Entrepreneur and author Steve Blank talks about one powerful force in his recent post, “Why Companies are Not Startups”
The Enterprise: Business Model Execution
We know that a startup is a temporary organization designed to search for a repeatable and scalable business model. The corollary for an enterprise is:
A company is a permanent organization designed to execute a repeatable and scalable business model.
Once you understand that existing companies are designed to execute then you can see why they have a hard time with continuous and disruptive innovation.
Every large company, whether it can articulate it or not, is executing a proven business model(s). A business model guides an organization to create and deliver products/service and make money from it. It describes the product/service, who is it for, what channel sells/deliver it, how demand is created, how does the company make money, etc.
Somewhere in the dim past of the company, it too was a startup searching for a business model. But now, as the business model is repeatable and scalable, most employees take the business model as a given, and instead focus on the execution of the model – what is it they are supposed to do every day when they come to work. They measure their success on metrics that reflect success in execution, and they reward execution.
In other words, we repeat what has always worked for us in the past. The institution enforces the “tried and proven” behavior pattern. The organization actually fights against innovation and change.
In a January 6, 2014 article, The Biases That Make Bosses Hate Creativity, on FastCompany.com, author Drake Baer notes that while American’s prize creativity, research says we’re disposed to reject it.
The thing about creativity that is rarely acknowledged: Most people don’t actually like it. Studies confirm what many creative people have suspected all along: People are biased against creative thinking, despite all of their insistence otherwise.
“As much as we celebrate independence in Western cultures, there is an awful lot of pressure to conform” writes Jessica Olsen at Slate. The creative process signals uncertainty and introduces risk
“We think of creative people in a heroic manner, and we celebrate them, but the thing we celebrate is the after-effect,” says Barry Staw, a researcher at the University of California–Berkeley business school who specializes in creativity.
This creates an unseen blinder: as the University of Pennsylvania has documented, while people prize new ideas, they reject them if they feel a motivation to reduce uncertainty.
More on this next time.