In this episode of The Committed Innovator, McKinsey innovation leader Erik Roth speaks with the Amazon Web Services (AWS) worldwide leader for venture innovation, Jelena Joffe Weil, about how AWS works to close the gap between innovation and go to market for startups. The global hyperscaler is known for helping businesses grow and scale rapidly, but it also helps start-ups and established enterprises find each other to engage in open, or collaborative, innovation. This is an edited transcript of their discussion. You can follow the series on your preferred podcast platform.
Erik Roth, McKinsey: Tell us what you do as Amazon Web Services’ worldwide lead for venture innovation.
Jelena Joffe Weil, AWS: We help start-ups and enterprise customers collaborate effectively. The number-one thing start-ups want from AWS is go-to-market support. They want access to decision makers who are looking for solutions that could be the piece of the puzzle an enterprise is missing. We started this because AWS is home to the largest start-up ecosystem in the world, and large enterprises are looking to fill internal capability gaps with start-ups. We thought there should be a structured, methodical approach for bringing them together.
Erik Roth: How do you select the ventures that are in the program?
Jelena Joffe Weil: We actually don’t select the ventures. We have a large start-up team that works with founders and investors all around the world. It’s a couple thousand people, and we have an internal process to tap into their breadth and depth of ecosystem expertise, based on a theme or use case. We work very closely with our enterprise customers to become their trusted advisers for innovation, and specifically for what we call collaborative innovation. Most companies understand that they need to find good partners to innovate with, and we want to be that partner as well, in addition to being the company that helps companies build. We also understand that a lot of customers prefer to collaborate to derisk innovation, rather than just building on their own.
Erik Roth: What we know from all the research and years of doing this is that innovation is best when you get a really clear problem to solve and a great technology that enables that solution. How do you identify the problems to focus on? And what’s the mechanism to match the technology or the start-up to that problem?
Jelena Joffe Weil: We talk about it as the three challenges of open, or collaborative, innovation that we help our customers solve through venture innovation mechanisms: the what, who, and how of open innovation. The first one is the “what” to be solved. Here we really help our customers work backward from the customer need or opportunity they’re trying to create. The second is the “who.” Who is the right partner, what capabilities should they have, and how do you find them quickly? Do they have the right maturity stage, cultural fit, and presence in the market to be able to collaborate with you effectively? The third piece is the “how.” What are the internal capabilities you need to scale? Do you have an innovation foundation or maturity to do this?
Erik Roth: Amazon is famous for its innovation model. How much of that do you bring into the process when you’re working with these startups and companies?
Jelena Joffe Weil: We always try to bring our leadership principles into play. That includes things like focusing on customer obsession, truly working backward from customer needs or opportunities, and keeping a bias for action, which is really important in innovation. We try to make high-velocity decisions and help our customers understand the difference between one-way-door decisions, which have significant and often irreversible consequences, and two-way-door decisions, which let you try things with reversible outcomes.
Erik Roth: There’s a long history of large companies trying to partner with small companies, and sometimes it goes well, but more often than not, it doesn’t for a variety of reasons. It can be simple things like just getting security clearance and setting them up as a vendor, or more complicated things like the R&D team of the large organization really not wanting to collaborate with a small organization. How do you overcome these challenges?
Jelena Joffe Weil: I’m really passionate about making sure outcomes do take place, and it’s not just, “We got to meet an exciting start-up through an innovation day,” and then nothing happens. We realized that we could help enterprises with the three challenges of open innovation through unique Amazon assets, such as our industry, start-up, and innovation expertise. One challenge was that enterprises sometimes would not start from the right customer need or would have a solution in mind without a customer need. The second challenge was knowing what to look for in companies to partner with, in terms of cultural fit and capabilities. The third piece was their innovation foundation. If you’re trying to build your innovation practice as an enterprise, without first having the foundation for it in place, you are not going to succeed.
Erik Roth: Can you describe that foundation a bit more?
Jelena Joffe Weil: At Amazon we think of our innovation foundation as having four pillars: organization, mechanisms, architecture, and culture. Organization refers to how you’re structured, how aligned your innovation pipeline is to the business and technology road maps, and how you’re measuring your goals. Are you working on initiatives that are tied to a C-level agenda, or are you working on innovation in isolation? Mechanisms are the repeatable processes, including the boring things like partner onboarding, procurement fast track, legal fast track, intellectual property, and so on. If you don’t have those in place, and you take six months to onboard a partner and have 270-day payment terms, you’re not going to have many start-up pilots to run per year. Architecture is all about upskilling your teams and having the experimentation space where you can use technology with your own data in a safe and secure environment. The last piece is the culture. How does your leadership communicate your innovation initiatives and lessons learned from them? How do you make decisions? Are they high-velocity or is every decision a one-way door? If you have that foundation in place, and we have done this with a number of companies, it’s transformative over the long term.
Erik Roth: The reality, though, is that most companies are nowhere near that level of foundation. How do you help those companies when they want to innovate with your ecosystem?
Jelena Joffe Weil: It’s really important to understand where you are in that innovation maturity stage, and we have a mechanism of how we help companies assess where they are and then understand what are the gaps and the tools, techniques, and processes they need to implement to get where they need to be. Specifically for the start-up partnerships, if you’re just beginning your innovation journey, you’ll probably want to partner with more mature start-ups to deliver results quicker, earn the trust of your leadership, and show true business impact. What we’re advocating for is that we don’t want to chase the shiny object. We want to chase the business impact and impact for your customers.
Erik Roth: What’s the most important starting point for an organization that really does want to work with an outside partner that’s a start-up? So often we see that large enterprises are just too slow, and their processes too cumbersome for a small company to work with them.
Jelena Joffe Weil: I think the first piece to start with is prioritizing the customer need. We had a customer that was focused on reinventing the marketplace, but they couldn’t get their product to stores on time. You can have the best marketplace in the world, but if your product is not in a store to sell, you’re defeating the business purpose.
The first step in the innovation maturity ladder is to fix the basics. Second, transform your organization. Third, transform your industry. Before you attempt to transform your industry, start with fixing the basics, earning the trust of your customers and leadership, and then you can proceed to the next phase.
Erik Roth: For companies that have mature innovation programs, what is the first step for them to work through you to get involved with a start-up in some way?
Jelena Joffe Weil: Pick the right mechanism. When we built our venture innovation program, we knew customers didn’t want to be pushed into a specific innovation process, and instead wanted modules with mechanisms they could leverage when they needed them. So we offer three categories of mechanisms: start small, think big, and be curious. As we get to know the customer and understand their maturity, we can work on start small mechanisms. Starting small is all about having a use case and needing to achieve results quickly, in a matter of weeks. If the use case is well-defined, we can just do a start-up discovery meeting, look into our network, and find you the right capability very quickly, in a matter of days. If the use case is not well-defined, we can leverage a rapid open innovation mechanism where we pull in our innovation experts and work backward to define the customer need or opportunity. Then we break it down into capabilities, look for a matching start-up, and create an ROI for an in-market pilot.
Erik Roth: Can you give us some examples of the three different categories of mechanisms in action?
Jelena Joffe Weil: In one, we introduced an insurance company to insurtech start-up Slice Labs, which ended up building an AI-enabled insurance product for the company. That then led to the creation of a new business unit at Slice Labs to develop other AI-enabled insurance products. And all of that started with a rapid open innovation engagement.
In another, we brought together a generative (gen) AI start-up called PhysicsX and a global manufacturing company to partner on new ways to do engineering and in particular, engine durability simulations, cutting the time from months to hours or seconds. These are examples of our start small category.
The think big category is about joining forces with a company to create a strategic partnership where we support the company on an ongoing basis in a variety of ways, from things like, “Can you help us with our 26 innovation labs around the world?” to building that innovation foundation.
The be curious category has some of our most popular mechanisms. This is where we look around the corners to address emerging themes and technologies through start-up showcases and innovation days. We say to customers, there is incredible innovation happening over here in a particular piece of the value chain—whether it’s drug discovery with gen AI or digital twins for manufacturing—and ask, “Would you like to learn about that?” It’s not educational. Rather, we’re saying, “Let’s validate that you have a need, you have interest, and then we can bring you together.”
Erik Roth: It’s not always obvious who the right folks are to collaborate with and nurture a start-up, especially in larger organizations. And start-ups don’t have time for things that don’t have an immediate path to value. So how do you ensure you’ve got the right people to make that connection?
Jelena Joffe Weil: On the enterprise side, the main people we work with are chief innovation officers and heads of innovation. They’re the ones who help us connect with the lines of business. One of our key requirements is that it has to be a decision maker from the business in the room, not a procurement team, and not even the innovation team itself.
For the start-ups, our go-to-market formula is, “Access equals the right person plus the right need in the power of now.” So that’s what we deliver. We bring the decision makers into the room. We validate that the solution is relevant. And the power of now means that the enterprise has prioritized the need, has a budget, and would act on it now.
Erik Roth: How do you increase the probability that you avoid pilot purgatory? We’ve seen a lot of that with gen AI in the last year or so.
Jelena Joffe Weil: From what we’re seeing, there are a few things that customers need to get right. One is choosing the right use case and making sure it’s scalable beyond just the very niche, small use case. Second is the solution itself needs to be reliable, performant, and secure. Third is that from the get-go, you need to be testing it with real company data. Synthetic data is not enough once you go into production. Things will always come up, so you want to be testing from the beginning with the right data—and, of course, getting customer feedback early.
Erik Roth: What we see is that it’s easy to find the small thing to pilot, but companies struggle to think past that to a broader domain where the ROI might actually be much higher. They peg the business case solely on the small use case, which doesn’t work because it’s too small and doesn’t have the right ROI for the time and money you’ve spent to do the pilot.
Jelena Joffe Weil: It’s difficult to build an ROI case on the small things you haven’t even created yet. We want to help customers understand the bigger picture of what we’re trying to achieve. It’s a delicate balance between disruptive and incremental innovation. You want to think about new revenue streams, new customer experiences, and new products you’re trying to launch that might have higher ROI. But at the same time, and especially earlier on in your innovation maturity, you want to focus on incremental innovation that maybe is more bottom line but will still deliver value for you. Earning the trust of the organization to get people along for the journey is also critical. The technology you’re developing is not enough on its own. You have to involve all the stakeholders early.
Erik Roth: What’s an example of when this match making has come together and created something of value at scale?
Jelena Joffe Weil: One is connecting NASA with a start-up called Ejenta for remote health monitoring. NASA was looking for a company that could do remote monitoring of mental health and well-being of astronauts traveling into deep space. When we looked at the capabilities required, we realized there were four: mental health, remote monitoring, beaming the data back to Earth in real time, and voice-enabled communication.
We thought of Ejenta because we knew they were backed by the Alexa Fund, which works to support voice technologies, and they already do remote health monitoring on Earth. We also knew their co-founder had built technology that is licensed by NASA and used on the International Space Station today to transfer data in real time. That’s three out of four capabilities. They were just missing the mental health component. So we encouraged Ejenta to apply to NASA’s request for proposals for this. They ended up winning the grant and brought in another start-up to fill in the missing capability. They spent three years building the solution, and they’re doing their first commercial launch this spring.
It’s a delicate balance between disruptive and incremental innovation. You want to think about new revenue streams, new customer experiences, and new products you’re trying to launch that might have higher ROI. But at the same time, and especially earlier on in your innovation maturity, you want to focus on incremental innovation that maybe is more bottom line but will still deliver value for you.
Jelena Joffe Weil, Worldwide Venture Innovation Lead, Amazon Web Services
Erik Roth: That’s very exciting.
Jelena Joffe Weil: It is. And what’s interesting for the start-up as well is that this changed their trajectory completely. They thought they would be a health-monitoring solution on Earth, and now they are back to their space roots. They’re working with the Navy, too, and have other exciting projects on the horizon, so it’s a very different and exciting path.
Erik Roth: That combination of identifying the attributes of what a solution’s looking for and matching the right companies to come together to build it is what most organizations would love to be able to do on a regular, continuous, and scalable basis.
Jelena Joffe Weil: Yes, but you really need to know the company. If I had just googled it or looked into PitchBook, I wouldn’t have known that Ejenta’s co-founder had this background. This is where our team’s deep knowledge of the ecosystem comes into play.
Erik Roth: Do you think most organizations are better served by innovating through collaboration than trying to do it themselves?
Jelena Joffe Weil: For certain things, absolutely. But I think a company needs to understand what is core to their business, and what capabilities they need to harness and hone in on internally. They need to think about where it makes sense to invest in a team, to upskill it to innovate internally. And they need to know where it makes sense to collaborate—for example, what is the intellectual property they have that they don’t want to share with anyone? And where can they collaborate to launch a new product or experience that is outside their forte?
Erik Roth: What are the biggest challenges you see to doing more of what you’re doing for Amazon?
Jelena Joffe Weil: Just the scale and people, because we have so much demand from customers to help them innovate through the ecosystem. It feels as if everyone has just discovered in the age of gen AI that partnerships and collaborative innovation is the way to go. It’s cost-effective, efficient, and makes all the sense in the world. Enterprises need that kind of cutting-edge innovation. And start-ups need the kind of access, resources, and scale that enterprises have. Both ecosystems want to find each other.
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