Appropriate post. At the August LLP for Educators, it was interesting to note that a majority of those in attendance were not from academe, rather from existing companies. Most likely there is significant value in adoption of these techniques for existing companies…growing and changing from strengths in their existing organizations…perhaps easier (?) than launching new ventures. Looking forward to more posts on this topic…best regards…Stan
I think there is a convergence going on, by combining the talents you gathered at your ranch, gleaned from the books the continuous innovation movement can evolve. Be interesting to see how you go about structuring this, beyond Gary Hamels MIX approach, combining up with it. Maybe this may be a twin speed approach- not just get out in the market to learn and evolve but get ‘within’ your own walls to learn how through an internal BM canvas.
I enjoyed reading your above posting on the evolution of Strategy and Structure in business. However, I’m taken by your remark that “By the 21st century, organizations still lacked a tool to create new strategies.”
What about Michael Porter’s tools of “The Five Forces” and “Value Chain Analysis” for creating Competitive Advantage Strategies (Differentiation; Cost Leadership; Focus)?
Or, what about the tools of Blue Ocean Strategy (such as the Strategy Canvas and Four Actions Framework) featured by W. Chan Kim and Renee Mauborgne especially in articles of the Harvard Business Review in the late 1990s?
Blue Ocean Strategy is great for differentiation, but has nothing to do with corporate entrepreneurship in general. Porter stuff is great for competitive strategy and cluster formation, but again nothing to do with corporate entrepreneurship in general. Each of the ideas you mention don’t really solve the strategy and structure problem.
I believe we don’t need yet another structure or consulting model for strategy for that matter. It’s all up to the mindset and attitude.
I work with the larger corporates in the Netherlands and abroad and they are achieving great results just by adapting the entrepreneurial mindset described by the Effectuation principles. If you read as many books as you mentioned, you must be aware of Effectuation Theory. If you ever visit the University of Utrecht again, which I think you probably will :-) I would love to meet and hand you a copy of my Corporate effectuation and/or Orchestration of Effectuation.
If corporates would only orchestrate the unused potential that is available within the corporates by remixing their means we will have a transformation blast for years.
Applying the effectuation principles, lowers their risks, makes them much more adaptive and proactive creators of new markets as well.
All of the materials and work methods you and the guys you met at your ranch have given us the tooling that will last for years. If only we would use them wisely… effectually I would say.
Thanks for your clarification, for I had thought that your statement refers to tools for product/service strategy. Just for the records, I’d like to note that Blue Ocean Strategy and in particular, Value Innovation is great for resolving the trade-off between differentiation and low cost.
With regard to corporate entrepreneurship in general, the Blue Ocean Strategy book has some interesting ideas and a visual tool for developing and managing corporate growth strategy. The tool is the Pioneer-Migrator-Settler (PMS) Map and focuses on organizing a portfolio of businesses (business models) according to their stage of maturity on the S-curve, that is, as pioneers, migrators, and settlers; pioneers refer to new businesses or startups with Blue Ocean business models. My interpretation is that with regard to corporate entrepreneurship, corporations need to have a dynamic mix of Blue Ocean and Red Ocean businesses (business models). Future corporations have to be ambidextrous.
Admittedly, the framework that you are proposing for corporate entrepreneurship appears more comprehensive. For instance, Kim and Mauborgne do not talk about the prospects and limitations of managing an ambidextrous organization or ambidextrous models in a corporation. I’m therefore eagerly awaiting the rest of your story on corporate entrepreneurship.
As always, thanks for the great insights that you provide on the future of entrepreneurship and organizations.
Think you’re right about this issue: big companies fail at this for a number of reasons (culture, inertia, silos, ‘wounded prince’, sales/product dev’t/marketing disconnect). And traditional approaches like team meetings, focus groups, skunk works, ‘incentives’ (been there) are internally focussed and not on the ‘customer’ whose tastes/needs are ever rapidly changing.
You might like to know that there is an Australian innovation, in beta, which addresses this corporate issue and many of the entrepreneur issues on your business model canvas.
Using a simple analytics platform, the technology maps business model, product features and customer profiles from the outset prior to market launch. It allows corporates/entrepreneurs to use customer inputs (your “get out of the building” advice) to pivot in real time.
If you would like to learn more about the company, its innovation and product lines, and the Nobel prize-winning science that inspired it, their web site is at http://www.theseusdm.com.
There are indeed some large challenges to be overcome to realise the eight points listed (point seven may be most difficult). In my experience some of these are where:
– The capital structure and operating metrics of the new business models are different to that of the legacy model which the capital allocation and performance management processes (and culture) are built around
– The company wants to “monetise”/”white label”, operational assets and the asset owners sit within the legacy model and performance management system
– The company is large and the need of management to be seen to be ‘moving the needle’ requires a significant enought opportunity to be identified up front
– The company is public with large institutional shareholders
– The company traditionally sucks at benefits realization and holding people accountable
I am a great fan of your work and look forward to future posts.
I believe that you’re addressing a problem that is alive and well with most established businesses today – large and small. In his recent book, “the business model innovation factory,” the author, Mr. Saul Kaplan, explains that disruption is now the norm vs. the exception and that incremental changes/innovations are corporate habits that continue to serve a master who doesn’t understand the new world and the economy that it pretends to serve.
It’s true, business models don’t last as long as they once did. They are constantly under attack by new thinkers and doers who are supported by disruptive technologies and who have abandoned the use of old era industrial rules and methods. And to make matters worse, these new-day entrepreneurs utilize connected markets to bedazzle consumers and quickly defeat their competition as they become the newest market leader.
Today it’s much more than a survival or relevancy issue, its all about changing one’s worldview through continuous and powerful innovation in existing markets along with the ability to create and pioneer new ones.
With that said, I look forward to your observations and the many solutions that you’ll be sure to offer for debate and discussion.
Hi, Steve — I’m not convinced that organizations, once they reach a certain size, are capable of responding to disruptive forces. I agree with Clayton Christensen — their profit maximizing strategy is a significant barrier to figuring out how to do the disruption dance.
In organizations so deep and wide that they require mind-numbing meetings with complicated (and complex) Powerpoint presentations to keep everyone up-to-date on project xyz … disruptive innovation simply has no place to breathe.
Great post! We are working through these very same challenges inside a $100B health care company. We are certainly incorporating your customer development approaches, but so many more supporting changes throughout the enterprise are needed to create an environment that fosters and cultivates entrepreneurship inside a Fortune 25. We are making progress on the organizational, cultural, and financial structures needed and would love to trade stories.
First of all, great post. I especially agree with the fact that companies need to continuously maintain a portfolio of new businesses.
There are four challenges for companies in doing that (and maybe you plan to address them on the next post):
1. Not having the right people with the right DNA – Companies tend to hire domain experts with a similar characteristics as the rest of the employees
2. Organizations find it hard to bear uncertainty and prefer to spend countless hours in meeting rooms, debating the risks and trying to mitigate them.
3. Companies have a brand to maintain and testing things that are “half baked” can lead to objections from different parties within the company.
4. These portfolio of new businesses usually fail the “CFO test” and are at risk of being cut back every time the company’s performance is under pressure.
My experience, has led me to believe, that these new businesses need to exist somewhat outside of the company, with an incentive system that is similar to a startup and independently of the corporate dynamics.
On the business level, we are trying to help corporations do just that with 2020: http://www.2020.vc
I’ve always found in European corporates that things go wrong when they set up an innovation department in the belief that their existing business models are “basically OK’ and that they just need a bit of tweaking like your video suggests.
The success comes when the corporation realises that innovation is a culture and the only way forward is to continually test everything.
[…] The Future of Corporate Innovation and Entrepreneurship (Steve Blank) – Almost every large company understands it needs to build an organization that deals with the ever-increasing external forces of continuous disruption, the need for continuous innovation, globalization and regulation. But there is no standard strategy and structure for creating corporate innovation. We outline the strategy problem in this post and will propose some specific organizational suggestions in follow-on posts. […]
In the past few issues Harvard Business Review has published a number of articles addressing this shift directly or tangentially. Including concepts such as a dual operating system, adaptive strategy approach, and dual strategic business transformations when faced with disruption; one transformation initiative of the core business model, and one transformation initiative for developing new disruptive enterprises for long term growth.
Steve…my experience is in the Defense Industry and like it’s customer, the government, it is slow to change. Nonetheless, I’m seeing some indication that even the big primes are shifting their thinking as the external force of reduced federal spending squeezes the entire industry.
At least one company I’m talking to is beginning to consider utilizing the business model canvas as an approach to designing newer, more innovative business models. This is desperately needed in Defense. The jury is still out, however, on whether these innovative approaches can be effective unless the customer (government) changes their approach at the same pace.
I’ll be anxious to read your thoughts on how the approach you outlined above interacts with the internal and external organizational structure and inertia.
[…] el proceso y aprendiendo del movimiento que se va generando poco a poco cuando el gran Steve Blank publicó un artículo en su blog la semana pasada que está llamado a iniciar una nueva vía en la estrategia corporativa y a llamar poderosamente la […]
Corporate accelerators and a corporate LEAN approach to external start-ups is a good starting point for corp innovation…but they have to apply in the best way ITIL change management to boost efficiency and adaptation…I think your 8-point table is the corporate Bible for any Chief Innovation Officer !
[…] Isto posto, a necessidade de inovar é imperativa e, as corporações que não desenvolverem esta habilidade estarão, cada vez mais rapidamente, condenadas ao desaparecimento (Christensen, Clayton – The Innovator’s Dilemma). Processos iterativos como Lean Startup e Customer Development podem servir de base para processos de inovação, como se pode ver na colaboração de Steve Blank, Alex Osterwalder e Henry Chesbrough (The Future of Corporate Innovation and Entrepreneurship). […]
[…] In conversation with Sheena Iyengar, S.T. Lee Professor of Business at Columbia Business School, Steve Blank, arguably one of the nation’s leading thinkers on organizational innovation, will share some of his new approaches to Corporate Innovation. […]