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Most companies seem to screw it up once they leave the startup stage and enter the growth stage. Incentives schemes aren't designed to 'reward' failure, but zer

Most companies seem to screw it up once they leave the startup stage and enter the growth stage. Incentives schemes aren't designed to 'reward' failure, but zero risk-taking. It seems to be that simple: If you WANT innovation, you'll get innovation. What most people (at least those willing to climb the corporate ladder) want however is a career. And within a corporate incentive structure, career and failure don't go well together. Creating value out of nothing is way harder than simply not screwing up existing value. So it's obvious what you're gonna get. Eventually, there is no such thing as 'corporate innovation'. There could be a thing called 'corporate sponsored innovation garage', or something similar. At least for new business development from the ground up. The promising way to pull that off it seems is a blend of YC startup school tutoring, venture capital, [Google] X, the innovation culture of Tesla/SpaceX and access to cutting edge technology/people - baked into the right incentive structure. IF innovation was repeatable, I'd bet on such a vehicle and allocate resources there.

michaelcampbell 6y ago
I could retire if I had a Euro or 2 every time I have heard management say that mistakes are just lessons, experiments SHOULD fail now and again, and other such platitudes. Then reward the exact opposite type of workflow.
- jorblumesea 6y ago
  "we want innovators, outside the box thinkers and people willing to take risks" proceeds to promote people who only make safe bets, suck up to management and tow the party line
  - Gruuuuulyes 6y ago
    Sounds politically, but 'To generate a room in an existing room, to use its reaction as an impetus...' um that maybe also another topic... phys... ^^
- deleted 6y ago
  [deleted]
BigJono 6y ago
The most damaging part of this risk averseness is that it's pervasive throughout the engineering side of a large company, not just the business side. I've seen a few big companies attempt to avoid the pitfalls you're describing. They set up some moonshot division consisting of "startups" and they do allow them to fail, but that's not enough. The problems are that they don't face the same financial pressures as startups, and they draw from the same talent pool as the general engineering pool of the company. This is a problem because I don't think the article's premise goes far enough, big companies don't just drive out innovators, they convert them. They create a context where adding more bloat is seen as innovation, and then suck up enormous amounts of talent into this environment. These "startups" I've seen look on paper like they have every chance to succeed. Financial institutions starting companies in the finance space for example, they have all the domain knowledge, it's right in their wheelhouse etc etc. But they don't seem to realise that they don't have the right kind of engineering talent. It's not that their devs are bad, they're just playing a completely different game. I think this is partly to blame for the whole "ageism" thing in SV as well. Somewhere along the track a big group of people realised (probably subconsciously) that there's a whole bunch of very talented senior engineers out there that are complete garbage at building something from scratch in an environment where you live and die by the quality of your software, because the majority of people work in places where their success and failure is just indistinguishable noise in quarterly profits. And for interviewers that aren't particularly good at surfacing that or don't even know what they're looking for, ageism is the easiest (and shittiest) way to filter most of that out and improve your odds All these "startup within a big company" projects seem to follow the same rules as a modern trendy enterprise project. Big fuck off kubernetes clusters on the back end, a monorepo clusterfuck for the front end with more packages than pages in the app. Everything "scales", everything is perfectly set up to handle every possible use case, there's 8 kinds of tests, and a huge CI/CD setup, and all the tooling you could ever need. And then once that's all set up, in true waterfall fashion, the dev finally starts... at the same pace all the company's other projects run at. And because all the other company's projects run at that pace, nobody notices anything is wrong. But if you do this, and you have any even remotely competent competition, you're going to get absolutely fucking poleaxed in features. Slow and steady might win the race but nobody has ever won the race after being shot in the foot with the starting pistol.
speleding 6y ago
I agree with your analysis, and that of the original article, but I don't see it as a problem to be fixed. Companies have an incentive to provide a predictable cash flow to share holders, genuine innovation is often too risky for that. But that's fine, that's why we have start-ups with a different risk profile to do that instead. Most attempts I've seen about fixing that by creating a "startup culture" inside a company have not really added more value compared to simply investing that money in a start up.
Spooky23 6y ago
Innovation is an awful word because it means different things to different people. In my experience, end of the day, “innovation” or “creating value” or “getting shit done” boils down to solving problems. It could be big problems like fundamental research or little problems like moving a desk in an office. Either way, big organizations, private or public sector, create their own problems that are difficult to solve. Inefficient or dumb process sticks around until times are tough because the process gives someone power.
- edparcell 6y ago
  100% agree. People now use “innovate” and “invent” interchangeably. Typically they use the fancier sounding one because they want to impress people with their long words. They are not interchangeable though. Invention is the initial spark to the first version. Innovation is the polishing process of the next n versions. The iPhone 1 is an invention, and every iPhone after that is an innovation. Now, the iPhone 1 didn’t do very much, and often there is far more value in the innovation than there was in the original invention. But you don’t get the innovation without first inventing something that didn’t previously exist. Sadly, using words incorrectly swaps into thoughts, and affects reasoning. Because these words have been conflated, organizations are typically no longer able to reason about invention and innovation correctly, and are uninterested in inventing as a result. I would argue we see this in the lack of new underlying technological inventions after the 90s. It is like we have eaten our own seed corn. Very sad.
- cs02rm0 6y ago
  Innovation is an awful word because it means different things to different people. Doesn't it just. I approached someone in charge of innovation for a part of the UK's National Health Service. I offered some software (at no cost to them until they were content it met a need) based on a project I'd worked on in a different part of the public sector where the same idea had been successful. I was turned away, not because it wasn't actually innovative, but because to the NHS innovation meant funding deployment of commercially successful, mature software with existing customers and I didn't own the software from the previous project so I'd written a new (and improved) version. It still puzzles me. I occasionally wonder how much time he must spend turning away people who have innovation ideas wondering why companies with mature products aren't calling his innovation department.
Konohamaru 6y ago
> Creating value out of nothing is way harder than simply not screwing up existing value. I disagree. Not screwing up existing value is way harder than simply creating value out of nothing.
- mdorazio 6y ago
  This is an extremely odd position to take. The failure rate of startups vs. large companies alone is enough data to disprove it.
  - Nbox9 6y ago
    Large companies have more value than startups, so it takes more time to lose that value. Large companies also have expertise in value preservation and value creation. Startups usually only have expertise in value creation. I’m not sure I 100% agree with the statement, but it’s an interesting perspective to try from time to time.
- rytill 6y ago
  I'm interested in this. Can you formalize your thinking here a bit more? For instance, do you mean to say that, given the average company making $X net profit per month, it is harder to steer that company to grow to make $(X + Y) per month, than it is to start another company that makes $Y per month, from nothing? Like sibling comment said, from a data-driven perspective that seems incorrect, but I wonder if your definitions of "value" or "difficulty" have some other nuance.
- benjohnson1707 6y ago
  Interesting take. Seems legit from an entropy perspective. Given that most corporations fail eventually no matter what, you might have a point there. Maybe what I meant was the micro-level, not the macro-level evaluation. It might be easier for a given individual within a large corporation to play the game of 'keep the system running' and do well as compared to playing an active role in a small group of pirates that is building value from scratch which eventually can scale to a significant size. Fair point though!
- 6y ago

michaelcampbell 6y ago

I could retire if I had a Euro or 2 every time I have heard management say that mistakes are just lessons, experiments SHOULD fail now and again, and other such platitudes. Then reward the exact opposite type of workflow.

jorblumesea 6y ago
"we want innovators, outside the box thinkers and people willing to take risks" proceeds to promote people who only make safe bets, suck up to management and tow the party line
- Gruuuuulyes 6y ago
  Sounds politically, but 'To generate a room in an existing room, to use its reaction as an impetus...' um that maybe also another topic... phys... ^^
deleted 6y ago
[deleted]

BigJono 6y ago

The most damaging part of this risk averseness is that it's pervasive throughout the engineering side of a large company, not just the business side. I've seen a few big companies attempt to avoid the pitfalls you're describing. They set up some moonshot division consisting of "startups" and they do allow them to fail, but that's not enough. The problems are that they don't face the same financial pressures as startups, and they draw from the same talent pool as the general engineering pool of the company. This is a problem because I don't think the article's premise goes far enough, big companies don't just drive out innovators, they convert them. They create a context where adding more bloat is seen as innovation, and then suck up enormous amounts of talent into this environment. These "startups" I've seen look on paper like they have every chance to succeed. Financial institutions starting companies in the finance space for example, they have all the domain knowledge, it's right in their wheelhouse etc etc. But they don't seem to realise that they don't have the right kind of engineering talent. It's not that their devs are bad, they're just playing a completely different game. I think this is partly to blame for the whole "ageism" thing in SV as well. Somewhere along the track a big group of people realised (probably subconsciously) that there's a whole bunch of very talented senior engineers out there that are complete garbage at building something from scratch in an environment where you live and die by the quality of your software, because the majority of people work in places where their success and failure is just indistinguishable noise in quarterly profits. And for interviewers that aren't particularly good at surfacing that or don't even know what they're looking for, ageism is the easiest (and shittiest) way to filter most of that out and improve your odds All these "startup within a big company" projects seem to follow the same rules as a modern trendy enterprise project. Big fuck off kubernetes clusters on the back end, a monorepo clusterfuck for the front end with more packages than pages in the app. Everything "scales", everything is perfectly set up to handle every possible use case, there's 8 kinds of tests, and a huge CI/CD setup, and all the tooling you could ever need. And then once that's all set up, in true waterfall fashion, the dev finally starts... at the same pace all the company's other projects run at. And because all the other company's projects run at that pace, nobody notices anything is wrong. But if you do this, and you have any even remotely competent competition, you're going to get absolutely fucking poleaxed in features. Slow and steady might win the race but nobody has ever won the race after being shot in the foot with the starting pistol.

speleding 6y ago

I agree with your analysis, and that of the original article, but I don't see it as a problem to be fixed. Companies have an incentive to provide a predictable cash flow to share holders, genuine innovation is often too risky for that. But that's fine, that's why we have start-ups with a different risk profile to do that instead. Most attempts I've seen about fixing that by creating a "startup culture" inside a company have not really added more value compared to simply investing that money in a start up.

Spooky23 6y ago

Innovation is an awful word because it means different things to different people. In my experience, end of the day, “innovation” or “creating value” or “getting shit done” boils down to solving problems. It could be big problems like fundamental research or little problems like moving a desk in an office. Either way, big organizations, private or public sector, create their own problems that are difficult to solve. Inefficient or dumb process sticks around until times are tough because the process gives someone power.

edparcell 6y ago
100% agree. People now use “innovate” and “invent” interchangeably. Typically they use the fancier sounding one because they want to impress people with their long words. They are not interchangeable though. Invention is the initial spark to the first version. Innovation is the polishing process of the next n versions. The iPhone 1 is an invention, and every iPhone after that is an innovation. Now, the iPhone 1 didn’t do very much, and often there is far more value in the innovation than there was in the original invention. But you don’t get the innovation without first inventing something that didn’t previously exist. Sadly, using words incorrectly swaps into thoughts, and affects reasoning. Because these words have been conflated, organizations are typically no longer able to reason about invention and innovation correctly, and are uninterested in inventing as a result. I would argue we see this in the lack of new underlying technological inventions after the 90s. It is like we have eaten our own seed corn. Very sad.
cs02rm0 6y ago
Innovation is an awful word because it means different things to different people. Doesn't it just. I approached someone in charge of innovation for a part of the UK's National Health Service. I offered some software (at no cost to them until they were content it met a need) based on a project I'd worked on in a different part of the public sector where the same idea had been successful. I was turned away, not because it wasn't actually innovative, but because to the NHS innovation meant funding deployment of commercially successful, mature software with existing customers and I didn't own the software from the previous project so I'd written a new (and improved) version. It still puzzles me. I occasionally wonder how much time he must spend turning away people who have innovation ideas wondering why companies with mature products aren't calling his innovation department.

Konohamaru 6y ago

> Creating value out of nothing is way harder than simply not screwing up existing value. I disagree. Not screwing up existing value is way harder than simply creating value out of nothing.

mdorazio 6y ago
This is an extremely odd position to take. The failure rate of startups vs. large companies alone is enough data to disprove it.
- Nbox9 6y ago
  Large companies have more value than startups, so it takes more time to lose that value. Large companies also have expertise in value preservation and value creation. Startups usually only have expertise in value creation. I’m not sure I 100% agree with the statement, but it’s an interesting perspective to try from time to time.
rytill 6y ago
I'm interested in this. Can you formalize your thinking here a bit more? For instance, do you mean to say that, given the average company making $X net profit per month, it is harder to steer that company to grow to make $(X + Y) per month, than it is to start another company that makes $Y per month, from nothing? Like sibling comment said, from a data-driven perspective that seems incorrect, but I wonder if your definitions of "value" or "difficulty" have some other nuance.
benjohnson1707 6y ago
Interesting take. Seems legit from an entropy perspective. Given that most corporations fail eventually no matter what, you might have a point there. Maybe what I meant was the micro-level, not the macro-level evaluation. It might be easier for a given individual within a large corporation to play the game of 'keep the system running' and do well as compared to playing an active role in a small group of pirates that is building value from scratch which eventually can scale to a significant size. Fair point though!
6y ago