Entrepreneurship has come to be largely about taking small ideas, often of little consequence, and making them look big — even if it turns out their failure was predictable — so you can get funded. At the end of the day, it’s largely about starting a new company. Innovating is not about funding. It’s about meaningful work to solve a real-world problem. What you need to worry about when you’re innovating is scaling up — but not as it’s understood generally in the entrepreneurship “literature.”
Your scale-up can begin anywhere. Understanding of the problem you aim to solve lives well beyond your means; you need to solve a smaller version of it at the scale of the resources you have. The glamour, the funding, your “idea” — all that’s secondary. Funding is one gateway to the next scale. You prove your way up one step at a time. There is no hacking that.
Harry Schechter, CEO and founder of temperaturealert — an internet of things company — shared with my students that after looking back on the growth spurt that had resulted in his company’s growing by an order of magnitude, he felt as though he had built a new company atop the old one.
Schechter’s story is from my book Innovating: A Doer’s Manifesto for Starting from a Hunch, Prototyping Problems, Scaling Up, and Learning to Be Productively Wrong. What follows are adapted excerpts from multiple sections of that book.
The field of entrepreneurship is full of amazing stories of innovation and powerful figures — ones we know of only in hindsight. And yet, what makes most of their innovation stories exciting is that we already know the end; and in the end, they solved a real-world problem.
Still, there’s one thing I can almost always count on: Audiences have already been led to conflate innovation and entrepreneurship. And so, as they apply themselves to it, the same contradictions, paradoxes and even sense of frustration seem to kick in — no matter their backgrounds.
This has resulted in the creation of a bunch of truisms that put an outsized burden on the idea you start with and myriad opportunities to enter “idea” events that are a lot like beauty pageants; the pitches are the “talent competition.” This all has little or nothing to do with actually innovating. Nevertheless, everyone claims to have an “innovation.”
Put simply, we talk a lot about how innovations happened, but rarely discuss how you actually produce one.
Innovating is what you do. Innovating by making real-world problems tangible offers you an alternative to the many innovation recipes that seem to take a “good idea” as a given at the start, and hinge on convincing others that it is, indeed, good. I contend that the very notion that at the beginning you can even identify an innovation is specious at best. Innovating is an industrious learning endeavor that cannot be fully comprehended from the safety afforded by the methodologies of any one discipline alone.
To be clear, I am not taking a position on whether innovation can or cannot be learned. It’s a moot discussion. Innovating, like most other activities, is something you can practice and become better at with a combination of knowledge and the kind of muscle memory that comes from repeating certain tasks. Innovating takes doing, practice and perseverance — which are how your brain has adapted to learn best. At some point, you ought to learn to trust that your brain can operate quite well outside the realm of formulas.
Working on the problem requires a new vocabulary, a different attitude toward innovation, and a subtle mind-shift. The task may require you to venture a bit into the impossible. Innovators are the explorers of our time.
Innovating, scaling up and growth
Innovating — bringing together parts, people and scale in a way not done before — is something you do continually; innovation is the afterthought. Innovating is about finding a way to bring resources together to demonstrate a path to solving a real-world problem worth solving. If any new ideas emerge, it will happen along the way; at the outset, nothing needs to be new.
After advocating for the larger reality you imagine today, and getting the go-ahead, it would be only natural to think that all you have left to do is build the scaffold that supports the story arc you advocated. You’d be wrong. That mind-set assumes that you have to know accurately today what will be needed when your organization is far bigger. And it is risky, because scale-up would then hinge mostly on the true size of the market you imagined — that is an externality.
It is easy to trace how Apple evolved from its Apple I all the way to today’s App Store and make sense of it — in hindsight. It is not so easy to imagine how you might have built the Apple of today from the organization it was in its earliest years.
The same could be said for Netflix. In about five years, the media described Netflix as a company that went from competing with Blockbuster and Walmart, to being equated with the AOL failure, to competing with HBO and Amazon. Judging by the nature of the organizations compared to Netflix, one might argue it was in fact three different companies.
It follows from these examples that thinking about building today the scaffold of the larger organization you imagine might be as stressful as believing you need an earth-shattering idea to begin. You are better off thinking of your growth curve as supported by a scaffold that at the very least evolves over time, if not changes entirely. You are building the first scaffold.
Growth — particularly high growth — may not be distinguishable from layering a new organization atop an old one, in much the same way you layer proof of concept upon proof of concept: by repurposing parts and insights and learning to scale. The “old” organization — no matter how big — thus becomes an innovation prototype or a set of parts you already have. If you are an entrepreneur who’s just starting, that’s the organization you’re building right now: the one that is wrong and that you’ll make obsolete as you scale up — you just don’t know how yet, you’re learning.
Whenever you become big enough, your innovating will continue the same. Your innovating will emerge from repurposing parts from the larger, existing organization, and will eventually cannibalize some of its units. IBM and some other companies seem to have been doing that for quite some time.
IBM went from typewriters to mainframes to personal computers. Though presented as an evolution, each of these really started as an isolated unit that eventually cannibalized one of the others. Most “innovation” books talk about that sequence. But, IBM has done the same thing several more times. It sold its lucrative laptop business to Lenovo to focus on its consulting and services business, and since that happened Deep Blue evolved out of Deep Thought to become a chess master and then Watson the Jeopardy champion, and continues to evolve through a series of reinventions of the original idea.
The evolution of IBM is consistent with the picture of growth through creation of entirely new organizations within the old.
So, no matter how big your company, innovating is the way you scale up to solve a new problem.
You can think of growth as a consequence of scaling up. Simply put, scale-up is about doing more of what you just did at a lower cost per unit. That’s quite similar to this operating principle: Learn a disproportionate amount with the resources you have now. You scale up by discovering what is less sensitive to scale and by finding ways to systematize what you’ve learned. As you systematize, you are simplifying your solution. Those who will benefit from your innovating will be able to verify it as a solution to their problem only when it has become simple enough for them to use for their own purposes.
There’s a corollary to all this. By the time you’ve “grown” your organization, it may turn out to solve an altogether different problem than the one you spoke about in your “beauty pageant” days. The people who may have cared back then walked the path with you and won’t care whether the future you envisioned back in the day corresponds exactly to what the present has turned out to be; they are happy if it has grown. Everyone for whom you actually solved a problem will be delighted. No one else really matters.
It follows that the super-duper beautiful problem you used to build the story you pitched — the beautiful idea that got you started — no longer matters. It mattered then because it helped people believe in you and because you believed in it. Whether it ever mattered after that is hard to say.