Sep 17, 2014
In 1676, Isaac Newton borrowed a comment from the 12th century Bernard of Chartres, in which he said that the only way that he had managed to do what he had done was by “standing on the shoulders of giants”. That is, people before him had set the foundations for Newton’s work – without all that had gone on before him, he would not have been able to do what he had done.
At a recent event, Jared Leto was talking about his career in the music industry. He made a comment that sticks with me – he said that working for a large company was like “standing in the shadow of failure.” If this is taken in conjunction with the basis of Clayton Christiansen’s book “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail”, it makes sense.
Christiansen’s hypothesis is that large firms tend to be too focused on the here and now, and as such tend to miss out on the tectonic shifts that are happening around them. With Technology being such a changing environment, the large firms end up being followers, and eventually they fail as smaller and more nimble companies come along and take their market.
If you were asked to name some innovative people, you’d probably come up with a Who’s Who list of names that are well known – maybe the likes of Steve Jobs, Mark Zuckerberg, Richard Branson and so on. Sure, these people have changed the world we live in by being in the right place at the right time, but how about those who have incrementally but surely shifted the world to a different view?
I think that this is where Leto has a strong point. For a young person to come into the market, set up a company and change the world is difficult: for the same person to do the same within a large company is almost impossible. However, within that large company environment, the person will be seeing how things can be done badly – and that experience can provide them with the wherewithal to change things later, on their own within an organization that they can create.
This is where the main threat to the existing companies is likely to come from. Not a company set up by a twenty-something fresh out of college, but one that is set up by a thirty-, or even forty-something who has done their time fighting the corporate shackles. Whereas the archetypal young entrepreneur fails several times before coming up with something that works, a person coming from the ranks of the large corporation already has that experience to make sure that they avoid some of the larger pitfalls in trying to set up and run an organization.
Technology makes their start-up life easy – the costs of setting up a company are negligible these days. Employees can work wherever they want, sharing information through cloud-based systems and using VoIP around the world for pennies to keep in touch. External expertise can be brought in for months, weeks or days at a time on almost a subscription basis – the organization does not have to employ the expertise on a permanent basis itself. Operational funds can be raised through investment angels or venture capitalists as long as the business plan is viable, and crowd funding offers an alternative to these (often constraining) channels to money.
The new innovator just has to look at an existing company and see what the main underlying processes are and apply a little common sense. Those processes that work – keep them. Those processes that are slowing down the existing business – optimize them. Those processes that are broken – don’t replicate them, replace them with processes that work.
Within the existing constraints of an organization that has spent years getting to where it is, making these changes would be hard – the hierarchy in the organization is likely to fight change as they have always done. Within the opportunities of a new organization, the innovator can make everything happen; can embrace all the new technologies, leap-frogging the large organizations and leaving them trailing in the wake.
Sure – large organizations will have existing purchasing deals with suppliers which the innovator will have difficulty getting close to start off with. However, with a cost base that is significantly lower than the existing organization, this can be dealt with, and as the new organization grows and shows how it can compete in the market, suppliers will be more willing to negotiate and so allow the new organization to be more competitive.
The problem for any such new organization is in keeping that new model and the innovation going. It is all too easy to look at those organizations that started off as disruptors in their markets and then grew to such a point that they became as slow and unresponsive as the organizations they had shaken up. The innovator needs to understand their shortcoming: they must allow innovative thought processes to flourish; they must embrace change on a regular basis and surround themselves with people of a similar mindset.
Failure should not be avoided – fail often, fail fast and learn should be the motto. By maintaining a flexible and fleet of foot approach, not only will the new organization manage to continue disrupting the old guard, but will also be able to face off any new competitors that start up in the same way.
Large companies have come and gone in the past – in the technology world, the likes of Ashton Tate, Digital Equipment, WordPerfect, and Compaq spring to mind, along with the fortunes of Nokia, Lucent, and Motorola. In retail, companies such as Woolworths and BHS in the UK – the list could go on.
The innovator’s dilemma is really now on how to take that first step: at what point does it make sense to jump ship and compete from within a new platform? For the existing organizations, maybe it is time to reinvent themselves as much as they possibly can along the lines of a new organization.