Disruptive Leadership

As I mentioned in my last post: A Measure of Success,  I had asked Thomas Thurston to write an article for Disruptive Leadership giving further insights into his research on disruptive innovation.  He delivered faster than I expected. Enjoy.

One of the most shocking things I keep finding in disruption research (at least it’s shocking to me) is how little a new venture’s team, financials, geography, or industry seem to matter in predicting whether it will succeed or fail.  Disruption Theory doesn’t answer every question, and it continues to be refined.  Still, it seems to operate at a level of abstraction that supersedes a lot of details that most of us consider critical.

For the sake of argument, businesses can be categorized as having three primary components:  (1) strategy, (2) team, and (3) execution.  While all three are vital, the data has consistently demonstrated how, time and time again, if you get strategy wrong (in disruptive terms), you’re doomed (even with a great team and stellar execution).  That runs somewhat counter to the chestnet “bet on the jockey, not the horse.”  It also defies my old-school sales upbringing where the conventional wisdom was to always “prefer a bad strategy with good execution, over a good strategy with bad execution.”  Even today it can be hard for me to emotionally digest how good strategies with bad execution do, in fact, tend to fare  better than bad strategies with good execution.  Yet the data doesn’t care how I feel, and that’s a good thing.  This also shouldn’t stop any of us from trying to excel in all three categories.

That being said, there is another string of research that may also interest people.  It’s separate from our disruption research, but arose because disruption alone didn’t account for every venture failure we saw at Intel.

While the dynamics of disruption can be one cause of failure, another primary cause can be the company itself.  In other words, there are tons of unspoken rules, politics, incompatible processes, cultural biases, legacy interests and other toxins that can poison any new venture, unless the right precautions are taken.  This won’t surprise anyone who has ever tried to start a new business within a larger parent company, and it certainly isn’t news to anyone reading Disruptive Leadership.

Yet I bring it up because we took a crack at solving this riddle, too.  “Can we”…we asked… “create an empirical model to predict if a company will kill one of its own ventures?”  In other words, since internal toxins can consistently kill new ventures (irrespective of the marketplace), it may be possible to quantify those toxins and to develop a predictive tool accordingly.

What we’ve done since is, in effect, found a way to capture the empirically essential political “rules of the road” within most organizations (big or small), and to assign thresholds for the level of cultural “violation” that will be politically tolerated.  Using that tool, we can now predict whether a company will kill one of its own businesses with more than 90% accuracy and tremendous statistical significance.

This is important because, as any manager can tell you, new ventures spend a tremendous amount of energy worrying about how “strategic” they are within their larger parent company.  A bad “fit” with political vagaries can mean certain death, and political dynamics change all the time.  It’s not uncommon for a new venture to be funded as highly “strategic” one year, only to have its political champion (usually a VP somewhere) move to a new role a year later – leaving the venture to fend for itself.  As a fledgling new venture, it can be near impossible to then compete for resources against larger, more entrenched businesses company-wide.

I’d be happy to discuss this research, or the work mentioned in Mark’s earlier post, with other like-minded folks.  It’s always a tremendous learning opportunity to hear about interesting work others are involved with.  Feel free to reach out through my firm.  Be sure to mention the Disruptive Leadership blog in the subject header:  info@growthsci.com.