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Big companies are too slow, too disorganized and too stuck under the weight of outdated playbooks and bad habits to benefit from opportunities to innovate.
Rubbing shoulders with startups, collaborating with them in some way, or absorbing them altogether, may sound like a clever way for established companies to innovate. But the strategy doesn’t appear to be working, according to the 500 Startups report.
The report portrays the problem as one that can be solved by educating corporate innovators. But while handholding might improve the results, my hunch is it won’t be enough to produce a substantial turnaround because big companies and startups are incompatible at their core.
Tomasz Tunguz, Venture Capitalist at Redpoint, published a blog post last May about Conway’s law, which states that a company’s product or service will, more often than not, reflect its organizational structure. In other words, the nature of the tree determines the nature of its fruit, as Googler Manu Cornet illustrated in his now-famous doodles from 2011:
While Conway’s law was originally applied to describe the phenomenon specifically at software product companies, I think it might hold true for the influence a corporate structure has on the capacities of a company — particularly in relation to how it impacts a company’s relationship towards innovation.
That is, can you create a culture of open innovation without first tweaking, reorganizing, or adapting the corporate structure to be compatible for it? Going by the…
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