The Transformational Leadership Zone, Leaps of Faith, and Vetting Those “Awesome” Ideas

07/07/2016 06:26 am ET

There comes a time in one’s life when you just have to close your eyes and leap. Well...let’s be real. There are actually many times when this happens! In fact, I can probably recount probably half a dozen or more in my own life.

I remember the day I decided to stop the college thing. I had worked extremely hard to move up the ladder by going from Radio Shack store manager, to community college, and to getting good enough grades to transfer into the business school at the University of Texas. After getting in, I was working a full-time job, plus trying bootstrap a startup on the side (now Rally.org), and managing a handful of side gigs to help fund the single dad mode I found myself in.

Eventually, I came to an intersection. I could either go on and continue the sort of half-assed job I was doing at both university and startup mode - OR - I could shore up the willpower to drop out and double down on an idea I had started to chase. To make matters worse, I was in my final year of university - and only needed two more semesters to be totally done.

Rally was beginning to show early signs of success, investor interest, and promise around becoming one of the early players in political fundraising space - and eventually - one of the top crowdfunding products in the country.

So, I took a leap of faith. I made a conscious decision to forego university, drop everything else I was doing, and focus entirely on building out the Rally business. I had made several assumptions based on early data, revenues, and the recognition that some early wins were clearly starting to put some wind in our sails. While everything was looking really positive, nothing was even remotely set in stone. Everything could have just as easily fallen apart within a few months of making this decision. All was riding on some basic assumptions I was making and ultimately recognizing the need to have nerves of steel to take that leap of faith - to start truly testing some of these ideas.

Fast forward through many struggles, wins, victories, press interviews, the largest Series A ever raised entirely online, and nearly a billion dollars raised across 60k+ organizations - I still reflect on the moment I decided to jump ship and make the investment to validate my assumptions.

I began to think about this more as I was reading Eric’s new book on the leader’s guide to adapting lean startup at scale. There’s a section early on in his book that talks about “Leap of Faith Assumptions”.

Eric states: “Leap of faith assumptions are those claims in a business case or proposed process solution that will have the greatest impact on its likelihood of success. If they are true, tremendous opportunity awaits. If they are false, the project risks total failure.”

Obviously, I think we can apply these principles to many aspects of our lives. Something Eric and I discussed during an interview I conducted with him on the new podcast show I’ve been experimenting with. In fact, what we really dove into was the need to focus on principles vs. tactics. Tactics might change, but principles - they rarely change. 

The principle here is that we need to have courage to clearly state that our assumptions are, in fact, just assumptions. Whether technical or commercial, we need to identify and test these assumptions as fast as humanly possible. You don’t need an MBA to understand this principle - In fact, it’s probably the root of most success in the silicon valley startup scene. The best entrepreneurs move fast, sometimes break things, and test/ditch ideas relentlessly. Which is why pretty much every good entrepreneur often values failure as much as they value success. Failure, it’s just another data point in the pursuit of validating an idea.

Back to courage, I was once at a Google Ventures conference for portfolio companies. Eric Schmidt got up to give a talk and it was centered on the idea of Courage. He believed that Courage was one of the most important values an entrepreneur and founder should have. It takes courage to leap, it takes courage to admit something is just an assumption, it takes courage to try something new...it takes courage to love, trust, etc. Courage...is really required to have and maintain a whole lot of other values and principles!

Eric went further on: “As many of you have experienced first hand, you need more than a breakthrough idea to build a successful startup”

I’ve found in working amongst some of my recent colleagues and many on the corporate innovation front, more is needed around testing assumptions and accepting that an idea is - just an idea - it’s not the idea that matters as much as the people behind the idea that ultimately determine its ability to generate momentum, execution, and ideally success.

These are some of the hardest things for people to let go of. We’ve all done it. We get an idea into our head, we think we’ve just friggin nailed it, and we do very little to test and validate the initial assumptions that put that idea into our head. Then, eventually, it becomes very hard to let go of it because we’ve poured so much heart and soul into it. This is probably the most common mistake in the world of building startups or launching new product ideas.

I guess what we’re really getting at here is a fundamental need for education in entrepreneurial leadership. Leadership, generally speaking, is something that is heavily talked about and studied in the corporate world, but IMO, largely ignored in startup land - until of course you somehow manage to acquire some significant traction and generate the need to bring in operational talent to help you grow and manage an actual business.

How do you teach entrepreneurial management in a large corporate system that’s designed to keep that which is not immediately broken, the same, and yet infuse the seemingly chaotic, messy, and fast paced nature of early stage product hunting into a corporate unit? Without it being pushed out by the organizational antibodies designed to protect that which is not yet broken. It’s a really interesting phenomenon to watch happen and it’s a tough one to solve. Probably the greatest challenge of any Fortune 2000 CEO.

I’ve seen and experienced many trying to outsource it, but that doesn’t feel right. When you’re put in that client / partnership oriented position - you’re still at a fundamental disadvantage to achieving true asymmetric advantage and executing towards a win. You still have a need to appease a client. Most startups, they’re looking to destroy the client. That, unfortunately, isn’t going away - and you’ll make certain product sacrifices to maintain the relationship. If they’re already having trouble doing it internally, outsourcing it is just going to ultimately make them even more co-dependent - and that’s not good for long term value creation for the firm.

Some months back, I had the pleasure of sitting down with Geoffrey Moore before the launch of his new book Zone to Win. I wanted to know how legacy organizations could better compete with emerging threats from the startup world. He broke down his theory into Four Zones for me: Transformation Zone, Performance Zone, Incubation Zone, and Productivity Zone

Now, I won’t dive too deeply into this - perhaps another article - but one of the things he points out is:

At its core is a simple idea: Start-ups outperform incumbents in disrupted markets because they are not conflicted—all their enemies are outside them

To compete effectively, management must free itself from this bind. It needs to reconfigure its enterprise to fight independently on multiple fronts, acting in parallel but not in lock-step. Specifically, it needs to segregate investments in disruptive innovation from those in sustaining innovation, and at the same time to separate its mission-critical activities from its enabling ones. These two divisions result in four zones of management activity, each internally aligned around its own goals and objectives, each demanding a different style of leadership to achieve those ends.

At the end of the day, it seems to me that this is really more about leadership. It’s my assumption that you can try to outsource your innovation efforts all you want, but it’s never going to change the internal leadership style, mentality, and DNA of the firm. And thus, you’ll never truly achieve the longer term success you’re looking for.

If anything, perhaps these firms should really focus their digital transformation needs on attracting the right talent, releasing wild animals into the system, figuring out how to partner with startups more effectively, and overhauling the corporate leadership layer to more heavily embrace some of the most basic principles of entrepreneurship - and the wacky leadership layer that comes with it. Let’s get into the transformation zone. While this might also be super difficult, at bare minimum, you’re building real value and knowledge internally and learning quite a bit along the way.

Shall we test this assumption? :-)

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