Wednesday, December 14, 2011

Can Goliath become David?

Can a large established company start over? As the economy evolves, more and more companies are finding themselves in situations where the model they have been using to become so profitable is literally dropping out from under their feet. For example, Blockbuster once Netflix came along.

It's impossible to see where and when these market trends will change but more companies are trying to gauge for it. But can they really start over or is their too much baggage?

Some larger companies are setting up remote groups that work in different locations and are autonomous from the rest of the organization. The hope is that these groups are free from the traditional company bureaucracy to create something truly creative and new.

The idea is valid, the execution is flawed. When GM decided to take everything they knew and start over, they came up with Saturn. Some people think that it was successful because of customer loyalty and things like that, but overall it is not held up as a huge success.  That's because they weren't a true start-up. They all received paychecks, they all knew they had the backing of the mothership. They were missing some key elements in order to truly be creative. When you take away the panic, and people aren't facing success or failure, you have just eliminated the creativity you need to evolve.

Like it or not, that kill or be kill mentality is necessary for true innovation. There is chaos in start-ups and that is where the innovation lies.  Large companies spend millions of dollars a year to "streamline" or "create efficiencies" around chaos, which makes real innovation impossible.