Tilting at Windmills: Intrapreneurship in large organizations from Lean UX NYC 2014

Tilting at Windmills
Innovation in large organizations.
Photo by Echiner on Flickr. Used under a creative commons license. https://
www.ﬂickr.com/photos/decadence/249922560
Thursday, April 10, 14

Back in 2008.

That escalated quickly.

When you’re a startup
your goal is to ﬁnd a sustainable,
repeatable business model.

When you’re a big company, your
goal is to perpetuate one.

Instead of:
Companies are what they repeatedly do.

How about:
Organizations that do things repeatedly
are companies.

Once, this was all about scale.

How to perpetuate something.
Photo by Kamal Hamid. Used under a creative commons license. https://
www.ﬂickr.com/photos/evergreenkamal/395448039

Daniel Craig
McCallum.

How’s that working out for you?

F500 lifespan history

Fortune 500
Life Expectancy
(http://csinvesting.org/2012/01/06/fortune-500-extinction/)
1950 2010...
75
years
15
years

Fortune 500
Life Expectancy
(http://csinvesting.org/2012/01/06/fortune-500-extinction/)
1950 2010...
75
years
15
years
Growth by
entering a new
business
Corporate
Strategy Board
95
% fail
99
% fail
Clay
Christensen

The innovation
problem isn’t new.
Picture by James Whatley on Flickr. Used under a Creative Commons license.
https://www.ﬂickr.com/photos/whatleydude/6202872135

Companies die because they fail to
move to new business models.

Clay Christensen, The Innovator’s Dilemma
CostperMB
$1000
$100
$10
$1
Time
The
Innovator’s
Dilemma

CostperMB
$1000
$100
$10
$1
Time
14”
M
ainfram
e
The
Innovator’s
Dilemma

CostperMB
$1000
$100
$10
$1
Time
14”
M
ainfram
e
8”
M
inicom
puter
The
Innovator’s
Dilemma

CostperMB
$1000
$100
$10
$1
Time
14”
M
ainfram
e
8”
M
inicom
puter
5.25”
D
esktop
The
Innovator’s
Dilemma

CostperMB
$1000
$100
$10
$1
Time
14”
M
ainfram
e
8”
M
inicom
puter
5.25”
D
esktop
3.5”
N
otebook
The
Innovator’s
Dilemma

$1000
$100
$10
$1
Time
8” 5.25”
Technologies
outstrip what
the market
needs, driven
by feedback
from the “best”
current
customer.

$1000
$100
$10
$1
Time
8” 5.25”
Technologies
outstrip what
the market
needs, driven
by feedback
from the “best”
current
customer.
High end
customer

$1000
$100
$10
$1
Time
8” 5.25”
Technologies
outstrip what
the market
needs, driven
by feedback
from the “best”
current
customer.
High end
customer
Low end
customer

$1000
$100
$10
$1
Time
8” 5.25”
The new market
has different
criteria for
success, which
are uninteresting
to incumbents.

$1000
$100
$10
$1
Time
8” 5.25”
The new market
has different
criteria for
success, which
are uninteresting
to incumbents.
Storage
capacity

$1000
$100
$10
$1
Time
8” 5.25”
The new market
has different
criteria for
success, which
are uninteresting
to incumbents.
Storage
capacity
Portability

Amazon Web Services and the
server value network
Server computing
• Density
• Heat
• GHz
• MIPS
Capex, ﬁnancing,
TCO, ROI
CIO, enterprise IT
Value
criteria
Money
Buyer

Amazon Web Services and the
server value network
Server computing
• Density
• Heat
• GHz
• MIPS
Capex, ﬁnancing,
TCO, ROI
CIO, enterprise IT
Value
criteria
Money
Buyer
Cloud computing
• Instances
• Objects
• Spinup time
• Scaleout
Opex, demand, time
to result
CTO, coder, app owner,
line of business, startup

HP and Dell
missed the
disruption and
the change in
the value
network.
$1000
$100
$10
$1
Time

HP and Dell
missed the
disruption and
the change in
the value
network.
$1000
$100
$10
$1
Time
Physical servers:
MIPS, heat,
density, cost per
cycle.
Sold to CIOs

HP and Dell
missed the
disruption and
the change in
the value
network.
$1000
$100
$10
$1
Time
Physical servers:
MIPS, heat,
density, cost per
cycle.
Sold to CIOs
Cloud computing:
Opex cost, time to
spin up, scaleout,
objects stored.
Sold to developers,
marketers, startups

HP and Dell
missed the
disruption and
the change in
the value
network.
$1000
$100
$10
$1
Time
Elastic resources mean we
can scale up to huge, and shrink
costs when not in use.

YOU ARE
HERE
This is a problem of local maxima.

YOU ARE
HERE
LOCAL
MAXIMUM
OPTIMIZATION
OF CURRENT
METRICS

YOU ARE
HERE
GLOBAL
MAXIMUMINNOVATION
WITH NEW
RULES

YOU ARE
HERE
SHORT-TERM
INVESTORS
HATE GOING
DOWNHILL

By trying to innovate in a big
organization, you are going against
its mandate to perpetuate an
existing business model.

You are a pariah.

You are a pariah.
Bad listener: Wilfully ignore feedback from your best customers.

You are a pariah.
Cannibal: If successful, destroying existing revenue streams.

You are a pariah.
Job killer: Automation & lower margins are your favorite tools.

You are a pariah.
Security risk: Advocate of transparency, open data, communities.

You are a pariah.
Narcissist: Worry constantly about how you’ll get attention.

You are a pariah.
Narcissist: Worry constantly about how you’ll get attention.
Slum lord: Sell to those with less money, deviants, and weirdos.

But there’s hope.
Photo by Tom Grydeland on Flickr. Used under a creative commons license. https://www.ﬂickr.com/photos/thunderchild5/225675725

Small batches change everything.

3D printing.
Photo by Keith Kissel on Flickr. Used under a creative commons license. https://www.ﬂickr.com/photos/kakissel/6165114664

http://www.ﬂickr.com/photos/fdctsevilla/4052593758/
Cloud computing and shared services.

Social platforms.
Photo by Michael-Davis Burchat on Flickr. Used under a creative commons license. https://www.ﬂickr.com/photos/curious_e/10473440064

Crowdfunding.

Digital
channels.
PhotobyGaryLerudeonFlickr.Usedunderacreativecommonslicense.
https://www.ﬂickr.com/photos/garylerude/7511464618

What happens
when the prototype costs
what the product does?

Iteration wins.

In a small-batch, digital-channel
world, cycle time trumps scale.

Ultimately, successful businesses
must become organisms designed
to learn.

Three kinds of innovation

Sustain/core
(optimizing for more of the
same)

Sustain/core
same)
Improve along
current metrics...

Sustain/core
same)
Improve along
current metrics...
...or alter
the rate of
improvement

Sustain/core
same)
Innovate/adjacent
(introduce nearby product,
market, or method)
Improve along
current metrics...
...or alter
the rate of
improvement

Sustain/core
same)
Innovate/adjacent
market, or method)
Improve along
current metrics...
...or alter
the rate of
improvement
Switch to a new
value model

Sustain/core
same)
Innovate/adjacent
market, or method)
Disrupt/transform
(Fundamentally reframing
the business model & value)
Improve along
current metrics...
...or alter
the rate of
improvement
Switch to a new
value model

Sustain/core
same)
Innovate/adjacent
market, or method)
Disrupt/transform
(Fundamentally reframing
the business model & value)
Improve along
current metrics...
...or alter
the rate of
improvement
Switch to a new
value model
Change the business
model entirely

A three-maxima approach
See also: Three horizons model, Geoffrey Moore, etc.

Current
state

Current
state
Business
optimization

Current
state
Business
optimization
Product,
market,
method
innovation

Current
state
Business
optimization
Product,
market,
method
innovation
Business model
innovationA three-maxima approach

Current
state
Business
optimization
Product,
market,
method
innovation
Business model
innovation
You can convince
execs of this because it’s
somewhat familiar.

Current
state
Business
optimization
Product,
market,
method
innovation
Business model
innovation
You can convince
execs of this because it’s
somewhat familiar.
This terriﬁes them
because it eats their
young.

Good Intrapreneurs embrace the harsh
light of data.

Times a song in “heavy
rotation” is played daily
2007 2012
0
15
30
EVERY 4h EVERY 55m

Good Intrapreneurs take baby steps.

Netﬂix

Tesla
http://www.hdwallpapersinn.com/wp-content/uploads/2012/12/600-tesla.jpg

Twitter’s 140-character
limit isn’t arbitrary.
It’s constrained by the size of SMS
(160 characters) and username (20
characters.)
http://i.i.cbsi.com/cnwk.1d/i/tim/2011/11/18/
sms_screen_twitter_activity_stream_270x405.png

Good Intrapreneurs reframe.

http://www.flickr.com/photos/maladjusted/5207565912

Blockbuster had a lot going for it.

Plenty of inventory, of course.
But that matters less than...

...market
intelligence,
customers,
existing payment
approval, and
customer history.

The problem was framing:
Blockbuster thought it was in the
video store management business.
Netﬂix realized it was in the
entertainment delivery business.

Good Intrapreneurs are subversive.

http://www.ﬂickr.com/photos/bootbearwdc/1243690099/

Ultimately, good Intrapreneurs know
cycle time trumps scale.

www.tiltthewindmill.com
Alistair Croll
acroll@gmail.com
@acroll
Windmill by Eric Bennett on Flickr. Used under a Creative Commons license.
Thanks!

Tilting at Windmills: Intrapreneurship in large organizations from Lean UX NYC 2014

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Tilting at Windmills: Intrapreneurship in large organizations from Lean UX NYC 2014