The law of buying innovation

A few definitions first.

Inside led, is the innovation that is primarily driven from the inside. The kernel sits inside the organisation. The teams that kicks it alive is an internal one. The resources and the way they are allocated mostly internal as well. The vision is limited to addressing the perceived internal weaknesses, and strengths.

Outside led, is the innovation that starts from the premise that is too hard to be really innovative from the inside. Based on previous internal led failures, or just simply lack of internal confidence. Then, the argument for buying (M&A, venture capital investing), is based on the premise that the entity must be gaining time to get to realise their vision. Outside led not necessarily means completely on the outside, usually means starts from the outside. With a promise of transforming the organization and becoming the inside, and core of it at one point.

Your vision is the quest, is what you want to change, and what form ultimately you want to change it to. Is the core ideology and beliefs of what needs to be changed. Your role in the change, and the final state of it. Where you play an important part in the happening. Your vision guides efforts to how get the magic change happening, and also gives you the pace of whether you are close to it or not. It is sort of a compass, that attracts only what should stick to it, although it might not be what you originally intended.

Your setup is what you are geared to execute. Let’s start from the premise that you have a machine that is doing something (aka Company, NFP, etc). Your setup reflect that something, that was a vision once, and that led to building a machine of efficiency. One that churned out results based on a landscape that wasn’t changing that fast, and allowed you to remain relatively static for long chunks of time. That setup is more or less flexible. Your people, your way of transforming things, and critically how you get the system to change at a pace of internalizing new ideas that are an input to it. This, defines your setup.

I guess the final thing is to connect these ideas. Vision, setup, and the definition of whether you want to start renewal from the inside or the outside. By now, you probably have guessed that everything is interrelated, and there is not a magic formula that will always gets it right.

One heuristic I use, Is what I call the law of buying innovation, my outside led innovation filter. If you buy something close to you vision and setup, you will do better than building it yourself from scratch. If on the opposite, you buy something outside your remit and dream,  you will be worse off than starting it yourself. Or, like I said to a friend, you don’t buy a swan to turn it into duck, you raised the duck from hatchling yourself.

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