When introduced a new solution, be it a product, a process, or a business model, the problem for the startup is the absence of a business foundation while for the established company it is precisely its existence. As discussed, market competition occurs at the level of the business formula, while company's value capture occurs through the unique arrangement of operational capabilities, strategic resources, and established relationships with key partners of the value chain; that's what we call business foundation. If the value created by the company must be captured and multiplied, it will be necessary to design a repeatable, scalable, and automatable system based on the adjustment of the business formula with the business foundation. This chapter explores lean operation.
TopIntroduction
The test, as in medical practice, is not whether the treatment is ‘scientific’ but whether the patient recovers...Administration is fundamentally a practice, although, like medicine, it uses various sciences as tools. (Drucker, 1993)
Figure 1. Source: Portillo, E. (2016), The Stragile Conscious Corporate Innovation Model. TopStep 17. Lean Operation
Why are there so many cases where the company that discovers a “gold mine” is not the one that “exploits” its profitably? In the mid-1970s, the Altair 8800 was introduced to the market, considered the first personal computer. Two years later, Steve Wozniak and Steve Jobs introduced the Apple I. Both created a viable minimum product for personal use computer equipment. MITS—the company that introduced and marketed the Altair 8800—as Apple Computers, ran the natural risks of experimenting with a new value proposition and developing a market, but IBM set the standard and became the dominant design of the industry. (Markides & Geroski, 2005).
For David J. Teece, capture value is a function of the nature of technology, the effectiveness of the intellectual property protection system and complementary assets. Depending on the possible arrangements between the three variables, the inventor - be it a person, a team or a complex organization - can opt for licensing or marketing. In the case of the latter, it can, in turn, integrate complementary assets under its control or ensure access through contract. As a general rule, the inventor should be able to capture the value created by his design in the possible combinations, with the exception of two cases: in both, the complementary assets are key for the reproduction of the invention and are owned by a third party. If the technical and legal appropriation is strong, the inventor must share the profit with the owners of the assets, but if the appropriation regime is weak, then it is very likely that the inventor loses to the imitators and the owners of the complementary assets. In this scenario, the recommendation is to integrate the assets under the control of the inventor or the company.
Once a design with the potential to become relevant has been validated or confirmed, the challenge of reproduction, popularly known as the scaling stage, is presented. This constitutes a “quantum leap” from entrepreneur to entrepreneur and from startup to enterprise, the weak point of the whole movement around invention, entrepreneurship and venture capital industry. In the case of the established company, when the new design is adjusted to the complementary assets under its control, it will be providing them with a new capacity for wealth creation; otherwise, you must develop them on your own or through a contract following the strategic criteria proposed by Teece (Teece, 1986).