It doesn’t matter in which market your company is operating, if there are successful startups in the same domain you most probably have felt their impact.
Startups are a force to be reckoned with. They face harsh constraints on financial, material and human resources, they begin with no name for themselves. And yet those very constraints propels them. Their products evolve faster, they generate more buzz than anyone else and they gain market shares at an amazing speed. They call it “disruption” and if they can sustain it long enough, they will hurt you.
To be clear, I’m not talking about those startups with a focus on pure growth rather than profits in order to be bought off. Those will hurt you too, but they will disappear at some point. No, I’m talking about financially viable startups. Those are the ones that will be the mainstream companies of tomorrow. But the very way they operate means that tomorrow’s way of doing business will be very different from today’s.
It is crucial for any company to understand how those successful startups operate, regardless if you are a giant multinational, an established local company or even a startup yourself.
So, what makes successful startups so special?
They can sell an idea
Having to search for capital forces startup promoters to learn to sell. Early on, they might not even have a product yet, so they harness the power of storytelling to sell a compelling idea.
You see, no one really cares about a product or its features. Customers, like investors, care about their own story and realities. Like Kathy Sierra says in her seminal book Badass: Making users awesome, people don’t care about the features of your camera: they just want to take better pictures.
Learning to sell ideas through storytelling is a powerful skill. It requires refining a number of intangible concepts into one neatly packaged idea. This brings the added bonus of clarifying what the company is all about. It gives a clearer vision to guide the company and a sharper message to draw the targeted customers.
They have focus
Limited budgets and resources force startups to keep a clear focus. If they spread too thin, nothing will get done in a timely fashion and they will run out of money too quickly.
Sounds familiar? This exact situation happens pretty much everywhere. Many companies, however, have pockets deep enough to withstand a surprising amount of waste before they really start noticing.Startups keep a tight focus, which helps them deliver a clear message.
They are customer-driven
Most companies repeat like a mantra that customers are their most important concern. In the case of startups, it’s far more than rhetoric: both their company’s and product’s development are absolutely driven by their customers.
Instead of planning their products or services over several years, they use what their customers are saying and doing to understand pain points and drive improvements. They do not waste time or effort on services or feature that are not wanted or necessary.
Also, startups work in the open: when the spotlight is on you, secrets have a way to get out and get blown out of proportion. If you want to reduce the damage these secrets can cause, just don’t have any. Discuss your problems openly with your customers, ask for feedback and make your community work for you.
They experiment and learn fast
Innovation is key to staying relevant, and experimentation is key to innovation.
Startups favor numerous small and controlled experiments to increase the chances of striking gold, even in unexpected ways. Most larger companies will instead carefully plan and execute long experiments in order to test a specific theory and often discard outlying results that can turn to be more profitable than the original experiment.
The difference between the two approaches is that between making many small bets and making a large one. With many small bets, you maximize your chance of having some success, and you drastically increase your learning opportunities.
They respond to change quickly
By innovating quickly and constantly using customers to test their products and drive their company, startups will change their plans quickly. Add a few other startups in the same space and the market itself will change quickly.
While this may sound like a nightmare to many is business as usual for startups. In fact, it is a good environment for them as they are built to adapt and they know that most other companies are not.
How fast can they adapt? Many startups working in software development will release into production several times a week to a few times daily. Those in the service industry use a franchise model internally to safely distribute decisional power across the company and provide customized reactions to events in real time.
They bet on engaged people
Most startups can’t afford to have an army of drones to execute senseless actions. They need people with initiative, who are creative enough to quickly find solutions to the problems that will inevitably rear their ugly heads.
Since they also cannot afford to have long chains of command, decisions are often taken locally. That means those running a startup must be able to trust your people to make the right decisions themselves with only the people around them to discuss it. That requires quality people and engaged people. And that, in turn, requires investing in people through mentoring, training and support.
There’s something exhilarating about working in a startup: to be part of something that grows and draws that kind of attention, to face a continuous stream of challenges and surmounting them.
People don’t join startups because of the hiring package. They join because they want to. They stay in the face of adversity because they feel they belong.
But… can we do that too?
Yes. Yes, you can.
Those characteristics can be capitalized on by all companies, regardless of the size, age, or revenue bracket. However, that capitalization will be done differently and at a different level according to each company’s specific context.
All companies can become more reactive, collaborate with their customers, make their own employees’ amazing assets and true leaders. But it does require some change.
For companies who are using a model straight out of the industrial age, the change will be significant. Companies that are already people-first, developmental, podular, Agile or Lean will adapt much more quickly and easily. Still, any company willing to undertake those changes can gain the vitality of a startup.