Embracing elements of start-up culture can help big companies keep a fresh, innovative edge and stay relevant in the era of digital disruption.
Large industrial companies do not necessarily love change and unpredictability. They have a great product or service – perhaps the reason they got big in the first place – and they would prefer to keep on doing what they are good at.
Unfortunately, given today’s rapid digital transformation, it simply won’t be enough, says Pekka Sivonen, Director of Digitalisation of Business Finland (former Tekes).
“The big things that are coming – artificial intelligence, the platform economy and blockchain technology – will each change the world in more fundamental ways than the internet has. No industry or process will remain the same, and no company can survive these shifts by sticking to current ways of thinking and doing business,” states Sivonen.
Instead, he says that companies need to actively challenge their current business models and look for new innovations outside their own walls. In short, they need to think more like start-ups.
According to Sivonen, here are five ways in which established organizations can embrace a start-up mentality:
Start from scratch
“The biggest issue with big companies is that they are quite invested in their existing products and business models. It can lock them into old ways of thinking and seeing the world,” says Sivonen.
Start-ups, on the other hand, are not as committed to the status quo, so their perspective is influenced more by what could be than by what already is.
“They begin with a blank slate. Instead of improving the current business model, companies should blow up the entire model and start from scratch. This means trying to find new, surprising partnerships and bringing in out-of-the-box thinking.”
Focus on new services, not products (Hint: Data is the key)
“Technology will change, but business models will change even more,” says Sivonen.
Many start-ups don’t produce a physical product at all, but provide a new way to serve the fundamental customer need behind existing products. So instead of making cars, for example, they might look at how to solve people’s need for mobility. Instead of motors, you might sell power by the hour.
“More and more, we will buy things as services instead of paying for a physical product. Data is the key to this change: You need to have as much data as possible on your products to be able to turn them into services.”
Experiment more and test on a shoestring budget
A start-up mentality also involves the willingness to experiment – often going from idea to first trial quickly – with minimal resources.
“Engineering organizations are often too focused on getting things perfect before testing them. Start-ups are much better at boot-strapping and rapid prototyping. Get the minimal viable product together and start testing. ‘Fail fast, learn faster’, as they say,” says Sivonen.
Engineering organizations are often too focused on getting things perfect before testing them. Start-ups are much better at boot-strapping and rapid prototyping.
Encourage risk-taking and celebrate failure
One of the biggest differences between start-ups and large corporations revolves around company culture.
“In a quickly changing environment, you should make decisions faster, be agile and challenge conventions. The Six Sigma ideal of ensuring success through flawless processes doesn’t necessarily achieve this very well. People should be encouraged to take risks, and failure should be rewarded as much as success. This mentality comes more naturally for start-ups and is harder for larger groups to foster,” Sivonen explains.
Don’t be afraid of start-ups – work with them
He points out that big companies can’t really expect to change into agile risk-takers overnight. Instead, they can begin to collaborate with start-ups to infuse their organization with new energy and novel ways of thinking.
“Many corporations are, in fact, starting to include these ecosystem functions that work with and speak the language of start-ups. I believe this type of cooperation will be key in finding the next big innovations.”
Text: Mari Suonto
Illustration: Riikka Uhmavaara