Thinking Like a Startup

Recently written for the MaRS Verge blog

Lately, it seems as though an hour doesn’t pass without news of the disruption and demise of a proven, established business at the hands of a more agile, innovative startup. Thinking more like a startup and less like an established firm is the business imperative du jour.

If you are a corporate leader under pressure to think more like a startup you may want to start by reflecting rather than by reacting. Your ultimate goal isn’t to look and feel more like a startup. Rather, your goal is to translate relevant aspects of startup culture within your own unique corporate culture to accelerate business growth. So hold off on hiring a chef to flip gluten-free pancakes and pass on adopting the dress code of the Pied Piper crew in HBO’s “Silicon Valley.”

I recently spent some time in the innovation ecosystem working on design thinking and  lean startup projects. Without a doubt, both of these methods are potentially game changing for an established enterprise. However, now that I am back in a corporate role, I am reminded of two simple behaviours that must be mastered in order to use these innovation methodologies and truly think like a startup.

1. Think critically about everything

Humans are hardwired to rely on bias and past precedent to make decisions. If you don’t believe me, here are a Harvard Business School study and a Fast Company article that shed some light on the science behind this claim.

Why is this relevant? Haim Mendelson, a professor at the Stanford Graduate School of Business whose class I had the pleasure of taking recently said: “Our world is undergoing dramatic change. Changes in technology and demographics are working together to overturn assumptions and precedents that have guided us for hundreds of years, to disrupt time-tested business models, and to reshape firms, value chains and entire industries… when we make decisions, we won’t be able to rely on our experience and intuition, which were formed in a world which is disappearing right in front of us, and extrapolating from the past will be increasingly dangerous.”

This was a big “a-ha! moment” for me. Unlike established companies, startups are completely free from learned experiences. Startups reason from first principles and find cheap ways to test their assumptions in real time before making big bets. Here is a great article about how Jennifer Fleiss and Jennifer Hyman, the co-founders of Rent the Runway, tested the logic of their business model before investing time and effort in formal planning or expensive prototypes.

When asked to share one piece of advice with aspiring entrepreneurs, the co-founders spoke directly about the need for unbiased testing and learning.

“Going for it means don’t just sit there with your ideas—figure out a way to see if it’s going to work,” said Fleiss.

“Number 1 is to figure out how you’re going to assess whether you have a good idea or not. So, go do something, learn from it and be able to have an unbiased view as to whether your idea works,” added Hyman.

Software developer Intuit is a terrific example of critical and analytical thinking in action at an established enterprise. Check out this Forbes article, which provides an overview of how a $26-billion enterprise leverages critical thinking to deeply understand and test the underlying assumptions of new ideas. Intuit places just as much emphasis on testing and challenging the assumptions behind ideas, as it does on ideation itself.

In my own experience, I have learned to pause before making major decisions and to ask myself the following questions.

• What assumptions am I making in this decision?
• How can I test my assumptions further and is the company really ready to adopt a test & learn mindset? (Hint: This article provides a few great suggestions on how to test assumptions. Mind maps and decision trees are other great tools to leverage.)
• What qualitative and quantitative data do I have to support my decision position?
• What are the possible counterpoints to my argument and how can I collaborate to find common ground?
• What biases do I have? What group-think pressures might be influencing me?
• Am I really ready to let go of ideas I am passionate about but don't test well?

All corporate innovators will eventually learn the ins and outs of design thinking and lean startup methodology - but they’ll find that each method depends on using solid critical and analytical thinking skills.

Key takeaway: Counterbalance the directive to be “fast” with the discipline to constantly test your business assumptions and make decisions in a deliberate, analytical and logical fashion. This will help you to make decisions that are more successful, better implement innovation methodologies and avoid blind spots you may not have even realized you had.

2. Pursue new ideas with conviction

One of the most magical aspects of a startup is the conviction held by every person who is involved in it. In my experience working with entrepreneurs, I’ve found that there is an almost-manic conviction to acquire a new customer, secure investment or attract new recruits to join the cause.

This same level of conviction is required as a corporate innovator, but is used in a vastly different way. Entrenched corporate interests have a stake in keeping the status quo. Often, disruptive ideas mean disrupting the things that an enterprise holds most dear, such as talent, distribution models and product mix, to name just a few.

One of the most famous examples of this conflict in action is the demise of the Eastman Kodak Company. If you’re not familiar with Kodak’s story, this Mashable article is worth the read. It sets out how, philosophically, Kodak was so steeped in the film business that it failed to commercialize its own innovative ideas. These same ideas, hatched by competitors, led to Kodak’s demise.

The lesson in the Kodak story is that, in order to truly take an innovative idea to fruition in an established enterprise, innovation champions must be ready to act with great conviction to:

• attract allies and support for innovation;
• become comfortable with advocating for controversial points of view and managing opposition and conflict;
• assess the change readiness of various internal constituencies and prepare for change; and
• learn to tell a story about their innovation in a compelling way (check out how some famous startup founders told their stories to attract investment).

In my experience, learning to tell and defend your story is absolutely critical to an innovator's success, and this is as true for small tweaks to processes as it is for disruptive innovation. If you can't make it real and relevant and if you can't generate excitement and buy-in for your idea, you will likely find yourself dead-on-arrival. This is the tough stuff - for me, the toughest of all. Ideation and co-creation is fun, politicking - not so much.

In closing, I would be remiss if I didn’t share one of my personal favourite examples of thinking like a startup. With over 25 million views on YouTube, the video is moderately cliché, but it still gets me every time. It was 2005 and Steve Jobs was delivering a commencement speech to the Stanford Graduate School of Business. I recommend watching his entire talk but, if you must, you can skip to the last five minutes. He closes his speech by telling new graduates to: “Stay hungry. Stay foolish.”

As corporate leaders, if we can find the time to become a little bit hungrier and a little bit more foolish, I think we will be amazed at what may follow.