Corporations Are Doing ‘Innovation Theater’ at the Worst Possible Time
💥A Boom with a View💥 is a column about startups and the technology industry, written by Erin Griffith. Find them all here: fortune.com/boom.
Over the past few years it has become common for senior executives at Fortune 500 companies to make a pilgrimage to Silicon Valley. Touring Mountain View and Menlo Park is the latest trend to sweep the C-suite, next to corporate mindfulness and adult summer camps.
You can imagine the awkwardness that follows. Stiff-haired corporate ladder climbers play dress-up in hoodies, trading their golf outings and steak dinners for drone flying and hipster tacos. They return to the home office in Parsippany or Peoria brimming with ideas about growth hacking. Maybe they rip out their cubicles and install an open floor plan. Perhaps they create “intrapreneurship” competitions. They might even hire a staff futurist or an overpriced “millennial consultant.”
Startups have a term for this condition: innovation theater. It has been especially intense as leaders of staid categories, such as hospitality, transportation, and finance, realize their entire industry could be flipped on its head by some kids with an app. It took only seven years for Airbnb to become more valuable (on paper) than Hilton Worldwide (HLT); it took Uber six years to top Ford (F) and General Motors. It’s no wonder Fortune 500 CEOs can’t shut up about transformation and “disrupting ourselves.”
They’re in an awkward position. If these executives dismiss the startups or do nothing, they risk irrelevance. If they engage in innovation theater, they risk the mockery of snarky columnists like me.
But now I’m wondering why we assume that Silicon Valley’s way of doing things is automatically better. From Theranos to Zenefits, it’s clear that the age-old startup philosophy of “ask forgiveness, not permission” is not a viable business strategy. “Hustling,” in startup parlance, works only when you’re a 10-person company making cute Internet distractions—not when people’s health and safety are at stake.
Ironically, the hot new trend at startups today is corporate theater. As venture funding slows, startups are curtailing spending. They’re learning their way around Capitol Hill and K Street too. “People are buttoning it up a bit,” says CB Insights CEO Anand Sanwal. Before, startups “could get away with lots of questionable and bad behavior.”
Some startups have even created positions like chief regulatory officer as a sign they’re taking things more seriously. That’s a lot less fun than roles like chief inspiration officer or vibe manager (Heroku, a cloud-platform-as-a-service company, has two of those). But the least fun thing of all is shutting down your company.
Thus startups’ newfound focus on profits. That’s good news for Fortune 500 companies seeking to emulate them: Making money is kind of your thing.
A version of this article appears in the July 1, 2016 issue of Fortune with the headline “Hey, Jealousy.”