opportunities?
Monahan: Yes, I had an opportunity earlier in my career to be in product management, and also in general management, so when I went in to the CFO role I brought a different perspective to that. I think the challenge for any larger company, especially a company like Pitney Bowes, which is 100 years old and public, is to create that balance between investing in the new and sustaining the existing. We had a very valuable and profitable franchise. What we did is really made sure we were maximizing and optimizing that business. Investing in it to optimize that, but then being able to take that cash flow and invest in new opportunities.
Kampel: Great. Slava, we’ve spoken a bunch about how big corporations are making those financial decisions. I think it was a couple months ago that we sat over lunch and you were telling me how big companies are actually turning to crowdfunding, over trying to navigate those channels internally to get the CFOs approval to make those investments. Talk a little about how companies like GE, and Whirlpool, and even Motorola are starting to look outside at other platforms like crowdfunding, and how you guys are working with them to help them innovate.
Rubin: Sure. Let me contextualize it for a second. We launched in 2008; we’re a crowdfunding platform. People post ideas and get them funded, or not. We have lots of small projects that have gotten funded, over half a million projects and entrepreneurs, well over a billion dollars around the world. A few years ago, an interesting thing happened. We have Philips, a large corporation, that comes and they start using Indiegogo. They’re like, “Can you help us?” We’re like, “Yes, it’s self-service. Just do whatever you want.” They’re like, “No, we want to pay you to help us.” We say, “Nope, self-service. We don’t take any money. Just do whatever you want, just post it.” They’re like, “No. We don’t want to fail.” Then they’re like, “Yep. Self-service, just do what you want.” So, they actually did it. They proceeded to move forward and it went pretty well. Then Google did the same thing, Marvell [Technology], the chip maker—these are all multibillion-dollar companies. Companies were knocking, saying, “We want to use Indiegogo.” We weren’t really ready to create an offering. About a year and a half ago, a little more than that, we decided to create an enterprise offering, and ensure that it is split into three different things, which are: 1) validate innovation, 2) source innovation, and 3) sponsor innovation. I’ll just focus on the first two per the question.
Validate innovation. A really amazing thing is happening at the Fortune 500s. They are publicly traded, so they care about three months off, not three years. They have to care about their reports to the analysts, and they often play defense instead of offense, as it relates to going in to new markets. Because of that, their R&D budgets are getting cut and it’s hard to break through their actual bureaucracy to channel conflicts, cannibalism, all kinds of different issues. GE is a good example, as Josh already mentioned. GE has been around for a while, they had an appliances division, a refrigerator line, that’s well over $7 billion dollars. For them, innovation is going from a cherry wood handle to a walnut wood handle.