Unpopular opinion: Corporates CAN act like a startup

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Hold on! Don’t quit reading yet; I worked very hard to come up with a headline that wasn’t boring.

And if you still find the headline boring, just read the rest of the article in anger.

The popular opinion today is –

  1. Corporates can’t be startups
  2. Corporates can never work like startups

I whole-heartedly disagree with that opinion.

And so, here’s the unpopular opinion: Corporates can act like startups.

I understand it’s hard for corporates to act like startups. I have been in a position where I had the freedom to act like a startup in a corporate. There were some interesting lessons in that experiment.

But I am fortunate to have had the opportunity to experiment on how to act like a startup at a 50,000+ people organisation.

Firstly, what does it mean to “act like a startup”?

Pool table design
Does having a pool table in the office make one a startup?

I found a good description at MIT that makes sense. To summarise:

Four characteristics of a startup facilitate that learning:

(1) a structure as a small, independent organization
(2) a mission-driven design;
(3) an embrace of frequent pivots; and
(4) an acceptance of delayed profitability.

Jeanne Ross on MIT Sloan Management Review

This isn’t a definitive list of what it means to be a startup. But it’s a good starting point.

It’s also a good time to reflect on how there isn’t really a clear definition of “a startup”.

Anyhow, getting back to the unpopular opinion.

Corporates can act like a startup

#1 – Let project teams be autonomous

constrained teams vs autonomous teams
Autonomous teams lead to better decision making, rapid iterations of delivery, and employees get trained for the future of work

Self-governing teams are a must. In my opinion, they will eventually become the norm. Or should. There is absolutely no point in hiring good talent and then telling them how to do it.

Letting teams be autonomous does not mean it’s a wild-west environment. But rather you are giving them the freedom to carry out their own OODA loops.

OODA loop design
OODA comes from the US Air Force, obviously

O – Observe
O – Orient
D – Decide
A – Act

Each of the steps in OODA has further cycles. You can find more information on OODA here.

This is the most important aspect. Free the team from the monolithic lethargy of the large organisation.

How do you govern, if you build autonomous teams?

I hear you ask…

Good question. The answer to it is simple: take on the role of investors.

So if you are investing in the project team, you are the budget holder. Get the team to create the deck for why you should “invest” in the project. Not with an eye for profitability. But rather, a different metric that fits into one of the 3 buckets below:

3 buckets product metric
If the project doesn’t fit into one of these 3 buckets, think very carefully about “investing”.
  • Metric mover – it moves important KPIs
  • Customer request – pretty obvious
  • Customer delight – also pretty obvious

When you invest in a team – put on your investment hat. And once you invest, the team will have to send you updates and take direction – but in a different manner.

You see, startups aren’t in a lawless land. Startups push the boundaries of innovation by taking someone else’s money too – whether that is the customer or investors. In both cases, they have to answer to the funding gods! Startups have to keep an eye on the cash and the work they are doing.

As you can see, letting teams be autonomous will help corporates tremendously. Not just in the actual work, but also in employee behaviour. As employees will learn to work in a fast-paced environment, making quicker decisions, etc. All these soft skills will help them in their career AND also make more efficient employees.

#2 – Use EGR as a key metric instead of “profit”

Every time I had to make a case for a project, the success of it was judged by

  • how much time it saves – aka money
  • will it make money – more money
  • how much risk will it reduce – aka money

And then you know what happens when folks have to show these figures. They get calculated in very creative ways.

Don’t hate the player, hate the game.

Corporate budget holders need to stop focussing on profit. But rather, focus on EGR –

E – Engagement
G – Growth
R – Revenue

EGR against profit metric
Build engagement. Grow the idea. Generate revenue. This is a better metric than “profitability” for corporate teams to act like startups.

EGR as a metric makes more sense if corporates want to act like a startup.

In my opinion, anything in innovation or general work in project teams should fall under one of these three categories.

Does the project increase engagement (with employees, customers, users, partners)?

Does the project work lead to growth?

Will doing the project increase revenue?

Profitability alone is a dangerous metric.

Nokia was profitable. As was Blockbuster. And the 440 of the FTSE 500 companies since 1955 which are now dead, were profitable.

Amazon was unprofitable for 14 years. And so is Tesla unprofitable (Sep 2019).

You chose which list you want to be associated with.

Now, I know there is more to this than just listing companies. But my point is, profitability alone is a dangerous metric. Stop trying to make / save / avoid money.

Think of your project teams as to whether they increase engagement, or increase growth, and eventually increase revenue.

For corporates to act like a startup, a relentless focus on the Engagement, Growth, Revenue metric is highly recommended.

#3 – Build internal / external customer pipelines

customer pipeline should have more than one customer
This is a poor attempt at showing a customer pipeline. If you are reading this caption, I apologise. I did not focus on my art class at school.

In large corporates, project teams solve problems or work on challenges for one customer. The customer could be either internal or external, it doesn’t matter in this case.

Startups, on the other hand, build customer pipelines and speak to potential customers A LOT before building something – aka solving a problem.

So get your project teams to find more than one customer, ideally 4 or 5 to speak to. There are a number of reasons this will help with project teams becoming more successful.

  1. Having just one customer means putting your eggs in one basket. Get multiple, so if one budget holder was to pull out, you still have others to deliver to.
  2. Speaking to multiple customers gives you more insight into the problem.
  3. Customers, both internal and external, can be notorious with their time availability. So instead of waiting on one customer to come back, you can continue to discuss with others.

This is such a simple tip, yet, in all my time in a corporate, I haven’t seen this happen. Project teams work with one customer at a time.

In conclusion

Corporates can act like a startup. The three points above are a starter for building more innovative and driven teams in a corporate. And each one of the points above has so much more information behind it, that it’s something that would take me a long time to write.

But I am always happy to discuss it with you. If you want to find out more about how to experiment with making one of your teams act like a startup and see if that leads to a different result, then let’s talk.

You can reach me on LinkedIn or Tweet me if you’d like.

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