Startup Thinking; the two lessons large businesses need to learn
By John Martin, principal technologist, NetApp Australia and New Zealand
Startups are becoming increasingly fashionable; their innovative and disruptive business models, not to mention their colourful offices, are the talk of the town in business circles. With organisations of all sizes and structures in a constant race to modernise and think outside the box, leaders in established businesses are often searching for ways to infiltrate their companies with startup-inspired thinking.
From the alternative perspective, one could argue that “acting like a startup” might be interpreted as an excuse to make rushed decisions with minimal analysis. However, having worked for both startups and Fortune 500 companies, I think that large businesses and startups can ultimately learn a great deal from one another.
The “lean” business models on which startups thrive can be adapted to better position large businesses to deal with the uncertainty they face, and use their budgets more effectively. However, many of the businesses that see the potential for more “agile” or “lean” practices fail to adequately invest in the foundations required for it to succeed.
Conversely, startups must take the time to learn from their enterprise counterparts. Those that fail to adapt the best operational and planning practices developed by large companies often stumble, even if they have all the other makings of a highly successful business.
Lesson 1: Knowing when to minimise upfront planning (and when not to)
Startups don’t choose to minimise upfront planning because they think it will produce the best business outcomes in every situation. In reality, they opt with this approach because it’s the best fit for a company facing extremely tight timeframes, limited human and financial resources, and rapid growth and change.
Coincidentally, this is a very similar set of circumstances to those CIOs find themselves facing when they are looking to decide how to spend their limited innovation budget. Therefore, this is one area where, when handled well, implementing “startup thinking” can reap enormous rewards for large companies.
Lesson 2: Balancing the best of “startup thinking” with the “big end of town thinking”
Often, the day-to-day components of operations and management are forgotten, as businesses race to reach critical mass. This is understandable, however it also threatens overall efficiency.
To illustrate, I recently met with a client whose immediate concern was to find a way to quickly gain value from an underutilised and expensive capital resource that was purchased over a year ago. Unfortunately, in my experience, expensive and underused resources are often unsurprising in very large companies. What was surprising though, was that one of the reasons given for the poor utilisation was that the purchase had been made as a result of an “agile decision” inspired by startup thinking.
This is a classic example of a problem I frequently see in large businesses, and something I would consider to be the most significant barrier to enterprise organisations truly benefitting from startup thinking. As author Steve Denning explains, it was a case of, “agile doesn’t fit our organisational culture.”
To address this, make sure your innovation strategy supports rapid evolution and growth, but also upholds the levels of structure, governance and operational efficiency that are commonplace in large businesses. Essentially, building successful organisational innovation, like building anything, requires steady foundations and support.
Putting it all together
Established businesses, regardless of how large they are, can reap enormous benefits from applying “startup thinking”, and perhaps more significantly “startup behavior”. However, it is important for businesses of this kind to recognise the value of their existing structured organisational processes, and with a clear vision from the top, should work to combine the best of both worlds.