The 10X Growth Machine OS
No established company can disrupt itself within its existing structure. The way a company is organized to make money and execute existing business is to maintain and optimize the status quo. Many change programs fail due to these deep ingrained ways of thinking and working. Innovative ideas are being stopped before they come to fruition due to bureaucracy and politics.
At the same different studies from Bain, McKinsey, KPMG shows that CEO’s admit that they face declining revenues or small growth in existing business and also believe that innovation should go beyond the core business, including different business models to achieve long term growth.
10X Growth Machine a separate entity
There is a clear difference between executing the existing business and validating and scaling new business. To build new business on top strategic priorities a separate entity is needed with full support of the senior leadership of the company, this is the 10X Growth Machine.
The 10X Growth Machine is focussing on two types of innovation;
- Renewing the core business. Time horizon is mid-term (2-4 years)
- Future growth business. Time horizon is long term (>4 years)
Renewing the core business is challenging because we want to leverage the entrepreneurial way of working in the 10X Growth Machine (rapid prototyping and building iteratively new business) with the scale the corporate has. Though at the same time we need to manage the integration pathway with leaders from the core business, allocate resources to scale and prepare the integration in the existing business, doing all this without becoming bureaucratic and slowing down.
Venture boards and the 10X mindset
To make decisions and cut through corporate sclerosis executives should re-focus again on building business for top strategic priorities. Moving from talking about operational excellence benchmarks to having a bold mission, bringing back obsession for the customer, an ‘ownership’ mindset and amplifying the corporate startup teams that need to build the new business around the next customer problem.
To make this happen Venture boards should work on;
- Resource allocation - making sure the right capital and resources are allocated to build the new business from idea to scale (lean innovation process) through principles of metered funding (allocating additional funds if milestones are achieved). See also the checklist ‘Corporate Startup Maturity - metered funding’ (link toevoegen).
- Managing tensions - intervening swiftly when tensions arise between the core business and the new venture by communicating clearly the strategic focus of the separate entity, why it exists, how it works and what it should achieve.
- Coaching the teams and amplifying the entrepreneurial spirit by letting corporate startup teams take risks, fail fast and run the business as it is their own (this has consequences for the incentive scheme for intrapreneurs)
The real challenge for the venture board team is: “Are we as leaders, really acting as founders and owners, or are we in a “wait- and- see” mode, or worse adopting a protective stance and defending the status quo?”
To make sure the senior leadership in the venture board is acting themselves as entrepreneurial investors, the team needs to have an external challenger that guides them in this journey and has permission to coach the executives on an individual basis. Senior leadership will learn that behavioral change has to be hammered home repeatedly. Steer intentionally away from monthly powerpoint updates towards winning (how is the prototype delivering results for our customers) and scaling (whether a repeatable model is evolving).
Leadership needs to commit to ending venture meetings with clear calls to action, removing specific impediments. Identify patterns over all the accelerators and determine what needs clear leadership attention.
Venture building micro-cosmos
Every corporate matrix faces the same problems, working beyond silo’s and facing a couple of tensions;
- Scale vs personalization - how far can we personalize around the customer and leverage the scale we have?
- Product innovation vs new business models - how far can we innovatie beyond the core business?
- Short term vs long term - how far are we willing to sacrifice the short term vs the long term.
Because the core business is designed to execute the existing business at scale and is measured by quarterly results, the default modus is to focus on scale, the short term and improving existing products, especially when the system is stressed it falls back into its existing modus operandi.
To deal with these challenges venture building teams should be composed out of three types of people profiles, that bring these three corporate tensions in a venture building micro cosmos. The three profiles are;
- Corporate rebels (innovators) - people who challenge the status quo, creative and think differently. See also my first book ‘Oh nee, een goed idee’ about this topic.
- Business builders (takes innovation to fit into the playbooks of the company so the executors can work with it)
- Executors - execute perfectly according to the playbook.
In a next post I will dive deeper into these three types of people and how to manage these tensions in the teams.