Five Ways Your Company Can Think Like a Startup
With more and more startups shaking up the business world, older and more established corporations worldwide are trying to keep up, particularly when it comes to innovation.
The failures are now famous: Kodak was hit by Instagram and Snapchat as digital photography and communication together destroyed the photographic film industry. Online streaming squashed the movie rental industry. It’s now a fact that if big businesses don’t innovate, their end will be nigh.
So how are businesses trying to keep up? They’re thinking like the enemy.
“Big businesses are finding they need to act more like startups as startups become an ever increasing threat to their survival. Startups have become more of a threat as both technology and capital are more accessible to them than ever before,” says Iain Montgomery, engagement manager and innovation consultant at Market Gravity, a firm that has helped businesses like Atlantic Lotto and MasterCard tap into the startup mindset.
“Big businesses are now seeing the fruits of companies who have successfully transformed into more innovative organizations. I would argue there are as many or more doing it badly as there are well,” he says. “Being like a startup requires much more than hiring some young people and putting them in a nice office with a ping pong table and some good coffee.”
Here are Montgomery’s top five tips to help your business thinking like a startup:
1) Define your innovation horizons.
Before you start innovating, you need to first decide what it is you want to improve.
“Companies first need to work out what they’re trying to innovate. I like the McKinsey 3 horizon model. Are you looking to a) make better versions of what you already sell? b) reimagine what that could look like for a new customer segment or take advantage of a new technology/ distribution channel? or c) consider what a future world could be like where your business is entirely reimagined?” says Montgomery.
“This is so important, as without it, you can’t guide your efforts. If you want all three, then you need to structure accordingly. You can’t task one business unit or a central innovation team with doing all of this.”
2) Identify your innovation champions and their lines of reporting to the executive (ideally the CEO).
Even though you’re trying to think like a startup, you still need to remember that there is still a core business bringing in the revenue you need today so you can innovate. This means you need to put someone in charge of the startup/innovation division. This person is usually called the “head of innovation.”
“One of the challenges these people have is that they have traditional reporting structures that can kill many of their good ideas,” Montgomery says. “If you want to act like a startup, then whoever you task with this needs to be empowered to try things out and get resources when he/she needs them.
Traditional bureaucracy often prevents innovation from occurring in large corporations.
“The impact of this can be ‘hey, we’ve got a great idea, it’s tested well but I need you to authorize launching it to a small number of customers,'” he says. “When this goes through traditional reporting lines, great ideas can be killed for all sorts of reasons.”
3) Set a process.
Just because you may be getting rid of an old process doesn’t mean you don’t need one at all.
“Anyone who does corporate innovation has a process. This is where corporates have to act differently to most startups. Most startups have a finite amount of time, try different stuff and see what works. Successful startups tend to follow a process of learn, test, iterate and release quickly,” Montgomery says.
“At Market Gravity, we have a process of discover, design and deliver. We find out what customers do and need, we design based on this insight, we test it and iterate before finding a way to deliver it to market (launch or release) to paying customers at acceptable levels of risk.”
A lot of companies have adopted an approach similar to Market Gravity, including Atlantic Lottery. A big part of this process is checking in with stakeholders after each phase.
“They feel included and can add their input from experience or what they are currently focussed on. Some companies look for approvals here or release of funding from the executive. Startups are somewhat similar. They need access to funding from investors,” Montgomery says. “I encourage big companies to use these check-ins to think like the investor would of a startup. Are they comfortable with the investment? After all, they need to look after the interests of the shareholders.”
4) Don’t set out to “fail fast.” It’s a cliche.
Instead, you should set out to iterate often based on customer feedback.
“While you should never fail slowly, why should you set out to fail? Failing isn’t a good thing. Learning from your various screw ups, mistakes or ‘even better ifs’ is the most important,” Montgomery says. “You know things are working when customers tell you, so building in iteration loops is critical.
“I can think of a recent project where I loved our first prototype, sadly customers didn’t so we went through a few rounds of testing and iteration. The end result has answered questions I originally never considered. To me, that’s not failing fast, that’s iteration. An old colleague told me ‘innovation is iteration’. It’s true.”
5) Give more than you expect to get back.
This is a lesson Montgomery learned from working with Jean Marc Landry from Atlantic Lottery a few years back.
“He always says yes to meeting with someone new and often this can turn up serendipitous introductions that help him, his team or other contacts out,” he says. “Often they will also be meetings with people who can waste your time a little.”
As a startup, you’re always looking to meet new people as they might be good for funding, hiring, access to customers or technology. In a large corporate business, you’re always looking for great partners to work with, people to hire or help that can advance your ideas.
“I think in the beginning, you get a lot from these meetings and as you become more experienced, you find that you’re helping others more than yourself,” Montgomery says. “Still, keep going as things will come along and those serendipitous introductions can prove hugely valuable.”