Part 3 of 3 – WHY UNICORNS EAT DINOSAURS FOR BREAKFAST
The why and how every established company can engage employees, accelerate innovation and transform culture, to fuel innovation and avoid becoming someone else’s breakfast.
Part 1 of this post showed us how big established organizations are being disrupted faster than ever before and part 2 highlighted how more and more entrepreneurs are innovating to build startups that become billion dollar organisations in record time. Surely this scenario creates the imperative for established organisations to learn and apply entrepreneurship within their enterprises as a method for innovation?
The Ambidextrous Organisation
In 2013 the term “ambidextrous organisation” was added to Wikipedia. It refers to an organisation’s ability to be efficient in both its management of today’s business as well as its adaptability in coping with tomorrow’s changing world. Ambidexterity requires the organisation to use both search and execute principles to achieve long-term success. Whereas startups are optimized for search, most established companies today are optimized for execution (milking the existing cash cow).
Companies must employ search capabilities and systems that allow for ideas to evolve through the 3 phases of ideation, discovery and incubation. Only During the launch phase, can a gradual hand over of the venture from search to execute begin to take place in order to optimize for sales traction and growth.
The Search for Search
Many companies have indeed recognized the need for incubators to provide the space necessary to work on innovative products. How well these incubators have been set up and managed is however another issue. A key observation I have made when looking at the innovation activities of corporates versus startups is the lack of a “Discovery” phase. Many projects jump from Ideation to Incubation where resources are invested to build a potential solution (or call it a prototype) before the idea has been validated to solve the right problem for the right customer in the right way (known as finding problem-solution fit). Failing to complete a discovery phase gives rise to a number of obstacles:
- Ideas get put forward based on the “Highest Persons Paid Opinion” (HIPPO affect) rather than basing decisions on real customer data gathered through experimentation
- Incubation projects fail because fundamental attributes of the idea are wrong / falsely identified
- Those tasked to innovate become discouraged as they are perceived as failures
Unlike in Startups, corporates have the luxury to fund ideas and start building product and if after launch it doesn’t really work out, it can be swept under the carpet and everyone involved can get on with something else. Everyone still gets paid. In a startup, that approach would mean game over! They simply don’t have the resources to start over, so they try to eliminate risk at every stage and base decisions on real data. This is the approach embodied in Design Thinking, Customer Development and Lean Startup.
A Lean Innovation (corporate entrepreneurship) Journey
The good news is that most entrepreneurs are not born, but made. Successful entrepreneurs do share common personality traits (as recent research from the Founder Institute suggests), but the skills and methods can be learned. Steve Jobs, Elon Musk, Richard Branson and Co were not born as visionaries – they figured stuff out as they went along and persisted.
Today, and especially for the digital world, we have many techniques that can help you de-risk uncertainty and there is no reason why a team of corporate employees can’t learn and apply those methods as well as a team of entrepreneurs do. After all, where do you think all those entrepreneurs come from? They were probably once working in your company!
Founders of Twitter, Pinterest, Instagram, Asana, Cloudera, Foursquare, Ooyala, Docusign, Tumblr, Uber and even Intel and Apple left corporate jobs to start companies.” (The Lean Enterprise)
A lean innovation journey begins by building the capabilities of certain individuals (Intrapreneurs), teams (corporate startup teams) and leaders (corporate startup team leaders). These individuals can come together as a cohort to work on live innovation projects, thinking boldly as entrepreneurs and focusing on key search principles rather than internal processes. To clarify, the key search principles are: a deep understanding of the customer, purpose built experiments, and data informed decision making.
The Lean Innovation Journey, requires you to build capabilities, systems and culture – in that order.
Once cohorts are up and running practicing the capabilities of lean innovation, we can start to build systems that help innovation transcend functional groups and business units. These systems may comprise of: allocating time to run experiments, thinking beyond product, in-house tech for rapid experimentation or in-house innovation catalysts, creating operational guidelines for legal, HR and brand support, as well as a “train the trainer” approach to scale up capabilities and systems.
Over time, an entrepreneurial mindset can spread from “special innovation projects” to “daily work” activities and start to impact the organisation’s culture. Leaders will be able to walk the walk, know how to allocate innovation resources, and be able to find a balance between leading with search objectives, and execute objective.
Now’s the Time to Build An Army of Corporate Entrepreneurs
When I talk about startups to some corporate leaders, I often get a reaction similar to “we are not so interested in creating a million dollar venture, it wont impact our business that much, – we’re working on the next billion dollar market” or “we are focused on growing our core business”. That’s fair enough and probably the right thing to do in a predictable world. But recent history is teaching us that the world in which we operate is not so predictable, largely due to technological change but also due to environmental and legal changes, monetary policies etc. So if the billion dollar big idea doesn’t work out as we were hoping, wouldn’t it be sensible to fall back on 10 different million-dollar ideas that are picking up speed, or 50 or 100 of them? Because some million-dollar ideas turn into billion dollar ideas, it’s worth building the capability and systems that can continuously generate and foster those ideas.
By 2020 almost half of the workforce will be made up by millennials and Entrepreneur recently stated, “71% of millennials at regular jobs would prefer to quit and work for themselves. 60% will likely do so within two years.” I’ve seen first hand crowds of employees leaving well paid and prestigious jobs to start their own startups, often purely out of frustration for not being able to pursue ideas within their company. This trend is likely to continue, unless organizations start offering intrapreneur career paths to certain employees. As more Intrapreneurs are created, the culture will begin to change to foster a more innovative way of working as seen inside Google, Facebook, 3M, Intel, GE, P&G and Intuit etc. The more entrepreneurial spirit a company has, the more innovative it seems to be and hence prospers.
It is only the most innovative companies that are escaping and keeping themselves ahead (which at current churn rates will only be 25% who will avoid dramatic losses as described in part 1). If innovation is the answer to surviving, then we at the Academy for Corporate Entrepreneurship believe that corporate entrepreneurship is a justified answer to innovation. It certainly is another useful tool in the toolbox and probably one of the best investments a company could make.