Dear Start-up ecosystem, move over..

How enterprises made start-ups possible and how they will make them “obsolete” again.

SUPER START-UPS

In many, not all, discussions I have with start-ups it is remarkable how superior Start-ups feel compared to “old large enterprises”. They often talk with a certain contempt about large enterprises. Condemning their innovation speed, their defensive strategies and their large complex hierarchies. You could say that Start-ups feel like they have some kind of magical “intelligence” that makes them unique and so much smarter. I have done it myself. I have bashed former employers of mine for their lack of innovation. Yet I think it’s time to stop doing that. Here is why.

THE ORIGINAL OPENING

It is my belief that start-ups are only made possible because large enterprises lacked the structure to free up teams to autonomously solve problems that lived within the ecosystem of the enterprises. Now it would again be easy to judge enterprises for not having such a structure in place. Yet mind you large enterprises for a long time did not need such a structure, as changes within the ecosystem were slow to manifest and were easy to deal with. It was once the speed of change picked up, due to the manifestation of technology, that the enterprises exposed what it was missing: the ability to transform itself easily by freeing up autonomous teams that absorb technological resources and bring back solutions to the system. This opened a window of opportunity for these autonomous teams to emerge outside of the enterprise. Lots of these teams we called start-ups. It resulted in an ecosystem that made starting a business a business in itself.

WE ARE OUR SYSTEMS

What we tend to forget is that all these large enterprises have created functioning and valuable systems. Systems that provide the people of this planet with whatever they need. These systems needed every human resource to make these systems work properly and efficiently. It also required the creation of complex structures where many people ended up doing abstract jobs. Look, we can complain that these systems are not perfect. Yet I believe that they are the best systems we could have made in the time that we made them. In fact we all should take full responsibility for the systems that are in place right now.

THE START-UP MUSCLE

As the start-up ecosystem now is maturing it becomes evident that the product of this ecosystem is not it’s products or the technological solutions but it’s ability to start and grow companies. The repetitive element in this ecosystem is starting, manifesting and preferably growing a company. It is this repetition of these activities that allowed the ecosystem to learn and become better at it. The start-up itself has become the transactional unit. The tens of thousands of start-ups that went before, made it possible to discover the formulas to successfully do these activities. And now this knowledge is becoming available in the public domain. All practices and behaviors are well documented and described. Fueled by accelerators and books like the Lean Startup the world knows about iterative development cycles, MVP and the importance of a founding team. It developed what I call a muscle. A “start-up muscle” so to say. As the knowledge to start and grow is becoming public knowledge this start-up muscle is becoming less of a differentiator for success. You feel that the start-up ecosystem is now exposed to entropy and is rapidly being commoditized. (It is in fact opening up a new market which Iwill address in another post).

THE PROBLEM

Now here comes the interesting part. Even with decades of knowledge of starting and growing companies still 99% fails. This means you do everything right by the book yet you fail. So what is lacking here?

My take on this is that you can compare it with a parents/child relationship. Where the start-up is the child and the parents are the large enterprises and systems that made the start-up possible in the first place. Start-ups are the rebellious teenagers that don’t want to acknowledge that if you want to fix a system that you actually need to be part of the system. So their rebellious behavior of pushing the system away, makes it actually impossible to become part of it again. Start-ups are often like orphans finding a place on earth. They don’t know to which family(system) they belong. This makes it incredibly hard to bring the start-up back into the system. If you don’t know your source you don’t know your destination. This rebellious attitude made start-ups become an isolated ecosystem. An ecosystem that in it’s isolation probes to find where it belongs. Here is a clue, you belong to the system that gave birth to you. That is your source.

STARTUP ISOLATION

This isolation creates start-ups that tend to be righteous. Start-ups fueled with young ego energy with the desire to dominate and replace existing systems. It goes with a lack of respect that really bothers me. For example a company like AirBnB that is clearly the child of leisure/hotel industry now takes over a “system responsibility” that involves the cities, tourists, existing hotels and inhabitants of cities. Taking on such responsibility means that you need to listen to all stakeholders in the system and serve them. Yet clearly AirBnB’s attitude is that of “move aside older generation, it’s our show now”. It shows such disrespect for the previous generation that took care of the system before they did. It exposes the youngness of the companies and how unprepared they are for the job that needs to be done. Barack Obama recently said that you can’t run the country like a start-up. Obama clearly states that once you take on your responsibility to take care of a system you serve all groups within your system. You keep them safe and you give them a voice.

As long as start-ups want to change systems instead of healing them the friction associated with taking over the steering wheel will not go away. If you cannot acknowledge that you are part of the system you will not get a role to play a part in it.

It is my conviction that acting rebellious against the systems worked in the past when technology was still young. Now it is time to grow up and just take on a responsible role.

THE LOGICAL RESULT

I expect that the coming 5 years systems and large enterprises will absorb the “start-up muscle”. The start-up muscle will be brought back to the source. They will absorb the quality to start, manifest and grow autonomous teams, in order to heal their systems. It will prove to be more frictionless to integrate the start-up muscle in our systems than to convert start-ups into systems themselves. This means we will see less and less unicorns and lots of small fixes to our existing systems. Smaller teams working on a comprehensible human scale to solve problems that can be overseen.

Traditionally you would say that this can never result in substantial change. People will focus on the symptoms of the disease instead of the real root cause of the illness. Innovation will just be incremental. WRONG! (as the Donald says).

People used to lack a bird’s eye view to properly identify what is wrong with the system. Yet now through technology systems are well documented and monitored. They consists of millions and millions of data points. It is impossible for a human to digest all this data and make sense out of it yet a machine can go through millions and millions of records in a second and come out with a root cause analysis of any problem in any system. The state of machine learning and artificial intelligence allows humans to have complete systemic view. It allows to focus energy on the right things at the right times. It will bundle effort. It will allow us to communicate the right challenges to the right teams to solve them.

THE BIRTH OF INTELLIGENT AND REGENERATIVE SYSTEMS

Decades ago an opening was created for start-ups, Now we see a new opening emerge. An opening for millions of temporary autonomous teams. These teams are different in three things.

• First these teams have a purpose to bring balance and harmony to systems. Which is a significantly other approach than the growth focused purpose start-ups had.
• Second they will give the people working on the projects meaningful and transformative experiences. People will work on projects to derive meaning out of them. It is a crucial steppingstone to a purpose driven economy fueled by the discovery, definition and expression of intentions. Not so much by the exploitation of these intentions.
• Thirdly these teams will operate closer to existing systems unlike start-ups that are disconnected from the start. These autonomous yet connected teams will work on more local challenges. They will solve well dimensioned problems with solutions that have the right proportions.

The existing systems in combination with these autonomous yet connected teams will be the foundation of the Intelligent and Regenerative System. A system that is actively healing itself by being aware of it’s own needs.

I also expect the start-up ecosystem, as it is, to enter it’s final hour. The key differentiator of that system is quickly being absorbed by the masses. So let’s all make a big bow to this system that has served us for the last decades. It gave us the knowledge, skills and tools to cope with a world that is continuously changing.

Disclosure: Raimo van der Klein is CEO of Teamily. With their product TEAMDRIVER they support organizations to allow for the emergence and effective operation of autonomous teams within organizations.