The Fortune 500’s success at “optimizing at will” has come at a cost. To survive in today’s fast-paced global economy, it’s time to focus the ability to “grow at will.” You need to install a Growth Operating System.
Ask a Fortune 500 CEO, “How many $50 million companies did you launch last year?” The answer should be: “many.” A great company should be teeming with growth. But more likely than not, the answer you’ll get is: “zero.”
Why is new growth not common at large enterprises packed with talent, capital, expertise and scalable leverage? There is a simple way to understand the challenge in terms of battling processes: New to Big vs. Big to Bigger.
Big to Bigger has had a stunning run of success. After 30-plus years of efficiency and optimization efforts, large enterprises have created the capability to optimize at will. Tools from TQM to Lean Manufacturing to Six Sigma allow an “always on” capability to impact optimized, bottom line value.
But while Big to Bigger has won big, it has been at a substantial cost. Benchmarking and executive compensation based on efficiency and share have led to the near eradication of the capability to grow. While Big to Bigger thrived, the concept of New to Big lost the organizing framework that would allow leadership to unleash the capability to grow at will.
Into this growth vacuum stepped a new set of competitors. The capability to grow has effectively been yielded to “the valleys” — venture capitalists and entrepreneurs set out to defeat the Big to Bigger machines. It was a clash of contrasting mindsets, mechanics and decision architecture: predictability vs. opportunity in uncertainty, incrementalism vs. disruption, inside out vs. outside in mindset — the addiction to being right as stunted new growth discovery. Now under accelerated attack, big companies double-down to their old ways. It’s easier to see and measure what exists today — what is knowable — what we can make, what customers say, than discovering what customers will need tomorrow — what we can become, what customer do. Behaviors don’t lie.
Fortune 500 companies are bigger and more efficient than ever. But in securing their stature, they have traded their ability to grow. Well-intended “innovation” efforts can’t compete with talent trained and incentivized to tame risk. The loss of the New to Big mindset and mechanics to grow at will looms as a serious threat.
Organic growth has been brought to a standstill. But there is a solution: the Growth Operating System (OS) pioneered at GE as Fastworks.
The Growth OS, which restores a permanent growth capability by installing the mindset and mechanics of the world of venture capital and startups, is reigniting a contrarian view that large enterprises to go on the offense and win. The outcome is a new and permanent competitive growth capability that both advances and defends the core. It unlocks a new learning velocity that creates confidence and speed in identifying, validating and growing ideas into scaling enterprise startups across the core stages of venture capital: seed, launch, scale. It’s installing the conditions, experiences the skills of venture capital and entrepreneurship as a new form of management.
Giants like GE, Citibank, Tyco, Exelon, and others are already installing, piloting and now scaling the Growth OS with hundreds of enterprise startup teams. Many will join this pioneering restoration of entrepreneurship at the enterprise. But New to Big growth will not happen on its own. Companies must become better, stronger, faster — they must become Bionic. CEOs must create, foster, launch and protect New to Big growth capability if it is to survive.
That starts with the New to Big leadership job description:
- Operator and VC: The Ambidextrous Leader
Beyond leading the original Big to Bigger mission, it’s about creating, disrupting and restoring a permanent growth capability and nurturing a New to Big mindset.
- New Talent Contract: Find, Build and Focus on Developing Creators
Obsessed and advantaged leaders can be found, skilled up and incentivized for growth.
- Break the Addiction to Being Right: Question Driven Leadership
Shift from answer-driven leadership to question-driven leadership.
- Destroy Success Theater: Demand and Drive New ‘Commercial Truth’
Create permission to engage with radical differentiation in a way that gets to the truth.
- Be Outside-In: Growth Anchored in Massive Customer Problems
The answers are outside the building. Inside-out growth ideas largely fail as they are shoehorned to fit the enterprise’s view of the world, then prematurely scaled on thin evidence.
- Expire Past Assumptions and Drive Net New Learning
Validate customer problems based on observable action — not what customers say, but what they do.
- Embrace “Lean” Validation: Celebrate Productive Failure
The venture capital concept of productive failure — honest, cheap and fast failure — rules.
- Shift From TAM to TAP
At most enterprises, the focus is on total addressable market (TAM) — looking at current customers and markets, developing new products and services from the “inside-out” and launching ideas without pre-validated customer support. The focus should be on total addressable problem (TAP).
- Install the Growth OS: Drive Mindset, Mechanics, Experience, Change Culture
The shift in CEO behavior is critical to the restoration of organic growth. If New to Big is not fully embraced, protected and driven from the C-suite, it’s doomed.
- Go on the Attack: Compete with Startups
The only way to compete with startups and disruption is to become one. Embrace a “software will eat the world” ideology.
The rewards for big companies from New to Big are visible in the marketplace every day. Growth that is net new is always valued at a much higher compounding rate than existing share growth. This is why startups have the valuations they do today.
How would this permanent growth capability impact the mindset, decisions, speed and competitiveness of the core? The answer should be profound: Grow at will.
(Top GIF: Video courtesy of GE)
David Kidder is author of The Startup Playbook (Chronicle) and co-founder of Bionic, the pioneers behind The Growth Operating System (OS), which creates permanent capability within large enterprises to install, discover, validate and manage growth. Bionic works with teams — from the CEO down — across the world’s leading companies to Ignite Growth Revolutions. David can be reached at dkidder@bionicsolution.com and @davidskidder.
All views expressed are those of the author.