AOL will be shutting down AIM, its instant messenger service, on December 15. This iconic product was highly popular during its heyday.
According to the WSJ, AIM grew from 13 million users in 1997 to over 65 million users in 2000. While some of us will lament the the closure of AIM, these feelings are more nostalgia than anything else.
The truth is that many of us stopped using the platform long ago and we have migrated to other platforms such as WhatsApp and Facebook Messenger.
For me, the underlying question for corporate leaders is why AOL failed to turn its early dominance into ongoing success as social networks and smartphones grew in popularity.
Success is indeed a poor teacher that can convince leaders into thinking that they can never fail. The challenge most leaders face is that they are using tools, paradigms and frames of reference that are no longer appropriate for the contemporary business environment. While execution and operational excellence are key for maintaining current success, future success requires entrepreneurial leadership.
Below are the five traits that entrepreneurial leaders must have:
1. Humility: In a world that is ever changing, leaders need to concede that they cannot possibly know in advance what is going to happen. Humility challenges the myth of the visionary leader who can see the future and leads the people towards it. Entrepreneurial leadership is about developing hypotheses about what the future might look like, and then allowing teams within the company to test these hypotheses. This innovation thesis is not a strategy to be executed against, but a theory to be tested with customers and refined through learning.
2. Serendipity: Instead of micromanaging the exact ideas that people get to work on, entrepreneurial leaders create an environment that supports serendipity. Such leaders know that the best ideas will not come from them, but from their employees. In such an environment, hierarchical decision making is limited, cross-functional teams mingle and ideas cross-pollinate. Breakthrough ideas are not killed early. Instead, they are supported while being tested for viability with customers and markets.
3. Moneyball: Even as entrepreneurial leaders understand that they can’t predict the future, they also know that they have to invest money and resources to take the company there. Traditional investment decision making was based on business plans with five year revenue projects. But you cannot plan for an unknown future. Innovators have to test their ideas before they scale them up. So when investing in transformational or breakthrough products, entrepreneurial leaders use incremental investing. They initially invest small amounts to allow innovators to test their key assumptions. They then double-down investment on those ideas that are showing the most promise or traction.
4. Right Questions: Incremental investing works when it is accompanied by innovation accounting. The skill that the entrepreneurial leader has masters is asking their innovation teams the right questions at the right time. For example, before asking about the solution, entrepreneurial leaders ask about customer needs. Before asking for how much revenue the product will make in year five, they ask whether the team has found the right business model. Entrepreneurial leaders are happy to invest resources to have these key questions answered before they invest in scaling a product. This also allows them to learn quickly what works and doesn’t work so they can stop projects early.
5. Celebrate Failure: Entrepreneurial leaders celebrate failure, publicly. This is because they want to encourage a culture of trial and error, that is key for innovation. They also do not over invest in projects with untested assumptions. As such, each failure is easy to celebrate because it was relatively cheap and represents key lessons learned about customers and the future that the company is trying to navigate towards.
As you can see, entrepreneurial leadership is all about creating the right context for innovators to thrive.
Entrepreneurial leaders do not have to be product visionaries. Instead, they can be visionaries of creating the right culture and a future facing organization. With that in mind, we bid farewell to AOL’s AIM.
I just hope that we will not be asking the same questions about WhatsApp or Facebook Messenger in a decade from today.