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Access to technology and capital allows startups to create products and business models very quickly. Consequently, established companies need to deal with innovation at speed they never imagined.

Among the various cases we can use as an example, the most shocking, in my opinion, is Space X, a company led by Elon Musk (serial entrepreneur, Tesla, PayPal, among others), which challenged the planetary exploration market, which until then was dominated by NASA, and achieved faster results than the government entity.

The speed with which new players like Space X execute their innovations and compete with established giants has dramatically slowed down the corporate lifecycle.

The chart below shows the average lifetime of a company listed on the S&P 500, which brings together the top 500 companies in the United States and reflects well what we're saying.



In 1958, a company lasted an average of 60 years. In 1978, an established company had a survival time of 40 years. In 1998, the average of about the experience of an established company became 25 years. And the projection is that this deadline is getting shorter and shorter.

It is noteworthy that this phenomenon is not centered in one industry. All economic sectors are impacted by innovation from fintechs, construtechs, agrotechs, martechs, retailtechs, biotechs, healthtechs, beautytechs. And the list spans more than 20 categories that make use of emerging technologies such as Artificial Intelligence, Blockchain, IoT, and Robotics to create more consumer-centric, efficient, and profitable solutions than those of established players, who have immense difficulty updating themselves because the education that the executives of these companies had is based on an approach made for industrial revolution used to this day in the best colleges in the world.

This kind of "management theory" certainly does not prepare you for today's world, where your competitors' speed of innovation is the greatest threat.

Time is the biggest enemy of established companies!

Innovating means meeting our users' current or future needs by transforming an idea into a product or service with speed and urgency, using minimal resources and costs. This is why more and more companies are looking for startups to innovate.

Let's look at the above sentence to understand the excellent tool that a promising startup represents for the corporation.

Innovating means:

  • Meet the current or future needs of our users:

    • By definition, startup founders are people frustrated with the product or business model. They want to solve the problems themselves.
    • They are usually divided into two groups:
      • 1 Executives of a particular industry who perceive a profitable opportunity poorly met by the market and abandon their corporate career to undertake, understanding current or future real demands.
      • 2 Customers of frustrated products or services who got tired of relying on the market to offer a specific solution and decided to produce something that satisfies them.
    • Regardless of executive or customer, both sides start the project focused on the current or future needs of a group of users. They believe so much in the idea that they take financial risk to make it happen.
    • The above scenario is quite different from established companies, where the people responsible for innovation often do not have daily contact with the customer, do not understand their pain. Areas such as Customer Support and Sales are devalued as a potential pool for generating business ideas. Their employees have no motivation or do not have the means to help the company with innovative ideas. Innovation in established companies is usually short-sighted and incremental.
  • Transforming an Idea into a product or service

    • This is another crucial point. To find useful ideas that apply to the market, the company first needs to start managing a pool of ideas. But the company that relies only on its employees to do it orders its bankruptcy. As smart and empowered as R&D employees are, their ability to generate ideas is infinitely less than the number of ideas generated by entrepreneurs worldwide who are focusing on scalable solutions to challenges from day zero.
    • Examples: Uber was not born from a taxi cooperative, Airbnb did not come from a hotel chain, car did not come from a wagon manufacturer.
    • The R&D department is very good for creating incremental ideas to the core of the company and an excellent opportunity evaluator for the horizons 2 and 3 of innovation. Still, it will never be able to compete with the strength of entrepreneurs' collective thinking around the world.
  • With speed and urgency, using the minimum resources and costs.

    • Fact is that companies have established and bureaucratic processes for everything, unlike a startup, which has a fast decision-making process, errs fast and adjusts fast, not insisting on errors by executive ego. In a startup, there is no room for vanity due to limited resources.
    • Such limited resources force the startup to be creative and seek cheaper solutions than those implemented by a corporation. The startup cannot waste time, or it will go bankrupt before it can put its product on the market. In a startup, especially in the beginning, entrepreneurs are giving up a lot of their quality of life to be able to endeavor. They have enormous urgency to make the project happen. On the other hand, the company's employees are more comfortable, with salaries and benefits guaranteed. To complete, under a structure that penalizes error instead of encouraging attempts.

It is straightforward to understand why a startup is an excellent tool to assist the innovation process in established companies for the reasons presented. If this partnership is set in the right way – and this book's goal is to show how to do this – the startup can accelerate the innovation process by 50x.

I say this because, in an organized process of innovation with startups, it is possible to run 10 times more initiatives in 1/5 of the time. That's 50 times faster. And that number, even if it looks big, is very conservative. Big names in Innovation like Steve Blank, Eric Ries believe it to be even bigger. In my innovation projects with companies from various sectors, I can say that we have increased this number by 10 times per quarter. And understand that initiative is not just having the idea, putting it on paper, and discussing. I'm talking about an initiative with proof of concept execution.

With this book, I want to help create ambidextrous companies, that is, organizations that have the ability to remain competitive in their core while innovating and implementing new offerings in their portfolio so as not to enter the corporate mortality statistics of the S&P500.

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