Success and failure are deeply related in the startup world.
Many big companies are trying to replicate the success of startups rocking their markets. CEOs all over the world are wondering how they can achieve the performance of players such as Airbnb, Uber, or Tesla that in a few years have grown from passionate projects to billion worthy businesses. Is it a matter of luck? Do we need a huge bunch of money? Are these achievements just for very particular individuals or leaders? Not at all.
Corporates can learn how to operate like startups, just taking some lessons from their best practices. We are listing them in this post, but first and foremost we would like to point out that the most important point that anyone willing to run a startup-like business should memorize: you have to learn how to embrace failure. Every successful new startup has pivoted at some point throughout its development, trying to find the most sustainable and attractive business opportunity. Most startups do not even make it that far, over 90% of startups fail in finding the right product-market fit. Failing is however not necessarily a bad thing and can be leveraged: by staying flexible, experimenting at early stages and learning from every unsuccessful attempt, a startup can find the right track quicker and cheaper.
This principle makes the core for many popular methods to navigate the first stages of any startup. Probably the most known is the Lean Startup method by Eric Ries. This is an approach that focuses on agility, experimentation, and prototyping to find the right match between your product and a specific market as quickly as possible. First designed for digital start-ups, it has successfully been applied in other industries.
Some advice from startups best practices.
Obviously, embracing failure and experimentation is a very different kind of corporate culture compared to regular business practices. We need to shape new ways of working if we want to move into lean innovation. Some best practices from successful startups:
Prototype quickly. One BIG lesson from startups is that you do not need a full product to test its value. You can create several small and very cheap prototypes to check the product-market fit and explore innovative business models. Good startups often fail with their first prototypes before designing a successful solution. James Dyson and its innovative vacuum technology is a good example: he created 1516 versions of his revolutionary Dual Cyclone vacuum cleaner, before he found the right one.
Keep the customer involved. Prototyping is a quick and cheap way to ask your customer about any product. Consumer feedback is a highly valuable datapool to spot critical issues and reformulate the value proposition. Elon Musk is a great example for this kind of mindset, he even took a customer complaint in Twitter from idea to execution in a few days. Really impressive!
Have fast processes. For every project you will need some management tools. The most popular ones within the startup community are those based on agile development, an excellent way to combine quality with a customer oriented approach and the chance to easily change any workflow to quickly adapt product design and prototypes to new demands from the market. Intercom product management approach is a compelling example, with a clear set of guidelines to set up goals and agile processes.
Create blended teams. This cheap and quick process need the removal of any silo within the company, and the creation of mixed and dynamic teams composed of product managers, developers, engineers, marketers and financial people working side by side.
Empower your people. Decision making should be on the field, not in an office on the top floor. Every employee should be empowered to give his best for the company and this means clear communication (avoiding silos), flattened hierarchies, and spaces suitable for open collaboration and teamwork, plenty of opportunities to socialize, discuss new ideas and explore the next business model innovation. AirBnB have successfully implemented such kind of company culture, with some interesting outcomes.
Recruit the best talent. To move swiftly and quickly through the iteration and experimentation process you need to recruit the best talent. This is not about recruiting the best experts, but the best athletes. You will need some really good experts, but a bunch of generalist people, capable of getting the whole picture together and figuring out new paths and iterations, will also be very much needed. You should aim for a balanced, highly tuned team to navigate the big waves! Zappos apply a clear rule to this issue “slow to hire, quick to fire”. This means that we need to ensure that every new candidate fits into the company, and we should fire poor team workers as soon as possible.
Give people the chance to fail safely, and you will save money.
The previously mentioned points are very common startup traits that many big companies have been adopting to improve their innovation processes. But all this will be useless if innovation teams do not have the chance to fail safely. Without that it is much harder for anybody to take the risk ingrained into any business innovation process.
Of course, failing in the way startups do is always cheap. It has been designed to be this way. Prototypes are easily crafted and easily dismissed, just spending a few bucks to test many business model assumptions. Designing your product through this experimentation process will dramatically reduce the chances to deliver a product to the market that nobody wants at a great cost (and huge losses). This is why failing cheap and often will save you a lot of money in the long term. And this is probably also the most important lesson we can take from successful startups: in the process of making innovation happen, failing can be turned into success if we know how to do it.
Further reading:
https://www.theguardian.com/media-network/2015/jul/06/startups-cannes-lions-innovation
http://mashable.com/2010/12/07/tips-startups-entrepreneurs/#WiIp6Lu1Lmqb