As he entered his third decade as an angel investor, Howard Love noticed something. Across the sixty or so companies he had been involved in, a number of patterns were evident. The companies seemed to go through a predictable set of steps he named the “J Curve.”
According to Love, although most entrepreneurs believe that their start-up journey will be something of a linear journey, a straight line from the beginning to the exit, the truth couldn’t be more different. He identified six different phases that, if graphed, resembled the letter J.
We caught up with Howard to ask if our readership, mostly enterprise companies, could glean anything from these lessons.
How can the J Curve be relevant in a corporate environment?
As large corporations struggle to remain innovative, you need a tool to facilitate product innovation in an environment that may not be conducive to innovation. The good news is that the J Curve can be exactly the tool you need to overcome the corporate obstacles that stand in your path.
The J Curve predicts exactly what happens in the early stages of innovation and explains why innovation often struggles in larger organizations. There are specific actions that you can take that can protect innovation, and indeed encourage it.
Well, whether you are a corporate employee or are working with a large organization while still a start-up founder, recognize that the factors affecting your success are different than if you are operating as a small, independent entity. These factors can be both positive and negative, but it’s more likely that they’ll be positive if you are aware of them and are sufficiently agile to shift your approach to take advantage of them.
New projects need strong sponsorship from the leadership. They need to be protected when they are in the delicate phase of trying to figure out exactly what the new product is. There is a lot of natural uncertainty involved in the messy process of birthing a new product. The team that is spearheading the innovation needs the time and flexibility to make it through what I refer to as “the long cold winter.”
Once they are through that, then larger organizations actually have many advantages over a raw start-up and these advantages need to be leveraged.
Can we include the checklist from your book in the interview?
By all means.
- Is the large organization with which you’re associated hamstrung by a slow-moving approval process, bureaucracy, and difficulty accepting any type of failure? Are there ways you might incorporate aspects of J Curve to facilitate the speed, flexibility, and innovation that characterize the best start-ups?
- In the Create phase, can you form a small team that is insulated and protected from the pressures, bureaucracy, and procedures that can make it difficult to come up with truly innovative products?
- In the Release phase, are you able to speed up the process of getting a product out there by either creating a beta product, releasing it under a different brand name, or committing to come out with different versions of it quickly—or doing all three?
- In the Morph phase, are you able to overcome the innate organizational resistance to making major, wholesale product changes by having your effort fly under the corporate radar or by operating as a company within a company and not subject to the typical corporate oversight?
- In the Model phase, are you able to capitalize on the large organization’s infrastructure that the company may already have in place?
- In the Scale phase, are you taking advantage of the organization’s people, process, and money resources? Can you leverage the existing customer lists and marketing infrastructure?
- In the Harvest phase, are you drawing on the corporation’s extensive experience with using excess cash for investing, new products, growth, and so on?
In your experience, what are the areas where large companies excel the most?
Scaling is where large corporations really shine, and they have huge advantages over a start-up because they possess three primary ingredients: people, process and money.
When you’re the size of, or partnering with, a larger enterprise, you gain the advantage of speed in the Scale phase as you can leverage existing people, process and distribution to expand externally at a fast pace.
Also, unlike start-ups, corporations operate in a continuous Harvest mode. So they have real experience with this phase and can deal with the opportunities and major financial questions without missing a beat. Large companies are so used to the Harvest stage they can do it blindfolded!
The Start-up J Curve is available at howardlove.com.
Howard Love is a life-long entrepreneur who has founded, co-founded, funded and managed startups for over 30 years. He has founded or co-founded over 15 businesses and invested in over 50 startups.
Love was born in Detroit in 1960, and attended Phillips Exeter Academy (1974-1978) and Colgate University (1978-1983). He completed his first Ironman competition at the age of 51 in Lake Placid, NY.