Startup companies are widely perceived as being lean, agile, flexible, and most importantly: fast. Decisions are made and implemented quickly. They can “turn on a dime” when business needs or marketplace conditions require.
Large enterprises, in contrast, are known for none of these characteristics. They are however, generally, very good at “process.” Though sometimes derided as “bureaucratic,’ this process mentality is vital to successfully managing large-scale operations.
Process is what assures the right people are involved (whether that means activity, approval, or just awareness), and that tasks are completed in a repeatable, measurable, efficient, safe, and scalable manner.
So, can large firms learn anything from the operational models of startups? Writing in Forbes, John Martin contends in “Why Can’t You Be More Like A Startup?” — How To Build A Culture of Agility that not only can big business learn from small companies, but due to “disruptive innovation and disruptive business models,” they must.
Martin believes big and small organizations “could learn a great deal from each other,” noting that “the ‘lean’ business models on which startups thrive can be adopted, to allow large businesses to deal with uncertainty and limited budgets more effectively.” Meanwhile, startups can benefit from learning “the best operational and planning practices of large companies.”
Startups frequently adopt agile development and business models because they provide “the best fit for a company with extreme time pressures, limited resources and rapidly changing targets,” according to Martin. He proceeds to write that “this is exactly the situation many CIOs face when deciding how to spend their limited innovation budget,” making IT a place where adopting startup company practices can benefit large organizations.
Agile practices aren’t just about controlling costs, of course. They also enable IT to embark on projects that provide value to the business quickly, and to swiftly reverse course on unproductive paths.
Startup companies begin at ground zero for operational software (HR, CRM, accounting, etc.) implementations. Large companies, in contrast, have in-place applications and platforms in which they’ve invested significant sums of financial and knowledge capital over the years.
While there are instances where a legacy system can simply no longer support an enterprise’s changing needs that a large-scale “rip and replace” project is necessary, in many cases existing systems of record can be leveraged with new technology and processes that provide business value rapidly while minimizing new capital outlays, taking an evolutionary approach.
Martin shares the story of a client company that misunderstood the agile approach, and possibly the benefits of evolution over revolution as well:
The company’s “immediate concern was how to rapidly extract value from an underused and expensive capital resource, purchased over a year ago.” Surprisingly though (as the participants were supposedly “well versed in ‘Agile'”), “one of the reasons given for the poor utilization was that the purchase had been made as a result of an ‘Agile Decision.’…if there’d (truly) been a pervasive culture of Lean or Agile thinking, then a continuous two-week cycle of small testable actions would have begun extracting value from the investment starting the day after the equipment was delivered.”
Or, perhaps the company wouldn’t have purchased the “expensive capital resource” to begin with, if an evolutionary approach leveraging existing technology assets (perhaps supplemented by a more modest investment in smaller components) was a practical alternative.
As Martin notes, “The beauty of the incremental and measurable actions of such approaches is that they help an organization learn rapidly, not just from successes, but also from mistakes.”
Startups know that great products are built by great teams. But it can be difficult in larger companies to build small, multi-disciplinary teams, and for management to then “support these teams by removing the roadblocks that get in their way,” in Martin’s words.
Martin further quotes Rich Karlgaard regarding the optimal size of teams: “There’s a right size for every team, and it’s almost always smaller than you think…The best leaders keep their teams small and agile.”
Or, as written here recently, teams should ideally be made “as large as necessary, as small as feasible, and as passionate as possible.” The keys to team-building in large organizations are to make sure all necessary stakeholder groups are involved—but no more—and to select individuals who can both contribute as individuals and collaborate with the group.
Combining startup characteristics and practices like agile development and (small) team-building with an evolutionary technology approach that leverages existing investments in management and control platforms is ideal for aligning IT with the business. This combination enables IT to respond to rapidly changing business requirements while maintaining efficiency and data security.
Much has been written about “shadow IT” and the perception of some business users that IT is more hindrance than help. But agile development and an evolutionary approach to technology allow IT to demonstrate business value quickly, while team participation builds trust between stakeholders.
Big and Small
Martin advises large enterprises and startups alike to “make sure your innovation platform not only supports rapid change and growth, but also maintains adequate levels of governance and operational efficiency.”
The approaches are different, but the goals the same. New technology investments need to be made with an eye to what’s already in place and can be leveraged. Agile practices, an evolutionary approach, and teamwork are vital to enabling IT to support rapidly changing business needs while maintaining corporate standards, efficiency, cost-effectiveness, scalability, and information security.
For more information about agility, security or business process optimization, download any (or all) of these white papers: