Why Large Companies Must Learn From Start-ups
4월 6, 2013

I remember, at one of my presentations last year on the ‘Fan-orientation Strategy’ – the business strategy framework I’ve developed, I asked the audience what the #1 company, non-oil, at the top of S&P 500 Global, but with only five different product categories was. And the audience was surprised when I named the company. Not before a year has passed, that company has made me rephrase that statement! Now the company is at the top of the list. And it’s called Apple Inc!

Last weekend, there was an interview article in WeeklyBiz by ChosunIlbo, with Adam Lashinski, who is a senior editor at Fortune and the author of Inside Apple, who claims to have revealed the secrets of Apple’s success. (The interviewer, by the way, happens to be one of the guest speakers at beLAUNCH, the upcoming event organized and hosted by beSUCCESS in June, but it’s not the main topic of this article so I won’t talk about it.) And it was a very interesting article. One of the secrets to Apple’s being so innovative and so successful, Lashinski claimed, was that in effect it keeps the start-up or entrepreneurial culture up to this day when it is the largest and the most successful corporation in the world.

Innovative and being entrepreneurial - what have these two got to do with each other? Is there any correlation between the two elements? The answer is a huge, resounding “YES!”

At large companies, there is what we call bureaucracy. And by bureaucracy, I mean there is a system that’s sometimes sugar-coated as hierarchy at best and it implies there’s a certain flow of unchallenged decision-making (when not sugar-coated, it means “shut up and just do what I tell you because I’m the boss”!). Now, please don’t get me wrong. I’m not totally against bureaucracy, or hierarchy. They’re definitely necessary to keep an organization running effectively. I just go completely against them when there’s too much of either.

For those readers, especially from large companies who haven’t come across with what happens at a start-up, what you’re likely see the most at a start-up is lots of rattling fights and battles and chaos. Say, you are the founder or the CEO or both of a start-up, but (since you’re paying your team peanuts at best) you don’t even get half the authority that a junior manager at a large company has. You don’t have the top-down decision making process in a start-up, meaning your team members won’t hesitate to call your idea “bullshit” and you’d have to listen to them.

The result is astounding, though. Most of start-ups and entrepreneurs are not of the top-notch education background. They don’t have the expensive consultants to tell them what to do next and they don’t have much money to innovate something. Well, guess what? All of the greatest innovation ideas in the history have come from such chaotic teams from the minor league!

How is it possible? Aren’t we at a large company belittling those unknown entrepreneurs?

By not having (or not being able to have) the top-down flow, the information and ideas flows in from every direction in a start-up. While entry-level employees at large firms who probably have the freshest, the most innovative and the least restricted ideas are simply doing chores for their boss, everyone, whether she/he is high school graduate, fresh in the job market or an ex-large-firm-C-level, at a start-up generates ideas and executes them, via the chaos. Why? Because they have to. While the CEO at a large company is probably the most alienated person from the market, everyone at a start-up is a decision-maker AND connected to the market. Start-ups don’t analyze the market based on the scientific, objective data like large companies do. They don’t try to be a safe-bet. They’re full of biases based on their unproven, unprecedented ideas on the market. Thus, by nature, their ideas can’t be substantiated by the conventional notions, but then again, isn’t that what we call “innovation?”

From Wal-Mart to Apple, all of the most innovative and successful companies in history, regardless of the industry, knew this. They all have had the healthy mix of hierarchy and entrepreneurial culture. Steve Jobs, the founding CEO of Apple, RIP, was notorious for his terrorizing nature, but he would too deliberately and constantly create the culture and environment that would emulate a start-up within Apple, while he would make the process as strictly top-down as possible.

Now, reading again what I’ve just wrote, I notice it’s possible that I have a over-simplified to a little extent why large companies must learn from the start-ups, however I believe my argument still stands. I don’t believe Christopher Columbus could have sailed to the then-unknown America if the King Ferdinand ever asked him of, or told him to based on, a hard evidence of the new land. It’s the time that begs all employees to be like Chris Columbus and all the bosses to be like King Ferdinand AND Columbus!

So, now, large companies, here’s your chance – get down to the start-up’s league, and learn from the chaos!

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