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Can corporations act like startups?

September 20, 2017 By: Jon E Worren

In a recent Harvard Business Review article, Steve Blank — the father of customer development and of much of modern entrepreneurship’s vocabulary, as well as a great source of inspiration for our work at MaRS — explained why he thinks large corporations can’t be like startups. It’s a topic of interest to us, given how many corporations approach MaRS with an expressed desire to “be more entrepreneurial” or “to foster a greater ownership culture” or to “become more agile” — basically, to understand what they can learn from startups.

Steve’s main reasoning? He argues that startups can do anything, whereas corporations can only do stuff that is legal.

Steve believes that it’s OK for startups like Uber and Airbnb to launch their businesses in violation of prevailing rules — some of which are industry-designed regulations put together to protect a certain way of doing business — but it’s a behaviour that he doesn’t think should be available to corporations. (For clarity: Steve and I both recognize that certain regulations are there for the protection of health and safety, and neither of us is suggesting that those regulations be violated by anyone, whether big or small).

In a recent panel discussion hosted by a local law firm and attended by legal counsel from many of the city’s largest corporations, the topic of innovation working outside of the boundaries of current regulations was discussed. There, I cautioned the corporations in attendance strongly against letting their innovations be boxed in by the current regulatory environment. Judging by the responses from both my fellow panellists and the audience my view was a new and radical perspective.

The belief that industry regulations are immovable objects is a pacifying, rent-seeking behaviour that breeds complacency from a business model perspective — especially at a time when technology breakthroughs are eroding current value chains and enabling new business models at an ever higher frequency. Corporations must own their own destinies. Companies like Uber and Airbnb have hopefully demonstrated that most regulations will not protect large, established industries against the innovation that consumers are seeking.

I also wanted to challenge legal counsel and their advisors to play a more proactive role in the innovation processes of large corporations. They should be enablers of new ideas rather than innovation antibodies shutting down anything that looks like colouring outside of the lines. Many innovations take years to bring to market so the current regulatory environment is a poor yardstick to measure it against. In the end, large corporations have a better chance than startups do of influencing regulators, who need a solid nudge or two themselves to understand their role in the brave new innovation economy (but that’s a different discussion).

Finally, it is a matter of perspective. If employees working for large corporations see that their workplaces are fighting to make big ideas a reality they are more likely to think bigger, and the corporation may get one step closer to enabling the entrepreneurial culture they seek.

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