David Kidder – New to Big: Book Review & Audio Summary

Book Info

• Book name: New to Big
• Author: David Kidder, Christina Wallace
• Genre: Business & Economics
• Published Year: 2018
• Publisher: Penguin Books
• Language: English

Audio Summary

Synopsis

New to Big tackles one of the most pressing challenges facing established corporations today: how to innovate when you’ve grown comfortable. David Kidder and Christina Wallace argue that the corporate world’s obsession with shareholder returns has stifled innovation and growth. Drawing on examples from Microsoft, Facebook, and other tech giants, they present a roadmap for installing a permanent growth operating system within legacy companies. The book challenges the mid-20th-century corporate mindset that prioritized efficiency over innovation, showing how adopting startup principles—focusing on customer pain points, embracing risk, and maintaining agility—can revitalize even the most established enterprises and create sustainable, long-term growth in today’s rapidly evolving marketplace.

Key Takeaways

• Mid-20th-century corporate culture shifted from customer service to shareholder appeasement, killing innovation and long-term growth in the process
• Successful startups focus on identifying and solving customer pain points rather than incremental improvements to existing products
• Companies must adopt a “new to big” philosophy that embraces risk and continuous innovation to remain competitive in today’s fast-paced market
• The top companies by market capitalization share a common thread: they’ve all maintained a startup mindset despite their size
• Like sharks that must keep swimming to survive, businesses must keep innovating or face gradual decline and irrelevance

My Summary

When Good Companies Go Bad: The Mid-Century Corporate Trap

I’ve read dozens of business books over the years, but what struck me about New to Big is how Kidder and Wallace frame the problem facing established companies today. It’s not just about digital disruption or changing consumer preferences—it’s about a fundamental mindset shift that happened decades ago and continues to haunt corporate America.

The authors take us back to the late 19th century, to the era of Rockefeller and Carnegie. Say what you will about the robber barons, but these early American capitalists understood something crucial: businesses existed to serve customers and provide value. Sure, they wanted to make money, but they maintained a connection with the people buying their products, whether it was oil, steel, or tricycles.

Then came the 1960s, and everything changed. American mega-corporations started focusing almost exclusively on accumulating profit rather than solving customer problems. Executive compensation ballooned while product innovation stagnated. The economist John Kenneth Galbraith sounded the alarm in his book The New Industrial State, arguing that big corporations were raking in enormous profits at society’s expense.

But here’s where things get interesting—and where I think Kidder and Wallace really nail the diagnosis. The response to Galbraith’s critique wasn’t to refocus on customers. Instead, two economists, Michael C. Jensen and William H. Meckling, published their influential paper “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Rather than encouraging corporations to serve customers better, they told them to prioritize shareholders above all else.

This shift had catastrophic long-term consequences. Businesses became completely detached from public and consumer needs. They abandoned any activity that didn’t immediately boost stock prices. Innovation? Too risky. New product development? Too expensive. Instead, companies focused obsessively on cutting costs and improving efficiency ratios to keep shareholders happy.

The Cuckoo Bird Metaphor That Says It All

The authors use a brilliant metaphor that really stuck with me. Picture a small mother bird with a huge cuckoo chick in her nest. She forgets her own chicks and feeds only the cuckoo, which grows ever more enormous and demanding. That’s exactly what happened to American corporations. They became so consumed with tending to shareholders that they forgot about their own growth, their customers, and their capacity to innovate.

As someone who’s watched companies rise and fall over my career, this resonates deeply. I’ve seen businesses make short-term decisions that pleased Wall Street analysts while slowly eroding their competitive position. It’s like watching someone sell off pieces of their house to pay the mortgage—eventually, there’s nothing left.

The Startup Mindset: Swimming Like a Shark

Here’s where Kidder and Wallace pivot from diagnosis to prescription, and it’s where the book really comes alive. They introduce this compelling metaphor: if a great white shark stops swimming, oxygen can’t pass through its gills, so it sinks and dies. The same principle applies to businesses. When companies stop innovating, they begin their decline—sometimes gradually, sometimes catastrophically.

Modern startups understand this instinctively. Unlike established businesses obsessed with shareholder returns, successful startups focus on identifying and solving customer pain points. The authors use Facebook as a prime example, though I’ll admit the irony of using Facebook as a positive case study in 2024 isn’t lost on me. Still, the principle holds.

When Mark Zuckerberg was coding in his Harvard dorm room, he identified a genuine pain point: people wanted better ways to stay connected with friends and family, to share photos and stories across distances. He didn’t conduct endless focus groups or worry about quarterly earnings. He built something people needed, and it scaled from there.

The Deliveroo example is even more relatable. Founder Will Shu was working late nights at Morgan Stanley’s London office and couldn’t get decent restaurant food delivered. That personal frustration became the foundation for a billion-dollar company. This is the startup mindset in action—seeing problems as opportunities rather than obstacles.

Why Incremental Thinking Kills Companies

What really resonates with me is the distinction Kidder and Wallace draw between incremental improvement and genuine innovation. Established companies love incremental thinking. Make the product 5% better. Improve the process by 3%. Reduce costs by 2%. It feels safe, measurable, and controllable.

But in today’s fast-paced commercial climate, incremental thinking is a death sentence. While you’re tweaking your existing product, someone else is building something that makes your entire business model obsolete. Just ask Blockbuster, Kodak, or Nokia.

The startup mindset means embracing risk and facing the future head-on. It means being willing to cannibalize your own products before someone else does. It requires a fundamental shift from asking “How can we protect what we have?” to “What problem should we solve next?”

When you look at the top five companies by market capitalization in 2018—Apple, Amazon, Alphabet, Microsoft, and Facebook—they all share this characteristic. They’ve all maintained the ability to innovate and seek new customer solutions, even as they’ve grown to enormous size. That’s the “new to big” philosophy in action: taking an idea with potential and letting it grow exponentially without losing the hunger that made it successful in the first place.

Microsoft’s Resurrection: A Case Study in Transformation

The book uses Microsoft as a fascinating case study, and I wish the summary I received had included more details because this is where theory meets practice. Microsoft was a corporate powerhouse that found itself slipping. In 2012, it was in the top five companies by market capitalization alongside General Electric, ExxonMobil, Citigroup, and Walmart. By 2018, it had dropped out of that elite group.

What happened? The summary cuts off here, but we know from recent history that Microsoft managed to reinvent itself under Satya Nadella’s leadership. The company shifted from its defensive posture around Windows and Office to embrace cloud computing with Azure, open-source development, and a more collaborative approach to the tech ecosystem.

This transformation embodies the core principles of New to Big. Microsoft stopped trying to protect its existing moats and started swimming again. They identified new customer pain points, embraced risk, and invested in innovation rather than just cost-cutting. The result? By 2024, Microsoft is once again one of the world’s most valuable companies, having successfully navigated the transition to cloud computing and AI.

Applying the New to Big Philosophy in Your Organization

So how do you actually implement these principles? Based on what Kidder and Wallace outline, here are some practical applications that can work whether you’re running a Fortune 500 company or a small business:

Start with Customer Pain Points, Not Products

Instead of asking “How can we improve our existing offerings?” start asking “What problems are our customers facing that we’re not solving?” This requires getting out of the building, talking to actual customers, and being willing to hear uncomfortable truths. Create cross-functional teams whose sole job is to identify and validate customer pain points, not to defend existing products.

Create Protected Innovation Spaces

One reason established companies struggle with innovation is that new initiatives get strangled by existing processes and metrics. Create protected spaces—whether that’s a separate division, a skunkworks team, or dedicated innovation time—where people can experiment without being judged by the same ROI standards as mature products. Amazon does this brilliantly with its “two-pizza teams” that can operate with startup-like autonomy.

Embrace Failure as Data

Startups expect most experiments to fail. They see failure as valuable data that points them toward what works. Established companies need to adopt this mindset. Instead of punishing failed initiatives, celebrate the learning they generate. Create systems that allow for small, fast failures rather than slow, expensive ones.

Measure What Matters for Growth

If you only measure efficiency and short-term profitability, that’s all you’ll get. Develop new metrics that capture innovation capacity, customer problem-solving, and long-term value creation. Track how many new customer pain points you’re addressing, how quickly you can move from idea to market, and how much you’re investing in future capabilities versus maintaining existing ones.

Build Venture Capital Thinking Into Your Investment Process

VCs expect that most of their investments will fail, but the winners will more than make up for the losers. Established companies need to adopt a similar portfolio approach to innovation. Instead of demanding that every initiative show immediate returns, create a portfolio where you’re making multiple bets, knowing that some will fail but others will drive exponential growth.

The Strengths and Limitations of the New to Big Approach

Having spent time with this book’s concepts, I think Kidder and Wallace have identified something crucial about why established companies struggle. The historical analysis of how we got here—from the shareholder primacy revolution to today’s innovation crisis—is compelling and well-researched.

The startup mindset they advocate isn’t just trendy Silicon Valley thinking; it’s a genuine alternative to the sclerotic corporate culture that dominates many established firms. The emphasis on customer pain points, risk-taking, and continuous innovation provides a clear framework for transformation.

However, I do see some limitations. First, the book sometimes makes transformation sound easier than it is. Changing corporate culture, especially in organizations with decades of ingrained habits, is extraordinarily difficult. The incentive structures, performance metrics, and career advancement paths all reinforce the old way of doing things. You can’t just declare “We’re going to think like a startup now” and expect change to happen.

Second, while the focus on customer pain points is valuable, not all innovation comes from obvious customer problems. Sometimes breakthrough innovations create needs that customers didn’t know they had. Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.” The new to big philosophy could benefit from a more nuanced discussion of different types of innovation.

Third, the book’s critique of shareholder capitalism is spot-on, but the practical reality is that public companies still operate within that system. CEOs who ignore quarterly earnings to invest in long-term innovation often find themselves out of a job. The book could do more to address how leaders can manage this tension.

How New to Big Compares to Other Innovation Literature

For those familiar with business literature, New to Big sits in interesting conversation with other innovation classics. It shares DNA with Clayton Christensen’s The Innovator’s Dilemma, which also explains why successful companies fail. But where Christensen focuses on disruptive innovation and technology shifts, Kidder and Wallace emphasize mindset and operating systems.

The book also echoes Eric Ries’s The Lean Startup, particularly in its emphasis on experimentation and customer focus. However, New to Big is specifically aimed at established companies trying to recapture startup agility, while Ries was primarily writing for actual startups.

There are also parallels with Good to Great by Jim Collins, though the conclusions differ. Collins emphasized disciplined execution and staying focused on what you do best. Kidder and Wallace argue that sometimes you need to abandon what you do best to survive. Both perspectives have merit, and the right approach probably depends on your specific situation.

What makes New to Big distinctive is its historical framing. By tracing the problem back to the shareholder primacy revolution of the 1960s and 70s, the authors help us understand that the innovation crisis isn’t just about technology or disruption—it’s about fundamental assumptions about what businesses are for.

Questions Worth Pondering

As I reflect on the ideas in this book, a few questions keep nagging at me. If you’re reading this and leading an organization, these might be worth discussing with your team:

How would your company’s strategy change if you measured success by customer problems solved rather than quarterly earnings? What decisions would you make differently? What projects would you start or stop?

Is it possible for a public company to truly adopt a startup mindset while still operating within the constraints of public markets and shareholder expectations? Or do we need systemic changes to how capitalism functions?

Final Thoughts from Books4Soul

Look, I’ll be honest—reading about corporate transformation can sometimes feel abstract and disconnected from reality. But what I appreciate about New to Big is that Kidder and Wallace aren’t just offering platitudes about innovation. They’re diagnosing a real problem with real historical roots and offering a framework for addressing it.

Whether you’re leading a Fortune 500 company or running a small business, the core insight holds true: if you stop swimming, you sink. The companies that will thrive in the coming decades are those that can maintain the hunger, agility, and customer focus of startups even as they scale.

That’s not easy. It requires fighting against decades of ingrained habits and powerful incentive structures. But the alternative—slow decline into irrelevance—is worse.

I’d love to hear your thoughts on this. Have you seen companies successfully make this transformation? What obstacles have you encountered when trying to foster innovation in established organizations? Drop a comment below and let’s keep this conversation going. After all, we’re all trying to figure out how to keep swimming in these turbulent waters.