Chunka Mui wants you to know that the conventional narrative about start-ups versus large companies — the small and nimble Davids against the slow and clumsy Goliaths — doesn’t actually have much basis in reality.
Sure, newcomers will always come along to threaten older rivals, and dazzling stories of startup success can certainly seem common. But, as Mui pointed out at our recent Spring Conference, the truth is that startups have a much higher failure rate than established firms. “Large companies have resources — customer relationships, technology platforms, and data — that are really, really valuable in this age of large technological disruption.”
“Break it down into smaller pieces: ‘What are the areas of uncertainty? How do I test critical assumptions?’ Take a scientific approach to innovation.”
The challenge, then, is for firms to use these assets to keep up the innovation that made them successful in the first place, and to avoid a descent into obsolescence. This is where Mui’s mantra, “Think big, start small, learn fast” comes in. He advocates a systematic approach that deconstructs innovation challenges and allows time for learning from failure.
This approach includes throwing out the rulebook that typically applies to big investments. Firms intent on innovation will need to defer their desires for immediate ROI and instead focus on cultivating the right behaviors — a point which Mui makes with Shakespearean fervor that should leave any nearby CFOs nervously tugging their collars.
Chunka Mui is Managing Director of the Devil’s Advocate Group and co-author of The New Killer Apps: How Large Companies can Out-Innovate Start-Ups.