The corporation that wanted to become a start-up
Also known as... the adult that wanted to be a child
Imitation is the most sincere form of flattery… yet, some are so bad that is insulting
Many large corporate CEOs believe that the solution for many of their challenges lies in acting more like a start-up and, on the surface, seems logical right? For example, only in healthcare in Europe there are more than 30.000 SMEs trying to disrupt the value chain through technology, higher risk appetite and agility.
The problem is what should you copy from them?
“Lets copy what it says here”
A lot of what you read online about companies are at least exaggerations in a PR attempt to boost reputation, specially for start-ups looking to increase their value pre-investment or IPO. Theranos might be one of the most hardcore examples in recent years but to some degree all play the same game.
Copying requires understanding, not only of what you want to copy but the industry’s inner-workings including the processes used to deliver the good or service, the organisation, talent (including how many people are involved), regulatory constrains, financing and much more.
Copy but dont copy and paste
“OK, lets copy the way they work”
Sure, it’s very simple man, my 50K employee corporation should just work like the 15 employee start-up. Ok but what about the other 500 products we have since they only have one? or the international operations, should we close our presence in 8 other countries? what should each country do vs. the central “start-up” team? Should we also stop doing all these compliance, legal and regulatory committees or should we just risk it like FTX did? Should we forget about our legacy and start a new venture?
Copying how a start-up works makes sense but you should copy their empowerment and accountability. Because they are smaller, you always know who is responsible and is somewhat easy to agree since power is concentrated on a few people. Copy that and read this our article on empowerment vs. accountability.
“Fine, lets instead hire some of them”
A topic to be discussed in length but this argument again, on the surface makes sense, but fails for several reasons. Large corporations are talent grinders, for example by not providing a good value proposition for younger people to develop or even in good intentions by paying a lot and creating the incentive to protect your job at all cause.
Large corporations also require a different kind of talent, with the ability to navigate politics, understand complex processes, use legacy technology tools and overall show a bigger sense of resilience towards frustration.
Hire but also fix the underlying problems, look also for rockstars that are hidden and remove the bureaucrats that hid them in the first place.
“Lets try to match their prices”
From entropy over time, most corporations are bloated with people and cost structures that just make it imposible to match the efficiency of smaller players. Intuitively you would think that economies of scale give corporations an advantage, but most of the time is wasted on unnecessary overhead instead of going to the client. Large corporations also struggle, specially in some regions, to quickly reshape because of regulation or their gov. links.
Competing requires some very hard decisions, firing people, selling or closing unprofitable businesses, saying the truth, be able to fail and dont fear the consequences, something extremely hard when you’re playing with other people’s money compared to start-ups where the owner can be sitting next to you…
“Lets boost our innovation”
For many companies innovation is a department, sometimes isolated from other areas where “innovative people” are trying to find the next Coca-Cola. This approach is fundamentally flawed for not being close to the actual business and their problems, the people that posses the highest expertise and lacking real incentives other than playing with new cool things.
Invest in innovation, give your teams the time and resources to get their heads out of the day to day from time to time but dont isolate it.
“I give up, lets just buy them”
Great idea, lets absorb these 15 guys inside our 50K employee organisation because they will for sure have the energy, empowerment, expertise and willingness to transform us after we fill their pockets with millions.
I’m glad you agree, you incentive this year is to buy at least one start-up, don’t fail me!