Disruptive Change and Unicorns
Unicorns are popular with children and business publications…for different reasons. Children are enchanted by magical creatures. Business writers like their version – a startup company valued at over US$1 billion – not yet listed on a share market.
What is a Unicorn?
Venture capitalist Aileen Lee, coined the term unicorn because such businesses are so rare. Luisa Zhou reports that only 0.00006% of startups reach unicorn status. Bain report that fewer than 1% of unicorns are profiting at scale with true business success despite $1 billion-plus valuations. Most sources say there are 1400-1500 unicorn companies in the world in 2024. If Bain, are correct, less than 15 of those are truly profitable at scale. It seems that unicorns are rare indeed.
Operating Disruptively
Unicorns are fundamentally disruptive in nature, echoing calls from business gurus for organisations to be disruptive to create value for shareholders, stakeholders and customers – usually in that order. The idea of “disruptive innovation” came from Clayton Christensen’s 1997 book The Innovator’s Dilemma. His focus was on startups with bold new ideas that created new industries. There has been a clamour of calls for disruption from business gurus ever since.
Unicorns have an operating mode of disruptive improvement – an approach to improving operations based on creativity, innovation and eschewing past practices. This is the operating mode of ambitious start-up companies. It is the mode Google, Facebook, Air BnB and others adopted. They now have the luxury of huge cash reserves to explore more disruption.
Those particular disruptive start-ups have been successful on a vast scale. They are, however, a tiny percentage of the businesses operating in the world today. Most businesses do not operate like that and most normal startups don’t fail but it is reported that 90% of disruptive startups fail.
Are you really a disruptive organisation?
Most businesses are not disruptive. Most businesses are not even very nimble. Other organisations like not-for-profits and government agencies are even less likely to be disruptive like unicorns. Most organisations adopt non-disruptive modes of improvement. That means that a lot of the language, rhetoric and approaches associated with unicorns does not match the way that they operate. There are better ways for them to think about strategic change and improvement.
If you want to improve your organisation you need to do it in ways that fit the way you work. That doesn’t mean you can’t do change. It is more about the way you do it. I will share more thoughts on that in my next blog. What do you think? Feedback welcome.
Phil Guerin, Consultant/Director, Hague Consulting Ltd. © Hague Consulting Ltd 2024
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