It is the age of startups in India, with entrepreneurs celebrated as they embody the spirit of New India. Large corporations are the economy’s mainstay, but are perceived to be steady and slow. In the corporate savanna, large corporates are elephants compared to the startup cheetahs. Let’s explore what the former can learn from the trendy.
Mindset of build, break, learn and rebuild: The dominant mindset in a startup is that of a challenger breaking new ground; experimenting, learning and re-pivoting as needed. Many successful startups pivot to a new model as the market context changes. Globally, the example of how Netflix shifted from a DVD rental service to an online streaming service is well known. In India, Myntra started as a personalized gifting service before moving to lifestyle and fashion e-commerce. These are just two examples. Large organizations, however, have a bias for the status quo. Some companies set up innovation accelerators or labs to drive innovation, but studies show that many of these fail to achieve business impact at scale. The real challenge that large businesses face is to find a balance between risk-taking and care-taking as they grow—and adopt the ‘build, break, learn’ approach.
Bias for agility and action: In today’s fast-moving world, the ability to move with speed and agility is a competitive advantage. Startups have a knack for taking decisions quickly, prioritizing action over deliberation. Large firms struggle with this partly because of the many processes and systems they have. One company we know of conducted an ‘audit’ of all its reports and processes and found that a large portion of reports were not being used at all and many processes were too complex. The solution was to eliminate unused reports and radically simplify processes to speed up decision making. The authors found that a systematic and dispassionate review of processes and structure is a good starting point to attain speed and a mindset for action.
Obsessive customer focus: In startups, leaders have first-hand insights into market realities. They are out in the field, interacting with prospective customers, getting a feel of competition. The customer’s voice is a key input for decisions. In large organizations, leaders have a reduced and sanitized (largely) market exposure. Despite their best intentions, even the ‘market visits’ of leaders only provide a rose-tinted view, with everything staged for the big boss’s visit. Of course, large companies are aware of this and try to set it right. Recently, a leading telecom firm announced that all its executives would spend one day visiting customers and understanding their pain points. This boots-on-the-ground approach is important, but even more crucial is the synthesis of what the customer voice requires the company to do differently, and to make it a part of the company DNA and not yet another process.
Organization-first approach: In the early stage of a startup, the founder knows everything about the company and takes all decisions. As it gets larger and some functions get established, the founder remains the focal point who resolves every conflict—implicitly or explicitly making trade-offs that decisions may involve—optimizing for the overall organizational objective. In large organizations, it is impossible for one person to decide everything, and hence structures get created. Unfortunately, most structures have implicit (if not explicit) incentives for people to optimize for the silo and not the whole. Creating autonomous mini businesses within a larger entity can mimic aspects of startup culture, granting both independence and accountability to different parts of a large company. One must be thoughtful in creating these structures, so that they truly solve business problems and are fit for purpose, and not force-fit business-unit structures where they don’t make sense.
Personal connect and collective purpose: In a startup, everyone knows everyone (and even families). There is camaraderie, a sense of collective purpose and informality, while the size and dynamics of the group promotes a sense of mutual accountability. Large companies should find ways to maintain this small-company feel as it grows. Mini-business structures, cross functional task forces and office designs all are mechanisms that organizations have tried using to foster this spirit.
Owner’s mindset: In each area above, large companies have tried structural or process interventions to replicate startup magic. In our view, those are helpful, but there’s a common ingredient that is the most important, and that is developing an ownership mindset among all employees. Granting stock options is a good foundation for that. Genuine involvement in crafting the overall agenda, autonomy in driving strategic initiatives, encouraging boundarylessness and a sharp focus on result orientation all go a long way in making employees feel like owners. When big companies embrace startup themes and create an ownership mindset, the elephant really starts to dance.
Let’s not forget that every large corporation was once a startup. In the next piece, we’ll explore what young startups can glean from their more established counterparts, closing the loop of mutual learning.
These are the authors’ personal views.
