The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth

by Eric Ries

Innovation accounting suggests one possible way to solve that problem. Along with division- and function-level growth boards, which allocate funding and hold teams accountable within their existing structures, how about a corporate-level growth board that can fund and accelerate new startups that no existing division wants to fund. Create “M&A” and “IPO” analogs, just like an external startup. If, at some point in the life of an internal startup, a division wants to exert control over its destiny, let them acquire the internal startup out of their M&A budget. IA will give finance a rigorous methodology for assigning it a fair price. And if no division wants to pay this price, create a mechanism to allow the startup to “IPO” and become a new stand-alone division—if its results warrant. If you’ve gone that far, why not use these “M&A” and “IPO” events to encourage finance to create real internal startup equity that is tied to the success of the project. Not—as in so many ill-conceived corporate bonus plans—as bonuses paid out for interim short-term milestones, but as real equity tied only to long-term performance. For most organizations, these ideas are too radical to be considered, so I leave them here as provocations. But especially for the next generation of founders, who are considering the kind of organization they want to leave behind, why wouldn’t you want your best employees to experience the rewards, the focus, and the growth that comes with true high-stakes entrepr...