Corporations are struggling to evolve and innovate. That is not news.In many sectors they are being outpaced by smaller companies, startups, new entrants that are not dragged down by legacy systems, outdated business models and redundant personnel. And while the bites start off small, mosquito-size at first, eventually the bites take their toll — it is 凌遲, death by a thousand cuts.

But rather than fearing the rise of the startup, there are opportunities for established companies to learn and borrow from how startups approach their business. Corporations will not revert to their “startup” period, but their mindset toward new product and business development should reflect certain startup principles.

The following are a few of these key principles that corporations can borrow from startups:

  • Customer First
  • Fast Iterations and Fast Learning
  • The Buck Stops With You

Customer First

The vast majority of corporations have forgotten the customer. While they may tout “high quality customer service” and “customer-orientation” in their mission statement, in actuality, the customer is just a number on a spreadsheet, an entry into a CRM database, and, at most, it is ever only the call center operator that even speaks with them.

Whenever I conduct workshops at corporations, one of the first questions I lead off with is, “how many of you regularly interact with your customers?” The question is usually met by blank stares with everyone looking around at each other. The only ones that raise their hands confidently are those in the corporate sales department, to which I quickly counter with, “how many of you regularly listen to your customers?” Their hands quickly go down.

Startups on the other hand, by default, are close to the customer. They have no other choice. There are no layers of bureaucracy, no phases along the supply chain, no distant representative that separates them from their customers. They are up-close and personal, getting to know and appreciate each of their first customers and trying to craft their value proposition to meet their needs better.

Startup founders that abide by the principles of Customer Development know that they need to be in regular contact with the customer, learning about how the market works and discovering the as of yet unmet needs. Corporations need to borrow this mindset, to remember that the heart of their business is not their financial statements but the customer they service.

A couple suggestions for how corporations can put the Customer First:

  • Have every employee in your organization spend a day every quarter talking to customers, being at the point-of-sale, responding to customer complaints or just calling them up to ask how they are doing
  • Constantly ask yourself how you can be improving your value proposition to the customer. More revenues are a byproduct of providing more value and solving more of the customer’s needs.

Fast Iterations and Fast Learning

Corporations are great at planning. Employees sit around all day, churning out reports, spreadsheets and presentations about next quarter, next year, the next five years. Following, management sits in multiple meetings debating every trivial detail of those plans and projections until a finalized, almighty ultimate plan is approved. Then this ultimate plan is printed and distributed across the organization, only to end up at the bottom of a drawer at every employee’s desk never to see light again.

Startups also plan. But rather than fret and debate about the merits of the plan for months in meeting after meeting, they go out and test their plans quickly in the market. What are the major assumptions in my plan and how can I know if they are true or not?

The backbone of the Lean Startup Methodology and Design Thinking is prototyping and iterations. Startups are constantly creating new prototypes and pushing out new releases, each time learning something different about the customer, the market, their business model. And they keep doing this until they get it right and can scale their solution.

In the corporate approach, you get one shot, and you hope that all the great minds in the company have figured out the perfect solution the first time around. With an iterative mindset toward all new business, a cycle of testing and learning gets you to the right solution, with feedback from customers constantly prodding you in the right direction.

A couple suggestions for how corporations can achieve Faster Iterations and Faster Learning:

  • When creating new plans or debating new ideas, rather than launch a discussion based on everyone’s preconceptions, use the meeting to list out all the assumptions and discuss how those assumptions can be tested
  • Conduct meetings that discuss learning — what have we learned about our customers, our business, our competitors this week?
  • Measure the progress of new projects not just on pre-established financial milestones but quantify the level of learning they’ve been able to achieve.

The Buck Stops With You

In a typical corporation, people learn how to hide. With hundreds if not thousands of people around them, employees know how to pass the responsibility and pass the blame around, thereby never actually getting too involved while protecting their individual balanced scorecard. Employees can point to bad boss or an irresponsible colleague; project leaders can also complain about lazy reports or lack of management support; management identify under-performing teams and departments while citing the difficulties of managing such a complex organization. Everyone has someone else to blame.

In such an environment, people can get away with doing the minimum (and they learn what that minimum is very quickly), coasting along in the corporate hierarchy until retirement or another similarly cushy opportunity comes along.

In a typical startup setting, each individual person’s performance and contribution is out in the open for everyone to judge. There is no room or resources available for redundancies. Everyone contributes, everyone delivers and everyone is responsible to moving the agenda forward. It is all hands on deck, all the time. There is no place to hide.

With all the internal innovation teams I work with, I make sure that they know on Day 1 that the buck stops with them. If they want management to invest in their idea, if they want the responsibility and the acclaim of success, then they have to take ownership of moving their project forward. For example:

  • If the legal department is dragging their feet on a contract, wait by their desk until they get back to you
  • If your manager is trying to block you from working on your project, escalate it until you get the right approvals
  • If you aren’t getting any responses from your first prototype, get out on the street and get feedback from customers yourself

Working like a startup means taking ownership of the successes and failures and not making up excuses. Keep testing and learning until you get it right. And keep going back to the customer.

A couple suggestions for how corporations can empower employees to know that The Buck Stops With Them:

  • Provide metered funding to new projects, allowing project teams to spend their specific budget as they wish with little oversight, while informing them they will be held accountable at the end of the cycle
  • Give time for each employee to contribute to innovative projects, whether as a project owner, team member or just a supporter. (See my post on Innovation Slack, Sept 23rd 2018 where I advocate for the principle of 1 hour a day.)

There’s a lot that corporations can learn from startups; taking these principles to heart and empowering employees to adopt them in the workplace will put them on the path to be a bit more nimble, a bit more dynamic.


About the Author

This article was written by Jason Lau, Partner at Core Strategy. See more.