Tilting at Windmills - DCU plenary talk on clouds, innovation, and small batches

Tilting at Windmills

Innovation in large organizations.

Photo by Echiner on Flickr. Used under a creative commons license. https://www.flickr.com/photos/decadence/249922560

Back in 2008.

Today.

That escalated quickly.

When you’re a startupyour goal is to find a sustainable,

repeatable business model.

When you’re a big company, your goal is to perpetuate one.

Instead of:Companies are what they repeatedly do.

How about:Organizations that do things repeatedly

are companies.

Once, this was all about scale.

How to perpetuate something.

Photo by Kamal Hamid. Used under a creative commons license. https://www.flickr.com/photos/evergreenkamal/395448039

Daniel Craig McCallum.

How’s that working out for you?

F500 lifespan history

Fortune 500Life Expectancy(http://csinvesting.org/2012/01/06/fortune-500-extinction/)

1950 2010...

75years

15years

Growth by entering a new business

Corporate Strategy Board

95% fail

99% fail

Clay Christensen

The innovation problem isn’t new.

Picture by James Whatley on Flickr. Used under a Creative Commons license.https://www.flickr.com/photos/whatleydude/6202872135

Companies die because they fail to move to new business models.

Clay Christensen, The Innovator’s Dilemma

Cost

per

MB

$1000

$100

$10

$1

Time

14”

Mainframe

8”

Minicomputer

5.25”

Desktop

3.5”

Notebook

The Innovator’s Dilemma

$1000

$100

$10

$1

Time

8” 5.25”

Technologies outstrip what the market needs, driven by feedback from the “best” current customer.

High end

customer Low end

customer

$1000

$100

$10

$1

Time

8” 5.25”

The new market has different criteria for success, which are uninteresting to incumbents.

Storagecapacity

Portability

Amazon Web Services and the server value network

Server computing

• Density• Heat

• GHz• MIPS

Capex, financing, TCO, ROICIO, enterprise IT

Valuecriteria

Money

Buyer

Cloud computing

• Instances• Objects

• Spinup time• Scaleout

Opex, demand, time to resultCTO, coder, app owner, line of business, startup

YOU ARE HERE

This is a problem of local maxima.

YOU ARE HERE

LOCALMAXIMUM

OPTIMIZATIONOF CURRENT

METRICS

YOU ARE HERE

GLOBALMAXIMUMINNOVATION

WITH NEWRULES

YOU ARE HERE

SHORT-TERMINVESTORSHATE GOINGDOWNHILL

By trying to innovate in a big organization, you are going against

its mandate to perpetuate an existing business model.

You are a pariah.

Bad listener: Wilfully ignore feedback from your best customers.

Cannibal: If successful, destroying existing revenue streams.

Job killer: Automation & lower margins are your favorite tools.

Security risk: Advocate of transparency, open data, communities.

Narcissist: Worry constantly about how you’ll get attention.

Slum lord: Sell to those with less money, deviants, and weirdos.

But there’s hope.Photo by Tom Grydeland on Flickr. Used under a creative commons license. https://www.flickr.com/photos/thunderchild5/225675725

Small batches change everything.

3D printing.

Photo by Keith Kissel on Flickr. Used under a creative commons license. https://www.flickr.com/photos/kakissel/6165114664

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Cloud computing and shared services.

Social platforms.

Photo by Michael-Davis Burchat on Flickr. Used under a creative commons license. https://www.flickr.com/photos/curious_e/10473440064

Crowdfunding.

Digitalchannels.

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What happenswhen the prototype costswhat the product does?

Iteration wins.

In a small-batch, digital-channel world, cycle time trumps scale.

Ultimately, successful businesses must become organisms designed

to learn.

Three kinds of innovation

Sustain/core(optimizing for more of the

same)

Innovate/adjacent(introduce nearby product,

market, or method)

Disrupt/transform(Fundamentally reframing

the business model & value)

Improve alongcurrent metrics...

...or alterthe rate of improvement

Switch to a newvalue model

Change the businessmodel entirely

Currentstate

Business optimization

Product,market,method

innovation

Business model innovation

You can convince execs of this because it’s somewhat familiar.

This terrifies them because it eats their

young.

A three-maxima approach

See also: Three horizons model, Geoffrey Moore, etc.

Good Intrapreneurs embrace the harsh light of data.

Times a song in “heavy rotation” is played daily

0

15

30

2007 2012

EVERY 4h EVERY 55m

Good Intrapreneurs take baby steps.

Netflix

Tesla

http://www.hdwallpapersinn.com/wp-content/uploads/2012/12/600-tesla.jpg

Twitter’s 140-character limit isn’t arbitrary.

It’s constrained by the size of SMS (160 characters) and username (20

characters.)

http://i.i.cbsi.com/cnwk.1d/i/tim/2011/11/18/sms_screen_twitter_activity_stream_270x405.png

Good Intrapreneurs reframe.

http://www.flickr.com/photos/maladjusted/5207565912

Blockbuster had a lot going for it.

Plenty of inventory, of course. But that matters less than...

...market intelligence, customers,

existing payment approval, and

customer history.

The problem was framing:

Blockbuster thought it was in the video store management business.

Netflix realized it was in the entertainment delivery business.

Good Intrapreneurs are subversive.

http://www.flickr.com/photos/bootbearwdc/1243690099/

Ultimately, good Intrapreneurs know cycle time trumps scale.

www.tiltthewindmill.comAlistair Crollacroll@gmail.com@acroll

Windmill by Eric Bennett on Flickr. Used under a Creative Commons license.

Thanks!