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Can an established organization act like a startup? No.

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An established organization cannot act like a startup.  Can they learn from start-ups and apply techniques from startups? Yes.

Recently, Waverly Duetsch, Clinical Professor of Entrepreneurship, University of Chicago Booth of School of Business reported[i]  the burning question she gets from CEOs is “How can we be more entrepreneurial?”  Her answer was that established organizations can’t be entrepreneurial, but an alternative is experimentation.

The more relevant question for CEOs is: How can established organizations be more nimble and adaptable? This is where entrepreneurial techniques, like experimentation, can be leveraged (experimentation is a key element of our approach, Exploratory PD®).

It may be helpful to explain the differences between an established company and a startup.  According to serial entrepreneur and author Steve Blank, a startup is a “temporary organization designed to search for a repeatable and scalable business model.”[ii]

Established Organization / Enterprise Startup
Existing infrastructure (salesforce, distribution, service, customer base, etc.) creates constraints on product development N/A – Figuring out how to create, sell, distribute and support the product at an appropriate cost and price is the critical goal
Departments with defined skill sets (marketing, engineering, operations etc.) Typically one person wears many hats
Policies, procedures and processes (HR, Operations, Product Development, etc.) If existing, typically in flux
Established supplier base N/A – Finding suppliers is part of the task
Defined markets Focus is on finding the right product for the right market (product-market fit)
Salary If lucky
Multiple product categories Typically one product
Maintenance and support of existing legacy  products is a large percentage of the workload Working on developing one product that has a unique value proposition (product-market fit)
Funding is provided by existing profitable products Investors, families, friends
Culture is established and difficult to change Culture is evolving

 

Because there are so many constraints on an established business, it is difficult to be entrepreneurial. But the alternative approach of experimentation and adaptability can be leveraged to achieve similar results.


[i] The University of Chicago: Booth Women Connect Conference, October 23, 2015. http://www.chicagobooth.edu/faculty/directory/d/waverly-deutsch

[ii] Steve Blank, Post: Why Companies are Not Startups, March 4, 2014. http://steveblank.com/2014/03/04/why-companies-are-not-startups/

 

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2 comments on “Can an established organization act like a startup? No.

  • I agree that established companies have a difficult time being entrepreneurial but with a few specific changes in infrastructure, processes and culture, the Intrapreneur will surface. With sufficient support from management, these individuals can function as entrepreneurs within the existing organization.

  • I agree that it is much more difficult for established companies to act like startup’s. Think of the law of inertia. In an established company, there are more moving parts, decision processes, etc. While startup has better focus, shorter decision cycle, also the sense of surviability, “if it’s not done today, there might be no tomorrow” reality. Having said that, it does not mean, entrepreneurial spirit can’t exist in established companies. Simplifying processes, renew culture, and make sure everyone, from top to bottom, buys in and supports the environment.

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