Start-ups are Time Machines for Big Companies [and open source is a worm hole]

My time at Dell (ended 10/2014) forced me to correct one of the most common misconceptions I hear about big companies – that they cannot innovate. My surprise at Dell was not the lack of innovation, but it’s overabundance. Having talked to many colleagues at big companies, I find the same pattern is everywhere. It’s not that these companies lack amazing and creative ideas, it’s that they have so many that it’s impossible for them to filter and promote them.

Innovation at a big company is like a nest of baby chicks all fighting for a worm but the parent bird can’t decide which chicks to feed.

In order for an idea to win at a big company, it generally has to shout so loudly and promise so extravagantly that it’s setup to fail right out of incubation. Consequently, great ideas are either never launched or killed in adolescence. Of course YMMV, but I’ve seen this pattern repeated throughout the tech industry.

TeamTimeCar.com-BTTF DeLorean Time Machine-OtoGodfrey.com-JMortonPhoto.com-07.jpg

“TeamTimeCar.com-BTTF DeLorean Time Machine-OtoGodfrey.com-JMortonPhoto.com-07” by Terabass. Licensed under CC BY-SA 4.0 via Wikimedia Commons

What big companies really need is a time machine. That way, they can retroactively pick the right innovation and nurture it into a product that immediately benefits from their customer base, support infrastructure and market presence.

Money is a time machine.

With enough money, they can go backwards in time and unwind the decision to not invest in that innovative idea or team. It’s called purchasing a company. Sure, there’s a significant cash premium but that’s easier than stealing more plutonium for your DeLorean. In my experience, it’s behaviorally consistent for companies to act quickly on large outlays for retroactively correct decisions while being unwilling to deal with the political and long-term planning aspects of incubation.

I’ve come to embrace this cycle of innovation with an interesting twist: the growth of open source business models enables a new degree of cross innovation between start-ups and big companies. With open source, corporate locked innovators can exercise their ideas with start-ups and start-ups can leverage the talent and financial depth of big companies.

That’s like creating temporal worm holes in the venture-time continuum. Now that sounds like a topic for a future post… thoughts?