June 2019 Magazine

Established Companies Should Think Like A Startup

established

Jeff D. Standridge, Ed.D., Chief Catalyst, Conductor

Winning in any business environment demands that companies embrace various forms of disruptive innovation. This paradigm shift requires a new way of thinking throughout the entire organizational ecosystem – one that necessitates a culture of creativity, transparency and agility. 

Threats to an organization’s success often come in the form of severe local or global competition and dramatically reduced product development lifecycles, underpinned by the swift rise of digital technologies. These threats, among others, conspire to create a rapidly changing overall business environment. Incumbents who either refuse or fail to adapt to these dramatic changes fall prey to those who do. 

Startup companies seem to thrive in the presence of this rapidly changing landscape. In fact, many startups experience their genesis as a direct result of these various threats. But why do startup companies “lean in” to this new way of thinking while more established firms often struggle to embrace it? 

At the Conductor/Startup Junkie, we consult with a growing number of larger, more established firms as they face the need to be disruptive or as they attempt to traverse the shifting sands of change. We have found that helping these established companies to view their challenges through the lens of a startup company helps to facilitate a more “reasoned” approach to disruptive innovation and organizational change. 

Some estimates suggest that 35-40 percent of all new startup companies fail, because they create a new product or service that too few people actually want. In other words, not enough people are willing to purchase the new product or service at a price point required to create a profitable, ongoing concern. As a result, these young, fledgling companies run out of funding before they recognize the error of their ways. They literally fail, and as a result, they close their doors. In more established companies, embarking on a project that fails to garner the support of clients and/or key stakeholders certainly creates frustration, and might even result in unnecessary expense, wasted effort and significant distraction – but it seldom results in bankruptcy. In our experience, it is this very real likelihood of failure, and the dire consequences it brings, that makes the disciplines of a startup company appropriate for a business of any size. Let me explain. 

The most successful among the startups, those that thrive beyond the proverbial five-year failure milestone, first engage in a very disciplined process of de-risking their business by testing their underlying assumptions. They are very pedantic about clearly and concisely identifying the problems they are trying to solve, as well as the target customers who experience those problems. They are vigilant about ensuring a close alignment between their product and the target market. Even then, they start with a little more than a working prototype, or a minimally viable product, so they can begin testing their actual solutions in a real market of paying clients. They then use the experiences and feedback of those early adopters to make improvements to their products and services before making them generally available to the broader target market. In the final analysis, these successful entrepreneurs actually spend very little money or make very few investments until they are reasonably certain that they have strengthened their plans by testing and retesting their riskiest assumptions. Using a combination of quantitative and qualitative research techniques to test those assumptions, they are willing to fail early and often in their pursuit of a solid plan with a much greater likelihood of success.

The established companies we work with are learning that these skills and disciplines of innovation and entrepreneurship are fully transferable into their setting. They find that this measured, very pedantic approach significantly reduces the fear and trepidation that often accompany market disruption or rapid organizational change. And finally, they often learn that the teamwork required to truly innovate within the walls of an established company can be very motivating, extremely fulfilling, often exhilarating and even fun. 

At the end of the day, when companies of any size tap into the skills and disciplines of innovation and seek to build “intrapreneurs” within their everyday setting, they create a climate for real innovation and real organizational transformation. In doing so, they drastically increase the likelihood that they’ll generate sustained results that create massive value, for their clients, their shareholders and other key stakeholders.     

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Jeff D. Standridge helps organizations and their leaders disrupt the status quo, create massive value and generate sustained results in the areas of innovation, strategy, profit growth, organizational transformation and leadership. He serves as chief catalyst for the Conductor (www.ARConductor.org), is co-founder of Cadron Capital Partners, and teaches entrepreneurial finance & innovation leadership at the University of Central Arkansas. 

                                                                                        

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