Can Startup Thinking Solve the Innovator’s Dilemma?

July 11, 2012 § Leave a comment

When I discussed theories about how and whether Apple has solved the Innovator’s Dilemma, I neglected to mention my favorite theory:

Institutionalizing Startup Thinking (IST)

Apple has solved the Innovator’s Dilemma by institutionalizing startup thinking.

This is characterized brilliantly by an Andreessen Horowitz post on Why We Prefer Founding CEOs:

The technology business is fundamentally the innovation business…These innovations are product cycles. Professional CEOs are effective at maximizing, but not finding,product cycles. Conversely, founding CEOs are excellent at finding, but not maximizing, product cycles. Our experience shows—and the data supports—that teaching a founding CEO how to maximize the product cycle is easier than teaching the professional CEO how to find the new product cycle.

This is a very useful take on the Innovator’s Dilemma, and may well explain why startups (founding CEOs) regularly disrupt incumbents (professional CEOs).

What’s most exciting about this is that in the last few years, we’ve seen a revolution in our understanding of startups, nicely captured by Steve Blank’s Lean LaunchPad:

  1. A startup is an organization formed to search for [not execute] a repeatable and scalable business model.
  2. A business model describes how your company creates, delivers and captures value.
  3. The Customer Development process is the way startups quickly iterate and test each element of their business model.

Here’s the kicker.  Conventional wisdom is still that this kind of thinking is only for startups; once they become a “real” business they’ll shift their focus on writing traditional business plans and executing their existing business model.

But what if the conventional wisdom is wrong, and Andreessen Horowitz is right?

What if the primary job of the CEO should always be to find the next product cycle/business model?

In that case, the modern corporation should look more like the Innovator’s Restaurant, where “solved” business models pay the bills while the organization focuses most of its energy on creating the next big thing.

Isn’t that obvious?  Isn’t that what Apple and other innovative companies have always done?

So how come hardly anyone seems to know this, much less practice it?

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