Why is the business press so enamoured with the culture of startups? What do startups and their innovations create that fascinates so many people? It has a lot to do with the mythical successes that emerge and have become part of cultural lore.
Some of the rags to riches stories that are well known
- HP was founded in a garage in Silicon Valley à took over the personal computer market
- Google also started in a garage à dominated the information age
- Facebook began in a dorm in Harvard à perfected personal identities online
- The idea for AirBnb originated on an air mattress à disrupted the worldwide hospitality industry
These are amazing stories and deservedly require attention. A lot can be learned from them. Organizations today need a responsive operating model that better adapts to an ever-changing environment.
Lessons to be learned
But what are those lessons exactly? How do organizations rise up and then dominate their markets for extended periods of time? In hindsight, the past 10 years has been an incredible period of innovation and disruption. New players have successfully competed against larger & more resource rich incumbents.
Although media attention has focused on new entrants, many entrenched leaders also innovate and continue to extend the lead over their rivals.
In both cases, the often-cited reason for success is the employment of technology to create radical change.
Technology is not the be all /end all
Technology has been rightfully placed on a pedestal as a key aspect for success.
But is technology the quintessential aspect that determines success or failure? Granted, technology is growing at an exponential pace. One of my favorite sayings is the slowest rate of change is this very instant. Change is only accelerating as we move forward toward the inevitable singularity!
However, I don’t agree that is the key aspect of what determines success or failure; correlation does not equate causation.
There is a certain fallacy that digitally driven organizations are more effective simply due to their use of new technology. Many studies and white papers celebrate this point and hail to this mythical god of human advancement.
The real reason these organizations excel is not their use of technology; technology is simply a means to an end. It is the active choice (read leadership) to undergo a profound digital transformation. It’s the method that technology is used. It seems like a small distinction but in reality this is huge. Many business leaders wrongly believe that by simply purchasing / adding more technology in their organization that they will become more competitive. This is patently false.
We can’t learn much from the tools and tactics employed because these change all the time.
What doesn’t change is the application of the right strategy and thinking at the right moment.
Smart leaders recognize that the world has fundamentally changed and to this end redesign their companies to better serve their customers, enhance employee productivity and generate more good old-fashioned revenue.
It is no surprise than once the decision to undergo a digital transformation is made; these organizations have a better chance of success. The real recipe for success is the agility / responsiveness of an organization (regardless of size) to effectively respond to their market. And yes, often technology plays a key role.
The strong do what they can, the weak suffer what they must
Smaller organizations (aka startups) have no choice but to employ a different approach. With today’s information based economy, it has never been easier for smaller entrants to attack existing markets faster and more effectively than ever before.
A great treatise on this subject is written by Larry Downes entitled Big Bang Disruption. He states that incumbents need to watch for disruptive technologies that enter their market. By tying their products to the exponential growth and falling costs of new technologies, a startups’ offerings can be simultaneously better, cheaper and more customized. Not just for one group of users but for all customers.
The sands have indeed shifted to favor nimble & adaptable teams.
The lady sitting in the corner office is now confronted with a new reality: their organization needs to be in a constant state of change (eternally) in order to thrive and survive.
The new operating DNA
The growth and success of startups has left us with many clues.
There is core set of principles that can be distilled and applied to almost any organization:
- Plans are agile but the core purpose doesn’t waver
- Always internalize important competencies
- Culture is strategy
- Focus on the customer and all else will follow
- Product becomes platforms
I will explore this new model more in depth in a subsequent post as I think it deserves more attention.
The largest implication in my humble opinion is that no one can be satisfied with the status quo – if you aren’t moving fast (and breaking things), someone else will. The opportunity to innovate at scale, better serve your customers has never been greater. It is yours for the taking.