Can established brands learn from start-ups?
For much of the last decade the world has lauded the achievements of tech entrepreneurs who turn small companies into big ones. But lately, the start-up scene has started to show signs it may be losing its lustre. There are stories of over-zealous investors pumping cash into dumb businesses that will never turn a profit. There are founders with messiah complexes hoping to emerge as Musk 2.0. There are also products designed to fix problems that weren’t there in the first place.
Founders of fast-growing tech companies are wincing at the global market downturn. This week buy now pay later company Klarna announced that it was laying off 10 per cent of its workforce. Other brands are following suit. And, there’s still a lot that established brands can learn from the activities (and failures) of start-ups.
Allow for innovation
The ability to innovate and move quickly on ideas is one of the defining features of start-ups. Part of this agility comes from their size – with smaller teams, there is more openness to ideas from across the business and also an ability to enact change without multiple sign-offs and red tape.
But innovation is also an attitude. Start-ups encourage questioning the status quo, so why shouldn’t large companies do the same? Many corporations are beginning to launch their own innovation hubs, such as Mastercard’s Sustainability Innovation Lab, which gives employees permission to experiment and be proactive in solving sustainability challenges for their clients. Even if you aren’t starting a specific lab within your company, you can build that culture of innovation into your teams, encouraging them to voice and test out new ideas, acting like mini start-ups within a larger organisation.
Grow from failure
Start-ups are quick learners, especially when it comes to failure. There is no question that for every start-up that has succeeded, hundreds have failed. And we are now entering a period of turbulence in the market, especially for start-ups who have burned through excessive investment capital on a path to growth.
Already, we are seeing headlines of start-ups cutting their workforces to manage their burn rate. Celebrity video service Cameo, for instance, slashed 25% of its workforce in early May as part of a “a painful but necessary course correction”, according to its CEO Steven Galanis. While chasing growth and unicorn status has been part of startups’ raison d’etre, the next decade has to be about a more considerate approach to expansion. “The new view of growth is not at all costs, but growth at a reasonable cost,” writes Eric Rosenbaum in CNBC. For bigger business it is worth thinking about the longevity of innovation. Here, having innovation tied to key metrics of the wider business will make it tangible and grounded in the company’s wider purpose, rather than expansion or growth for the sake of it.
People come first
There’s a stereotype around the perks of working at a start-up – table tennis, free drinks, branded swag are all hallmarks of the 2010s. But with workplaces becoming increasingly part-time, there’s a realisation that while people come to work at a start-up for the culture, it isn’t the actual physical space that makes it engaging.
Some start-ups are looking at their budgets, and slashing extra expenditures like excess office space, and dedicating that money to pay raises instead. Keeping employees engaged is crucial to creating innovative products. Indeed, one Gallup study found that engagement is more important than any other workplace perk in driving results. So rather than focusing on outdated workplace perks, make sure you’re investing in your employees, so they invest back in you.
Despite, these challenges it’s not quite time to sound the death knell for start ups just yet. Well run companies solving genuine problems will continue to secure investment, create new markets and challenge established brands regardless of the economic environment.