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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These and many more difficult questions arise and management will need to handle them in a unique context, because success of Startups are diverse and rare. These ample difficulties are well known and it is not a surprise that most Startups will not fly. Forbes is one of many sources writing about the fact that 90% of Startups fail and the authors behind Blue Ocean Strategy claim that 90% of all businesses fail within ten years.
Another well known fact is that many prosperous businesses will not keep on flying. A widely used measure is the list of the Fortune 500 companies. A number of articles point out that just 12% of the Fortune 500 companies included in 1955 were still on the list in 2017. Mark J. Perry, who is Professor of economics and finance, calls this phenomenon “creative destruction”. And all signs show it will get worse. In a report in 2016 Innosight writes that half of the S&P 500 companies are expected to be replaced over the next 10 years.
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In theory it is very logical that any business should want to take care of both the current, the next and the future business, commonly called the three horizons as it is coined in the book The Alchemy of Growth. I would like to believe that every business leader have the long term sustainable growth as their main mission and in many cases it is what they express. But in practice, I have seen that it so emotionally difficult to, just slightly, give the current business a lower priority. The current business is where the customers are complaningcomplainng, where the money is coming in and where the employees have their loyalty. As if this was not enough, the current business is also where managers get most of their credit and create opportunities to jump to new positions with even higher pay.
It is exactly these emotional difficulties that requires the true future leadership that seems to be rare. I watch managers trying lead their organisation in a certain direction, but further down in the hiarchy hierarchy the sight normally gets shorter and it is very much the current business and operantional responsibilty operational responsibility that counts. Even if the top management are working hard to establish a long term vision; including corporate identity, values, culture, tradition and such, the middle management is not very keen on changing for the future. I even heard frustrated leaders call middle management "permafrost" due their inability to drive change.
What top managers do not seem to fully grasp is how strong the signals coming from anual annual or quaterly quarterly reporting are. Most of our society is awaiting montary results form current businesses. Even Gartner, who make all their business from predicting the future, have a traditional anual annual report with mostly historic and operational figures. I wonder what will drive the future of future predicting services?
Let's agree, to prioritise the future over the current business is a delicate challangechallenge. It requires extrdonary extraordínary leadership to mitigate the friction between new and old. The leadership includes being brave and lean on figures that cannot be proven.
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Much of the business literature describes how to do innovation and delivers many examples of successful serial entrepreneurs. But hardly any literature gives practical advise advice about how to continuously develop a business by transforming it into the future over time. Some books like Good to Great, written by Jim Collins, does take a long term perspective but it is mostly about high level principles rather than organisational patterns.
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When I write "easier to sustain over time" it absolutely does not mean "easy". It means; since <a thinking> <vs the "Core and Startup pattern" is> based on stable and evolutinary evolutionary learning it will in comparision comparison be more predictable and more controlled <than a thinking based on...>. However it requires hard work and courage from the leaders who want grow a business for real. And I'm sure it pays off, just heard Jeff Bezo's net worth surpassed 100 billion dollars. He is a leader with a clear sustainable path to create a company culture where every one everyone should be involved in the future.
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Development is in it's nature aimed for dealing with unique changes as the opposite operations in it's nature is aimed for dealing with repeatable deliveries. To bake the two together and treat them as one, and for example call it execution, is a fatal misstakemistake. Ofcourse a tight cooperation is need between the two but the basic nature must be acknowledge and given the proper attention.
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What many Startup fans seem to have missed is that modern Product Development, for an established business, has been tailored to handle all sorts of uncertainty. In fact much of the same uncertainty a startup is facing. There are well proven frameworks and techniques that supports simulatinous simultaneous development of the current business as well as any future business. It is true, many organisations are still working too bureaucratic and without acceptance of uncertainty. However the absolute majority is trying to adopt new and modern ways of working. The same goes for Operations which I think is more mature than Product Development in general. Continuous improvements, automation and empowering of people have been around for ages. The target is ever increasing volumes, productivity and the superior quality.
For those of you who think the sustainble sustainable "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 certainly 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.
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The feedback should preferable involve Operations also for new and not industrialised products. Operations acts in the reality and need to catch the real insights of customer needs. The insights may leed lead to improvements of the Operational processes or
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The target audience of this article is not thoose those who have a unique and fantastic idea and want to create a new innovative company. The intension intention is to reach out to normal companies, large or small in any industry, who want to take care of their future business. I want describe how futurstic development can be incorporated as a part of the normal work and where all cooworkers coworkers are able to contribute.
Of cource course the world needs brand new startups coming from nowhere. But also the establisehd established organisations need to live on taking their responsbiltiy responsibilities for owners, emploees employees and customers. My 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.
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