The legacy of most leaders is legacy. Legacy thinking. Legacy process. Legacy systems. Their organizations competing for the future while mired in the complexity of the past.
According to Innosight, 50% of S&P is expected to be replaced in the next 10 years. S&P 500 longevity is forecast to more than halve from 33 years in the 1960's to 14 years in the 2020's.
Companies are dying as kids.
Every institution was once a startup. Driven by a high energy entrepreneur with ambitions of conquering a market. Resolving a simple problem with a simple solution that resonates and scales. The startup exploits the market asymmetry and accelerates. It’s size and agility giving the startup an advantage over the inertia of incumbents and their resistance to changing direction. If the startup can sustain the asymmetry for long enough, the startup scales. Transitioning from niche to mainstream, it becomes a market force in its own right.
As growth begins to taper, the elegance of the simple solution demands complexity to defend. From both commoditization and new market innovations. The startup transitions from offense to defense. Professional management is embedded creating the controls and compliance demanded of high-profile companies. The freedoms of the past evolve to constraints on the future as companies like Facebook and Uber know too well.
Innovation is a constant. The challenge is embracing the dynamics of change by overcoming the byproduct of the past: Friction.
Laws of Innovation
CHANGE IS ALWAYS OPPOSED
Change will always be resisted. There is an inherent tension in any corporation between the old and the new. Today's cost is a certainty. Tomorrow's revenue is a risk. And quarterly results remain a priority.
CHANGE REQUIRES ENERGY
The natural state for any corporation is the status quo. Many CEO's are simply the stewards of someone else's energy, managing momentum. It takes a high energy CEO with a growth mindset to lead the business in a new direction.
SCALE DETERMINES INVESTMENT
The fundamental objective of innovation is to drive growth (acceleration in physics terms). Boards and Executive teams have two primary options. Apply significant force (capital and people) to a large mass or reduce mass through spin outs until they are large enough to affect the large mass of whole company.