About grey rhino’s, black swans and the incumbent’s dilemma

About grey rhino’s, black swans and the incumbent’s dilemma

Black swan versus Grey Rhino Image by Holger Detje from Pixabay and by Geran de Klerk on Unsplash



There are a number of articles online comparing COVID-19 to a black swan event. But is it really?


Let’s check out some definitions. Investopedia describes a black swan as “an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the widespread insistence they were obvious in hindsight.”


Impact? Check.
Obvious in hindsight? Check.
Extreme rarity? Not so sure… Humanity’s history has been rife with widespread pandemics. Smallpox, tuberculosis, the black death (killing 75-200 million people in the 14th century), not to mention the 1918 spanish flu pandemic, which killed an estimated 20 to 100 million people (caused by the H1N1 virus which also cause the swine flu pandemic in 2009). SARS, H5N1 (the birdflu), the Zika virus, smallpox (which was virtually eliminated thanks to … vaccinations). And the list goes on  As a matter of fact, Bill Gates mentioned it in his Gates notes already in 2015. Which could mean that the new coronavirus wasn’t really a black swan event, but something more akin to a “grey rhino”.


So what is a “grey rhino”? Other than a  massive beast that can trample you to pieces, a “grey rhino” is a highly probable, high impact yet neglected threat. Where these differ from a black swan event is that they are NOT random, NOT unexpected, but they are preceded by a number of warnings and visible evidence. Yet, decision makers, governments and companies rarely act on them until it is too late, because they consider them too remote, and neglect them.


“highly probably, high-impact, yet neglected threats.”


So maybe COVID-19 was not a black swan, but something that we knew was coming one day but chose to ignore. Much like big companies tend to ignore incumbents eating away at their margin, while they are focusing on the next quarter’s results of their cash cow products.

BCG Growth Matrix

The BCG Growth Matrix helps you identify your rising stars.

This is something that those familiar with the BCG Matrix (a.k.a. The Boston Consulting Group matrix or growth-share matrix) will recognize. Deciding whether the “question marks” you are investing time, money and effort in will be able to turn into stars or not. This proves to be quite difficult for larger companies, as they are not very keen on betting the firm on new innovations. But for those who do, it can pay off big time. An interesting case study here is Microsoft, that under the leadership of Satya Nadella was able to significantly grow its market cap by making the transition to the cloud and AI (for those interested in more, Nadella’s book “Hit Refresh” is a good read).

Microsoft Stock rise since Nadella became CEO

Microsoft stock rise since Nadella became CEO

The incumbent’s dilemma – why are companies blindsided?


Very often they are blindsided by disruption because they did not see the grey rhino that was coming for them. There is no one reason for this, but it is mostly a combination of the below reasons.


  • It can be that their core products are built on “older” tech or legacy platforms that need to be maintained, and where new products or additions need to work/plug in/be backwards compatible with these platforms… Startups, on the other hand, can often start from a clean slate, giving them faster time to market. The answer to this is very simple: accelerated digital transformation (ok, even though the answer is simple, implementing it is a daunting task)
  • Due to their structure bigger companies also tend to move slower the bigger they get: testing, retesting, panels, committees, approval loops, all things startups are not bogged down by. This is one of the more difficult things for bigger companies – making sure that innovations from within are not stopped by corporate policies and politics – something that should be recognized by the corporate leadership and addressed from the top through real support for change, and not just innovation theatre.
  • And of course the other part of incumbent’s dilemma of keeping their shareholders happy with cash cows generating revenue versus investing in new and unproven products, techniques, business models. Companies should keep an eye out for what is happening in the market, identify the forces that can disrupt their cash cows and make sure to really act on them. Various solutions to address this are possible, ranging from innovation teams over internal programs to stimulate innovation throughout the company, all the way to corporate Venture Capital groups.


As mentioned before, what they absolutely need to avoid is the infamous Innovation theatre”, where big companies realize that they have the challenges mentioned above, and desperately try to address these with all kinds of innovation initiatives… that then don’t get implemented because of the issues listed above.


In summary, the problems to address are: failure to see the strategic inflection points coming, failure to see the disruptors coming from different angles, and failure to act and really implement change.


PS if you’re wondering what other grey rhino’s are still out there, have a look at this Politico article.




Startup success is the execution of your ideas

Startup success is the execution of your ideas



Startup success is in the execution of your ideas


“Ideas are just a multiplier of execution” is what Derek Sivers wrote in his book “anything you want”: You can see how this plays out in the visual scoring table of idea versus execution below. To see the true value, you need to multiply the idea with the execution.


ideas are a mulitpier of execution


Investor logic supports this approach: investors usually prefer investing in an A-team with a B-idea instead of the other way around. This is because ideas are easy, turning them into a profitable business isn’t. Once you have your brilliant idea, you need to see if it sticks, check with real potential customers if it is a viable solution to a real need that they have. You will need to get out of your bubble and gather hard feedback. You will need to create a product, scrape money together, build a first version (MVP) of that product, and IF you get traction, scale the business. It sounds easy enough, but as the startup curve shows, it’s a tough process, and most don’t make it past this stage.

The Startup Curve

The Startup Curve

Once you do get to a real solution/market fit, you’re ready to start scaling. But be warned: scaling at a rapid pace comes with its own unique set of challenges. What has worked for your startup in the past may not work going forward with your scale-up. You’ll likely experience additional stress and chaos that comes with exponentially growing your company. You will need to navigate additional pitfalls like shifting focus and alignment, hiring prematurely or too late, establishing long term goals, focusing too much or too little on marketing, postponing the next funding round, and lacking of a scalable infrastructure, to name but a few.

Implementation is everything

Everything needs to fit together in order to get to a successful implementation of your growth plans. Ignace Van Doorselaere, current CEO of Neuhaus, explains thus as follows:  “If you line up five dominoes, and you push the first … so that the second, third and fourth fall – but the fifth remains standing – then the score is not 4 out of 5, but 0 out of 5. Because everything that is not implemented does not exist.”

The good news is that companies have been scaling for ages, and that there are some strategies you can build upon. One needs real implementation of the strategy and ideas, because if something isn’t implemented, it’s all wasted effort. You’ll need to take a hard look at your current capabilities and how they fit with your future aspirations, clarify your strategic priorities/opportunities/challenges, and then build an action plan to take your company to the next level.



Is there a second valley of death for startups and scale-ups?

Is there a second valley of death for startups and scale-ups?

Before we talk about the second valley, let’s go back in time to 1991, when one of the “must read” book for high-tech startups was “Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers”. 

Crossing the Chasm

It was a book targeted at tech startups (yes, in the nineties we had those too) and focused on how to bridge the “chasm” between early adopters and mainstream customers. For a more in-depth intro, check out the wikipedia page.

After crossing the chasm (what we would now call the valley of death I guess), came the ride up “inside the tornado” (yes, that was the follow-on book, still available on amazon). It becomes interesting when you also plot the visual of the chasm onto the Gartner hype cycle. It is often in the stages between getting from their early adopters into getting sustainable traction through larger and consistent sales that most fail. But for startups turning into scale-ups the story doesn’t end there.







Credit www.businessprocessincubator.com

The second valley of death

Recently, some articles popped up talking about the further challenges for scale-ups, namely in wat is now dubbed “the second valley of death”.

What happens to companies once they have secured their first funding rounds and achieved product-market fit? According to the statistics, they’re not all successful in the long run. There are different opinions on what entails this second valley of death for scale-ups, and I tend to go with this one: overcoming the financial hurdles (i.e. later stage funding gap), and finding the right markets to truly scale up into.

Getting your future funding secured on time is key, as the story of our local startups Collibra and Small Teaser illustrate. 2 great stories, yet quite different outcomes with one becoming a unicorn and the other forced to close shop due to a lack of further funding…. which actually prompted this article (in Dutch) about the lack of growth capital in Belgium for scale-ups. But Belgium is not the only one with this challenge, as this Australian story highlights – clear issues in later-stage funding. SO … don’t forget to start your next funding round on time, and don’t be shy to get out of your home market to find additional funding.

Of course money is not the only pitfall when crossing the second valley of death. Have a look at the video below where Mahesh Kumar of Result talks about other challenges faced in the second valley of death. And if you’re looking for help, don’t hesitate to contact us at EYnovation.

Mahesh Kumar on the second valley of death.
Always think Attack – what does self-defense have to do with management

Always think Attack – what does self-defense have to do with management

Some years ago, I assisted Ignace Van Doorselaere with the creation of his book “Always Think Attack, street fighting techniques for managers“. This project allowed me to combine my professional knowledge with my activities as a self-defense instructor.

The purpose of the book was to help create better managers that keep the focus on their customers, employees and shareholders. We were not advocating dirty tricks for managers, but on the contrary, using the principles of self-defense to protect companies against disruptive forces.

Purpose of a fight: survive

Self-defense is all about self-preservation. This means avoiding to fight if possible, but but be extremely effective if you cannot avoid the fight. Projecting this on your company, the goal is self-preservation in the long term, which usually means thinking of what is best to both your customers and shareholders. But at the same time be prepared to take immediate action to ensure the survival of your company.

Avoiding the fight – be aware of your environment

In self-defense we call this the pre-fight situation, where you can still get away without having to resort to violence or being attacked. This is broken down into avoidance (don’t get into the fight) and control (stop a situation from escalating, or defuse it). Because once you do get into a fight, you may not escape unharmed either. So the key here is to be alert, and scan for threats around you. This crosses over well into the corporate world, where you need to be on the lookout for potential threats to your company. Those threats can be competitors but also market forces at work that may in the long run totally disrupt your business. Look out for the small signals that can lead to big changes!

Winning = execution

“Winning” in the case of self-defense means that your attacker is not willing or able to continue. This can be through being “broken” either physically or mentally. To be able to win, you will need focus and impact. A near miss is still a miss. Winning means reaching the goals you set, and not letting your ego or emotions get the better of you. In practice, this may mean running like hell if you are attached by a huge group of attackers, because it is in line with your long term goal of survival without being injured.

In the business world, you will need an actual growth state of mind, and the real implementation of the strategy and ideas, because if something isn’t implemented, it’s all wasted effort. A strategy can be for example deciding to not enter a certain market because it is a red ocean for you. But once you do commit your company, don’t do it halfheartedly.

You cannot fool human intuition

Listening to your intuition is important both on the street and in the office. It’s usually your brain or subsconcious mind trying to tell you something that you have not yet consciously realised. So if you have a nagging feeling about a competitor or new product, take a good hard look at them, because there are subtle signs of an imminent danger that you may have missed.

Stay flexible

“If you have a hammer, everything looks like a nail” is a trap that people can fall into. In self-defense, if your strategy or tactics don’t work, change them rapidly before you get in more trouble than you already are. The same goes for corporate life. Don’t hang on to your strategic long range plan if the ground starts to shift beneath you but be ready to shift into a totally new direction.

You can order the book in Dutch on the site of 4F (link here).

So you’re looking to fund your startup?

So you’re looking to fund your startup?

Congratulations, and realise: you are not alone. The startup scene is still growing across Europe and is a focal point of governments, private companies and the EU. On the bright side, this means that there is money available from both private and public sources to support innovative startups. On the other hand, there are a LOT of startups competing for that money, so you will have serious competition to get hold of the money you need to grow YOUR company.

A lot has been written about the different forms of funding, so I’m not going to go into detail on all of them. if you want an overview, here is a good start for the US,  and here is one for the Belgian market. Below, I’m offering some general thoughts and tips.

Get the right funding for your stage

The type and size of funding you can get access to will typically depend on the size and stage of your company. if you’re just starting out and don’t even have a product or an idea of your customers and revenue plan yet, don’t count on getting in millions of dollars. That typically doesn’t happen. There are always exceptions of course… don’t count on you being one. So for you, this will mean that you will need to work within the smaller budget, find creative ways to spend that budget and work like hell to get access to bigger funding.

Very early companies typically have to start with using their founders’ own money, and some funding from the infamous  3F’s: friends, family and fools. The good part of these latter 3 investors is that they typically want to help you, may not be as focused on a return on investment as a VC, and will be more hands-off. You won’t face too many difficult questions from them, and they won’t conduct an in-depth due diligence before handing over the money. Of course, they usually won’t put in big budgets either, so if you can find an angel investor early one, you’ll have a shot at bigger funding, and angels typically also take on a more hands-on role. You can also get bank loans here, or get free office space and mentoring through incubator or accelerator projects. Now… do not get focused only on the money, and don’t underestimate the value of the mentoring – that is, if the incubator you are in has a good mentor network. Why, you ask? A good incubator project and mentor can get you faster access to funding by helping you getting your story right (that’s right, pitch training) and help in validating your product ideas to make sure that your business idea is a viable one that people will pay for.

At this stage, you will typically not have revenues yet. But even here, there are some options to get funding and support from other sources. Do your homework: there may be a number of different possibilities depending on your specific sector and country. Did you know for example that if you are a European startup in e-health, you can apply for the EIT Health Launchlab, where you get no money but – if you are selected – you will become part of a 2 month program to test out your idea for a company. KBC StartIT also offers fresh starters in Belgium incubation space and mentorship.  There are surely opportunities in your country or sector. Do your homework and find out what is available.

Don’t forget to look at public funding

In these early stages, you can get both private and public funding. The advantage of getting public funding is that it typically comes without you having to give up any equity in your company. But there is a lot of competition for public funding too. In most countries there are specific government agencies that can provide funding. For example in Belgium, and depending on whether you are in Flanders, Brussels or Wallonia, it will be either VLAIO (Flanders), Innoviris (Brussels) or AEI (Wallonia). There are a lot of options in public funding, ranging from low to high budgets on innovation, research, etc. Every country that takes it startup and innovation support serious will have a program to support their local companies. A good start to look in your own country is the government subsidy sites (just google for these terms).

Next to these agencies, there are other option to get public funding, like “open calls”, typically from local organizations or bigger Horizon 2020 projects. One program that is now finished was the FIWARE accelerator program, where 80 Million EURO was invested in startups (up to 150,000€ per startup). There are other H2020 projects that are now providing startups with equity-free funding. A good place to start are places like F6S or FundingBox where you can find access to more public funding and incubation programs. Alternatively you can do a google search on terms like “open calls”. One other form of getting access to further funding or mentoring are the so-called startup competitions. These happen on a local and European level. Sites like Startup Calendar or F6S can give you a good start on finding some competitions that are interesting for you. Typically you’ll need to first apply with your idea online, and the best ones then get selected to pitch and get access to some funding and possible investors. You won’t need to do all of this alone. Without a doubt, once you get some visibility you will get contacted by a plethora of agencies and companies that will offer their services to you in order to help you get access to funding; usually for a fee.

More money

So you made it passed the first hurdle, got some funding and are rolling along? Congratulations, but unless you are creating some solid revenues at this stage, you ‘re going to need even more money to keep up. And even if you are creating those revenues now, if you want to grow beyond your borders, you’re going to have to get more money. Welcome to First Round Financing. Here is where you’ll need to get bigger capital for your venture that has successfully passed the initial start-up phase. Hopefully by now, you have your business plan all figured out and a product is under development or even shipping.

At this stage, there is one crucial question that you need to ask yourself: do you need the VC money? Are you self-sustainanble already? Can you grow organically? For some this may be a no brainer, but be fully aware that by accepting VC investments in your company, you will give up some ownership and control of your company to someone else. Do you need to grow big and fast and need funding for that? Then it may make perfect sense. But be aware that once you take on the investments, YOU will be held responsible for the fate of the company by your board and investors, and if things go south, it will be your head that will roll. Not being melodramatic, but that’s what boards are for.  If you’re ready to go for it, do your homework and learn all you can about the investment process. if you are looking at your first round (typically called the seed round), have a look at the advice of Y Combinator.  Next to a mentor that has gone through the process before, there are some good books that can help you with the ins and outs of the investment process. “Venture Deals” is one I recommend you read. One other book that deals with various aspects of running  a startup is “the hard thing about hard things” by Ben Horowits.

The SME instrument

There are some alternatives to early stage VC funding. The best known of these in Europe is the public funding for small and medium sized companies by the European Commission (EC), commonly known as the SME instrument. The SME instrument is part of the EC’s Horizon 2020 instrument, and can land you funding of up to 2,5M€ – equity free, meaning you will not need to give up part of your company. There is always a catch though: as the SME instrument becomes more well known and is open to companies from the whole EU, there is some fierce competition going on. Because, who wouldn’t want this kind of funding? As you would have guessed, a lot of companies apply for this funding, and the success rate is rather low. According to the 2017 report of the EC, out of the 31,000 applications, 2457 companies got actual funding. The figures don’t lie: 8.4% of Phase 1 applications were selected for funding, and only 5.5% of Phase 2 applications were selected for funding. These programs also work with cut-off dates throughout the year. If you miss submitting by the due date, there is no option but to wait until the next date.

The SME instrument has three “phases” where you can apply for funding:

  • Phase 1 is typical for concept and feasibility studies, has a fixed funding of 50,000€, and lasts for about 6 months. it’s got the easiest application process (only 10 pages).
  • Phase 2 is more for companies that are ready to scale up demonstration, market replication, r&d and product development. Here the EU may contribute 70% of your total project cost, between €0.5 and €2.5 million, with project lasting about 12 months. it’s also a harder application process (30 pages) and typically follows after a company has passed Phase 1.
  • Then there is a 3rd phase 3 for business acceleration and support services to get ready for market launch. However, there is no funding here, but business acceleration support, including training, coaching and facilitating access to risk finance.

There is a yearly overall budget for the SME instrument, which is spent as follows: up to 10 % of this is used to support companies in phase 1; at least 87% goes to phase 2; at least 1% of the annual budget will be used for phase 3 related actions, and 1% will be used to support coaching and mentoring activities supporting phase 1 and phase 2 and up to 1% will be used for evaluation. What all this means for you, is that this is a yearly budget, so if it’s spent on the top applications, and the budget has run out for that year, there is no more budget for you, even if you had a great score. You will however get a seal of excellence. Even if you didn’t get funding from the first go, don’t despair, because you can adapt your proposal and apply for the next deadline.

There are at the moment 13 different topics for which you can submit. The open disruptive innovation scheme is the most general, but there are other topics specific for healthcare, agriculture energy etc. depending on the focus of your company.

Getting acquired

OK, this last one isn’t really a way to get more money to grow your company, but it can definitely solve your money problems, and if you have what a corporate acquirer is looking for it can go really fast. Look at Indian company Halli Labs which was acquired by Google.  The company was less than a year old when they got scooped up. So, one of the items in your pitch deck can be your “exit strategy”, where you can list who you think can acquire your business in some year’s time. Techrepublic has a good guide to get your started on the M&A approach of some tech giants. Big corporates realise that they are in dire need of innovation and what better way to “insource” that innovation than to integrate a promising young startup into their ranks? “Innovation through acquisition” as they call it. Of course, that doesn’t always work and acquisitions are no guarantee to succes for either side, but that is for another post.


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Reading: The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers

When you think of Netscape, those of us old enough to remember the browser, thinks of Marc Andreessen. But at Netscape (and Opsware), he was joined by Ben Horowitz. Together they founded venture capital company Andreessen Horowitz. This book is a compilation of the lessons that Ben Horowitz learned at those companies, and that he is sharing with us.

The book is a must read for startups and growth ceo’s.  It’s not a book written by a management guru, but by someone who has been in the trenches and doubtless had a lot of sleepless nights figuring out how to make his company survive. There’s a lot of advise for CEO’s in there, ranging from how to direct your company through rough times, to minimising politics in your company.

Some of the highlights that I found worthwhile:

Crediting Grove – It was interesting that in the book Ben Horowitz makes a number of references to the works of Andy Grove, name “High output management” and “Only the paranoid survive“. Andy turned Intel around from a memory company to the biggest chip company in the world, so pay attention, and read his work too.

Lead bullets – “Ben, those silver bullets that you and Mike are looking for are fine and good, but our web server is five times slower. There is no silver bullet that’s going to fix that. No, we are going to have to use a lot of lead bullets.” “There’s not always a magical way out of your problems. Sometimes you just have to knuckle down and keep on going with all that you have.” The other interesting quote in this section was:

“There comes a time in every company’s life when it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself: “If our company isn’t good enough to win, then do we need to exist at all?” if you have the better product, why not knuckle up and go to war?”

War and Peace – what CEO are you? – A peacetime CEO will focus on expanding the market  and company’s strength. A wartime CEO is fending off immediate and existential threats (read Only the paranoid survive to catch up on strategic inflection points) . Can one CEO be both? You can read more on wartime versus peacetime CEO’s here.

People Product Profit – In that order. Take care of your people first, they are the ones that will make your product win, and in turn realise your profit.

A Market of ONE – The most important rule of raising money privately, look for a market of one. You only need one investor to believe in you and invest

2 kinds of friends – You need 2 kinds of friends in your life: one with real excitement, and a second kind of friend to call when things go horribly wrong. When your life is on the line and you only have 1 phone call to make, who’s it going to be?

If you’re going to eat shit, don’t nibble – Pretty straightforward!

Don’t believe in statistics – Startup ceo’s should not play the odds. Don’t believe in statistics, believe in calculus. Secret of a successful CEO? There is one skill: focus and make the best move when there are no good moves.

Ask for problems – Build a culture that rewards, not punishes people to bring problems in the open where they can be solved. The “old management standards” say “don’t bring me a problem without bringing a solution”. Well, if the employee had the solution, he wouldn’t need to bring it to the manager now, would he?

Time – spend zero time on what you could have done and spend all of your time on what you can do. Because in the end, nobody cares

Product Managers – good product managers think in terms of delivering superior value to the market place during product planning and  achieving market share and revenues goals during the go to market phase.

Hiring senior people in your company – When do you need to start hiring senior people, what types, advantages and disadvantages? Also an Andy Grove quote that hits home: the peter principle is unavoidable (full quote: “the Peter Principle is unavoidable, because there is no way to know a priori at what level in the hierarchy a manager will be incompetent“). The author gives some good advice on how to check if they are doing a good job, and when and why you need senior people. He addresses the questions like “won’t they ruin the culture with their costumes, political ambitions and the need to go home to see their family?” Maybe yes, but bringing in the right kind of experience at the right time can mean the difference between bankruptcy and glory. You’ll need a new executive to be more than a goal achiever, he/she needs to be part of the team. The CEO needs to evaluate people on current role, and nobody comes out of the womb knowing how to manage a 100 people. Managing at scale is a learned skill rather than a natural ability, and it’s nearly impossible to make judgement in advance.

The shit sandwich – from “the one minute manager” – go look it up. 🙂

Be honest but courteous with feedback – if you think a presentation sucks, just say it and give the reasons why. Watered down feedback is worse than no feedback at all. But… don’t go and show off your superiority.

What’s your story – a company without a story is usually a company without a strategy (see the amazon example – it’s amazing, Jeff Bezos wrote this in 1997!)


the hard thing about hard things