10 Chapters
Medium 9781609945534

5 Implementing the Startup Corporation

Tony Davila Berrett-Koehler Publishers ePub
Medium 9781609945534

10 Wrapping Up

Tony Davila Berrett-Koehler Publishers ePub

MANY ESTABLISHED COMPANIES have a unique combination of access to networks, global presence, knowledge, resources, and management expertise that makes them well positioned to address the complex challenges that our societies face. Making progress toward solutions to these issues will require breakthrough thinking. Simply extrapolating our current business and social models will be far from enough. Yet the coming of age at roughly the same time of two trends—the emergence of a huge technological shift and the rise of venture capital funding—has created the myth that established companies cannot bring breakthrough innovations to market. Although this myth holds true for many companies, others have proven it wrong.

The innovation paradox reflects how a narrow understanding of innovation has led many established players to believe in this myth—which has become a self-fulfilling prophecy. Over the decades the relentless focus on efficiency, execution, and shortterm financial goals has reinforced the business unit as the preferred organizational structure. The business unit has proven to be the most effective management approach to deliver on these dimensions. As we have said before, it is hard to argue against efficiency, quality, and flexibility.

See All Chapters
Medium 9781609945534

3 The Success of Startups

Tony Davila Berrett-Koehler Publishers ePub

OVER THE LAST TWENTY YEARS, startup companies have been major players when it comes to breakthrough innovation. Newborn businesses have appeared out of nowhere, upsetting industries, destroying venerable companies that had been around for decades, and creating industries that did not exist before. Amazon in retail distribution and Google in Internet search and many other services are two prominent examples of startups’ creative destruction. These companies, each now employing thousands, have excelled both at executing a winning business model and at creating and growing new markets.

It does seem counterintuitive that companies with limited resources—businesses that often rely on external funding from venture capitalists—can so quickly rise to dominate industries. Traditionally, large companies and their R&D departments were the natural repositories of breakthrough innovation. Businesspeople, as well as economists like Joseph Schumpeter and management theorists like Edith Penrose, had nearly accepted that creative destruction had to originate from established players. These players were, after all, the only ones with enough resources to devote financing to breakthrough innovation.

See All Chapters
Medium 9781609945534

8 Leading for Breakthrough Innovation

Tony Davila Berrett-Koehler Publishers ePub

IF YOU ARE LEADING YOUR COMPANY toward becoming a change agent in the world, your attitude, culture, and systems all need to be attuned to that vision. A range of cultures and leadership styles support innovation, but they share the points described in table 8.1. Both soft foundations—culture and leadership—are delicate and need constant attention. Although cultures vary across companies and geographies, they all need to support risk taking and understand the role of innovation efforts. Trust in the leadership team—a fundamental aspect of every innovative organization—takes time; it develops over each decision and interaction, but it can quickly erode. Combining the operational excellence and incremental innovation needed for ongoing development with the breakthrough innovation key to future success requires leaders who possess unique characteristics.

Most managers and their organizations know how to execute. They have been doing it all their professional lives—targets are set, performance is monitored, courses of action get adjusted, and people are rewarded based on how well they perform against targets. Pursuing breakthrough innovation is different, though, and leaders must avoid letting the current strategy receive all attention and resources.

See All Chapters
Medium 9781609945534

7 Innovative Cultures

Tony Davila Berrett-Koehler Publishers ePub

SINCE THE STARTUP CORPORATION lives within an established organization, the management of that organization has important implications for the success of strategic discoveries. The following chapters examine the aspects of established organizations that influence the Startup Corporation. We refer to them as the foundations, which encompass the soft aspects of culture and leadership as well as the hard aspects—strategy, incentives, and management systems. In this chapter, we focus on culture (table 7.1).

Culture can be the fertile soil that nurtures developing ideas, or it can be the hard ground that thwarts them before they have a chance to grow. Take, for example, a large Silicon Valley– based company in the software industry with a top-down, execution-focused culture. Every quarter, targets were set for each employee and closely tracked. One employee spotted an opportunity in Asia, but it required an upfront investment. At her quarterly meeting with her boss, he came with his usual list of goals for her. During their discussion, the employee told her boss about the opportunity. He did not dismiss the idea; instead, he added it to her list of goals with a 5 percent weight on her bonus (basically making it clear that she should not spend time on it). The employee who went into her meeting with an idea to potentially help the company came out of it with more work and no additional resources to pursue it. The message was: “So, you have an idea? Great, but you can explore it only in addition to your regular job, and we’ll provide you with no additional resources. Ideas worth the time and resources of the company come from top management alone.” That idea was her last with the company. A culture in which people who contribute ideas end up accountable for them but have no resources to pursue them will quickly kill bottom-up innovation.

See All Chapters

See All Chapters