Failing Successfully

An extract from Steve Case's book 'The Third Wave: An Entrepreneur's Vision of the Future'

Published 6 years ago on Nov 18, 2016 3 minutes Read

In some industries, the most successful Third Wave companies may also end up being the most established. They’ll be the companies that took the Third Wave seriously enough to get ahead of it. But what does that entail, exactly?    

Managing the Coming Wave:

It starts with developing a point of view-a hypothesis that the world is changing. Just the simple act of a CEO embracing and articulating such a world view is critical. It’s a way of delegating a mix of paranoia and curiosity, making people a little nervous and getting them out of their comfort zones. It’s also a way of expressing optimism, rather than dread, about the future-which naturally gets employees to pay more regular, focused attention to what is happening around the edges of your industry, with an eye toward what may happen next. It’s about lifting up the people in your company who are seeing around corners, and giving them the support-both emotional and financial-to innovate.

Incumbents often fail because they underestimate the speed at which the future is approaching. People at startups think about the future every day. Venture-scale investors are seeking companies with the potential to reach at least $100 million in revenue and go public. In the startup world, staggering sums of money are chasing some of the world’s biggest ideas. It’s only a matter of time before the right entrepreneur with the right idea connects with the right venture firm. The corporate mind-set is often to avoid mistakes, but in a world that changes rapidly, doing nothing can be the biggest mistake. Sometimes waiting for all of the facts can be riskier than taking a leap of faith.

Incumbents also fail because of the size of their organizations themselves. Frequently, large companies have a decision-making process where many people have the power to stop an idea, but very few have the authority to green-light one. This creates an environment where there is a strong bias toward “no”.

Objects in the mirror are closer-far closer-than they appear. One of the biggest mistakes companies make is overlooking the impact of nascent technology. Too often corporate executives are too shortsighted to understand how technology that is disrupting a different industry might be adapted to do the same to their own. Uber might be disrupting taxi services today for example, but as they move into the delivery business, will Uber disrupt FedEx or UPS tomorrow?

Second, corporate recruiters need to be working overtime hiring and retaining and celebrating and protecting the innovators within their walls. There is a mythology in the tech world that the best talent gravitates toward startups. But many of the smartest, most creative people in the world can be found working at some of its biggest, oldest companies. Siemens employs 90,000 research scientists. Monsanto employs some of the sharpest agriculture technology minds on the planet. GE’s research labs are filled with brilliant PhDs. The raw talent in there; the question is how it is organized and whether it can be mobilized to innovate. It’s not enough to employ these kinds of thinkers. They need to have a voice, along with the resources and protections that will enable them to commercialize their ideas. They need a level playing field to stay in front of their startup competitors.

The challenge for fortune 500 CEOs is to leverage scale advantages, while injecting a tempo of speed and a culture of risk. At Facebook, engineers are encouraged to “move fast and break things,” not because Mark Zuckerberg is reckless, but because he understands that innovators need the space in which to take risks. At most large companies, innovators are often discouraged from even sharing their ideas. That’s self-destructive — and self-reinforcing — behavior.