Engagement Ladder Methodology (ELM)

This article was first published by Levent Timur on May 29, 2023.

Infubator recommends its participants to follow the Engagement Ladder Methodology (ELM) that is employed when conceptualizing, prototyping, and solutioning with;

- technology ideators

- startup founders, as well as

- enterprises

throughout their journeys in invention, capability building, and technology transformation for disruptive innovation, increased productivity and/or positive societal change.

The methodology involves two parties: 1) the principal, and 2) the advisor. The principal is usually either a venture ideator, startup, or an enterprise; while the advisor is usually a single person who can act as a consultant, co-founder, and/or investor. The role of the advisor depends on the level of engagement, and in ELM there are three continuous engagement levels. These are;

1) Connect 2) Develop 3) Co-Innovate

Engagement Ladder Methodology (ELM) has three continuous engagement levels: 1) Connect, 2) Develop 3) Co-Innovate

Connect Level of Engagement, Level 1

In the ELM Framework, any engagement starts with the Connect Level of Engagement, Level 1. This is the level of engagement where the startup/enterprise meets with the advisor to explain the business/technological challenge they are experiencing. Following are the services that advisor will provide to the requesting startup/enterprise:

Introduce Potential Resources that can help with the challenge principal is experiencing. The advisor connects the principal with necessary resources - that can be human resources, capital resources, products/assets/tools, information sources.
Advise on Potential Solutions that the advisor had previously employed or seen/heard being implemented to solve the challenge of the principal.
Invite to Helpful Meeting/Events where the potential solution to the challenge would be discussed.

Connect level of engagements are the types of engagements where the advisor spends less than half an hour a week for free. If a given startup/enterprise requires more hands-on approach to the challenge they are experiencing, they may request the advisor to become a consultant for them. This requires the engagement to become a Develop Level of Engagement, Level 2.

Develop Level of Engagement, Level 2.

In the Develop level of engagement, the advisor is involved as consultant with the startup/enterprise in a hands-on approach. The consultant now knows the challenge well, and can provide one, many, or all the services listed below:

Support Staffing Resources: By working with the consultant, the startup/enterprise can decide to identify the type of resources that can help with solution of the challenge they are facing. In this case, the consultant works with the startup/enterprise to define, search for, recruit, coach the necessary staff for the solving of principal’s problem.
Engage in Active Consulting: The startup/enterprise can also request the consultant to actively engage in a project or program. In this case, both parties define the scope, timeline, budget, and resources of the engagement. Depending on the scope of the engagement, it is critical that both parties decide on the milestones as well as the deliverables of the project – whether it will be a business and/or technology related.
Implement the Solution (PM): if the solution requires both the consultant and additional resources to be involved, which is usually the case for large projects or programs, the consultant may be engaged as a program or project manager (PM). In this case, the consultant acts as a PM to implement large business undertakings (i.e., sales & marketing channel development, strategy & operations management, analytics/data science capability development, organizational restructuring, mergers & acquisitions) or technological implementations (i.e., system/software development, MLOps, agile delivery, engineering design, cloud native applications)

Main differences between the engagement levels of Connect (Level 1) vs Develop (Level 2) is that in the latter, consultant has a defined scope, timeline, and budget. In the Develop level, there is a written contract between the consultant & the principal startup/enterprise. This contract can be a full-fledged legal agreement or a simple email/LinkedIn message – however, requires the understanding of commercial terms (scope, timeline, resources, budget) between the principal and the consultant.

Co-Innovate Level of Engagement, Level 3

The principal or the advisor may request from the other party to take on more financial, commercial, managerial, administrative responsibility and ask for “Skin in the Game.” This situation requires the engagement to become Co-Innovate Level of Engagement, Level 3 which will evolve advisor’s role to become a partner. There are two scenarios in which Co-Innovate level of engagement can be realized:

- Principal requests that the advisor becomes a solution partner, investor, and/or a co-founder

- Advisor requests to become a solution partner, investor, and/or a co-founder.

In either of these forms, the requesting party makes a written proposal to the other side in terms of the roles expected to be assumed – solution partner, investor, and/or co-founder. In this case, evolved partner provides one, many or all the responsibilities below:

Develop Solution Partnership: This is the case when it is commercially feasible for the principal to grow inorganically or organically in a vertical/horizontal expansion. This type of engagement requires legal contracts between parties, that can include revenue/profit sharing, shareholder agreement, fixed/variable transfer pricing. Below are some of the examples of solutions that can be structured between a principal and a partner:

In ELM, there are four types of solution partnership: Organic Vertical, Organic Horizontal, Inorganic Vertical, Inorganic Horizontal.

Co-Invest in the Solution: The principal or the partner may request the other party to invest into the solution by making a shareholder agreement proposal to the counterparty. The proposal includes what percentage of shares will be owned by each party – as well as the financial and/or commercial requirements. By the signing of the contract, the partner now becomes an investor of the principal.

Cofound the Solution: If the principal or the partner requests to be also involved in the managerial decisions of the solution, shareholder agreement also includes managerial and administrative obligations of the investor in addition to the financial/commercial requirements expressed in the earlier engagement type (“Co-Invest in the Solution”). Managerial & administrative obligations of the partner will evolve their role of to a cofounder.