Corporation vs. startup
A corporation is a permanent organization designed to execute a repeatable and scalable business model that they have built over time. In a corporation ‘fear of failure’ inhibits speed and risk taking.
A startup is a temporary organization designed to search for a repeatable and scalable business model . Startups have limited resources to identify the best product/market fit (before they run out of cash). By nature, startups trade off certainty for speed, adopting ‘good enough decision making’ and iterating and pivoting as they fail, learn, and discover their business model.
Whereas failure in a corporation is linked to the execution of a known product in known market – failure in startups is linked to errors in he search of a business model – innovation in startups – by the very nature – require different structure, tools, culture, processes and metrics – and often failure is the norm, not the exception.
Horizons of Growth
To move innovation faster we can benefit from distinguishing between the the horizons of growth:
Horizon 1: Extend and defend core business activities / support existing business models (mature businesses). Horizon 1 operates on goals and incentives. Theses managers need to be incented to embrace and support innovation going on in Horizons 2 and 3.
Horizon 2: Build emerging business is focused on extending existing businesses with partially known business models (are rapidly growing businesses).
Horizon 3: Create viable options is focused on unknown business models (emerging businesses).
Clearly, the core of horizon 1 innovation is process innovation. On the contrary, the core of horizon 2 and 3 is business model innovation. Horizon 2 and 3 innovation can benefit from startup methodologies – the business model canvas, customer development, and agile engineering…