By Ben Yoskovitz, Founding Partner, Highline Beta
Disruption. It’s almost as over-used a term as “innovation.” It’s true, big companies are worried about being disrupted, and this has led to the common sentiment, “It’s better to disrupt ourselves than have someone else do it to us.” Fair enough. You’d rather destroy yourself than have someone else destroy you.
But disruption is scary. Very few people want to talk about it inside a large company. Very few people want to admit it’s happening. And if a small, disruptive group is set up within a large company, it usually leads to incredible friction. No one likes the idea that their colleagues are tasked with disrupting them (because if my job is to disrupt the company I work for, I’m potentially hurting a lot of people.) On top of that, when someone who runs a three hundred million dollar line of business realizes that she’s paying all the bills of the disruptors (because disruptors don’t generate meaningful revenue right away, and someone has to pay their salaries), she’s rightfully pretty ticked off. Why should the left hand pay for the right hand to chop the left hand off? It’s a recipe for disaster.
In these situations, when a big company decides to disrupt itself, it creates a sense of animosity amongst its employees and no one wants to play nice. And what almost always happens is the disruptor eventually goes to the mothership looking for access to what the mothership has a stranglehold on, namely money, customers and distribution. “We’d like to take this small thing that we think is going to kill the big thing, and use the big thing’s assets to speed up the process. How does that sound?” If you’re inside the mothership, it doesn’t sound great at all.
Instead of disruption, let’s talk about growth.
Here’s the thing, that three hundred million dollar line of business isn’t growing. At least not in a huge way. There are no more hockey stick growth curves. The person running the line of business knows it. Her boss knows it. The market knows it. Everyone knows it. That doesn’t mean the business is falling to pieces. It’s probably quite profitable (although most likely facing margin compression.) But it’s definitely a cash cow. And it pays for a lot of stuff. The company will do everything in its power to keep that cash cow alive. There’ll be a lot of incremental innovation. Perhaps an acquisition or two. Maybe some cost-cutting. And that’ll keep the milk flowing (or at least dribbling) for a while longer. But real growth? That has to come from somewhere else.
And that’s where new ventures come in. That’s where “disruptive” innovation plays a role. Just don’t call it that. Call it “growth innovation.” Because if the big company wants to survive and keep growing, it has to find new engines of growth. They can’t ride the cash cows forever.
Everyone wants growth. The person running the three hundred million dollar line of business wants growth and she knows it’s not going to come from her. And that’s OK. She has an important business to maintain. She matters in a big way. The business she runs is mission critical. But it’s not the real future for the company. And so she’s fine with other people within the company building the growth engines and focusing on growth innovation. “I’ll keep doing what I’m doing over here, I’ll keep the lights on, you go build the next billion dollar business.” She’s great at managing the business. She’s running it super efficiently and every year creating enough new incremental innovation to not go obsolete. And she’s happy that her work is funding the next giant growth engines, because that’s going to keep the company healthy, keep the stock price humming, and keep everyone’s jobs and careers intact.