Yes, Corporations CAN Innovate Like Silicon Valley
The keys to innovation success are rooted in venture capital. Read our take on how corporations can innovate just like Silicon Valley.
This Rule of Innovation May Be Misleading You
The 70:20:10 Rule of Innovation. Most of you have probably heard of it. A few of you may have even built your own resource allocation model around it.
Introducing Innovation Power Law
Imagine you’re a successful entrepreneur with a sizable chunk of extra funds you want to invest - let’s say $1,000,000 - and you’ve decided you want to try your hand at angel investing to help other entrepreneurs build their startup visions. You’re not the gambling type who’s going to go all-in on a single bet. You’re much smarter than that, so you decide to diversify your interests, spreading your million over multiple startups. You make 10 startup investments, each at $100,000. Being a savvy investor as well as an entrepreneur yourself, you know that most of the startups you invest in will fail, but you also know that the ones that succeed generally win big. In venture capital, this risk mitigation strategy is known as Power Law: When a small percentage of startups in a portfolio capture a large percentage of the returns. Venture capitalists live by Power Law, and they do so to diversify their interests and successfully hedge their bets. (Read about what angel investor and expert Jason Calacanis says about the strategy here.)