Of all the questions surrounding a business and how to effectively run it, "running my company like a startup" has got to be the most asked about strategic question. Why? Because nobody has given a commonly known satisfactory answer. Yeah, sure, every expert worth his flagrantly padded "CV" has to cough up all kinds of authoritatively sounding answers, preferably sprinkled with the current current biz buzzwords and concepts. But the question keeps being reasked again and again, in trade magazines and blogs and seminaries and so on, because despite all the promised answers amount to nutritionless rhetoric. Until now.
The secret, the key, to understanding how to run your company "like a startup" is to understand what changes occurs in a company's transition from startup to "up and running", as related to innovation and nimbleness. In other words, when you say you want to run your company like a startup, what you mean is you'd like your now bigger company to have the innovation, the innovation, the maneuverability, of a company just starting out. You do not mean you want to be eating cold pizza and sleeping on the couch in your Mom's basement when you're not pulling all nighter's trying to make Mr. Client Worth $ 50 Profit happy on an impossible deadline.
No, that's not what you mean.
So, we need to define what unique qualities a new biz has that which is lost in its transition to a more successful, but bigger, lumbering business. Once you understand the difference, then you can do what it takes to incorporate that innovative streak into your company.
To make this easy, let's use an example. Say you're just out of college, and together with a couple of buddies, you decide to launch a software company. You interned in this hospital not far from the college doing software grunt work on their information systems, partly because they paid you, but mostly because of Ashley, the cute nursing student you wanted to get to know better. While punching code, you notice their systems were inefficient and clumsy; wasted time, energy and money; and you thought, hey, I could do this much better.
So now you're a proud partner in Scalpelware, a medical information technologies and software systems company, whose tagline is "cutting out the deadweight".
You start out trying to make that medical records software that you were "working" on while using your hospital pass to self-important wander the hallways hoping to "accidentally" bump into Ashley. But you soon get quagmired in the gargantuan scope of the project, having to interface the records software with a veritable jungle of often arcane inputting programs and system setups, on top of the seemingly insurmountable twin goals of overpowering the entrenched dominant players in the business and convincing fickle, security – sensitive hospitals that your little college roommates and you are good enough to maintain sensitive patient records in a reliable and secure way. Honest!
So you and your partners fish around. You try an iPhone applet one buddy wrote (great, but did not exactly 'create waves', what with the 23 downloads and all), you try various kinds of linking-stuff-together-ware, a quick access to paramedics program, an internal algorithm to scan the records and identify patients who need certain age or disease triggered checksups, a program to ……. You get the idea. This goes on, with each idea running into its own set of challenges and problems. You finally settle on a program that optimizes and manages hospital functions to save money. You then go through all the usual start up steps and classic war-stories, from cold calling to selling off Uncle Elmer's gold teeth to that weekend you spent in County under Suspicion of Stalking, which led to your self-vow never to pitch to hospital executives late at night on their front porch after you followed them home.
A few years later finds you looking out your 42nd floor window office as CEO of the renamed MSS International (Medical Software Solutions), now a respectably sized company, facing the same economic issues with everyone else while trying to stay innovative and 'ahead of the curve '.
Then it hits you, while reading about another young startup: the memories of your earlier years, different types of software you had tried, the all nighter's you rolled, the cold calls and connections and friends you made – and the general nimbleness and maneuverability you had.
You remember this wistfully because now you do not have any of that. You spend your days locked up in the Glass Prison, only allowed to experience Fresh Air at preordained, often supervised recreation time blocks, only in designated areas, to be whisked back to your ornate cell in the cubicle encrusted Big House for further 18 – hour stretches of Labor.
And the problems you face! If only you had the old time inventiveness, you could, say figure out the Next Big Program or try something new – New! – or come come up with a fun advertising idea like the one you got Ashley to star in. Granted, it was shot by Jesse, the perpetually semi-inebriated Frat Boy Partner, and it was a spur – of – the – moment "business" idea, in that it was primarily designed to get Ashley in her bikini on the beach, and get lots and lots of video. If only that idiot Jesse had not forgotten the damn cap on the lens for the first hour. What and idiot! Oh well. He turned out OK, now that he's heading Asian Operations.
But the point is, you could use a major dose of that startup magic, that free flowing idea and innovation set up that you had years ago. If only!
So you write to …. Well, it does not really matter what you do or who you write to at this point, because we get the picture.
And no, I did not go into seemingly unnecessary details to waste your time, or because I talk too much. It is imperative that you understand and can envision the circumstance, beyond the technical bullet points, if you are ever going to comprehend the essence of the difference between a startup and established business.
So, what are you to do? How can you get that innovative streak back? How did you turn into Bob, the boring paper pusher?
Well, the difference falls into three categories, known as the Three R's: reading, ritin 'and rithmatic … wait a minute … woops, those are the wrong ones. The Three R's are:
1. The Romance, referring to our altered, romanticized view of the Startup.
2. The Responsibility, that your current position places on you, and associated constraints.
3. The Reality, which encompasses everything I could not fit under the first two, connected by the fact that they're all 'real', in that they're not "fake". Simple and logical.
When you started your business, you had no clue if it would succeed or not. You had and idea you were pursuing (which ever changed); but you did not know if you would succeed. You hoped, much as you hoped you'd bump into Miss Pretty Coed in Nursing Scrubs when you yourself importantly wandered the hospital. But there was no guarantee.
So you were just trying different stuff, without too much Responsibility beyond taking out the trash and making Mom's curfew.
Once you had success, however, you switched to building on that Success and making the company bigger and more profitable based on that kernel of an idea. And when the money continued to come in, so you began to "bureaucratize" the method that you used to succeed – hiring people and creating departments and mission statements and company policy's and all kinds of corporate innards to keep repeating what you have done, so that your initial method could metasize and be perpetuated to bring in great amounts of money and power.
So your position changed from inventing new solutions on the fly and having a finger in every pot, to being a narrowly constrained corporate manager, making sure a wide, predefined bureaucracy remains within the boundaries of its definition.
This is a major difference. And from this difference flows most of The Change. (The leader's changing role is a critical issue, but a different subject. You can read about it in "The Changing Sands of Leadership").
When you were just starting out, nobody knew who you were (except maybe the local sheriff). So it did not make any difference if an idea failed. You could afford to put out a cheesy iPhone applet that was designed as a half-joke, complete with a few buttons that triggered a burping sound. It did not really matter, nor did it matter that only only a handful of people actually downloaded it.
But now, if you were to release a program with anything less than stellar reviews and a huge buying audience, then the doubters and the Wall Street gum – flappers will throw a fit, extrapolating all kinds of gloom and doom collapsing scenarios and causing your company actual monetary losses and consequences.
This hangs a gargantuan deadweight around the neck of any serious new idea, with studies and projections and management approvals and focus groups and just a heckuva lot of hand wringing associated with any new idea.
Then there is the boring but essential heavy responsibility of keeping the company humming along and all the departments doing what they're willing to do and all the clients happy, knowing full well that if you were to leave the helm to less capable hands, then your company could have hurt by mistakes you would not have made. People could lose their jobs, credibility with clients could be defiled, and all what you worked for over so many years could be sunk because of a Damn Rookie.
This forces you to spend everyday stuck doing the creative version of an assembly line hole-puncher, traversing the same pathways day in and day out as you stay the course.
Ah, the good old days of the startup, when you would slurp Ramen, invent awesome ideas, between jokes and complaints from Mom regarding the strewn about empty pizza boxes. Or at least that's the part you remember.
What people tend to forget are the hard parts: the fact that you had really no idea what you were doing, the fact that every "killer ap" you quagulated from your beverage infused stupor was accompanied by a half a dozed inconceivably boneheaded ideas, the fact that you were consistently poorer than a naked monk, losing opportunities and wasting the little money you did have due to knowing zilch, not to mention working very hard for a pittance, and so on.
Furthermore, the creative aspects are exaggerated. It's not like you plopped down on the couch after downing a keg through your nose, and started to burp out multimillion dollar corporate business plans.
No, there was a lot of work involved before a useful idea come to you. You had experiences with the product and business, ran into problems and hardheaded executives and saw people's frustrations and mistakes before you could produce a good idea.
Moreover, people project on "the startup" all their supercreative fantasies of carefree, GoogleSque youthful genius. It's not like that. The guys joke around and play foosball because they do not have many responsibilities. Which is a good thing, considering their level of security. Startups from Facebook to eBay to pets.com brought in real executives for just that reason: you can not run a company like a college dorm. You actually need people who know how to do real work, and stuff.
So get over the Romance and be realistic. An up and coming company of some fresh college kids does not posses the Holy Grail of inventiveness, or the fountain of youthful genius in its structural DNA. And speaking of Barren, Ashley grow up into a fat, pushy, tobacco chewing nurse, who married "Buck", the guy taking a court-ordered alcohol and drug abuse course while working towards getting his ASE patch. See? It's not all like you thought.
The reality is, in enshrining every successful aspect, action, and lesson in company policy and bureaucracy, as you must do, these aspect and manners of action have become very difficult to change.
The reality is that the flip side of increased specialization is decreased wide angle vision of action and its consequences, and reduced responsibility, which carries its own negativity. Specialization also tends to eliminate cross pollination; you never know what anyone else is doing, so you neither experience how your work meshes with someone else's, nor do you really grasp how you do affect them. Designing a seat cushion based on parameters without talking to the guys designing the seat, means that there will be "discomfortables" that get brushed over because it's too much of a pain to send it back until you get it right. Etc., etc.
The Reality is the increased bureaucracy, including the layers of management meant to oversee and approve underling's decisions, makes getting anything new done a training ordeal, which unsurprisingly leads to people usually not trying anything new.
The reality is the changing role of management is not always fully comprehended by them, as evidenced by their relentless attempts to "act like a startup", initially leading to the Chief Financial Officer walking around the office uncomfortably dressed like "Larry the Cable Guy" .
Suffice it to say that management often has a hard time realizing that their role has changed, and is changing, and this leads to mistakes.
The reality is the size of the company, the history of its success, the breadth of its market and penetration all mean that any new product, advertisement, or business angle could not only fail on its own, but more importantly stab the company in the jugular, and cause whatever current success to be negatively impacted. This means that the creative and foresight people tend to be more focused on maintaining the status quo without upset, instead of inventing The Next Big Thing.
Maintaining the current success also often drains and occupations the leadership, neutering energy that can be devoted to something else.
The reality is "Need is the Mother of Invention", and success is the rich stepfather of Invention, providing little Invention with all the Comfort his heart could desire, but taking away his mother, Need, and thenby turning it, little Invention, into a spoiled, lazy-ass little brat, who never wants to get off his butt and do something inventive, because he has everything spoon fed to him. Which can be a problem.
So now that I've deflated your hope, let me remind you of something: You're not paying me to tell you what you want to hear; in fact, come to think of it, you're not paying me at all. So I'm not going to tell you what you want to hear. But I will tell you the facts. And the facts on the differences in mentality between the startup and the established business are exactly as I laid them out.
This does not mean that there are no innovative quality's in a startup, or that you can not capture them. Everybody now: Yes, you can. And I'll show you how. Just send me a thousand dollars, and a couple of dozen pictures of Ashley's younger, good – looking sisters, so I could pick one, and you'll be in business.
Or read the next article in this series. Although, personally, I'd go with the first choice. It's so much easier. And, hey, if I do not like a sister, I'll promise to send you the pictures I reject.