Innovate Or Die Trying: Why Corporations Need To Think Like Startups
The following article was written by Damone Franklin. Damone is an entrepreneur and lean startup expert.
In case you’ve been living under a rock, “Lean Startup” is revolutionizing the way new companies are created and built.
It has become a movement in the tech industry and for good reason.
If you’re unaware of the basic principles, here are a few soundbites:
Entrepreneurs Are Everywhere: You don’t have to be in a garage to be working in a startup.
Entrepreneurship Is Management: Startups require a management system.
Validated Learning: Running experiments paves the way towards building a sustainable business.
Innovation Accounting: Keep track of key metrics beyond financials to determine progress.
Build-Measure-Learn: Turn your ideas into products, measure customer response and make changes, quickly.
While individually these concepts are not groundbreaking in and of themselves, when you put them together they debunk many of the traditional business practices still being taught as standards today.
Practices such as creating elaborate business plans detailing financial projections of the future as if you are a crystal-ball-holding fortune teller.
The Lean Startup Conference 2015
I had the pleasure of attending the Lean Startup Conference this past November and it was refreshing to speak and network with others who were also championing Lean methodology and seeing results in their companies.
I made the trip with Rajiv Menon, Founder of Informulate – an Orlando based software consultancy that uses Lean Startup to deliver custom solutions to its clients.
As Lean Startup practitioners, we were affirmed in many of the concepts we work with on a daily basis and we also got to hear great case studies from companies both large and small (many of which were non-tech companies) and how they have been using Lean Startup methodology to create new products.
A few case studies included how data crunching reading habits can predict Hollywood blockbusters, how TechStars is Scaling Lean using Culture Maps, and how gamification is growing up into Game Thinking.
All-in-all one of my biggest takeaways has to do with something Eric said on his final keynote, “most of the people who are going to use Lean Startup have no idea about what it is today” and I believe that to be true.
Sure, companies like GE, Humana and other large enterprises have caught the Lean Startup wave but what about other organizations that haven’t been as fortunate?
Moving Outside The Fortune 500
The GE’s of the world are using Lean Startup to avoid wasting millions on projects and programs that wind up being ineffective, but non-Fortune 500 companies don’t have the extra millions to spend to begin with. Their dollars must stretch even further and for them a failed project could mean a failed company.
Strive To Be A Startup
It seems as if the bigger a company grows, the more bureaucratic, slow and lazy they become and this contributes to their demise. This is why, as cliche as it sounds, big companies need to continue to strive to become like startups.
Leaders Of The Pack
In The Lean Enterprise (Wiley), Trevor Owens and Obey Fernandez detail that “enterprises are in peril”, stating:
“The need for enterprises to innovate has never been more acute … A study of the S&P 500, which ranks companies by market capitalization, found that its constituents averaged 61 years on the list in 1958 but only 18 years in 2012”
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So what does this mean? This means there is movement towards newer companies once referred to as “startups” shaking things up and becoming the leading organizations in today’s market as opposed to the established enterprises of the past.
Companies like Apple, Google, Amazon and Facebook worth upwards of $100B+ are leading this movement, in addition to the 150+ newly founded software companies that are valued over $1B. (1)
Remember Your Roots
Most large companies began with the mindset to disrupt their industry as innovators. Somewhere along the way there is an inevitable shift from “disrupting innovation” to “maintaining innovation” which in itself is an oxymoron.
Eventually, this switch to “maintenance mode” causes the company to resort to playing it safe and mitigating risk which in turn leaves open opportunities for the next up-and-coming company to capitalize with new technology.
Established organizations need to innovate now more than ever. Today there are more and more young startups stealing the business headlines and global profits.
Competitive pressures force even the largest enterprises into building a corporate structure that embraces risk and uncertainty. The companies that survive for generations to come will be those who grow through continuous innovation.