What big business can learn from start-ups
It is often assumed that large, successful corporations sit on top a pyramid of business understanding and practices. Start-ups are frequently regarded as juveniles who would be wise to look up to the well established companies for creative and developmental guidance. However, there is a strong case for the reverse.
FAIL SMALL, FAIL OFTEN: Operating in an ecosystem where both external and internal variables affect profitability, businesses of any size must consistently adapt if they are to survive. The nature of a start-up allows the business to explore and experiment without lower monetary risk, less far to fall than established giants. Start-ups can trial new concepts and should they fail this can be factored in as part of an early business model, that anticipates loss at the early stage. For example, Fab.com started off as a gay dating site but flopped after a year. One of the founders however possessed a knack for picking ‘hot’ items, Fab.com now it’s an online mulit-milion pound retailer of well designed products, valued at over one billion dollars. Established companies face the risk of greater financial loss which impedes innovation. But, the ones that consistently dedicate a small percentage of time into trial and error, otherwise known as R&D, stand a better chance of success in this economy.
FLEXIBILITY: In a world where an ever-growing number of channels have created a more connected world, the ability to react swiftly to external mood is of importance. The start-up’s bureaucratic procedures tend to be minimal, allowing agile response. Large companies operate on a robust structure of hierarchy and red-tape that restricts spontaneous reaction. Some clever companies are implementing trendjacking programs that take advantage of rapid responses, but it’s not the norm. Real-time advertising has many bureaucratic hurdles to overcome before it is fully adopted.
SELF-INVESTMENT: Visual image, branding and perceived culture, is important for all businesses. Investment in appearance and talent, be it through pounds or time, is core to developing an attractive body and mind for your business. Many start-ups are yet to reach a position where the drop of their name will secure an interview or invite. Consequently, start-ups tend to be more willing to give the time and funds to consider an impactful image. With a roster of demanding clients to tend to, the overloaded big businesses tend to not go the extra mile to risk an image rehaul.
FORWARD FACING: A vibrant history brings with it a sense of identity, tradition and direction. However, a persistent consciousness of the past makes it difficult to keep an emphasis on evolving. Start-ups with little heritage are free to direct all focus and efforts to their future and growth. Start-ups are at liberty to immerse themselves in current and future trends, enabling appealing contemporary businesses. Large businesses can find themselves obsessed by hindsight in attempt to reserve their legacy as opposed to developing a new one.
Obviously established companies are adept at maintaining a pulse of revenue and success, otherwise they wouldn’t be established. But, even established start-ups must look forward. Companies like Amazon and Facebook reinvent themselves and their revenue streams every few years. The aim is to always be two steps ahead.
THE SPIRIT OF STRUGGLE: Businesses of all sizes should strive to maintain a “fighting” spirit in them. Start-ups by nature are underdogs. Statistically most will not succeed, but talk any of them individually and you’ll hear a different story. All start-ups believe they will succeed beyond any doubt. They will do whatever it takes and rarely give up. They’d rather pivot, adjust and change than give up. The last thing they will do is give up the struggle. Start-ups that fail lose while fighting to survive. In contrast, when established companies lose the fighting spirit, it’s usually the beginning of the end.
Luis Carranza is Digital Strategy Director at Inferno.