Friday, November 9, 2012

innovating: what's the difference between startups & enterprises

Before heading to NY, we have been invited by Mike Grandinetti to attend the Fall CXO forum on "Best Practices on Global Innovation How Companies Innovate across distributed centers & teams" in Boston. EMC, IBM, Intuit, P&G top executives were sharing their view on global innovation. 

During this forum, I enjoyed a lot how critical is was to distinguish exploitation and exploration. Enterprise are great at exploiting innovations and startups great at exploring. Mike has been an amazing moderator for this event. I have rarely seen someone asking thought questions and not putting the interlocutor in defense mode, its simply an art. 

Here are how those enterprises deal with this dilemma or been great at both:
  • IBM do partnerships with startups throw programs such as smart planet and leverage VC to better select them before acquiring them.
  • EMC try to stimulate internal innovation with contest and execution in distributed center collaboration. 
  • Intuit trains its employees with the lean startup approach, leverage the voice of customer paradigm and stimulate internal innovation with contest.
  • P&G acknowledge that innovation doesn't work in enterprise due to the lack of internal trust which is a management issue. P&G has spin inno360 to create trust and motivating culture to make everyone work together.
Exploiting and exploring required totally different mindsets. What works for one is a disaster for the other one. Why trying to make one fit in the other if its incompatible? It is funny seeing big companies wasting so much energy trying to be innovative. It is like trying to train a women to act as a man, it will always be inefficient.

Many startups can't survive without enterprise client channels and enterprise can't survive without innovation so it is like a man and women dilemma: they don't understand each other but have to work together.

As presented by Brad Feld of Foundry group, startups innovate way faster because they can leverage way better their network as oppose to enterprise who are stuck with their hierarchy constraints (check his book "startup communities").

I seriously think that IBM has the optimal solution, they don't wast time trying to fit a square into a circle. Unfortunately, the acquisition kill most of the time the innovation culture and innovative people leave after making the knowledge transfer. As pointed out by Mike, some Cisco's acquisitions went well due to high transparency. Also, a flat hierarchy will help retain innovation spirit.
Innovation need air (freedom) but execution need hard rules which is incompatible most of the time. 

For me, the best analogy to understand the difference between enterprise & startup is comparing a car and a bicycle. Even if cars can run fast, they are most of the time stuck in traffic but bicycle are free to ride. 

So, are you sitting on bike or in a car to innovate?

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