Why big business should steal from start-ups
In this guest post Samantha Hardman looks at the role start-ups play as trail-blazers in their ability to deliver ‘from Powerpoint to prototype to production’.
With the rapid proliferation of all things digital the change that is upon us both societally and, by association, in marketing is pretty damn interesting.
Never before have we been able to orchestrate, monitor, tailor, respond to or interact with customers, their experiences and purchases to such an extent.
Yet gone are the days when cautiously dipping your toe in the digital waters is sufficient or cheap.
But no matter the number of fiscal commas you have to work with, it’s impossible to argue that the tools, channels, techniques and opportunities now at our disposal aren’t worth your attention – or funding. Unfortunately, foraying into unfamiliar waters can be deemed risky amongst the more conservative folks at any organisation.
In case you didn’t get the memo though, it’s time to get wet. And friends, water sports aren’t free. By now you’ll be all-too aware of the smitten way big business likes to swoon over the litters of small businesses birthed in this connected age. ‘Disrupt’, ‘fail fast’, ‘flearn’… these are all catch-cries of, well, basically anyone who doesn’t work for a startup.
Such wild adoration for start-ups isn’t surprising. New and shiny aside, almost 90% of companies in the Fortune 500 in 1955 were gone from the list altogether some 60 years later.
The replacements are coming from somewhere, and today they’re called start-ups.
Josh Linkner
As Forbes magazine contributor Josh Linkner, put it some three years ago: “While big companies are busy protecting the golden goose with fear-based, micro improvements, start-ups are busy with the hard work of changing the world.”
Ridiculously of course, big business has everything going for it when it comes to taking on the world: it’s cashed-up; well-resourced; highly experienced and staff (individually or collectively) often have strong, game-changing ideas.
Moreover, these organisations have not just the opportunity but the market expectation they’ll succeed. So what’s stopping them?
At Australia’s inaugural Summit Series held in August last year, Isobar’s Regional Mobile and Innovation Director, Erik Hallander, spoke about the ‘Misplaced Worship of Ideas’.
Ideas on their own, he claimed, had no intrinsic value beyond their perceived (or forecasted) potential. Realising their value then, lies entirely in execution. In other words, seeing an idea through from PowerPoint pack to prototype to production.
The last frontier in applying start-up thinking to enterprise models may be in funding, giving senior executives confidence that they’re investing in something that’s going to be successful, delivering all that potential they were sold in the boardroom.
Start-ups often get those delicious ideas off the ground and keep the lights on through the early nights with a little love from venture capitalists using gated funding models.
For those who aren’t familiar with the approach, it’s pretty simple: you get a cash investment to see the idea through to the first milestone. The successful achievement of that milestone and its posse of targets unlocks the commitment to the next round of funding, and so on.
Erik Hallander
So how does this apply in a corporate environment? Across my career I’ve witnessed (and admittedly been party to) selling projects up the line to boards and executive teams in their entirety.
Six figures here, seven figures there. It will take 12, 18, 24-plus months to implement, but when it’s live look at all these cost savings/all this revenue we’ll be reaping! One project I observed (which will remain nameless) limped its way into the eight figures bracket over five years and never saw the light of day.
Gated funding, on the other hand, sets clear, articulate objectives up front specifying the ‘why’ of the project alongside its long-term potential benefits and then anchoring the opportunity in the present day with more modest, short-term targets and associated costs to achieve.
Like a start-up, keeping a project in play then becomes a matter of hitting smaller, short-term milestones and targets in order to get the next round of investment. With a clear road map in place articulating the stages between the current state of play and that lucrative end game – those inspiring project objectives become all the more attainable.
Importantly, however, it’s essential that agreed milestones aren’t just around project progress but around business outcomes, too.
This system is beneficial for everyone involved. Those with purse strings can see the project heading in the right direction and feel they are investing in the future rather than gambling. The team on the tools feels real momentum, and from a change management perspective everyone gets to celebrate success along the way.
The bottom line? The excruciating majority of start-ups fail. But this doesn’t mean a lot can’t be learned by the largest organisations (from both the corporate and government sides of the tracks) from their junior siblings. Romance aside, the realities endured by start-ups have much to offer.
Applying start-up thinking to business case development and project funding in established organisations has the ability to give more projects life, sooner, and to rally stakeholders of all levels behind the cause.
It’s start-up thinking, minus the late nights and terrible pay.
Samantha Hardman is strategy director ay Isobar
Brilliant, Hardman.
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