In various presentations, papers and books on innovation or leadership I have come across an organisational pattern I like to call “Startup then Core”. It is a pattern based on the idea that a new dawning business needs a special kind of leadership and special people, skilled and prepared to innovate in an uncertain world. Those in favour of this pattern also suggests that a mature business with “Execution” as its main mission needs leadership and people aimed to dwell in a more repeatable and secure world.
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A Startup can appear in many forms. Any form between completely outsourced to an external party to just a few internal persons allowed to put time on future ideas. Sometimes the future work is very systematic with clear objectives, sometimes it is just random exploration. Anyhow, in all cases management have decided to do something about the future and reserve the resources they currently can afford.
Why splitting organisations?
What are the more detailed arguments for splitting an organisations according to the "Startup then Core pattern"? First there seems to be a common belief that mindsets and techniques are completely different when it comes giving birth to a future business. A Startup needs to work with assumptions, hypothesis, experiments and quick turnarounds that does not have any room for the proper business plans needed in a Core Business.
The second best argument for putting any new business under a separate umbrella is control and security. "It is important the current business can develop and operate without disturbance. The Startup has a small fixed budget we could afford to lose. If it fails we will just terminate it. The rest of us will continue to serve our customers and and make sure cash is coming in". Does it sound familiar? Yes, I have seen many organisation handle their future like this.
I have heard many more arguments in favour of the "Startup then Core pattern" and of course it is not easy to deal with the unknown future. When there is a fairly simple model with apparently working tools and famous success stories. Why should it not be the way to go?
When it happens, initiatives for the future come as scattered sheds not seldom shortly after a new CEO has taken up the position.
Many would argue; "Look, Google has Startup labs which are working separately on new products. That is the way to go!" What these people forget is Google have mindset of creating new business also in their core. They foster all employees to be innovative and seek the future. This is not the case in most organisations, regardless of industry, management is putting current customers and cash flow first.
Yes, I do agree on diversity of people and tradition. Some people are more keen on changing for the future, others like to improve the current business. But to address this fact by organising people in different boxes could be the wrong path. Instead leadership needs to be divided in what, how and process. I have seen many managers sitting on several chairs...
When I hear managers speaking this language I do understand why an organisations have a hard time being innovative.
Silos..picture of value chains and functional entities
ignite your coworkers passion and energy
People bypassed not belived in
Tech driven instead of driven by values and customer need
For a small business without unlimited resources it is more clear how to do it.
The challenge
But what to do with the future ideas in the long run? When the "Startup then Core” pattern is practiced the ultimate challenge is always how to scale the ideas.
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For those of you who think the sustainble "Core and Startup pattern" is just something I made up; take a deep look at Toyota who has had this model for decades and created many innovations both in product and in production. I guess Toyota is the most well-published and well-studied organisation in more than one hundred management books. A protest I have heard many times from my clients is: "But look, we are not a car manufacturer we are a ..... Those methods and thinking may sure work in the auto industry, but certanly not in our business." If you think this kind of statement is valid for you I urge you to take a closer look at Toyota. Specially the Toyota Product Development System.
Why splitting organisations?
So from where comes the need to split organisations according to the "Startup then Core"-pattern? Most likely from the belief that mindset and techniques are completely different when it comes giving birth to a future business. Many would argue; "Look, Google has Startup labs which are working separately on new products. That is the way to go!" What these people forget is Google have mindset of creating new business also it their core. They foster all employees to be innovative and seek the future. This is not the case in most organisations, regardless of industry, management is putting current customers and cash flow first.
The second best argument for putting the new business under a separate umbrella is control and security. "We must ensure the current business without disturbance. The Startup has a small fixed budget we could afford to loose. If it fails we will just terminate it. The rest of us will continue normal operations and make sure cash is coming in". Does it sound familiar? When I here managers speaking this language I do understand why an organisations have a hard time being innovative.
I have heard many more arguments in favour of the "Startup then Core"-pattern and of course it is not easy to prioritize the unknown future. When it happens, initiatives for the future come as scattered sheds not seldom shortly after a new CEO has taken up the position.
The feedback loops
What is the trick with the "Core and Startup pattern"? How is it possible to make it a long lasting process that successfully will deliver?
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Yes, I do agree on diversity of people and tradition. Some people are more keen on changing for the future, others like to improve the current business. But to address this fact by organising people in different boxes could be the wrong path. Instead leadership needs to be devided in what, how and process. I have seen many managers sitting on several chairs...
Silos..picture of value chains and functional entities
ignite your coworkers passion and energy
Tech driven instead of driven by values and customer need
For a small business without unlimited resources it is more clear how to do it.
Devops It
Both dev and operations need to improve quckly Never swift and easy to scale up a Startup Establish continuous growth and change insteadMy plan is to write a small series of articles regarding the two alternative organisation patterns, "Startup then Core" or "Core and Startup". Next topic is innovation.
Emerging ideas..........
The role of suppliers is raises even more questions. Are we ready to climb the value pyramid and outsource low end parts to suppliers?
My plan is to write a small series of articles regarding the two alternative organisation patterns, "Startup then Core" or "Core and Startup". Next topic is innovation.