Jobs famously disembowelled the $5-billion/year iPod business by building the entire MP3 player into every iPhone—don’t think that didn’t prompt howls of outrage inside the walls of Apple!—and Page is spending something like $500-million on Google X. You may object that Google has the money, but query how many other companies that “have the money,” or the equivalent proportion given their balance sheets, are doing anything remotely similar. This takes guts, as does purposely making the iPod superfluous.

What’s a successful incumbent to do?

You’ve heard this before, but steal a page from startups: Visit some accelerators and incubators. (Remember, even IBM launched the original PC by setting up a skunkworks 1,500 miles from Armonk in Boca Raton, Florida.) Set up your own incubator and give it real resources. At Disney’s, for example, people get equity stakes so they can act like real entrepreneurs. Our panjandrums at the ABA won’t let us do that, exactly, but don’t tell me you don’t have creative corporate, securities, and executive compensation lawyers around.

We’ll give Gross the last word:

The equitization and the autonomy are the biggest factors. Because the thing that actually unlocks human potential is when people feel they have control over their own destiny and they can make a killing if they really succeed on their wild bet.

Autodesk’s Carl Bass on taking risks to innovate

Bass is blunt when it comes to the land mines on a large firm’s path to innovation:

[M]ost corporations [read: law firms] are set up and, in some ways, structured and designed to maximize profit and minimize risk.

We heard the same issue expressed differently by Gross in terms of the short term vs. the long term. Which tells me, at least, that the real issues here aren’t those of pure economics, finance, and organizational structure: They’re issues of human psychology.

And speaking of lawyers, we are risk-averse to a fault. This is both for better (representing clients) and for worse (running the firm). Lawyers are selected for risk-aversion at every step of their careers, meaning that by the time they emerge into positions of leadership at a firm they instinctively feel deeply threatened by risk. The fastest way to overcome that sense of threat is by invoking an even larger risk: The risk of inaction while the world moves on without you.

Granted, few firms are exactly perched on the famous “burning platform”—and for those unfortunate few who are, it may be too late—but if you adopt the perspective of, say, a 40-year career (there’s that nasty long-term perspective raising its unwelcome head again), the platform may look more like a beachfront house on a barrier island in Hurricane Alley. Beautiful today, but how sturdy for the long run?

Bass interprets the threat as that “of new disruptors,” but rather than retreating into denial, complacency, or paralysis, he counterintutively says:

As a matter of fact, for CEOs or management of existing companies, it’s the greatest thing that ever happened, in some way. It’s like the expression, “Don’t let a good crisis go to waste.”

What has this meant at Autodesk? Just for example, this year they are launching their first piece of hardware ever: a 3-D printer built on open-source standards. Now that’s different!

What would be the equivalent departure for your firm?

As they say in the tougher neighborhoods, “Lovely house you got dere. Shame if sumpin’ happened to it.” Like it or not, our neighborhood is getting tougher.


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