- Steve Blank is a contributing author on Forbes.com.
The corporate graveyard fills up quickly these days. Blackberry,Newsweek, Kodak, Blockbuster, Dell…once storied brands now routinely sell for a fraction of their heyday value. Steve Blank, four-time entrepreneur and author of The Four Steps To The Epiphany, argues that companies should get used to the churn.
“Companies in the 21st century are facing continuous disruption,” he says. “The 20th century rules don’t apply anymore.”
Known for developing the practice of customer development, the act of actually figuring out what customers want before developing a product, Blank’s ideas now guide startup founders around the world. (The practice was popularized by Eric Ries’ The Lean Startup.) Since publishing Four Steps in 2003 he’s gone on to help teams funded by the National Science Foundation commercialize their research. Next in his sights: corporations.
In an interview filmed last month, Blank told FORBES that large companies might place nominal value in the idea of “innovation”—reflected by new positions like Chief Innovation Officer and VP of Innovation—but most have no idea how to consistently execute on new ideas. “Rather than understanding that this is a systemic problem common among all corporations, every company is trying to solve it tactically themselves,” Blank says.
But tacking another division onto an already broken structure won’t change things, he argues. “The internet has changed the world completely. The cycle times of large corporations for innovation means our existing structures—P&L business units, advanced R&D in a corner over here, M&A over here, VC group over here—that stuff doesn’t work anymore.”
Instead, Blank favors a more radical rethinking of corporate structure: “The solution is actually blowing up the architecture completely and figuring out how to make continuous innovation an integral part of the organization.”
The threat doesn’t just apply to technology companies, he argues. Exxon, for example, was taken off-guard by the natural gas boom, paying dearly with its rocky $41 billion acquisition of natural gas giant XTO. Incumbent car companies face pressure from upstarts like Tesla while retail giants like Sears, Barnes & Noble and JCPenney have seen their top lines deteriorate as e-commerce grows.
Yet some companies–Amazon, Apple and Google come to mind–seem to innovate effortlessly. “What we really need to do,” Blank says, “is take those best practices and make them a common corporate type.” This is exactly what he intends to do over the next year. Joining him in the effort will be Henry Chesborough of Berkeley’s Haas School of Business and Alexander Osterwalder, developer of the business model canvas.
Blank envisions a future where companies publicly choose one of two paths. One group will opt for maximizing short-term profits and dividends in lieu of long-term sustainability. Others, like Amazon, will maintain slimmer margins to innovate and survive over decades. Wall Street, in turn, will have to judge companies differently according to their declared major.
Will corporate America actually listen to Blank’s theories? “I think it’s going to be like the Lean Startup movement,” he told me in an interview last May. “I was writing for a decade and all of a sudden it’s here.”
No comments:
Post a Comment