You don’t have to be a start-up to learn, lead and innovate like one…
1. Entrepreneurs are built, not born
By correlation we can imply all businesses have innovative capacity and building that capability can be through strategy, resource allocation, process, culture and leadership. Most importantly having a go! After all is not the best form of learning the practical as opposed to the theory.
2. Start-ups are unique
They are not small versions of large companies and hence traditional business thinking tends to stifle the start-up. Likewise if a large organisation is looking to innovate and ‘learn by doing’, they need to be open to start up ways of working, managing, funding. Less ruling by command & control and more by seeking, solving, encouraging and seed funding.
3. The Search for a Business Model
Under lean start up models the founders search for repeatable and scalable business models, rather than settling on one when the venture is launched. For larger corporates they tend to apply new ways of doing things through existing business models more often than not as the ‘status quo’ police of middle management apply traditional ways of reaching customers and consumers. Instead a healthy start point might be a small venture team based diverse group of individuals starting with a blank sheet of paper literally and saying ‘without constraint’ what is the best way we can create value from this idea/insight/trend/unmet need and take our product or service to customers and consumers in new and innovative ways. Senior leadership should give encouragement for the venture teams to take this approach and be open to growing some babies or children outside the corporate home or traditional business model.
4. Run Fast
Successful start ups observe when their business model is struggling, respond to new facts, decide which parts of the business model require urgent change, and act. Less time on detailed business planning and more time on testing in market with real live tests. How often do you sit in board rooms with your peers either a) presenting or b) picking apart detailed business cases on products or services with 5 year business revenue and profit projections that could be better spent on inquisitive questioning like “how can we test this for small dollars to get large learning”. What are some creative entrepreneurial ways we can find out if this is going to work before we scale it and go full blown national launch for example?
5. Pivot and Turn
Pivoting is about iteration, testing and validation, and can be as simple as realising you have priced a product or service incorrectly. Start up founders realise that several pivots maybe required in the early years to reinvent the venture. They ensure the culture and staff are flexible enough to turn on a dime if required. By correlation in many corporate cultures its often launch and leave or launch and run in case things don’t go well. Culture is an integral part here of creating a testing, learning and adaptive team based culture where the venture teams are kept together post product/service launch and report back in frequently with learning and recommendation to pivot, stop, start again, push harder, invest more/less, etc. Some large businesses realise that traditional leadership structures or meetings and forums do not allow for this type of learning and iterative process and set up incubators, skunk works, or get senior grey haired veterans to run these entrepreneurial business units. Cell based structures may also be appropriate and leaders will need to work out how and when the satellite businesses are brought back into the mother ship or scaled and grown by the battalion as opposed to continuing to operate like the special forces.
6. Lean and Learn
True learning comes from testing aspects of the business model and market hypothesis early and quickly. Rather than spending months researching start ups get their minimum viable product (MVP) to market quickly and let their customers inform them. Speed is the imperative and their most precious asset. In the age of ‘accelerate everything’ where we live by the mantra ‘I want it now!” and I can find it in 7 seconds or less on Google this is a very potent message to large corporations. Research is often done to reassure internal stakeholders and appease layers of management the homework has been done before the big artillery of $$$ of Advertising and Promotion are spent in the market to support this new product or service. More thinking can and should be devoted to how multiple controlled live tests can be launched simultaneously for e.g. 7 different products in 7 different states and review and learn after 6 months which 1 or 2 continue and we invest redevelop and roll out.
7. Feedback Loops
Start up entrepreneurs create feedback loops to measure customers response to new products, at least at the very start, to decide whether to ‘pivot or perserve’ with their business model. They constantly source customer feedback and let it shape their business model. With the advent of social media this process of continuous feedback loops should arguably be much easier for the larger corporates than the start ups. They have the millions of likes on Facebook constantly feedback criticism or favourites on new products and prototypes. Corporates often have very sophisticated customer engagement models and survey tools as well through third party providers. Turning these tools towards active engagement on product and service beta development, controlled market tests and post launch analysis with equally prompt redesign and redelivery will increase customer and consumer engagement and arguably make the large corporates a more nimble and liked business by their customers. The challenge is on the big to be ‘small & nimble’ far more so than the other way around in the modern age of instant gratification, response and listening.
8. The Critical Formula
Under lean entrepreneurship thinking, chaos + speed + pivots = success. Start ups realise they need to operate in environments of extreme unpredictability (chaos), use great skill to change quickly as circumstances dictate (speed) and reinvent aspects of their business model (pivot) to respond to threats and opportunity. This seemingly choatic, manic, back flipping or zig zagging appearance will not sit well inside many corporations where the mandate is often 10% topline and 10% bottom line growth year on year. However, entrepreneurship be that corporate or start up is never 10% steady year on year growth and its up to senior leaders to create ‘gambling funds’, set aside intrapreneurial seed capital and manage their own intracompany adventuring like a venture capitalist. Not all bets come off and provided the company accepts that some bets and teams are like the house money in the casino but that it could be the next one or the next one that comes off they are on the road to learning and the more they learn by doing the more that appearance of fast, pivoting, chaos will start to feel like the new normal around here and that will be a demonstration that culture has come to match the business innovation strategy, they have succeeded in allocating scarce resources to new ventures and they have a process that is producing results.
9. Entrepreneurship is Management
While it may not sit well with many strong minded entrepreneurs or creative innovators, Ries notes entrepreneurship is essentially another form of management. The start up management style recognises the uncertainty of entrepreneurship with its increased risk and reward profile and the need to adapt and develop a stream of constant innovation. For many large corporates like conglomerates who operate across different industries, geographies or have multiple business units they are already a great example of using multiple business models and management styles. To them entrepreneurship may not be new and maybe something we have been doing for years without the name tag e.g. Wesfarmers, Tata, China Resources Enterprise to name a few. For other large corporates who have not yet tackled this head on or are thinking about tackling it head on I can recommend a couple of immediate things to do. Step 1 Pick up a copy of Lean Start Up and note down everything as you read that is interesting and new, anything you learn and lastly but most importanly, what you can take and apply to your own context. Step 2 immerse yourself in the learning process. Go and see some start ups in action in your industry or adjacent industries. Go and seek to understand how large conglomerates can operate with multiple entities and entrepreneurial divisions inside a large business structure. Step 3 and the most important step. Get the strategy out, make sure it has an innovation strategy component and invest some ‘gambling chips’ into starting some ventures. Back those ventures and applaud their bravery across the business until what seems unnerving, unnatural and unreal becomes the new ‘way we do things around here’
It might take a lot of guts, determination and persistence but then again so does starting your own business as any entrepreneur out there will tell you over a coffee or cold beer or glass of wine.
Create Innovate Grow
Dermott Dowling @Creatovate