What do you think of when you hear about Fortune 500 companies? Large, stable companies that have stood the test of time. Organizations with significant resources that can direct those resources toward destroying the competition. Conservative but stable investments that have provided proven value.
But most of that is a lie.
Sure, Fortune 500 companies are large. But did you know that only 12% of the Fortune 500 companies in 1955 still existed in 2015?
It will always be harder for for large companies to compete with hundreds of small, nimble startups trying to innovate in the same market (see The Innovator’s Dilemma), but that doesn’t mean that all is lost.
You can learn some best practices from startups to increase your odds. Let’s talk about some of them.
1 – Build a minimally viable product
If there’s one distinguishing difference between how companies of different sizes build products, it’s that big companies build to specifications while startups focus on a minimally viable product (MVP).
The concept of an MVP has been around for over 15 years, but has become increasingly popular in Silicon Valley. The idea is that you focus on core features that allow people to use the product, and get early market feedback that guides future feature development.
Dropbox, Twitter, Airbnb, and many others have taken this path with great success. But in large companies, it’s much more normal to build detailed functional specifications before writing any code, then releasing a product only when those functional specs have been met.
In the meantime, your startup competitors have released five versions, gathered happy customers, and iterated based on real market feedback.
Most of this discrepancy is caused by perceived risk. But I believe that the actual risk is inverse to the way large companies often view it. The risks of building the wrong thing, solving the problem too late, and of missing your audience is far larger than the risk of not getting it right the first time.
And the concept of an MVP doesn’t just apply to new companies and primary products. It’s equally applicable to smaller units of work such as projects, reports, and other regular deliverables.
2 – Run lean
Most startups are resource constrained. Although “resources” are often synonymous with “money,” in almost every startup the most precious resource is time. Limited staff, an ever-present burn rate, and a desire to get to market first create a focus in a startup that just doesn’t exist in a larger company.
When resources don’t feel scarce, a lot of time is spent on unimportant things.
Running lean doesn’t necessarily mean running cheap. One of the advantages of being a larger company is the ability to spend money a startup can’t. You can take advantage of that while still running lean. Creating a near-term deadline, for example, does an amazing job focusing people on the core problem. Reducing the team size by moving some people to other projects is another way to do it.
After all, if you’re focused on building an MVP you don’t need all those people, do you?
3 – Share the vision
Fred Wilson (http://avc.com/2010/08/what-a-ceo-does/), a well-known venture capitalist, once asked a board member of one of his portfolio companies “what does a CEO do?” The board member replied that a CEO only has three jobs: make sure there’s enough money to run the business, hire and retain the best people, and communicate the overall vision.
As a company grows the first becomes easier, the second harder, and the third often falls by the wayside. The CEO hasn’t lost the vision, but it’s a lot easier to communicate a vision to 20 people sharing the same room than it is 420,000 people spread across the globe.
Vision gets lost in organization.
The solution? Hire and train managers who can not only communicate the overall vision but also share a vision for their immediate team. Broadcast company-wide all-hands meetings regularly so that everyone has an opportunity to see and hear the CEO. And most importantly of all, remember that the best people are motivated by a shared goal and dream, not by annual reviews.
4 – Tie people to the same goal
Speaking of shared goals, if you asked members of your team to name the most important goal this year, what would they say?
In many large companies, I’d bet that they’d talk about completing a project, meeting a deadline, or solving a specific problem.
Ask almost any employee in a startup, though, and they’d define their job in terms of revenue, customers, or the social value of what they’re building.
An engineer’s goal is to have 100 more customer using the product.
A receptionist’s goal is to have sales exceed its revenue targets.
A salesperson cares just as much about the company meeting its revenue goals as she does about meeting her own.
This kind of ownership is much easier to foster in a startup, and it’s a huge advantage. In previous roles, I’ve seen engineers spend thousands of hours solving a technical problem that really didn’t need to be solved. But they were unaware of the real issue the customer was facing and saw their job as solving the technical problem, not solving the customer’s problem.
By tying everyone to the end goal, you’ll increase efficiency, increase effectiveness, and make customers happier faster.
And it’s a great way to help your organization run lean!
5 – Celebrate successes
A few years ago I was working at a large company on a very visible project. The team I was on was working with one of our most strategic customers—and the customer wasn’t happy.
Fortunately, we all understood the real goal and managed to not only turn the situation around, but ultimately leave the customer in a better position than they were originally.
It’s not an exaggeration to say that millions of dollars in revenue were tied to this customer over the next year, based largely on the work we did.
How did the company celebrate? We all received a mass email from a global Vice President congratulating us. And he used a few different colorful fonts to emphasize how happy he was.
Then we went to the next project.
In comparison, we recently celebrated a success here at ThoughtSpot that had far less than a million dollars on the line.
How did we celebrate? We threw a party.
Celebration is important. Celebrating successes builds teamwork, encourages a shared vision, reinforces desired behavior, and creates loyalty.
But it’s often one of the first things to disappear as a company grows. Celebrate your successes in a way a five-year-old would recognize. Email is not celebration.
How can you contribute?
What startup lessons will you implement in your organization? What other lessons can we learn? Let me know in the comments.