There has been a lot of talk of a culture clash between older, slower, more traditional companies and younger, more dynamic, faster tech startups. Each of them has its own advantages and disadvantages, but in general it is very difficult to reconcile the two approaches, since they are fundamentally opposed to each other.
A common motto among startups is "Move fast and break things," which has led to very rapid but huge success for some companies. Google and Amazon, the most prominent examples, are growing larger than their traditional competitors that have been around for decades. But it also caused a lot of unintended damage to traditional industries such as transportation and publishing, whose “destruction” did as much harm as good.
And more often than not, startups spend millions or even trillions on bad ideas and untested technologies (anyone from Theranos?). “Do it until you succeed” means that you have to do it eventually.
Meanwhile, traditional firms that offer more lucrative and traditional forms of employment, deep institutional knowledge, and years of business experience face their own challenges. Often resembling large, inefficient bureaucratic structures, they are slow to respond and react to change.
Core companies can be overwhelmed and even intimidated by innovation and new technologies. This leaves them dead in the water when the future finally arrives. For example, Kodak went from being a respected and dominant company to almost nothing in a few years because it refused to embrace the digital photography revolution.
But is there a way to combine these two approaches? Get the most out of your culture and business plans and use those aspects to move forward? Making big old companies function, at least in some way, like nimble young start-ups? Yes, but it's not easy.
Continuous innovation
As mentioned, one of the biggest fears of traditional businesses is that their business, or their entire industry, will be undermined by a growing startup. While independent startups are disruptors, agents of change, or whatever you want to call them, traditional companies will be far less risk-averse. Perhaps one of the smartest things an old company can do to keep from being left behind is to manage the revolution itself.
Many traditional companies are currently investing and should continue to invest in the digital transformation of their business model from top to bottom. However, this is a slow process, especially in large companies.
The use of machine learning, predictive analytics, artificial intelligence and other advanced digital tools is enabling traditional business models to become more efficient and better responsive to changes in supply and demand and market shocks. But it's not as easy as flipping a switch.
New company to try new things
Many traditional companies are creating new sectors, technology labs, and other stand-alone silos for digital innovation. There is nothing unusual about this. The companies have always had subsidiaries. The problem is that it's hard to get these legacy companies to actually commit to this idea.
Often the established business is temporary. The leaders of large companies are cold-blooded, limit the powers of the new project and leave as soon as possible. Such fluctuations are limited in today's digital world, where the next breakthrough innovation is always around.
In addition, good ideas and by-products with growth potential die just as often as they are sown. Or, to clarify, the core business is not investing in incremental digital success. The big advancement in digital business is the ability to scale at lightning speed. But big companies need to be ready with the resources and support to scale, not to mention the work. Otherwise, a great opportunity will be missed.
If an affiliate is successful enough, it must be able to grow and change as needed if it is to remain successful and valuable. Either way, the goal is simply to make money for a new business in an area unrelated to the core business, or to develop digital innovations that the core business can accept, if it works, it works. Don't stand in the way of success because it's new or comes in an unfamiliar form. At the same time, nuclear companies should be careful in evaluating the success of these new experiments. Measuring a new business or side business using the same metrics as for the main business can sometimes drown out momentum and not provide a clear picture. After all, new companies or small initiatives are not expected to turn a profit right away.
Culture change from executive level down
All the innovation in the world means nothing if the people who run the company refuse to change. Companies and asset managers can ignore new technologies and ways of doing business, and ignore the automation and efficiency of advanced digital tools. We saw it twenty years ago, at the dawn of the Internet, and we see it now.
More importantly, those in business power must implement the changes needed to innovate and progress, and do so responsibly and effectively. He has to be willing to let the startup culture seep down and influence how business is done at all levels, or he won't be effective enough to help.
Large traditional companies often invest in the research and development of new ideas and technologies, but managers and other decision makers ignore what lies ahead due to cost, risk, or fear of the future.
But the future of business is changing in the digital world. Everything moves and changes at an almost frightening pace. The Covid-19 pandemic is absolute proof of that; not only companies with digital tools have been able to survive. While they had the advantage, companies that were able to recognize the rapidly changing situation and respond quickly and effectively to it made progress, and in some cases even improved their bottom line.
But it's more than cultural change
One of the biggest strengths of a startup's tech culture is vision. This is an attitude towards business and technology that not only looks to the future (as all companies do), but actively tries to fix it and even adapt it, if possible. Traditional companies must recognize that the world moves on and that they are responsible for influencing the development of their industry.
Part of this responsibility is to enable innovators to be innovators. When a large company creates a business unit to research and improve its digital technologies, that company cannot alienate these innovators by recommending major changes or creating a new idea that could shake up the company or its entire industry.
closure
Simply put, in order for an older, traditional company to reap the benefits of adopting a startup model, it must do so. He cannot simply make superficial changes; you really need to invest. But this type of investment comes with risks that can make more traditional businesses nervous. The transformation work really needs to be done.
This means supporting innovation and digital change as everything becomes more efficient. This means that subsidiaries must try new things and evolve when they find something new and successful. This means that leaders step aside so that the forces of change can really make a difference.
Otherwise, a "traditional" business will just be an "old" business waiting to be destroyed by some technological upstart until it becomes obsolete.
Mail Can Traditional Companies Behave Like Startups? It first appeared on ReadWrite.