We Need a New Operating System for Corporate Entrepreneurs

Corporate Entrepreneurs need a new operating system for big company innovation

What Corporate Entrepreneurs need to succeed is a whole new operating system for big company innovation.

When I assert that big corporations not only can but must act like startups, I hear rank skepticism. So many business leaders, students, entrepreneurs, managers, consultants and assorted other experts respond the same way.

That got me thinking: we need something really big to break this conceptual logjam.

What we need, I realized recently, is to create a new operating system for large corporations. We need an operating system that’s designed to nurture and support corporate entrepreneurship.

Corporate Entrepreneurs are, by the way, people much just like you and me (okay, maybe more like me). They just happened to be endowed and equipped with a determination to fulfill Austrian economist Joseph Schumpeter’s definition of an entrepreneur:

An individual who exploits market opportunity through technical and organizational innovation.”

But – and this is a really big BUT – unlike famous, celebrated entrepreneurs, they’re not financially or psychologically prepared to tell the boss, “Take this job and shove it.”

They’re not ready to mortgage their house and move to the trailer park to fulfill their dream of creating – for example, if you’ve seen the movie Joy, the next Miracle Mop.

And yet, if larger corporations hope to attract and retain the most innovative and creative people and not lose them to startups, they will need to entertain a radical new notion: to learn to combine, inside their own organizations, the best of both worlds.

Inside their own organizations, big corporations can create the conditions conducive to incubating startups of their own. The key is not only inspiring, but also properly rewarding the levels of passion, focus, commitment and creativity in startup cultures.

Unlike scrappy nimble little startups, big corporations have much more they can offer. But to do so, they need to develop and respect this new operating system. It has its own very different set of values, incentives and rewards.

All of these fundamental differences are revealed by a set of pertinent questions.

As the leader of a large organization, you’ll need to banish certain deeply-held beliefs and status-quo-sustaining traditions from your mental model.

For example, you’ll need to get rid of a few things you probably think you can’t live without.

  • Forget about things like conventional budget cycles.
  • Ditch the interminable sequence of “yay or nay” meetings that function as the ultimate gatekeeper of all innovation and development at most corporations.
  • Deep-six the time-honored big-company tradition of putting onto a promising project a few people permitted to devote, at most, a quarter of their time to it.

But you don’t need to slavishly replicate every last detail of the Silicon Valley ecosystem.

In fact, because of who you are, you will be free to lose the overwhelming preponderance of financial rather than technical experts to render judgments on new projects. You can also lose the VCs’ excessive reliance on outside experts. To both, say good riddance!

While you’re at it, banish the obsessive focus on the eagerly anticipated nirvana of an “exit event.” That’s the magic moment everyone in the ecosystem waits for, when all the VC’s get to pop champagne corks and rake in their winnings.

That’s the moment when most if not all the risk embedded in a new enterprise is conveniently transferred to a new set of funders, shareholders in public companies.

Some shareholders end up feeling like chumps, given the tendency of hot IPOs to sink like a stone once the first round of funders exits stage right, when the hoi polloi are finally allowed in. Anyone remember Pets.com?

On the other hand, you probably should keep from the start-up model the idea of putting an all-in-core team to drive the project. Keep the low-cost and flexible “rent-the-rest” approach to additional staffing. Definitely keep the relentless, obsessive focus of the startup on solving a real human need. Keep and emulate the startups’ build-measure-learn approach to product development.

Okay, you’re getting pretty excited about joining this so-called “Corporate Entrepreneur” movement. Where do you start?

Here’s where:

You’ll need to create an entirely new career path. It’s one not so narrowly focused on the traditional disciplines of operations, sales or marketing.

This new career path of Corporate Entrepreneur will be all about bringing the right resources, assets and people to bear on solving the right problem. That problem is hauling your average big corporation, no doubt kicking and screaming, into the second decade of the 21st century.

Business in the 21st century will be all about figuring out how big companies go to market with new products and services at the right pace. What’s the right pace? Not at the pace of their own processes. Not at the pace of their competitors. Instead, you need to match the pace of your customers.

Business in the 21st century will be all about creating the critical mass of talent, passion, skill, knowledge and relentless focus on customer outcomes that startups exemplify. It will replace century-year old jobs and job descriptions with people who ask very different kinds of questions.

Here’s an example drawn from my recent personal experience.

When I was at GE as Executive Director of Global Innovation, we met with one of our engineering teams.

They were, and for good reason, very excited about a new pump they had designed for an industry. It represented a quantum leap over its predecessors in efficiency, which boils down to a combination of volume and speed known as flow.

But when we asked them about pricing, they were stumped! Why?

Because they hadn’t been focusing on it. It really wasn’t all that surprising, since they had no one from sales or marketing attached to their team. Engineers don’t focus on pricing anyway.

So they fell back on tradition, and applied the most basic cost-plus pricing model to the problem. They came up with a nice round figure.

That price included a perfectly respectable 50+% mark-up. So, in the ordinary course of business, they typically wouldn’t hear too many additional questions asked.

Except that at that moment, something compelled me to call a time out.

Here’s the question we should be asking ourselves,” I said. “Not how much it cost us to develop and build the thing, but how much customers will think it’s worth.”

On that basis, we came up with several potential price structures. One of them better reflected the pump’s true value to customers.

The new price was a high multiple of the original price. After an in-market test, our customers gladly agreed with the higher value and price.

The moral of that story is this. Being a Corporate Entrepreneur requires you not only to be close to your customers but also to think like your customers.

Under the old traditional corporate operating system, the questions that people pepper project managers with end up being pretty predictable. In fact, that’s what makes those painful “yay or nay” meetings painful.

  • Did you make your budget?
  • Did you hit your deadline?
  • How soon can you deliver a prototype?

Now let’s hear the dramatically different questions a venture capitalist will ask the founder of a startup pitching his or her promising product:

  • Do you know how many people want to buy this new product?
  • If the answer is yes … What evidence do you have to back up that projection? Have you tested it with customers? What have they told you?
  • Do you have evidence to persuade me that you and your team can produce this competitive and desirable product faster and better than everyone else?

And so on and so forth.

Similarly, imagine if VCs asked all prospects this important question:

“How many other startups are you involved with right now?” Kind of silly, isn’t it?

For the Corporate Entrepreneur, the question is similar but phrased and framed slightly differently:

“How many people can we afford to put on this project full time?”

It’s all about bringing passion, focus and discipline to the project. You get the picture. I only wish more people did.

Remember, culture eats strategy for lunch. It’s as much about changing your big, slow-moving corporate culture as it is about launching a brand-new career path of entrepreneurship!

Ironically, I’ve found and I imagine you’ve found, the ultimate goal of every startup is to get big.

Startups want lots of things. They want access to lots of customers and customer insights. They want access to lots of capital. They want access to lots of great talent. And they want access to lots of data.

All of which are assets that big companies have in abundance.

Isn’t it ironic that entrepreneurs and the founders of startups desperately want so many of the same things big companies already have?

Except that, too often, we simply fail to appreciate it.