Innovation and continuous foresight
Why Large Companies Need Innovation at Scale
A couple of weeks ago, I wrote a post titled, “Unicorns don’t exist.” ...
A couple of weeks ago, I wrote a post titled, “Unicorns don’t exist.” (https://www.hypershift.systems/blog/unicorns-dont-exist), in reference to those sought-after startup exits that exceed $1B+ and sustain venture capital funds. My point in the article was not to negate the idea of a fast-growing startup, but rather to point out that there is no such thing as a “unicorn idea.” These $1B+ exits don’t result from one idea alone. Rather, they start with a good concept that has initial market traction. From that start, the company then builds scale through numerous decisions that deliver systematic growth responsive to market change.
When the term “unicorn” was popularized in 2013, there were only four ecosystems producing unicorns. Now, they have emerged in more than 80 ecosystems globally. That is really significant. (The report and infographic are published by Startup Genome (2020), here: https://startupgenome.com/report/gser2020). This doesn’t mean that more startups are succeeding. What it means is that those that do can get really big, really fast.
There are more and more signs pointing to what this means for large companies, and the need for these large companies to innovate:
- This Innosight report how the average tenure on the S&P 500 is shrinking, down from 33 years in 1964 to 24 years in 2016 and 12 years by 2027: https://www.innosight.com/insight/creative-destruction/
- This McKinsey report talks about the need for constant business refresh, illustrating that those that do so correlate to better earnings results: https://rb.gy/esxwve
So, why this change? One reason is the way that technology itself has evolved over the last few decades. The wave of disruption in the 1980s - semiconductors and PCs - launched a wave of productivity applications that transformed how companies operate and organize. The wave of disruption in the 1990s - the Internet - transformed how companies connect with consumers, launching massive waves of disintermediation that changed established channels of distribution. And the wave of disruption in the 2000s - mobile phones, application ecosystems, and social media - has now connected people together at scale.
Alongside this, foundation technology has become more modular and scalable. Cloud-native applications are allowing companies to manage their systems at much lower cost with faster time to adoption. Kubernetes and services orchestration are enabling scalability in a way that provides companies with access to both capacity and consumption-based pricing. No-code startups are beginning to build applications on top of other company’s technologies, delivering instant technology maturity to new market solutions.
This combination of ecosystem disruption and technology advancement means that when a company has the right combination of market fit and market tailwinds, it can grow pretty fast. Thirty years ago, large companies used to be able to rely on brand loyalty and distribution channels as a way to buy time in responding to market changes. That time to respond has shortened considerably.
For large companies, this means three things:
- Competition can come quickly from unexpected places.
- Time to respond to competition is shorter than ever before.
- Companies that are really good at innovation will have a market edge.
At Hypershift, we believe that in order for large organizations to navigate today’s fast-paced environment, large companies need to run innovation AT SCALE. This means that instead of trying to “pick” a few ideas and pour significant investment into them, innovation departments should instead adopt innovation pipelines that repeatedly test hundreds of business model innovations, and then invest in those that are validated with customers as having good market timing, market need, and scalability. This is a unique approach to innovation that large companies, with their global employee bases and substantial partner ecosystems, can adopt that cannot be matched by smaller startups.
In the same way that ERP systems transformed HR and finance, and CRM systems reshaped sales, Hypershift’s approach to running innovation pipelines can make innovation a partner to strategy, that helps companies keep tabs on changing customer trends and be nimble about market participation. We call this Innovation Performance Management (IPM).
If you’re interested in talking about IPM and what we do, please visit us (www.hypershift.systems) or email us at firstname.lastname@example.org. Sign up for blog here: https://www.hypershift.systems/blog1