Startup Inside A Non-Startup, Part 2
8 Lessons Learned In Starting Kafnu Inside Next Story Group
In my previous post, I discussed the cultural differences between being entrepreneurial vs. being corporate. In the last 12 months, I was asked to do a startup, Kafnu, inside Next Story Group. I thought I’d share my experience about what we have done to make it work so far.
Entrepreneurial efforts need time to breathe, space to grow, and nutrients to develop regardless of whether they occur in or out of a corporation. However, inside a corporation, the results often don’t come soon enough or large enough, particularly if there are established businesses that are pumping out results. While an entrepreneurial effort may get enthusiastic support from all parts of the company in the beginning, over time that goes away as employees go back to minding their own businesses without active involvement in the new project. To keep building momentum, the startup group must show and communicate results and learnings quickly and frequently.
Winston Churchill said, ‘Perfection is the enemy of progress.’ This is the maxim that resonated with us when we developed Kafnu inside Next Story Group. Looking back, here’s what I learned.
Pick the right people to work on the project — We preferred working with people with high creator potential. As I was starting something new, I needed people who liked to create things. Those people inherently understood how to try new things and fail fast so as to learn and move in ambiguous situations. I also looked for givers — their giving attitude helped me to form a team of people who mutually helped each other, especially during the darkest days. Experience was important but only when it was about creating new things, not just operating to excellence. Similarly, people who knew the essence and drivers of best practices were highly valuable, while those who could repeat the steps that led to someone else’s best practices weren’t the right people to incubate Kafnu.
Get patron saints — They’re needed for new ideas to flourish, even in the 21st century. Inside a corporation, you need more than just one — it’s best if you have patron saints in every level of every department in every geography. They’re the people who will provide material, and equally important, moral support to help you through the tough days; recognize and applaud you when you achieve milestones. We had an internal WhatsApp group called Kafnu where the senior and executive management of Next Story Group communicated with each other about the project, and it was always great to see people who didn’t have immediate or direct connections to the project acknowledge milestone achievements and offer help.
Make sure important resources are ringfenced — I managed this as best as I could, but as we were acting like a startup, I begged, borrowed, and stole resources from across the company to work on keeping the costs down for Kafnu. Issues such as human capital being inadequately allocated/shared and contractors working on other projects simultaneously almost killed the project by depriving it of enough nutrients to flourish. There was a pivotal moment 4 months in when my Group CEO pulled me aside and said that a few key members and myself had to drop everything we were working on outside of Kafnu and focus solely on it. It was the most important decision and saved Kafnu from certain death. 2 months later we were mostly back on track — however, some things weren’t quite as refined because we didn’t focus enough resources in the initial phase. This haunted us all the way to the end.
Set low but clear expectations about the outcome — Because my sister companies all had established businesses, it was important that I communicated what I didn’t know, which was mostly everything. I compensated for this by being clear about what we had to learn, shared when I learned, and applied the learning as quickly as I could. In doing so, I was trying to show that we were moving towards an intended direction. The roadmap was emerging as we went along, but it was important to show constant progress, even if there were failures.
Know what’s sacred — It was unreasonable to expect Next Story Group to let Kafnu break all the rules, but some things had to be done differently from the way they were done before. This required me to prioritize what I wanted to change, which meant I had to start from a set of possibilities that excluded anything sacred. The Board and the Group CEO were clear about the few things that we could not break (e.g. organizational values, financial discipline) but also clear about things that we could (e.g. talent recruitment, marketing, design). By knowing these things early on, we knew what we built wouldn’t eventually become a transplanted organ rejected by the host which would really defeat the entire purpose of doing a startup inside a non-startup.
Socialize concept/team to the rest of the organization — There’s always a shroud of mystery around new things and you have to work hard to uncloak the mystery. But the mysterious perception may never disappear because the rest of the organization isn’t on the front line with you. This could create undue fear, uncertainty, and doubt, which will eventually impact the people who are directly working on your project. There wasn’t a simple answer to this. Though time-consuming, I made it to as many group level meetings as I could and talked about Kafnu in a consistent manner, as well as made sure that I was available to answer any questions about Kafnu from anyone, and ensured that the non-ringfenced matrix team that was created to get the project off the ground knew how to explain Kafnu within their respective departments as well.
Don’t skimp on change management — Doing things differently meant change, and change management wasn’t so much about what was going to change, but why the change, how things would change, who would drive and who would the change effect, and when that change was coming. Each of these questions required careful thinking and planning, and any misstep caused people to feel bad or left out. There were some changes where we managed the change better than others; every time we skimped on change management, we ended up paying for it in due time, which was costly.
Accept that you may end up with something different from what you started — This is a conversation that you must have with your boss and key stakeholders, as well as your team. The truth is that no one really knows how things are going to turn out even with the best intentions and planning. Everyone involved with Kafnu accepted that we were moving toward a general direction but didn’t know what we were going to end up with. It’s important that in your startup inside a non-startup, you and the stakeholders have this level of understanding.
As you can see, when you’re an independent startup, many of these go away. They face different issues related to access, but don’t have to bridge the yesterdays and the tomorrows of a corporation. Accounting for a bridging function won’t appear on any spreadsheet analysis, but it is fundamental to the eventual success, or failure, of a startup inside a non-startup.
