Bob Morris Book Review – Blogging on Business

the inner unicorn: How companies can create game-changing companies at the speed of start-up
Linda K. Yates
Harvard Business Review Press (Oct 2022)

Here’s a “repeatable, scalable learning process for disrupting from the inside out”

What does the title of this book refer to? In a business context, a “unicorn” is a new or subsidiary company that reaches a valuation of $1 billion or more without going public. In the US, for example, they are listed in alphabetical order: Alchemy, Airtable, Bolt, Chime, Fanatics, Instacart, Miro, Ripping, SpaceX, and Synk.

Linda Yates points out that the average life of fortune 500 companies 50 years ago was 75 years. Today, it’s only 15 years and falling. “At the time of this writing, CB Insights reports that there are 1,135 Unicorns in the world valued at over $43.8 billion.” TheThere’s another statistic that caught my eye: Only 52 American companies have been to the fortune 500 list since 1955. Joseph Schumpeter would probably attribute it to what he characterized as “creative destruction.” Others would suggest an interruption or a form of natural selection.

Yates stresses the need for an innovation process that is “learnable, repeatable, and scalable,” one that enables almost any organization, whatever its size and nature, “to succeed against smart startups and defeat them at their own game” interrupting “from the inside, use that to generate significant growth…and do it forever by building [its] own incubator and accelerating [its] Engine of Growth itself.” There are additional perks “that startups can never hope to match as long as you don’t get in your own way and take advantage of those perks. You have ideas, talent, capital, brand, technology, channels, and best of all, you have customers, often millions of them.”

In this context, I am reminded of an event years ago at a GE annual meeting when then Chairman and CEO Jack Welch was asked his reasons for holding small businesses in such high regard. His response: “On the one hand, they communicate better. Without the noise and chatter of bureaucracy, people listen as well as talk; and since there are fewer of them, they generally know and understand each other. Second, small businesses move faster. They know the penalties for hesitating in the market. Third, in small companies, with fewer layers and less camouflage, the leaders appear very clearly on the screen. Its performance and its impact are clear to all. And finally, smaller companies waste less. They spend less time on endless reviews and approvals and policy and paper drills. They have fewer people; therefore, they can only do the important things. Its people are free to direct their energy and attention to the market instead of fighting bureaucracy.”

Here are some of the other passages in the inner unicorn of most interest and value to me, also listed to suggest the scope of coverage for Yachts:

o Beyond the Myth: Unleashing the Unicorn Within (pages 7-17)
o The building blocks of success (26-29)
o Recruitment selection and incorporation of the team (34-49)
o Phase I: Ideation (66-109)
or Tools (70-79)

o Phase II: Incubation (150-175)
o Prototype Development (155-175)
o Phase III: Commercial Phase (176-205)
o Building the Business Case for Entrepreneurship (180-192)
o OPERATION AND EXECUTION PLAN (192-205)

o Acceleration: from financing to Fit product-market (206-225)
o Building your own business growth factory (230-261)
o Driving the new business growth machine (262-297)
o Building the Mothership Advantage — Building an Internal Innovation Ecosystem (288-295)
o Ten Principles for Creating Unicorns (298-303)

As you proceed through Yates’ animated and eloquent narrative, keep in mind that there are now over 1,200 “unicorns” around the world; in the US, 610, including 75 added this year. As for all startups, 90% of all and 75% of venture-backed startups fail. Fewer than 50% of new businesses make it to their fifth year. And, on average, it takes about seven years for a startup to become a unicorn.

My take on all of this is that many (if not most) companies can design and run an “innovative business” within the limits of their resources, and do it as soon as possible, to become more efficient, more effective, and more profitable. . . In this volume, Yates provides a wealth of invaluable information, insights, and advice in answer to the question “HOW?”

It should be noted that all current fortune 500 companies were once a startup. They are now struggling every day to overcome what James O’Toole has so aptly characterized as “the ideology of comfort and the tyranny of custom.” Many of them have established Corporate Venture Capital (CVC) funds and I expect that number to increase substantially in the coming months and years. Another approach is called “Buy and Build” (ie mergers and acquisitions). And then there is the conglomerate diversification strategy. Exemplary organizations include (in alpha order) Amazon, Bank of America, Berkshire Hathaway, Disney, GE, Google, Johnson & Johnson, and Toshiba.

We urge those who share my great respect for Linda Yates’s brilliant book to consult pique: How to solve big problems and try new ideas in just five days, published by Simon & Schuster (March 2016). With John Zeratsky and Braden Kowitz, Jake Knapp explains how to solve the biggest problems, answer the toughest questions, and/or generate the best ideas with what he calls a “sprint team.” Knapp invented the Google Ventures process and has done over a hundred sprints with startups. However, the same process, with only minor modifications, can work for almost any organization. It offers exceptionally valuable resources and capabilities for the “Unicorn Toolbox”.

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