Successful startups are famous to be enthusiastic, open, daring, agile, and overall experimental in nature. And to be honest without these features, no startup can perform well in a competitive market. No wonder successful startups would typically win their hand in determining the unexploited market segments or consumers’ unfulfilled needs.
They have their own dreams that fuel them to make progress in their way; they are open to new ideas because they know that old ideas are already exploited and they need to add something to the end-product; they are daring and bold in implementing ideas, looking for novel ways to plan, implement, analyze their various efforts; and they are agile, most probably because they have not attracted a specific audience with specific needs and expectations yet, and so are free to start a brand new product without having to worry about losing their loyal customers.
Startups are great huh? But what if we turn the table and consider the situation from the perspective of an older business.
From the perspective of an older business, we might say that new business startups are potential threats to our market share. We know startups are cool and in fact we’ve been a startup some good old days. But seriously! They’re stealing our market share.
A new rival business in town means having to let go of our share of the pie for the newcomer boldly claims it.
Now, one great way for an older company to protect its market share against powerful startups is to adopt their culture. Established companies might have some benefits such as larger scale, better intellectual and financial capital, and stability; however, they might lack what a startup culture has. The general idea is to explore for yourself what you lack that makes you susceptible to the blows of your new startup competitors.
But anyway, here are two ideas you can consider for building a startup culture in your company.
Value Employee Engagement to Create Enthusiasm
Maybe the greatest ail of a company is employee passivity. When employees are only expected to do their assignments and keep their ideas for themselves, they take no responsibility for the end results. They don’t care if something will work or not even if they know that it won’t and they won’t be enthusiastic to produce valuable results for the company.
Instead of holding meetings behind the closed doors and restricting ideas to a group of high-profile people, you should create a culture of engagement in the whole company. Every employee has a mindset that could prove to be a valuable asset. Companies should value every employee’s ideas as if they are just what they needed.
If employees feel the enthusiasm to be part of the decision-making team, they will unleash their creative powers to responsibly propose value to the company rather than just spending their working hours in it.
You’ve probably heard of Google’s 20% time. The idea was to encourage Google employees to dedicate 20% of their work time on creative projects that benefitted the company. Whether it literally turned into a rule for every Googler or not is not important as long as the idea of it exists, according to Laszlo Bock, the author of Work Rules! and former Senior Vice President of People Operations at Google. 20% time “operates somewhat outside the lines of formal management oversight, and always will, because the most talented and creative people can’t be forced to work” he said.
Anyway, the important point to remember here is that Google’s attempts at encouraging people to work independently and responsibly, and in return giving their ideas enough momentum to be operational, has paid off. The development of Google News, Gmail, and AdSense is believed to be the result of 20% time.
Yoram Solomon in his article published in Inc. magazine explains that according to his own survey results, employees were more eager to be praised by their co-workers or at most their team leaders, who knew them well, rather than CEOs. They believed that creating an “award ceremony” was a waste of time as long as they are not genuine.
What Solomon proposes instead is to leave employees to do their job and not force them to be innovative and propose ideas because “that’s really what they need and what they want”. You should openly engage your employees by giving them enough confidence to propose their ideas yet not be be worried about being penalized for failing.
Creating an atmosphere of innovation without making it a work rule is the best idea to incorporate the enthusiastic atmosphere of a startup.
Watch for your customers’ needs and be agile to incorporate them
What would you do if you were to start a business in an already crowded market. Don’t tell me you would jump in there and imitate others, hoping to achieve their success?
If you were about to say the same thing, you’d better nail this question on to your office wall: “why would people leave their already trusted and beloved brands and buy my products with the same features, price, distribution channel, promotional efforts and post-sale services?” Really, why should they?
Successful startups know how to deal with this problem. They take their time to exploit new segments of the market and unfulfilled needs of the people. They try to add something new to the market. Maybe the product could be produced cheaper, or maybe a new geographic area that was previously out of reach could be targeted. Maybe current products have left a necessary need of the customers unfulfilled.
Startups need to be on an never-ending watch for new market segments and customers’ needs, and then be agile to incorporate their new learnings in their product development, distribution, and promotion.
The point is this process is not exclusive to the startups. Any company — old or new — could lose its market share when its products are not fit for the market.
In The Startup Owner’s Manual coauthored by Steve Blank and Bob Dorf, it is stated that in established companies “the customers are known, the product features can be spec’ed upfront, the market is well-defined, and the basis of competition is understood”.
Authors believe that for older companies the traditional product introduction model works because they know their customers’ needs for sure, and are 100 percent positive that their products are appealing to the customers (although we might argue that due to the ever-changing nature of people’s need, established companies need to be as watchful and as agile as startups).
For startups, on the other hand, the process of new product introduction includes many iterations and pivots on the way.
Whereas traditional product introduction model leaves room only for some small revisions, the new customer introduction model for startups believes that for every step of the process there should be a loop, so that when the expectations went wrong and customers’ needs changed, companies would be ready to do the process of designing the product from the beginning.
You might say that we’re stating the obvious but if we cast a closer look at some failed startups and companies, we would see that their failures were caused by overconfidence in their market. They expected customers to embrace every product they introduced instead of updating their product designs with insights from the new needs of customers.
Webvan, a former grocery e-tailor, is the prominent example. The startup had a dream of revolutionizing the grocery industry by delivering products within 30 minutes of ordering in 26 US cities. It raised more than $800 millions of funds just after a few months of its initial launch in 1996 in the heyday of dotcom bubble.
Yet according to The Startup Owner’s Manual, the company was bankrupt just after 24 months of its initial public offering. The reason was obvious according to the book: it was moving according to the plan, a plan that took for granted that people would be more than excited to see the company’s new service and would swarm in thousands to buy it.
This was a big mistake. In Webvan’s business plan, it was forecasted that daily orders would amount to 8000, yet the real number of orders was only 2000 per day. And Webvan played it cool by sticking to its initial plan and not considering an emergency replanning.
The fact that people were not as interested as Webvan executives thought they were points to one lesson we can learn from Webvan: we need to be agile as to learn insights from customers’ needs and expectations and incorporate the insights to our business plan.
To recap, we proposed that if established companies want to preserve their market share in face of powerful business startups, they need to adopt a startup culture.
We then reviewed two features of a startup culture: employee enthusiasm in engaging with the company’s decision-making, and agility in incorporating customers’ need in new product development, distribution, and promotion.
What other ways of adopting a startup culture can you propose? I’ll be glad to know what you think.