entreSociety

Building an entrepreneurial society

Archive for the tag “Business model iinovation”

Large companies as platforms for enterpreneurship

Entrepreneurship is not something that often arises when we think of large companies.  Maybe that is because we think of the legacy products and large scale infrastructure when we think of a large company.  We see bureaucracy and a commitment to productivity over change.  That perception would not be wrong because in most instances that is what they are.  They have legacy products and services that absorb most or all of their resources and attention.  Some have entrepreneurial units intended to create new products for the future that are poor second cousins and often amount to nothing more than window dressing.

I have long been curious as to the mix of large and small companies and how they will fit together going forward.  There are many cases of large companies becoming irrelevant as upstarts disrupt their markets and push them out.  Others just fade away over time as their market erodes or their performance declines.  Only a few seem able to go on through all kinds of change and turbulence and that number is declining.  Most struggle with innovation and rethinking their business models.

What if we looked at big companies in a different way?  We might see the potential for real innovation.

Large companies have some resources that would be valuable to the entrepreneurs as they develop their business models and try to scale them.  Large companies often have global reach with distribution and people in markets around the world.  They have infrastructure that enables large scale production and distribution.  There are lab facilities and other means of building and testing products and services.  There are usually financial resources that can be used to fund and build new ventures.  Finally they have people used to running larger entities and systems and processes that early stage companies can graduate to once they prove their business model.

With that in mind we could look at large companies as platforms with pools of capital on which to start and grow new ventures.  Thinking from this perspective will give a whole new structure to the lifecycle of businesses and products.  The company would not be the products but would be the mechanism to create, scale and retire a constant stream of products and services.

Part of the company would continue to focus on operational excellence in delivery of active products by constantly finding ways to improve their access to markets around the world and to efficient production and delivery of products and services.  The strength of this part of the organization will be essential in the ultimate success of products being developed.

Under this model all products would lack permanence.  They would be in place until the next generation moves them aside and funds would not be spent trying to extend the life of a dying product through price cuts and advertising campaigns.  The role of senior management would be to manage a portfolio of products and ensure that the knowledge and resources flow between the venture development and operational sides of the business.

With the market access, core product and technology knowledge and scaling infrastructures these companies would incubators on steroids.

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