Think You're Too Big to Act like a Startup? Think Again.

Everyone likes to say that established companies need to act more like startups.

As someone who has spent most of my career in the startup world and now has the benefit of seeing how Doug McMillon is instilling a startup culture at Walmart, I definitely agree with the sentiment. While an established company will always be different than a startup in terms of size and style, it can still structure itself to behave more like a startup.

I think it ultimately comes down to two elements: taking risks and moving fast.

Take More Risks

One of the most admired aspects of a startup is the ability to take risks. Startups famously take bets that have a low chance of working out, but a massive upside if they do. And while most established companies are the result of a moonshot that caught fire, over time they can become places where employees are much more likely to take safe bets than bold ones. This is a tragedy, because an established company is actually a better place to take a shot than a startup is—since it has a wider portfolio and can weather a failure more easily.

To solve for this, an established company should:

• Acknowledge that not everything that gets tried will be successful. Companies should view long shots as learning opportunities that might work out, or might fail while teaching something along the way. I especially admire Walmart’s history on this – some initiatives didn’t work out, but other shots (like building a grocery business) made up for it.
• Consider setting up separate risk-taking budgets. This will minimize the tension between new and existing business, and no one will be tempted to minimize risk in order to hit a number.
• Rethink how it evaluates and incentivizes employees. When you judge individual employees on their numbers, you ultimately get short-sighted behavior at scale. But if you evaluate people on their judgement and decision making, they’ll take smart risks, and the company will be better off on a portfolio basis.

Move Faster

The other attribute of a startup everyone admires is the ability to move fast—a startup is pretty much always in a 2-minute offense. This is in part because startups are made up of small teams, and do not yet have the challenges that come along with silos or legacies. It’s easier to reach consensus on decisions, and employees feel empowered to do something on their own without having to run it up a chain for approval.

Obviously, the dynamics at established companies can be very different. But an established company can still move fast by:

• Pushing down decision-making, so that people outside of leadership also have authority. This requires trust, but it will pay off in terms of making employees feel empowered and attracting talent.
• Creating small, agile cross-functional teams who have clear business objectives and goals. Since cross-functional teams include people with different backgrounds, they help mitigate the “us vs. them” dynamic that runs rampant in siloed organizations, and let you move faster.
• Creating separate organizations, ring-fenced from the rest of the company, that are working on very specific business opportunities. Their leaders need to have their own budgets and be free to hire their own management teams, so that they essentially are startups. While this setup can add costs, the upside is well worth it. At Walmart we’re doing this with our Store 8 innovation arm, which is experimenting with new retail technologies.

None of this is easy, but in today’s fast-moving landscape, it’s more important than ever to move quickly and take risks. And when you create a startup-like culture at your company, it will ultimately feed on itself in terms of successes and attracting the talent you need to keep growing. 

In case you missed it: Catch my interview with Dan Roth where we discuss how to move at the speed of a startup and more.