Blog Archives

Why is there less innovation than there is creativity?

Tuesday, May 22nd, 2012

According to Theodore Levitt of Harvard Business School, “Creativity is thinking up new things.  Innovation is doing new things”.

Tot up the number of university researchers and potting shed inventors, throw in the army of patent lawyers, TTO staff and others helping them , and it’s clear there is a great deal of Thinking Up New Things going on. 

But is there enough effective innovation going on to match this?   Not by a country mile, I suggest.   In established businesses it happens at the margins if at all.  In startups it’s central but the failure rates are eye-watering. 

Formal understanding of how to innovate is only now emerging.  (We’ve known how to do creativity for decades).  Few organisations have it as their primary activity.  Absent such things, it’s hard to learn to be an innovator.   That means few truly able practitioners, which means few successful innovations.

So when might innovation catch up with creativity?  My belief: when innovating is similarly established as a career, and when its infrastructure looks as mature as the creativity infrastructure.   And when no-one needs a Harvard professor to point out the difference.

Startup management – exactly how is it different?

Tuesday, May 22nd, 2012

Almost all of us who work in technology innovation would agree;  This is very different to blue chip work.  But what exactly makes it so?  Is it the ability to get a lot done on a little money?  Is it flexibility?  Is it even the evident passion so many of us bring to this kind of work?

My colleague David Falzani put his finger on it recently.  “It’s this”, he said.”  In companies you use destination based thinking.  In startups you use iterative thinking.”  Destination based thinking you envision the goal, work back from it, and allocate resources to get from A to B.  In startups you mostly can’t do this.  You normally cannot see B from A.  So instead of calculating back, you iterate forwards.  You craft and test your product and market hypotheses.  You feed the data back in, you run the experiment again.  It’s a mix of intuition, creativity and rigorous analysis, a continuum of discovery, both intellectually and market-based.  It should be cheap, fast and empirical.  More importantly, it’s the way to avoid investment train wrecks.  That’s what makes startup management different.

Don’t Get Clever…

Tuesday, May 22nd, 2012

Don’t Get Clever…

It’s axiomatic that the simplest ideas are often the best.  This can be true in technology, where complexity adds cost and often unreliability.  But it’s equally true of that other fiddly dimension of startups, the legal framework.

Time and again we come across new ventures with such complex arrangements in place that they are effectively uninvestable.  No-one is going to take the time to unpick it.  And we shudder at what must have been spent creating it.

Why do startups let this happen?  My guess is that two temptations get them;  most new venture leaders will have seen these before, and some of us will admit to having fallen for them!

Temptation #1, the eternal human desire to fiddle.  To be too clever for our own good.  In startups, there just isn’t time for this.  Near enough is good enough.

Temptation #2 is more subtle.  This is the temptation to allocate resources to risks we can get a handle on, at the expense of larger risks we cannot define.

I’ve seen seed rounds where almost 20% of the funds invested went in legal fees.  Every what-if problem the negotiation flagged up was chased down and written in by the helpful lawyers.  Everything was covered.  Very diligent.  Problem was, these weren’t the real risks the business faced.  An order of magnitude larger was the risk that they wouldn’t make the needed sales before the money ran out.  And they now had 20% less time to achieve it.

The conclusion?  New businesses face many risks, and the biggest of these are almost always market risks.  Keep in view the relative importance of each category of risk.  Don’t let your money get spent on smaller risks just because they’re the quantifiable ones.  Keep your legal structure and agreements short, standard, and simple.  Use the savings to talk to customers.