Disruption and Organisational Debt

"VaraderoBeach21" by AlejandroLinaresGarcia - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

It's a common view that big companies struggle to innovate.

I learnt this week that this truism isn't quite what it seems. Stanford's Bill Barnett caught my attention with his post "Why You Don't Understand "Disruption".

He gives several examples of amazing innovation by larger companies. Kodak for example. They basically invented Instagram in 1996. They were also the first mover in digital cameras. Their difficulty wasn't in coming up with disruptive ideas. It was in executing that idea. Their organisation wasn't suited to the innovations they were pursuing.

Barnett summarises;

Disruption is not just about technology changing; it is about changing the logic of a business.

At the heart of this lies an insight that every startup should bear in mind. Success comes from building an organisation that can deliver on the promise of innovation.

Once a business model is validated a company needs to build an organisation that is optimised around that business model. Bigger companies struggle with this because they have legacy organisations. Organisational debt

Speedboats

In some ways big companies are like big ships. They can sail rough seas but they take a long time to change course. Startups are like speedboats. They can move fast but they have to grow as they go so that they can sail bigger and bigger seas.

Disrupting venture capital

At Forward Partners, we are disrupting venture capital. Our model is that we invest into early stage companies, assist founders to validate their business model and help them to find a co-founder and grow their team. This innovative approach requires an organisation to match. I'm enjoying being on our speedboat as we refine this capability.