Why Large Corporations Should Behave Like Startups

Why Large Corporations Should Behave Like Startups



I often loathe and am hesitant to use anything that feels like a “buzzword,” but the often discussed “lean startup” has some real validity. The “lean startup” is really just a marketable description put forward by Eric Ries – the thinking isn’t new, it’s simply packaged in an easy-to-consume-then-copy manner. The core of this entrepreneurial philosophy is pretty straightforward:

1) Define your idea/plan
2) Market test the concepts and assumptions (hypotheses meet experiments)
3) Build a Minimum Viable Product (MVP)/Prototype
4) Roll out new features/designs that are responsive to the market rather than “predictive” of the market.
5) Test, test, test.
6) Rinse and repeat.

The idea driving all of this is that until traction and/or revenue is proven, a business is merely a hypothesis, a “faith based venture, as Steve Blank once said. Approaching development with this in mind, you can work to prove the validity of your assumptions, while also repeating it with more precision. The end result, if handled well, is a development that is resource efficient (in terms of startup costs) and highly attuned to the market. In one line: don’t spend time and money developing a product that hasn’t had all of its assumptions tested and its market relevance proven.

As it becomes increasingly more accessible and affordable to start a company, large corporations face a very real risk of losing their advantageous positions. By maintaining their traditional models, companies self-impose slow and inefficient mechanisms to innovate and execute.

Enter the startup model. Large corporations of any industry need to develop their own internal incubators and ‘skunk-works’ divisions, free from traditional constraints. The goal of these divisions should be very simple: receive and generate new ideas and concepts, rapidly market test and prototype them, and then lay the groundwork to scale the new concept/product for the rest of the company. But this is only step one. Scaling the prototype effectively is the next challenge.

To scale this entrepreneurial approach, large corporations need to develop focused teams for all relevant components (i.e. marketing, web-development, public relations, business development, etc.) These teams should only focus on their own particular project, each project having its own “CEO” that would lead the direction and decision making of the project.

Having focused teams and dedicated leadership is important, as the development and scalability of new endeavors would be more immune to “cross-contamination” and distraction.

The significant points for this model emphasize focus and ownership of key projects, while also ensuring that all the mechanisms involved in building a new endeavor are contained and given clear and direct vision and direction. In essence, I am proposing that large companies should instead work as a collection of many smaller companies. The key leadership in each project could then meet in “summits” as and when needed to share frustrations, difficulties and advice. This approach would effectively make the leaders of each project feel less like rivals or co-workers, and more like peer-advisors, each working to make their mark.

The entrepreneurial spirit exists in most people, but the difference between an entrepreneur and a “wantrepreneur” is simply the knowledge and courage to execute on a belief. By encouraging and systematizing an entrepreneurial environment, large corporations will be more able to unleash the creativity and innovative spirit of their entire work force. Not only would this model improve a corporation’s ability to rapidly and efficiently develop new concepts, it would also make the ability to innovate more equally (instead of the traditional “top-down” approach). A possible (and very beneficial) result of this might be that large businesses find it easier to attract both young and “top-shelf” talent that might otherwise be attracted to the more liberated environments of a startup.

To grow big — think small and move fast. The companies that operate in this manner are sure to emerge as the leaders in the next decade, as innovation, efficiency, and radical thinking increasingly become monopolized by the smaller, more agile companies that increase in number every day.

Reprinted with permission.

Image credit: CC by Martin Hricko

About the author: Maxim Wheatley

Maxim Wheatley is a recent graduate of Georgetown University, having studied Cognitive Science & Psychology. He is currently working to become an iOS development guru. His interests center around startups and new ventures, he has already been involved in three different startups, and started two small businesses before he graduated college. Currently based in Washington, DC, Maxim is always interested in talking about ideas and opportunities wherever they might be.