The Dancing Goliath
A necessary new horizon for big business innovation
We live in an era smitten with the ‘start-up’. Tales of talented rockstars, hacking away to bring a bright new idea to life are compelling. Sorkin’s The Social Network and HBO’s Silicon Valley point straight to the grip such stories have on our 21st Century psyche.
The reason is, of course, unsurprising. Unlike in any generation before us, today these tiny underdogs can (in just a few months and with barely any investment) have a massive impact in established industries. The notion itself is romantic. Gone are the days when industry impact meant scale, large workforces, giant offices, logistics management and costly brand-launches. Today, 3 kids armed only with a laptop and a good idea can legitimately build a billion-dollar business that rewrites an industry in the relative blink of an eye.
This era of digital entrepreneurialism is crazy. It’s an age of total empowerment to the little guys. And it’s utterly captivating.
The underdogs of disruption have changed
However, the story of the startup has matured somewhat recently. When it comes to industry disruption and innovation, the little guys are actually no longer seen as the underdogs. Instead, the successes of unicorns like Netflix, Uber, Whatsapp and AirBNB have lead to a commonly held belief that being a start-up (or at least having a start-up culture) is actually now a pre-requesite to the reimagination of an industry.
It’s not surprising. After all, these start-ups are enviably nimble industry scouts. They can survive for years on tight rations while in the uncompromising pursuit of a formula that will crack an industry. They’ve no mandate to turn a profit, no shareholders to answer to, nor any operational business to maintain. As a result they can switch pace and direction in an instant, rewriting their entire business model the day after their first MVP tanked.
When it comes to disruptive ideas — the big guys simply can’t compete. And certainly not when thousands of these hungry scouts are appearing and disappearing each year— learning more about the industry in a month than the big guys can in a year.
In his book - The Innovator’s Dilemma - Clayton Christiensen describes the challenge well :
“First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms’ most profitable customers generally don’t want, and indeed initially can’t use, products based on disruptive technologies.
By and large, a disruptive technology is initially embraced by the least profitable customers in a market.
Hence, most companies with a practiced discipline of listening to their best customers and identifying new products that promise greater profitability and growth are rarely able to build a case of investing in disruptive technologies until it’s too late.”
Markets have exploited this blind spot in big business so successfully that ‘behaving like a start-up’ is now a de-facto standard recommendation when it comes to business innovation and change. Eric Reis has established an almost evangelical following with his book, The Lean Startup. And if this one doesn’t take your fancy, when you search for ‘start-up business’ books, Amazon offers another 9,000 titles in its place.
In one of his recent novels, the great storyteller Malcolm Gladwell comments too on this increasing empowerment of the little guy. To do so he recalls the tale of David and Goliath. He explains that, contrary to popular interpretation, it was Goliath who was the underdog, not David. Of course the small, well trained, nimble David beat the lumbering, half-blind Goliath. He was far superior in every way. The hulking size of Goliath was no match for the precise expertise of David.
For the most part, both Reis and Gladwell are right, of course. Thinking small and nimble are necessary behaviours to finding and launching disruptive ideas in the fast-paced, anything-is-possible world in which we now live. But here’s my issue - this story is a characature. This ‘start-up-ification’ of industry change and innovation feels like a stereotype of our age that will date us like the free AOL CDs of the 90s.
Why? Two main reasons:
- A startup is only called a startup until they’ve made it. At some point, big business happens, and then what? To reach significant market impact they must have (to some degree at least) scaled up their business. Their staff, their infrastructure and their operational processes must all have been bolstered along the way. This additional weight brings people to manage, systems to maintain, processes to follow and an inevitable reduction in cohesion. Shedding some degrees of flexibility and adaptability is unavoidable as a start-up grows. He can’t stay a start-up forever, David trends toward Goliath. How can businesses keep innovating when they’ve matured beyond their start-up status?
- Old school scale still matters more than we think. Big business is certainly not dead. Far from it. Large, pre-digital, organisations still hold the power and play defining roles in most industries. That’s not going to change for generations at least. These companies often hold the keys to their industry and may only need to make small adjustments to their businesses in order to activate their huge assets and continue to tighten their grip on the market. Just think of the people, the brands, the physical spaces, the cash and the scaling mechanisms that can turn 100 successful products into millions over night. Most startups look at this Goliathian toolbox with green and envious eyes. If only we had such an array of weaponry in our arsenal, they say. If only we had the clout these guys have. How can large companies capitalise on their scale and realise the enviable potential of a big business that innovates?
Both questions point to the same conclusion; industry innovation and disruption can’t be born solely from new, untethered start-ups. The big guys have to learn to play too.
Making Goliath dance
Today, large 20th Century Goliaths typically respond to the threat of disruptive start-ups by simply finding a David to bolt on to their existing business. For example:
- Purchase the most threatening start-up and bring them into their own empire (e.g. Accor Hotels and OneFineStay)
- Partner with them — keeping enemies close and all (e.g. Dell and Unidesk)
- Create your own. Spin up their own internal startup cultures to disrupt the industry from within (e.g. British Gas’ Hive)
I have been a proud part of teams responsible for carrying out each of these activities within some of the UK’s largest and most successful companies. Each was (and continues to be) absolutely necessary and correct responses to the growing threat the big guys face from the little guys.
However, while this may satisfy an itch or mitigate an immediate risk, it doesn’t feel like it’s enough anymore. To truly stem the threat from insatiable young start-ups and to really embrace the new opportunities that lie ahead, these approaches feel like sticky plasters on a missing limb. Systemic and long-term disruptive innovation feels like it relies on something more.
It feels like we need a new goal. One which is neither a huge and lumbering Goliath, nor a small and naive David. Last week, amongst some colleagues, I called this third way ‘The Dancing Goliath’. They laughed (as they usually do with my irksome and tried metaphors) but it sounds about right.
It feels like a new phase of transformation for large organisations. In this phase, Goliath - as a whole - has to learn to behave inherently differently. It has to take the principles of innovative 21st century business and ingest them authentically into its whole organisation. It must avoid outsourcing change and disruption to a bolted-on David and take on the big challenge itself.
At the core of this new behaviour is a fundamental shift from values that reward efficiency and scalability, to those which reward flexibility and adaptability. From those fearful of the competition to those passionate about a unique and central purpose. This new type of business must centre around some unfamiliar capabilities — The ability to drop old skills and and learn new ones quickly. The vast accelleration and flattening of decision making. The ruthless focus on the mining of its unique assets. The humble respect of the fickle needs of its customers.
If successful, this new dancing Goliath can :
- Keep its culture fresh and engaged — Making the best use of the huge talent it wield and keeping talent density high
- Blend startup techniques into its operational processes such that it can still respond adapt to changing market conditions
- Design and implement a technical infrastructure made of lego-bricks rather than obelixes
- Integrate new and old experiences, digital and analogue. To offer truly unique and meaningful services that no startup could replicate
- Keep a vision strong enough to inspire the entire organsiation but flexible enough to empower colleagues to make their own decisions on how to deliver it each day
Critically, the dancing Goliath has reached an important realisation: this isn’t the stuff of science fiction. They’ve embraced a new cadence and fidelity of change. They’ve noticed that the powerful 21st century tools and methods that start-ups use to create disruptive businesses out of nothing, can also be used ignite a transformation in their own business.
Today, the identification, design and implementation of this more comprehensive approach to big business innovation seems to lose out against the much more popular start-up culture. However, it represents an important new horizon for large organisations and should be top of the thinking list for anyone in the business of innovation and market disruption. It’s a crucial and unavoidable component to healthy, innovating markets.
Ideas are easy. Transformation is hard.
But yes, let’s not forget, doing this is hard. Oh my goodness it’s hard. And it’s also far less ‘sexy’ than launching a new idea too. Big corporate change is marred with rusty infrastructure, well-set cultures, beurocratic processes and endless “you can’t do that”s and “it’ll never work”s. Running a mile of change for Goliath is worth a hundred for David. Transformation of large, traditional organisations is pretty much the hardest thing you can do in business.
But it can also the most impactful. Get the big guys and girls to think and operate differently and you’ve affected the lives of millions in truly meaningful ways. You can really have a postive impact on the daily lives of people. You can make a dent in a country. And what is more rewarding than that!?
At Fjord we are keenly pushing this agenda forward through the very well equipped practice of Service Design. We are helping our partners to waltz and rhumba the best we can — and we’re loving it. We truly believe that the future is a partnership between big and small. A left hand and right, both swinging in sync to innovate change and grow. Reaching and staying at the top relies upon it.
So while we must continue to respect and emulate the impressive innovations from a thousand hungry Davids, let’s also recognise the big guys. Let’s consider how true, sustainable innovation needs something more. Something a whole lot tougher.
Let’s consider how to help Goliath dance :)