Lately, it seems as though an hour doesn’t pass without news of the disruption and demise of a proven, established business at the hands of a more agile, innovative startup. Thinking more like a startup and less like an established firm is the business imperative du jour.
If you are a corporate leader under pressure to think more like a startup you may want to start by reflecting rather than by reacting. Your ultimate goal isn’t to look and feel more like a startup. Rather, your goal is to translate relevant aspects of startup culture within your own unique corporate culture to accelerate business growth. So hold off on hiring a chef to flip gluten-free pancakes and pass on adopting the dress code of the Pied Piper crew in HBO’s “Silicon Valley.”
I recently completed a program at the Stanford Graduate School of Business that addressed the challenges of corporate innovation and covered many methodologies, including design thinking and the lean startup. Without a doubt, both of these methods are potentially game changing for an established enterprise. However, I also learned two simple behaviours that must be mastered in order to use these innovation methodologies and truly think like a startup.
1. Think critically about everything
Humans are hardwired to rely on bias and past precedent to make decisions. If you don’t believe me, here are a Harvard Business School study and a Fast Company article that shed some light on the science behind this claim.
Why is this relevant? According to Haim Mendelson, a professor at the Stanford Graduate School of Business, “Our world is undergoing dramatic change. Changes in technology and demographics are working together to overturn assumptions and precedents that have guided us for hundreds of years, to disrupt time-tested business models, and to reshape firms, value chains and entire industries… when we make decisions, we won’t be able to rely on our experience and intuition, which were formed in a world which is disappearing right in front of us, and extrapolating from the past will be increasingly dangerous.”
This was a big “a-ha! moment” for me. Unlike established companies, startups are completely free from learned experiences. Startups reason from first principles and find cheap ways to test their assumptions in real time before making big bets. Here is a great article about how Jennifer Fleiss and Jennifer Hyman, the co-founders of Rent the Runway, tested the logic of their business model before investing time and effort in formal planning or expensive prototypes.
When asked to share one piece of advice with aspiring entrepreneurs, the co-founders spoke directly about the need for unbiased testing and learning.
“Going for it means don’t just sit there with your ideas—figure out a way to see if it’s going to work,” said Fleiss.
“Number 1 is to figure out how you’re going to assess whether you have a good idea or not. So, go do something, learn from it and be able to have an unbiased view as to whether your idea works,” added Hyman.
Software developer Intuit is a terrific example of critical and analytical thinking in action at an established enterprise. Check out this Forbes article, which provides an overview of how a $26-billion enterprise leverages critical thinking to deeply understand and test the underlying assumptions of new ideas. Intuit places just as much emphasis on testing and challenging the assumptions behind ideas, as it does on ideation itself.
In my own experience, I have learned to pause before making major decisions and to ask myself the following questions.
- What assumptions am I making in this decision?
- How can I test my assumptions further? (Hint: This article provides a few great suggestions on how to test assumptions. Mind maps and decision trees are other great tools to leverage.)
- What qualitative and quantitative data do I have to support my decision position?
- What are the possible counterpoints to my argument?
- What biases or group-think pressures might be influencing me?
For example, I recently worked with an amazing team of men and women to design a program to position TD Wealth as the personal-finance destination for women investors. It would have been easy to assume that this well-acknowledged market gap was attributable to gender-based differences in competence or risk tolerance (which were long-held beliefs at the time). However, we tested these assumptions through ethnographic and quantitative research, and learned early on that neither was the case.
Instead, our findings revealed that women investors were craving a different investing experience than men were, characterized by holistic goal-based planning versus just “the dollars and cents.” By validating and testing assumptions, our team was able to reframe the challenge and design a more effective program in less than six months.
All corporate innovators will eventually learn the ins and outs of design thinking and lean startup methodology, and they’ll find that each method depends on using solid critical and analytical thinking skills.
Key takeaway: Counterbalance the directive to be “fast” with the discipline to constantly test your business assumptions and make decisions in a deliberate, analytical and logical fashion. This will help you to make decisions that are more successful, better implement innovation methodologies and avoid blind spots you may not have even realized you had.
2. Pursue new ideas with conviction
One of the most magical aspects of a startup is the conviction held by every person who is involved in it. In my experience working with entrepreneurs, I’ve found that there is an almost-manic conviction to acquire a new customer, secure investment or attract new recruits to join the cause.
This same level of conviction is required as a corporate innovator, but is used in a vastly different way. Entrenched corporate interests have a stake in keeping the status quo. Often, disruptive ideas mean disrupting the things that an enterprise holds most dear, such as talent, distribution models and product mix, to name just a few.
One of the most famous examples of this conflict in action is the demise of the Eastman Kodak Company. If you’re not familiar with Kodak’s story, this Mashable article is worth the read. It sets out how, philosophically, Kodak was so steeped in the film business that it failed to commercialize its own innovative ideas. These same ideas, hatched by competitors, led to Kodak’s demise.
The lesson in the Kodak story is that, in order to truly take an innovative idea to fruition in an established enterprise, innovation champions must be ready to act with great conviction to:
- attract allies and support for innovation;
- become comfortable with advocating for controversial points of view and managing opposition and conflict;
- assess the change readiness of various internal constituencies and prepare for change; and
- learn to tell a story about their innovation in a compelling way (check out how some famous startup founders told their stories to attract investment).
In my experience, learning to tell and defend your innovation story is absolutely critical to a startup’s success, and this is as true for small tweaks to processes as it is for disruptive innovation.
Shortly after the 2008 credit crisis, for example, I worked with an amazing team to create PwC Deals’ first content-marketing initiative, a weekly publication about capital markets designed for a non-specialist audience. We came up against quite a bit of opposition (this was in 2008, before the days of widespread business-to-business social media and blogging). However, our team firmly believed that communicating a unique perspective to our clients in an informal way was the way of the future.
We secured a senior sponsor for our initiative, worked late, participated in many heated debates and, against advice, published the first few issues. Three months later, we had a few battle scars, but we were also pleased to have an onslaught of subscription requests (potential business leads) and media attention. Our buy-in challenge soon transitioned into a need to manage the appetite for more.
Key takeaway: Counterbalance the benefits of accepting fast failure with the imperative of building the institutional wherewithal to drive and execute change with conviction. This will help your innovation achieve exponential impact within your organization.
In closing, I would be remiss if I didn’t share one of my personal favourite examples of thinking like a startup. With over 25 million views on YouTube, the video is moderately cliché, but it still gets me every time. It was 2005 and Steve Jobs was delivering a commencement speech to the Stanford Graduate School of Business. I recommend watching his entire talk but, if you must, you can skip to the last five minutes. He closes his speech by telling new graduates to: “Stay hungry. Stay foolish.”
As corporate leaders, if we can find the time to become a little bit hungrier and a little bit more foolish, I think we will be amazed at what may follow.
Vanessa Iarocci is passionate about innovation, having spent close to two-decades working with both early-stage founders and at large established enterprises to design and execute novel growth and restructuring strategies.