How I Scale Intrapreneurship at Budsies
I absolutely love my job. It’s never boring. We at Budsies are constantly launching completely new brands and dominating markets. We…
I absolutely love my job. It’s never boring. We at Budsies are constantly launching completely new brands and dominating markets. We started with turning kids’ drawings into stuffed animals. Then we launched the Petsies brand to make adorable plush dopplegangers of people’s pets, a Budsies Market of toys designed by kids for kids, an entire line of plush dolls for Instagram famous pets, and 4 other businesses targeting completely different markets.
Beyond building a company, we’ve created an incubator environment where each brand is profitable and growing healthily. All the while, we are constantly launching new brands in search of our billion dollar Beanie Baby moment*.
I was recently challenged during the Q&A of a speaking engagement to explain how I could possibly sustain this pace of innovation going forward. Won’t the flow of ideas dry up eventually?
Absolutely not.
Top Down vs Bottom Up Innovation
Top down innovation is how most companies are launched. The founder develops new opportunities and the team executes. This is how we started, too. And while I hope I never stop dreaming up new wacky ideas, top down innovation does not scale. The reason Google, Amazon, and countless other tech giants have been able to stay at the forefront of their industries is because they created an environment of innovation that runs deep through the ranks. They create enterprises where employees of all levels are encouraged to ideate and take risks. Here’s how I’ve built Budsies to endure the cycle of ingenuity for many years to come.
1. Give Employees Ownership Over Their Projects
As I detail in my motivational methods post, you must give your employees agency over their projects. When Budsies was first founded, I was the key producer. I answered customer service emails, designed ux screens, and wrote marketing emails. Over time, my role shifted from “doer” to “enabler”. My chief role at Budsies now is to challenge my people and remove barriers from their self-directed paths.
For example, I used to be on the front lines of managing our overseas manufacturing partners. It was my job to dream up processes to optimize and improve quality for our production. Today, I’m very clear with Melissa (our talented Director of Operations) that she owns the factory relationships. It is her responsibility to innovate better processes, to negotiate contracts, and to enforce standards. She comes up with the ideas, not me.
When a supplier is being disrespectful or Melissa asks for backup, I’ll step in as CEO to remove Melissa’s roadblocks. But as eager as I am to lend a hand, I’m equally eager to get out of her way. She must know that I trust her. Which I do.
2. Get Out of Repetitive Tasks
I’ve found it’s near impossible to innovate when I’m stuck doing repetitive, routine tasks. In fact, I have a “Rule of 10” for removing mindless tasks from my life altogether. If I catch myself doing the same task 10 times in a row, I develop it into an encapsulated, teachable process. This process can be assigned to someone (e.g., Fiverr) or coded into automated software by our tech team. Regardless, your mind is now free to ideate.
3. Get Out of the Office
To spur innovation, I expel my management team from our offices one day each week. While the office is great for collaboration, it’s awful for deep ideation. There are simply too many distractions and routine tasks to stop and ponder. Instead, I push the team to go work out of the most hipster local coffee shop in town (Subculture Delray!). I push them to disconnect from email and take an hour to ponder over some large unwieldy challenge:
How can we improve the Holiday Ordering experience for our customers?
How can we reach pet parents without spending a fortune?
How can we help our factories manage seasonality?
What’s the next market we should go after?
The key here is to get out of your daily routine and away from the trivial distractions of the office.
4. Teach Your Employees the 3 Forms of ROI
The challenge I faced when pushing colleagues to take moonshots is that people can come up with some really zany ideas. But shooting down someone’s ideas is hurtful and stumps future creativity. I’ve developed a system for helping employees evaluate their ideas before presenting them up the ranks. Namely, every idea must be presented to me with a calculation of ROI.
Here’s the ROI framework we use, from least to most valuable. Each project must have at least one of these to be considered:
Brand ROI
You must show that the project will increase the value of our brand. Externally facing, this might be a project like our Budsies Pals program, which honors our commitment to making the world more huggable. Or our Voodoo Doll April Fool’s joke, which showcased our playful culture to collaborators and future hires. Internally, Brand ROI projects include anything that expands our IP portfolio. A great example of this is our Petsies Rising Stars program, where we develop adorable plush toy lines for Instagram famous pets and now have over 200 adorable pets under exclusive plush contracts. While note terribly profitable, the star pet parents are thrilled to see their fans engaging with their stuffed animals and we are happy to build this valuable IP portfolio.
This is the least defensible form of ROI and is met with the most scrutiny. We avoid investing meaningful funds into these projects, and the team knows I will heavily challenge any idea pitched as simply good for our brand.
Revenue ROI
Projects pitched with revenue ROI are those that help the company scale but might not deliver much profit to the bottom line. Especially given we are in the hyper growth stage of our business lifecycle, scale unlocks opportunities by reducing costs and opening doors to new partnerships. For example, high volumes from a project will allow us to negotiate lower prices with our shipping suppliers and thus increase profitability for the overall business. Similarly, larger overall revenues gives us more leverage to raise financing for future projects.
An example of this project is our all new Budsies Market, where we sell toys designed by kids for kids. While this likely won’t be a highly profitable venture, the project is certainly revenue-positive. It also embraces our commitment to empowering children’s creativity and may one day help discover the next multi-million dollar toy line. Bonus: I’m hoping its proceeds will put a child through college!
We look very favorably at positive revenue ROI projects. In fact, I support moonshot revenue ROI projects stronger than mid-sized positive profit ROI projects.
Profit ROI
These projects must show at least 40% cash flow profitability within 60 days launch. Obvious wins. These projects sustain the company coffers and fund future moonshots without requiring us to raise external funding.
5. What It Means to Celebrate Failure?
When giving your team the power to ideate and lead their own projects, you must also accept that many projects will fail. Further, you must help employees separate the failure of a project from the failure of themselves.
You’ve undoubtedly heard some podcast or clickbaity article telling you to celebrate failure at your company. That’s silly. If you celebrate failures as much as your successes, you risk reckless ideation that wastes everyone’s time! I believe it’s important to celebrate failure but only to the extent that it helps employees reset their sense of self worth and apply lessons learned to the next moonshot.
The goal is to create a medium for your employees to talk through their failure instead of (a) blaming their ineptitude [damages self worth] or (b) blaming some external factor [conflicts with the sense of project ownership]. At Budsies, this means announcing the failure, describing the learnings from it, and explaining what the failure means for future projects going forward. Here’s a copy of a failure proclamation I wrote to my management team recently:
Full Service Production: Failure
Hey guys, FYI (1) given we haven’t seen any traction on the managed plush production (where we hold inventory and charge customer fee) and (2) given we are about to launch the Budsies Market which accomplishes effectively the same thing but feels like a much better deal to the customer:
- I removed full service banner from the /plush-production page
- I proudly declare that this was a failed idea
Learnings:
- The offering was too complex: there were too many services bundled into one; it was difficult to explain; it was difficult to grasp; I intentionally made it sound complex to show customer the value they are getting… but that just confused people
- The pricing was probably too high; should have made the price very low just to attract the first couple of customers and then figure out the process + set correct pricing going forward; instead I tried to skim and this resulted in no customers
- We didn’t promote it enough (didn’t blast list serv, didn’t email all past bulk order customers, etc.)
Next steps with this project:
Placing on hold
Will see what happens with the Budsies Market
If Budsies market fails, may go back to this concept… simplifying offering and dropping the price
*I am BEYOND excited for the next brand launching this Fall. Stay tuned!!