Why Bigger Should Always Be Faster … and Better

Let me say upfront that I was rooting for Golaith, not David.

I was recently asked to speak about some of IBM’s intrapreneurship initiatives at the upcoming Intrapreneurship Conference in New York during October 21-23. I have been conducting my own research on corporate entrepreneurship and have gotten to know the folks behind this organization .. it should be a good event. I will be speaking on the first day and shared some thoughts on this in a recent interview.

As I reflected on the interview .. it occurred to me how tired I am of all of the rhetoric in business publications these days about it being easy and commonplace for small innovative companies to disrupt large established ones. Some articles and books even pretend there’s a formula for doing this. It’s as if these much larger and proven companies are incompetent, have lost their way and are filled with unmotivated, slow witted human zombie idiot robots. To think that David always slays Goliath is too idealistic. It might help sell books or increase readership … but it’s not a predictor of business success or outcomes. It’s also foolish to underestimate any competitor by reducing them to a cliché … especially the ones who can squash you.  Has anyone noticed that Gillette didn’t lay down and die when Dollar Shave Club and Harry’s started a subscription service to try to disrupt Gillette’s core profit source of razor blades.

In an entrepreneurial and intrapreneurial career has spanned both start-ups and large corporations … I have been in key roles in both types of companies, and can tell you that there are advantages and disadvantages to each type.

Being fast, nimble and adaptable are essential traits when starting a new business or bringing a new innovative offering to market. These are even definitional attributes of start-ups. But no matter how nimble you are, you can’t birth of baby in one month if you put nine pregnant women on the job.

Large companies have significant and undeniable advantages over smaller (and allegedly more nimble) companies … notably resources and customers. The larger, the better. When mobilized properly, these advantages can be leveraged and rapidly applied in ways not possible by smaller, less resourced would-be competitors. Sure … large companies can be complex and have too much politics and red tape … but bring it on.  I’ll take money and customers every time.

That fact is, nothing can be as productive as working on an important initiative with a highly motivated and excited team of the most talented people you can imagine.

BOOM .. and there it is.   An Intrapreneurial Business Team. Done right, it’s like being on an all-star team … even exhilarating. You get to work with the best people or have access to subject matter expertise that start-ups can only dream of.

Where do you find Intrapreneurial Business Teams? In large companies, of course. It’s really the only way that a large matrixed organization can operate in a “start-up” like mode.

A small empowered team(s) approach is essential when siloed reporting, resource allocation and decision making model(s) are the norm. The typical large company model fundamentally disables a single person’s ability to lead all aspects of a innovation commercialization project.

Even though the fundamental goals and skills are the same for both types/sizes of companies … but the execution model and processes needed are completely different.

Here is an overview to the similarities and differences of the two approaches:

Intrapreneurs – Similarities

•   Requires vision and strategy.

•   Needs leadership and strong execution to succeed.

•   Needs internal funding.

•   Similar “learning” process of validate, plan, build, launch and grow.

•   Opportunity driven.

Entrepreneurs – Similarities

•   Requires vision and strategy.

•   Needs leadership and strong execution to succeed.

•   Needs external funding.

•   Similar “learning” process of validate, plan, build, launch and grow.

•   Opportunity driven.

Intrapreneurs – Differences

•   Mostly fearful including fear of failure, peer perception, embarrassment and confrontation.

•   Stakeholders motives are not just financial and include NIH syndrome, lack of alignment, skills, priorities or reward system.

•   Has to navigate existing culture and processes … and may have little or no influence over this.

•   Has advantages/starting points – ability to leverage customers, assets, brand and track record.

•   Funding is NOT guaranteed once secured.

•   Depends on Team Based Leadership

Entrepreneurs – Differences

•   Mostly fearless who are more likely to take risks, start over or have a pivot mentality

•   Stakeholder motives are almost exclusively financial or performance related (keeping investors happy is a top priority).

•   Has to create a new culture and must build teams, culture and more.

•   Starting from a blank page without track record – must secure customers and build trust

•   Funding is guaranteed once obtained.

•   Depends on a Strong Individual Leader

By embracing on these similarities and differences, large organizations can move as fast or faster than start-ups. Importantly, start-ups should study large companies they are taking aim at … before taking them on. Avoid the ones who are operating Intrapreneurially as shown above.

Lastly, if you are a publicly traded company … your organization must be committed to these principles (from the top down). Public companies have a fundamental conflict of interest in that innovation projects are usually longer term investments with unclear ROI in many cases. There is a natural tension between organic innovation investment and fiduciary shareholder budget responsibility … where innovation projects almost always lose out. Quarter to quarter financial decisions (cutbacks) have unintended downstream innovation consequences. Projects without a clear ROI, or without committed revenue, are usually the first place that cuts get made when the belt needs to be tightened. The larger the company, the more acute the problem. Watch out for this dynamic. It’s difficult to overcome without a top down commitment to change and innovation commercialization. Shareholders are always sitting in the first chair. These are the people paying for Goliath’s projects and they expect a return (and soon).

I am definitely looking forward to speaking at the Intrapreneurship Conference. I’ll talk more about Intrapreneurial Business Teams and will feature the Intrapreneurship@IBM program … a program designed to foster corporate entrepreneurship and help bring IBM’s innovation to market.

I founded the Intrapreneurship@IBM program and community as well as the associated 8 Minute Pitch program. I will cover some successes, challenges and failures as well as our future plans for these programs. I will also cover a deeper set of findings from a benchmark survey I recently conducted with over 500 innovation professionals (both non-IBM and IBM respondents).

Lastly, IBM has set out on a “moonshot” attempt at transforming healthcare. Bringing our innovation to market to part of that strategy and Intrapreneurship is a key success factor of this initiative. I plan to cover some of our innovation in healthcare including the innovative and world-renowned IBM Watson family of healthcare solutions.

I hope to see you in New York at the conference … and as always leave your thoughts and comments below.