To avoid being too futuristic or too incremental, Cisco's innovation arm manages its ventures across two axes: technology risk and time horizon (from 6 months to 5 years). This portfolio approach ensures a mix of near-term value and long-term strategic bets.
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Unlike standard corporate M&A, an innovation incubator's acquisition criteria are different. Cisco's Outshift ignores a startup's revenue and business metrics, focusing solely on the technology, talent, and cultural fit to accelerate its own strategic objectives.
The tension between growth and profitability is best resolved by understanding your product's "runway" (be it 6 months or 6 years). This single piece of information, often misaligned between teams and leadership, should dictate your strategic focus. The key task is to uncover this true runway.
To vet ambitious ideas like self-sailing cargo ships, first ask if they are an inevitable part of the world in 100 years. This filters for true long-term value. If the answer is yes, the next strategic challenge is to compress that timeline and build it within a 10-year venture cycle.
For innovation arms inside massive companies like Cisco, early revenue is irrelevant—a $5 million success would be laughed at. The true measure of success is creating strategic options for the parent company to navigate future market shifts, not hitting traditional startup KPIs.
To select new ventures, Cisco's incubator finds a "Goldilocks zone." The idea must be close enough to leverage a strategic advantage from the core business, but far enough away that it doesn't overlap with or duplicate the work of existing business units.