Tilting at Windmills
Innovation in large organizations.
Photo by Echiner on Flickr. Used under a creative commons license. https://www.flickr.com/photos/decadence/249922560
Back in 2008.
Today.
That escalated quickly.
When you’re a startupyour goal is to find a sustainable,
repeatable business model.
When you’re a big company, your goal is to perpetuate one.
Instead of:Companies are what they repeatedly do.
How about:Organizations that do things repeatedly
are companies.
Once, this was all about scale.
How to perpetuate something.
Photo by Kamal Hamid. Used under a creative commons license. https://www.flickr.com/photos/evergreenkamal/395448039
Daniel Craig McCallum.
How’s that working out for you?
F500 lifespan history
Fortune 500Life Expectancy(http://csinvesting.org/2012/01/06/fortune-500-extinction/)
1950 2010...
75years
15years
Growth by entering a new business
Corporate Strategy Board
95% fail
99% fail
Clay Christensen
The innovation problem isn’t new.
Picture by James Whatley on Flickr. Used under a Creative Commons license.https://www.flickr.com/photos/whatleydude/6202872135
Companies die because they fail to move to new business models.
Clay Christensen, The Innovator’s Dilemma
Cost
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14”
Mainframe
8”
Minicomputer
5.25”
Desktop
3.5”
Notebook
The Innovator’s Dilemma
$1000
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8” 5.25”
Technologies outstrip what the market needs, driven by feedback from the “best” current customer.
High end
customer Low end
customer
$1000
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8” 5.25”
The new market has different criteria for success, which are uninteresting to incumbents.
Storagecapacity
Portability
Amazon Web Services and the server value network
Server computing
• Density• Heat
• GHz• MIPS
Capex, financing, TCO, ROICIO, enterprise IT
Valuecriteria
Money
Buyer
Cloud computing
• Instances• Objects
• Spinup time• Scaleout
Opex, demand, time to resultCTO, coder, app owner, line of business, startup
YOU ARE HERE
This is a problem of local maxima.
YOU ARE HERE
LOCALMAXIMUM
OPTIMIZATIONOF CURRENT
METRICS
YOU ARE HERE
GLOBALMAXIMUMINNOVATION
WITH NEWRULES
YOU ARE HERE
SHORT-TERMINVESTORSHATE GOINGDOWNHILL
By trying to innovate in a big organization, you are going against
its mandate to perpetuate an existing business model.
You are a pariah.
Bad listener: Wilfully ignore feedback from your best customers.
Cannibal: If successful, destroying existing revenue streams.
Job killer: Automation & lower margins are your favorite tools.
Security risk: Advocate of transparency, open data, communities.
Narcissist: Worry constantly about how you’ll get attention.
Slum lord: Sell to those with less money, deviants, and weirdos.
But there’s hope.Photo by Tom Grydeland on Flickr. Used under a creative commons license. https://www.flickr.com/photos/thunderchild5/225675725
Small batches change everything.
3D printing.
Photo by Keith Kissel on Flickr. Used under a creative commons license. https://www.flickr.com/photos/kakissel/6165114664
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Cloud computing and shared services.
Social platforms.
Photo by Michael-Davis Burchat on Flickr. Used under a creative commons license. https://www.flickr.com/photos/curious_e/10473440064
Crowdfunding.
Digitalchannels.
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What happenswhen the prototype costswhat the product does?
Iteration wins.
In a small-batch, digital-channel world, cycle time trumps scale.
Ultimately, successful businesses must become organisms designed
to learn.
Three kinds of innovation
Sustain/core(optimizing for more of the
same)
Innovate/adjacent(introduce nearby product,
market, or method)
Disrupt/transform(Fundamentally reframing
the business model & value)
Improve alongcurrent metrics...
...or alterthe rate of improvement
Switch to a newvalue model
Change the businessmodel entirely
Currentstate
Business optimization
Product,market,method
innovation
Business model innovation
You can convince execs of this because it’s somewhat familiar.
This terrifies them because it eats their
young.
A three-maxima approach
See also: Three horizons model, Geoffrey Moore, etc.
Good Intrapreneurs embrace the harsh light of data.
Times a song in “heavy rotation” is played daily
0
15
30
2007 2012
EVERY 4h EVERY 55m
Good Intrapreneurs take baby steps.
Netflix
Tesla
http://www.hdwallpapersinn.com/wp-content/uploads/2012/12/600-tesla.jpg
Twitter’s 140-character limit isn’t arbitrary.
It’s constrained by the size of SMS (160 characters) and username (20
characters.)
http://i.i.cbsi.com/cnwk.1d/i/tim/2011/11/18/sms_screen_twitter_activity_stream_270x405.png
Good Intrapreneurs reframe.
http://www.flickr.com/photos/maladjusted/5207565912
Blockbuster had a lot going for it.
Plenty of inventory, of course. But that matters less than...
...market intelligence, customers,
existing payment approval, and
customer history.
The problem was framing:
Blockbuster thought it was in the video store management business.
Netflix realized it was in the entertainment delivery business.
Good Intrapreneurs are subversive.
http://www.flickr.com/photos/bootbearwdc/1243690099/
Ultimately, good Intrapreneurs know cycle time trumps scale.
www.tiltthewindmill.comAlistair [email protected]@acroll
Windmill by Eric Bennett on Flickr. Used under a Creative Commons license.
Thanks!