A show called “Silicon Valley“, a brilliant parody of American startup culture, is much more true to life than most realize would believe. I’ve personally lived through many of the “fictional” scenarios presented in these comedy series.
In the show, one startup adopted a tactic known as “middle-out compression” to stay ahead of the competition. And it’s not just a TV thing: the world’s most influential tech billionaires have hit the jackpot using the same playbook.
“Middle-out innovation” is perhaps the most impactful and least discussed flavor of innovation. It focuses on creating platforms, tools, and infrastructure that allow participants across an ecosystem to build innovations on top.
Unlike the top-down leadership-driven or bottom-up approaches, middle-out innovation begins at the heart of a system.
Middle-out solutions facilitate collaboration between different actors and allow new products, services, and business models to emerge through a shared infrastructure. It is not limited to software but rather a holistic approach to cultivating ecosystems for decentralized innovation.
Focus on creating connective tissue
The middle-out approach starts with understanding the pain points, challenges, and needs within a particular system. What are the major obstacles limiting innovation? What are the key friction points between different actors? What infrastructure is lacking?
With this systemic understanding, middle-out innovators then create platforms, APIs, standards, regulations, toolkits, and other layers that address these gaps. They focus on creating connective tissue in ways that would be impossible through centralized top-down or siloed bottom-up approaches.
Some of the most impactful innovations have taken a middle-out approach, developing platforms and infrastructure that empower decentralized innovation.
Platforms empowering decentralized innovation
By offering cloud computing services — storage, databases, and machine learning — as APIs, Amazon Web Services enables startups and developers to build new products.
Similarly, Apple’s App Store provided tools, software development kits (SDKs), and marketplace access that allowed third-party developers to build millions of apps on top of the iPhone platform. This middle-out ecosystem dramatically expanded the capabilities of Apple’s devices.
Wikipedia used wiki software and crowdsourcing to create a collaborative infrastructure for the world’s encyclopedia. Instead of top-down creation, it enabled a community to build Wikipedia from the middle.
There are many other examples of major middle-out innovations, including Google’s Android mobile operating system, WordPress blogging platform, blockchain ledgers powering cryptocurrencies and smart contracts, and open source software projects like Linux and Kubernetes.
These platforms create accessible layers that developers and non-technical experts alike can build upon.
Democratizing innovation for experimentation
The middle-out approach allows innovations to be shaped organically by ecosystem participants. It unlocks emergent potential that exceeds the capabilities of any single organization.
The approach also leverages collective capabilities across an ecosystem. Instead of limiting innovation to what can be achieved internally, it taps into a diverse community of problem solvers.
Promoting interoperability and making tools work together also fosters collaboration between different actors. Innovators can work across organizational and technical boundaries.
Finally, with the middle-out approach, platforms and communities endure even as participants come and go. This makes innovation sustainable over the long-term.
Also, anecdotally at least, companies that fit within this framework also tend to raise a lot more investor capital.
Benefits for immigrant founders
The middle-out approach can be particularly empowering for immigrant entrepreneurs. Many face challenges breaking into American startup ecosystems, lacking connections and capital. Adopting a middle-out mindset allows immigrant founders to turn obstacles into opportunities.
Rather than trying to innovate entirely from scratch or to re-validate an idea in the U.S., they can identify gaps in infrastructure, resources, and collaboration. Immigrant founders can then build bridges in their target markets by creating platforms, communities, and shared tools.
Focusing on a middle-out innovation is an opportunity to drive change by connecting systems, not competing within them.
