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Ishan
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I think the BSSE theory would posit that when MCIs start they would need to be interdependent solutions, since they likely won’t achieve a customer’s definition of good-enough. As an extension of that theory, some MCIs may need to be cross-sector. Self-driving automotives built by technology companies could be an example of one.
I’m still thinking about how this fits into the overall story, but perhaps this is a useful anecdote:
For a CFO class last semester we had the CFO of Google X, Helen Riley, as a guest. She works alongside Astro Teller, the lead of the division. One consistent theme and challenge that came up, was how does one budget for a division like Google X, which works on things as diverse as Google glass, global internet access, and self-driving cars?
The first layer of her response was that both Larry Page and Sergey Brin were super passionate about the work. They devoted substantial money and time to Google X. Both leaders have visions about the jobs to be done 20 or 30 years from now, and they build products around these jobs.
The second layer was that Helen and Astro would often talk in a very transparent way. Their focus was on frugality, and in particular, seeking the minimum cost required to conduct the next incremental experiment. If that minimum cost was too great, they would try to split the experiment to again minimize cost. If they weren’t able to split the cost, they would cease to proceed with the experiment. One example of this was with weather balloons used to deliver internet access. At some point the costs of the experiment exceeded an internal cost threshold, and they decided to cease work until they found another way to experiment. This is perhaps a slightly different take on the notion of being impatient for profitability.
Lastly, they equipped their team with eclectic and diverse talents. This was clearly to promote contrarian and innovative thinking. However, perhaps it’s a bit lacking when compared to true heavyweight teams. My sense was that the teams lacked experience with running profitable P&Ls, and were better at inventions.
And if I may add an addendum to this thought, I think the power of self-selecting into an archetype can be a motivating exercise, largely because it involves both recognition of a problem and self-reflection. In addition, different archetypes may have different solutions. The challenge with this is achieving a set of archetypes that are mutually exclusive and collectively exhaustive.
Thanks for the response Farsh. That actually spurred another thought, I wonder if companies fit into certain archetypes in terms of why they do not invest in long-term growth. You mentioned companies that are beholden to their shareholders.
Perhaps another archetype would be companies that are beholden to their engineers:
I recently talked with a manager at an aerospace company that described a process of innovation focused on new engineering solutions. As an internal R&D process, that is not an issue. However, they applied the same logic when acquiring new start-ups, their acquisitions were largely based on resources. Almost never did they consider new business model innovations (processes, priorities, and profit formulas). This is happening in a world with vastly publicized disruption, with companies like SpaceX and Blue Origin. This type of issue is embedded deep within a company’s processes, and as a result, their culture. The culture is sustained by management who are promoted from engineering departments. I imagine that enacting change would require strong leadership tools and power tools, which perhaps is only possible through hiring new management.This comment perhaps is better suited in 7. Is it Hard for Companies to invest in Market Creating Innovations?
I wonder if managers often don’t feel as if they have the agency to take sufficient risks with investors’ capital. Incentives are tied to one / two year paybacks, while the risk of disruption is a multi year (albeit massive) cost – comparing the two is neither intuitive or an easy excercise.