A new model bridges the chasm between digital units and the core business
The Entrepreneurial Operating Model is a vital link for two distinct sides of an organisation to work separately but with the same mission
We spoke in a previous article about our patented Entrepreneurial Co-Creation model, which is explained in step-by-step detail in Fightback the book. This model is the backbone of how large companies can fast-track their path to growth.
However, the backbone needs connective tissue. And, that is the Entrepreneurial Operating Model; a framework for creating an ambidextrous organization, which can’t happen organically.
On the left of the diagram is the core organization, designed for efficiency and consistency. It is not configured to respond to changes in the external environment, thus it is vulnerable to disruption.
On the right is the Fast-track the future unit (FTF), optimized for new growth and incentivized to protect the future competitiveness of the business.
In a typical organization, these two units often clash. Boards set aside a rolling annual budget to the digital unit, and often give it fancy names like Innovation Hub or The Accelerator. The rest of the business often wonder what this mysterious digital unit actually does. Because there are often few tangible results.
Why?
Because the units don’t talk. This is why we created the Entrepreneurial Growth Board; a vital link between the two very different parts of the business. The growth board takes the strategic decisions and acts as a steering committee, governing how and when the FTF can leverage the assets of the core and fundamentally: it has full authority to make the crucial buy/build/partner decisions.
This means that things happen fast.
While the FTF unit focuses on building new ventures or partnerships, the growth board will assess and approve the right route for each new project. Driving the growth board is the CEO. With him a tech venture founder, a senior executive, a representative from strategy or finance, and a representative from corporate innovation, all from the core business. As a balancing influence, the board also includes two experienced external tech entrepreneurs.
The Entrepreneurial Growth Board defends the FTF, supports it to set strategic goals and KPIs, and monitors the venture portfolio against predefined standards.
Its members carry the responsibility for the successful implementation of the ECC process and they must communicate clearly to the core business on the other side, so the mysterious nature of the unit is debunked.
Furthermore, the growth board will play an educational role, introducing ideas like digital platforms, ecosystems, and technologies, so that company-wide, senior executives can change their mindset and get behind the transition to an ambidextrous organization.
Crucially, the FTF does not report to the Optimize the Core Business unit, as it must be free to work independently with different expectations and levels of risk. If there is not a strictly enforced separation the FTF will always be open to cost-cutting within the core business.
In an ideal world, the Optimize the Core Business unit should get 90% of the resources and capital, with 10% set aside for the FTF. This will take time. But, 10% is a realistic target once organizational-wide acceptance of the strategic future of the business gains acceptance.
The overarching purpose of the FTF is to secure the competitive future of the business by building a portfolio of digital ventures that are relevant and that are future-proof. Each venture should have the potential to grow to become as valuable as the current business, but sometimes the strategic value may lie in countering a competitor or establishing a foothold in a developing market.
By implementing the Entrepreneurial Operating Model, driven by the relentless growth mindset of tried and tested entrepreneurs, the full potential of the ECC model can be realized for a new gateway to growth in established companies.
Find out more in Fightback the book!
Amazon: https://amzn.to/2RbscSh
And please reach out to me if you are leading digital change at your company and want to discuss what is possible.
