4 Tips for Enterprises to Think like a Startup
In the early 2000s, before the iPod, the digital music landscape was a new frontier. Most people thought Sony would emerge as its king. After all, Sony already had an established music division, as well as the Walkman; the most popular portable music player of its day.
But in 2001, a smaller, more nimble company with an entrepreneurial mindset took the emerging market by storm. Apple debuted iTunes and the iPod, and soon virtually every listener was plugged into the iTunes ecosystem. Although the MP3 market has shrunk substantially since the rise of the smartphone and tablet, Apple’s iPod and iPad devices stepped in to fill the void.
What are the lessons enterprise can learn from startups?
Sony’s loss proves that belonging to the enterprise is both a blessing and a curse. Sony had far more resources than Apple in 2001, but lengthy product development cycles and poorly communicating divisions hamstrung its MP3 efforts. Apple, meanwhile, harnessed its startup culture to design quickly, iterate swiftly and get to market before its competition.
It’s hardly the first time an enterprise company has been beaten to the punch, but it’s one of the most famous examples. Here in Silicon Valley, one can’t go a day without hearing terms like “disrupt” and “innovate.” It’s clear that large enterprises want to be more like startups. Yet, as I’ve seen often with the companies I work with at Yeti, they don’t always know how.
The Problem with Processes
Over time, companies develop processes for research, development, iteration, and scale — that’s great.
The problem is that the time will come, like with Sony, when your company needs to create something new from scratch. Then, these processes end up slowing you down: Your company needs to deviate from its processes to iterate rapidly, but your employees have been trained to work only according to those processes. Multiple levels of approval, lengthy development, and in-depth user testing can produce great products, but often at the price of innovation.
Lean and agile companies like Apple and Google have workflows designed to break process barriers in an innovation stage, but that can be difficult and often requires outside perspective. At Yeti, we work with enterprises to help them knock down those walls and innovate more rapidly.
Think like a Startup
These are the methods we employ to help enterprises think and act more like startups:
1. Use the Scientific Method.
Remember the scientific method from high school biology class? We use it at Yeti to encourage creative, rapid product creation and iterations.
Begin by asking a question. Apple, in its quest to capture MP3 market share, might have asked itself, “What are users looking for in a portable music player?” Then, do research: “Do other MP3 players exist? If so, where do they fall short?” Next, construct a hypothesis: “Consumers want a digital music player, but they want it to look trendy, be accompanied by easy-to-use software, and be easy to navigate.”
After that, experiment. Create a working prototype of the product. Hand the prototype to usability testers — or your own employees if the organization is large enough — and ask them to keep notes on any confusing or nonfunctional parts of the product. Take user feedback seriously: Perhaps a tester thought Apple should add a wheel in the center to enable easier navigation. Finally, release the product after making changes that your trial group suggests.
2. Organize Experimentation Teams.
Big companies tend to organize employees departmentally, but this approach isn’t conducive to innovation. Instead, it tends to silo employees with those who think similarly rather than those whose fresh ideas could spark creative ideas and technical breakthroughs.
Big companies tend to organize employees departmentally, but this approach isn’t conducive to innovation
We recommend creating, or hiring, small units of people with resolute focus on experimentation. Cut back red tape to allow teams to experiment without regard to multiple levels of managerial approval, and then enable these experimentation teams to build out projects that show promise.
Brant Cooper, author of“The Lean Entrepreneur,”has worked with Intel and Capital One to encourage innovation. Cooper recommends that functional teams — sales, branding, compliance, etc. — join experimentation teams that create new products. That way, they’ll get to run experiments, see firsthand why these experimentation teams behave the way they do, and ultimately be able to speak the same language as they bring forth the products.
3. Promote Intrapreneurship.
Arguably the most famous intrapreneurship program of all time, Google’s famed “20 percent time” brought us Google News, AdSense, and even Gmail. Now, companies are opening “corporate innovation centers” here in Silicon Valley and creating intrapreneurship programs to encourage employees to develop new projects.
It’s not enough for the C-suite to want the company to become more lean and innovative. Employees, too, must constantly be thinking entrepreneurially: Where can a particular service be improved? How might a new product grab market share among a hard-to-reach demographic?
Incentivize entrepreneurial thinking by giving bonuses such as profit sharing to employees who bring projects to life. Award superlatives quarterly for the most innovative ideas, and recognize employees in front of the team. Be sure to allow intrapreneurs to take ownership of new ideas they helped create or promote — this means trusting them to manage the project and the teams working on it.
Incentivize entrepreneurial thinking by giving bonuses such as profit sharing to employees who bring projects to life
4. Collaborate With Startups.
One of the best ways to start thinking like a startup is, well, to work with a startup.
Start by exploring startups in the area — both within your industry and without. Don’t dismiss a potential partner because it’s only a few months old or has just a few employees. Both partners should look where the other can add value: Can the enterprise company contribute resources or offer strategy expertise? Can the startup share an innovative process that helped it get a product to market in months?
In my company’s case, enterprise business leaders come to us with problems they need help solving. We’ve worked with a leading consumer food company to help brainstorm new product ideas, helped multiple B2B companies build software prototypes and gather feedback, and assisted a major consumer electronics company redesign its online user experience. Our team gains experience and exposure working with enterprise clients, while the enterprise company gets to immerse its employees in startup methodologies and learn from our collaborative methods.
Business is about competition, but it’s also about collaboration. Startups are hotbeds of innovation, while big businesses have the established processes and resources to propel startups skyward. Let’s put our heads together and build something great.
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