There are more comparisons between startup and big firms than any of us can count and the agreed speech focuses on the agility of the former compared to the bureaucracy’s slowness of the latter, the difference of ability to breakthrough, the out-of-date state of management models or organizational models in big corporations…
But are those comparisons really rational ?
Elation and Wake up call
The startup movement has generated 20 years of collective euphoria in France. The current decade has been and still is amazingly favourable for the entrepreneurship movement. Yet, there is an increasing number of caricatures on the internet and truly interesting analysis are scarce.
As for every trend, or any new phenomenon, there’s always an elation phase, during which everyone (not quite but you understand) wants to join the movement, learn the new tools etc. It’s all about sunshine and rainbows, in a manner of speaking. But, as after spring comes fall, we are leaving this phase of elation and entering and less rosy period : the denigration phase. This not-so-nice stage will, little by little, give way to a more moderate approach.
The repercussions of the articles criticizing and challenging the startup movement can already be felt. They are, without a doubt, revealing of the diversity of points of view currently existing – but we can’t disguise the fact that we are going straight into a wall, a wall of startup bashing.
In Physics, there is a phenomenon called the Dampened Wave, which can be observed when simplistically analyzing things. It’s great ; it sucks, it creates value, but it can also wreak havoc. Ultimately there’s something positive. Generally, those big oscillations – here, the drastic changes of position – are proofs that the system is poorly regulated. And our propension to sort this phenomenon in boxes is what often misleads us.
2 popular misconceptions
Startups are strongly innovative companies. True, but it’s actually quite rare. Most of the time, they are rather turned toward execution : a better or cleverer execution of an existing process, product… Truthfully, an idea is worth nothing. Of course, startups spin and modify their value proposition according to the field reality. They obviously also consider operational constraints. However, once they have found the perfect market fit, the keyword is growth (scale phase), which requires a certain level of organization and precision.
Startups are going to uberise historical companies. Truth be told, it happens. Yet, it remains highly unusual. Clayton Christensen and his theory of disruptive innovations ; GAFAs, NATUs (Netflix, Airbnb, Tesla, Uber) ; and the disappearance of big corporations have strongly shaken our beliefs regarding the barriers to entry. As a consequence, corporates are getting feverish, while arrogance is starting to stain startups (especially whenever they decide to ‘attack’ a market leader).
Surprisingly enough, you can be invited, with due consideration, by a large company, despite claiming « Sir, I intend to disrupt your business model ». it’s actually quite a funny situation to live, from both side… What’s sadder is to notice the growing number of startups which becomes low cost software firms, relying on big companies, after only pivoting twice… Some – fortunately – are standing out from the crowd and succeed in revolutionizing the industry or the market as a whole. But it is not easy to forecast. What’s more obvious is that corporate people, who are too stubborn, and can’t evolve, will unequivocally have (at the minimum) their margin progressively snatched from them by rapidly growing companies.
But when ?
What do we actually compare ?
We are comparing a market context where big corporations have been able to stabilise their assets and optimize their productivity by regulating the market, to a cutthroat competition context (globalization, digital revolution, fickle clients…), enabling startups to quickly take over a new market by hacking what’s already existing.
What’s the reason behind those master strokes ? Startups are user-obsessed. It is their primary preoccupation and their business model mechanically evolves while users usually remain out of reach for bigger companies. For the latter, questioning the business model is extremely complicated : any suggestion or modification, especially when it is really disruptive, will have to go through several layers of validations and will have to take power plays into consideration. Nothing is ever quite simple in big companies.
We are comparing a corporate structure which channeled its R&D department into a single silo, to a structure which doesn’t have any silo issue – and probably couldn’t care less – whose philosophy is to empower its employees and give them the freedom to do things as they see fit, to move things forward (one the best example of empowerment is the company Valves – Flatland model of management).
We are comparing a company of 10 thousands employees to a team focused on a single strategic goal. We are comparing CAC 40-listed companies, subject to compliance rules, CSR, Licensing, intellectual/ industrial property, with millions of contracts in progress… to a young company, which, despite its potential, is still looking for the right business model and is continuously building & reassessing its culture and management models.
Have you seen Lord of the Rings ? If the answer is yes, then you have an idea of what can be considered an adventure. Newly entrants in the labour market are more liable to join a startup or other small structure because they seek and crave this image of adventurous journey. The consequence is that the attractiveness level of startups has increased over the past few years. Students actually consider them to be a better option, especially to achieve personal fulfillment. No wonder then that HR people from listed companies are sending their ambassadors to preach for their organisation. Funny, isn’t it ? Many can still remember the time when newly graduated students were competing to be hired in those large companies. Nowadays, the trend is to create your own company, sometimes for very commendable reasons… sometimes not.
And that, dear readers, is what we call the lemming instinct !
What if we stopped thinking of those rosy images and start building altogether ?
Aside from usual clichés, entrepreneurship is what connects large companies and startups. Why ? Well, hardly no one has ever started big : nearly all organisations started from scratch. To build the future, we need to get right back into this mindset and this culture.
We have one common goal : innovate and share the entrepreneurship culture to challenge the existing value chains – whatever the market – and create hybrid teams to serve the construction of new ecosystems.
Our solution relies on a new hacking zone, focusing on the value created by the union of those two worlds. There is such a complementarity between those two sides that sometimes a small hybrid team, alone, is enough to bring out ideas, solutions, new products or new ways to perceive business processes.
Providing a testing field and allowing creativity and initiative is one of the best way to reveal intrapreneurs and other dormant corporate hackers, existing within your structure.
Let’s learn from one another. Whenever advanced expertise (such as one for production or large scale distribution) meet other aspirations, and other corporate culture (pragmatism, effectuation, digital, Hacking…): the consequences are immediate. It can be on a small scale – Meet’up, Hackathon, Sprint – or it can be more long lasting and take the shape of a transformation program. The goal being to last forever…
Know the rules like a professional, hack them like an entrepreneur !
At some point, we will have to understand that hacking the existing to create something different is an innovation, and a creation per se. It is up to us to channel all those ingredients with the entrepreneur mindset of the youngest and the most experimented. We can testify of the richness created whenever those 2 worlds meet, as we live it on a daily basis.