Agile Business Model Innovation: Because No One Can Pick Winners

We’ve coached over a thousand startups and large company teams working to create new products based on innovative business models. The number one mistake they making is simply recognizing that when it comes to innovation, no one can pick winners. The data is overwhelming:

  • Only 12% of venture capital funds outperform the market (1)
  • Just 7% of angel investments account for 75% of the returns (2)
  • YCombinator, perhaps the top Silicon Valley accelerator, made 940 investments to get 8 $1b valuation startups – a 0.009 “unicorn” yield (3)

Innovation efforts don’t fail because of stupidity. They fail because of math. Even Steve Jobs couldn’t pick winners. After the successful Apple II, he sold only 50,000 Apple IIIs and roughly 100,000 Lisa’s. That’s at a time when over 1.3 million PCs were being sold per year. The original Macintosh sold 320,000 units in 1984 against 2 million PCs and Mac sales promptly went down to 200,000 units in 1985. NeXT sold about 50,000 computers in a market where 80 million PCs were being sold each year. Pixar was an unsuccessful hardware company, then a somewhat successful software company, and finally, a very successful movie company. Even for a genius, innovation is hard. (The One Device has a more nuanced view of Job’s prodigious talents while making us remember the iPod Hi-Fi, ROKR phone, and long, twisty road to the iPhone.)

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