Tilting at Windmills - DCU plenary talk on clouds, innovation, and small batches

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Tilting at Windmills Innovation in large organizations. Photo by Echiner on Flickr. Used under a creative commons license. https:// www.flickr.com/photos/decadence/249922560

description

Presentation on the innovation challenge, why large companies can't change quickly, and how the small-batch economy that digital technology is creating means cycle time is more strategically important than scale.

Transcript of Tilting at Windmills - DCU plenary talk on clouds, innovation, and small batches

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Tilting at Windmills

Innovation in large organizations.

Photo by Echiner on Flickr. Used under a creative commons license. https://www.flickr.com/photos/decadence/249922560

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Back in 2008.

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Today.

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That escalated quickly.

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When you’re a startupyour goal is to find a sustainable,

repeatable business model.

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When you’re a big company, your goal is to perpetuate one.

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Instead of:Companies are what they repeatedly do.

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How about:Organizations that do things repeatedly

are companies.

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Once, this was all about scale.

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How to perpetuate something.

Photo by Kamal Hamid. Used under a creative commons license. https://www.flickr.com/photos/evergreenkamal/395448039

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Daniel Craig McCallum.

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How’s that working out for you?

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F500 lifespan history

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Fortune 500Life Expectancy(http://csinvesting.org/2012/01/06/fortune-500-extinction/)

1950 2010...

75years

15years

Growth by entering a new business

Corporate Strategy Board

95% fail

99% fail

Clay Christensen

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The innovation problem isn’t new.

Picture by James Whatley on Flickr. Used under a Creative Commons license.https://www.flickr.com/photos/whatleydude/6202872135

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Companies die because they fail to move to new business models.

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Clay Christensen, The Innovator’s Dilemma

Cost

per

MB

$1000

$100

$10

$1

Time

14”

Mainframe

8”

Minicomputer

5.25”

Desktop

3.5”

Notebook

The Innovator’s Dilemma

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$1000

$100

$10

$1

Time

8” 5.25”

Technologies outstrip what the market needs, driven by feedback from the “best” current customer.

High end

customer Low end

customer

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$1000

$100

$10

$1

Time

8” 5.25”

The new market has different criteria for success, which are uninteresting to incumbents.

Storagecapacity

Portability

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Amazon Web Services and the server value network

Server computing

• Density• Heat

• GHz• MIPS

Capex, financing, TCO, ROICIO, enterprise IT

Valuecriteria

Money

Buyer

Cloud computing

• Instances• Objects

• Spinup time• Scaleout

Opex, demand, time to resultCTO, coder, app owner, line of business, startup

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YOU ARE HERE

This is a problem of local maxima.

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YOU ARE HERE

LOCALMAXIMUM

OPTIMIZATIONOF CURRENT

METRICS

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YOU ARE HERE

GLOBALMAXIMUMINNOVATION

WITH NEWRULES

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YOU ARE HERE

SHORT-TERMINVESTORSHATE GOINGDOWNHILL

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By trying to innovate in a big organization, you are going against

its mandate to perpetuate an existing business model.

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You are a pariah.

Bad listener: Wilfully ignore feedback from your best customers.

Cannibal: If successful, destroying existing revenue streams.

Job killer: Automation & lower margins are your favorite tools.

Security risk: Advocate of transparency, open data, communities.

Narcissist: Worry constantly about how you’ll get attention.

Slum lord: Sell to those with less money, deviants, and weirdos.

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But there’s hope.Photo by Tom Grydeland on Flickr. Used under a creative commons license. https://www.flickr.com/photos/thunderchild5/225675725

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Small batches change everything.

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3D printing.

Photo by Keith Kissel on Flickr. Used under a creative commons license. https://www.flickr.com/photos/kakissel/6165114664

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Social platforms.

Photo by Michael-Davis Burchat on Flickr. Used under a creative commons license. https://www.flickr.com/photos/curious_e/10473440064

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Crowdfunding.

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Digitalchannels.

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What happenswhen the prototype costswhat the product does?

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Iteration wins.

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In a small-batch, digital-channel world, cycle time trumps scale.

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Ultimately, successful businesses must become organisms designed

to learn.

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Three kinds of innovation

Sustain/core(optimizing for more of the

same)

Innovate/adjacent(introduce nearby product,

market, or method)

Disrupt/transform(Fundamentally reframing

the business model & value)

Improve alongcurrent metrics...

...or alterthe rate of improvement

Switch to a newvalue model

Change the businessmodel entirely

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Currentstate

Business optimization

Product,market,method

innovation

Business model innovation

You can convince execs of this because it’s somewhat familiar.

This terrifies them because it eats their

young.

A three-maxima approach

See also: Three horizons model, Geoffrey Moore, etc.

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Good Intrapreneurs embrace the harsh light of data.

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Times a song in “heavy rotation” is played daily

0

15

30

2007 2012

EVERY 4h EVERY 55m

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Good Intrapreneurs take baby steps.

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Netflix

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Good Intrapreneurs reframe.

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http://www.flickr.com/photos/maladjusted/5207565912

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Blockbuster had a lot going for it.

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Plenty of inventory, of course. But that matters less than...

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...market intelligence, customers,

existing payment approval, and

customer history.

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The problem was framing:

Blockbuster thought it was in the video store management business.

Netflix realized it was in the entertainment delivery business.

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Good Intrapreneurs are subversive.

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Ultimately, good Intrapreneurs know cycle time trumps scale.

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www.tiltthewindmill.comAlistair [email protected]@acroll

Windmill by Eric Bennett on Flickr. Used under a Creative Commons license.

Thanks!