Why Internal Ventures are Different from External Startups

“A startup is a temporary organization in search of a repeatable, scalable business model. A corporation, by contrast, is a permanent organization designed to execute a repeatable, scalable business model. While a simple statement, this is a profound insight. When companies want to innovate a new business model (vs. innovating new products and services within an already scaled business model), the processes that companies have optimized for execution inevitably interfere with the search processes needed to discover a new business model.”

The following post by Steve Blank lays out, in simple and concise terms, the different challenges internal initiatives face when compared to startup ventures. “Lean” startup methods may work on their own (I use the qualifier “may” since the premise is still somewhat debatable, to be sure) in the outside world, but inside the corporate firewall? Think of it as more like Mad Max fighting in the Thunderdome – you have to be alert and ready to engage on multiple levels and fronts, all in order to succeed.

Steve Blank

Henry Chesbrough is known as the father of Open Innovation and wrote  the book that defined the practice. Henry is the Faculty Director of the  Garwood Center for Corporate Innovation, at U.C. Berkeley in the Haas Business School.  Henry and I teach a corporate innovation class together.

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Thanks to Steve for the opportunity to share my thoughts with you all.  This post follows directly on Steve’s earlier excellent post, Why Companies are not Startups.

The question of how corporations can be more innovative is one I have wrestled with for a long time.  For those who don’t know, I wrote the book Open Innovation in 2003, and followed it with Open Business Models in 2006, and Open Services Innovation in 2011.

More recently, Steve, Alexander Osterwalder and I have started sharing notes, ideas and insights on this problem.  We even ran an executive education course last…

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