Corporation vs. startup
A corporation is a permanent organisation designed to execute a repeatable and scalable business model that it has built over time. In a corporation, ‘fear of failure’ inhibits speed and risk-taking.
A startup is a temporary organisation 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 their nature, startups trade certainty for speed, making ‘good enough’ decisions and iterating and pivoting as they fail, learn and discover their business model.
While corporate failure is associated with executing a known product in a known market – startup failure is associated with mistakes in the search for a business model – startup innovation inherently requires a different structure, tools, culture, processes and metrics – and failure is often 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: Expand and defend core business activities / support existing business models (mature businesses). Horizon 1 operates with targets and incentives. These managers need to be incentivised to embrace and support innovation in Horizons 2 and 3.
Horizon 2: Build Emerging Business focuses on expanding existing businesses with partially known business models (these are fast growing businesses).
Horizon 3: Creating viable options focuses on unknown business models (emerging businesses).
The core of Horizon 1 innovation is clearly process innovation. In contrast, the core of Horizons 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.
Sources: Steve Blank; The Ambidextrous Organization; The Alchemy of Growth: Practical Insights for Building the Enduring Enterprise.