For many years now I have recommended the classic book “The Innovator’s Dilemma” because I think it does such a good job explaining an important dynamic I see at larger companies. However, I have come to believe that The Innovator’s Dilemma is actually describing the symptom of the problem, and not the actual cause.
Ben Horowitz wrote an article a few years ago called “Peacetime CEO/Wartime CEO” and I believe his theory gets much closer to the underlying issues at play.
Using Ben’s analogy, startups are necessarily children of war. For a new company entering an existing market, getting to Product-Market Fit requires a team and organization that is skilled in combat and can actually create real value.
Mainly I work with these startups and earlier stage companies that are working to disrupt existing large companies and markets. Your enemy may have more money, and hold the existing territory, but when they are essentially unarmed, and unable to respond, it’s much easier to make real progress and establish your beachhead. I have long believed that if more large companies did what they should be doing, it would be much more difficult for the startup industry.
However, sometimes I’m asked to come help one of those companies being disrupted. They finally realize they need to develop the muscles and skills needed to respond. To learn how to innovate again. To move quickly and effectively. To stop wasting time and money on expensive, failed efforts.
In his article, Ben talked about how this often requires a different leader, or at least the leader must make a major change in behavior and priorities. Often we talk about this as cultural change, and it’s true the cultural changes are usually the hardest part of this. But I find too many large companies mean superficial cultural change.
What’s necessary is to prepare the company for wartime. This impacts everyone from the C suite, to HR, to Finance, to Marketing and Sales, and especially to the people responsible for creating the products that you’ll be taking into battle.
Unfortunately, what I see most often is that these large companies wait until they are already in serious trouble before they start taking the threats seriously and start mobilizing. The time to prepare for war, if you’re not already, is when you are at peace.
My personal view is that the whole concept of “peacetime” for technology powered companies will soon be reserved for those few that survive under monopoly conditions or legislative protection. The rest will need continuous innovation in order to survive.
I have little sympathy for the many large companies that are being disrupted every day. These markets are theirs to lose. Even in peacetime – especially in peacetime – all tech leaders, and their board members where necessary, should be constantly pushing to ensure their company is prepared for war.
NOTE: I updated this article on 7/13/2014 – the argument is the same, but with a stronger point of view.