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What can a Fortune 500 company learn from a start-up?

What can a Fortune 500 company learn from a start-up?

Omar Chihane on what newcomers on the business scene can teach established and successful companies

Before starting my own business I was a corporate junky, and I must admit I loved every minute of it. I still do, for it’s the corporate world that prepared me for entrepreneurship by teaching me first-hand what to do and what not to do.

To those looking to start an entrepreneurial journey because you’re fed up of the corporate world, I say wait – you’re not ready. It’s not about leaving your corporate career as much as it is being ready for your entrepreneurial one.

The two offer very different lives, and having made the switch, I sometimes wonder whether what I have learned as an entrepreneur could have helped me in the corporate world?

Having given talks to many multinationals about disruption, creativity and agile methodology, I often get asked the question ‘what is the main difference between your previous life in corporate and your new one running a tech start-up?’ My answer is quite clear and in three parts: Mind-set, failure and disruption.

First let’s talk about mind-set. I’m sure by now many of you have heard of agile methodology, and similar approaches. Most management consultant swears by this new trend and while I’m a definite subscriber, I think ‘agile’ starts between a leader’s ears.

I once wrote on an Instagram post that ‘Innovation doesn’t start when you ask why, it starts when you ask why not’.

As leaders in the boardroom, we are often asked to sit through our team’s presentations and are expected to give feedback. The natural tendency in the corporate environment is to look at someone’s presentation and find holes in the story, areas of improvement, and additional work that needs done.

Leaders do this not because they don’t want to be agile or innovative; they simply need to feel valuable – that he or she contributed to the discussion.

In the start-up environment, my advisory board – made up of proven entrepreneurs – adds loads of value to the discussion but conversations usually go something like this: “You’re overthinking it, you need to do it in half the time, you have too many features, keep it simple, launch now”. And if I dare say “launching now will cause this or that problem”, their usual answer is “So what? Who cares?”

My advisory board members fulfil their need to feel valuable when they help me simplify, strip down and speed up a new product or feature launch so that I can test, perfect, and then scale.

Next let’s look at failure. Perhaps the biggest difference between start-ups and corporate companies is the former’s acceptance of failure. While big companies have embraced the values of failure, failing is still somewhat a taboo – a status to avoid at all costs. Start-ups on the other hand, embed failure in their business model.

Approaching the launch of a new feature, product or solution with an attitude of ‘we’re not sure if this will work but let’s try it anyway’ fosters a lean approach to spending which makes trial and error quite affordable and hence experimental in the approach. Look at a start-up like a scientific experiment where trial and error are part of the process – where failure is embedded, remembered and used to lead to success.

Finally, when it comes to disruption, if a company isn’t thinking of disrupting its own business model, someone else will do it for them.

I was once giving a talk in a room filled with senior leaders of multinational companies. Many of those companies were making a fortune being middlemen. I started my talk by saying: “If your company acts as a middleman and you’re not thinking of disrupting your own model, you’ll likely be out of business within five to 10 years”. The room went silent with a few chuckles, but if you really think about it, technology and digitisation are hugely disrupting the middleman’s business model.

Michio Kaku, a famous theoretical physicist, beautifully described what I call ‘the disruption framework’ during the World Government Summit in Dubai earlier this year. He laid out five simple points:  Take an industry; find its middlemen;  find its points of friction; list all the aggravation and waste; digitise it.

It’s a fine example of how and why big companies should learn from start-ups. If they don’t, their future could be bleak.

Omar Chihane is CEO of Sellanyhome.com

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