Three Startup Strategies that Enterprises are Adopting
Think Big and Roll Out Quick
In an attempt to attract the best millennial talent out there, many large corporations are adopting superficial elements of startup culture, perks such as gym memberships and unlimited holidays. However, if you look beneath the hood, the inner workings of most of these companies couldn’t be more different than startups.
Startups generally have smaller teams and less rigid hierarchies. Managers encourage employees to adopt entrepreneurial mindsets, continually aiming to improve and adapt current systems. They need to be agile and take risks to stay ahead of competitors, constantly challenging the norm with their eyes firmly set on disruption.
Large companies, on the other hand, have more established hierarchies often split over different continents, and systems and company culture which have been developed over decades. Corporates want to innovate but are held back by their own internal systems.
Over the last few years, leading companies like Microsoft, Barclays and Ford have set up startup accelerators, and acquisitions of startups peaked in 2015 and are going strong.
But aside from cooperating with, and acquiring startups, we have also seen corporations adopt startup strategies into to their internal workings.
So aside from ping pong tables and free organic coffee, what else are corporates adopting from startups?
1. Take more risks, more often
At larger corporations, strategy and product decisions need to pass through various hands before they are approved, and traditionally fewer risks are taken as the global reputation of the brand, and the investments of thousands of stockholders need to be considered.
This means that innovation becomes a slow and expensive process.
Following in the footsteps of corporations like GE, ING, and Samsung, many large corporations are turning methodologies like Lean Startup, which is championed by entrepreneurs like Eric Ries and Steve Blank, to reduce risks and speed up processes.
Lean startup is heavily based around customer validation, building dedicated innovation teams, and iterating upon a minimum viable product. Instead of rolling out big projects that require large teams and can take months or even years, small teams working on an agile platform can develop, trial and roll-out experiments to improve specific parts of a process.
Being innovative requires being creative, and taking risks, but risks can be reduced by getting outside customer opinions as soon as an idea is born.
To combat this common problem for large companies, GE launched its FastWorks program in which 500 external experts were trained in the Lean Startup Methodology and then 150 coaches were handpicked to train and advise GE managers across the globe. GE launched hundreds of projects throughout the world in which managers would pitch ideas to external growth boards who would approve or decline and then allocate resources.
After rolling out FastWorks, GE has cut development costs by more than half in one of its divisions and reduced time to customer validation by 80% in another. The company aims to extend the program to 200,000 employees in 175 countries in the near future.
2. Giving employees time for passion projects
Another way to install entrepreneurial spirit is by encouraging employees to initiate independent projects, outside of their usual responsibilities. In a recent MTV survey about Millennials’ work habits, 78% of those interviewed believe it’s essential to have a side project in their day jobs.
Apple offers employees a few weeks per year to focus on their own side projects with Blue Sky, Microsoft launched The Garage, allowing employees to build their own products using Microsoft resources, Adobe launched the Kickbox, a project where employees are given tools and funding to follow ideas, and up until recently Google offered its 20% time policy, but has since backtracked.
According to a recent Fast Company article increasingly, non-tech corporations are also encouraging entrepreneurship on the fringes of their organizations.
Entrepreneurial programs appeal to millennials because they create a learning environment, offering any employee the chance to take a risk and learn new skills.
3. Applying more flexible work schedules
Many startups aim to offer employees as much flexibility in their work-schedules as possible. They allow members to work remotely, take ‘working holidays’ away from the office, and unlimited holidays with the focus being placed on producing great results, rather than just putting in the hours at the office.
On the contrary, large scale corporations required employees to spend the majority of their time in offices, due to the logistical challenges of managing tens of thousands of remote workers around the world. However, over time this is changing. Back in the late nineties, only 9 percent of U.S. employees worked remotely on occasion. Today, thanks to advances in internet bandwidth speeds and technology, that number has risen to 37 percent, and the number of workers telecommuting full-time has grown 103 percent over the last ten years.
In a recent survey of business leaders at the Global Leadership Summit in London, 34% of those interviewed said more than half their company’s full-time workforce would be working remotely by 2020, and 25% predicted that three quarters would work remotely.
According to Sara Sutton Fell, CEO of Flexjobs, large global corporations like Humana, Salesforce, IBM, Dell, Deloitte, Kaplan and UnitedHealth Group are already allowing workers to spend some of their time working remotely, and many more corporates are following suit every year.
Having remote employees globally allows companies to have a 24-hour workforce — due to time differences — and employ hard-to-find skill sets from employees who don’t want to or can’t live near offices.
This is especially important now, with the chatter of a ‘tech talent shortage’ as it allows companies to hire the best engineering talent, regardless of where they are based.
While there are undoubtedly challenges for corporates integrating startup strategies, and the adaptation is not as easy for all industries, the days of startups and corporations viewing each other with suspicion has ended, and we are seeing much more of a symbiotic relationship growing over time.