Why we should envy Startups

Startup 1 Marc Andreessen in his 2011 Wall Street Journal article noted that ‘software is eating the world’. He was right in that every company is becoming a software company but even more than that, every company is becoming a startup.

A startup is an ‘organisation formed to search for a repeatable and scalable business model‘ (Steve Blank & Bob Dorf, The Startup Owner’s Manual). Specifically, startups are temporary organisations seeking a product and market fit via a business model. By embracing an entrepreneurial culture, learning from failure and utilising short learning cycles, startups can quickly converge on a high-growth business model.

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Startups have been incredibly successful as they have the freedom to explore, innovate and rapidly deliver value, gain customer feedback and evolve solutions. Validated learning with end customers tests each element of a product vision with a build-measure-learn cycle. This scientific approach allows the company to pivot by changing direction whilst staying firmly grounded in what they have already learnt.

Recently developed business tools such as the business model canvas visualize the value proposition, infrastructure, customer segments and finances to help a company align their activities by showing potential trade-offs.

With low budgets, low risk and high agility, lean startups can rapidly grow market share against slow-moving and outdated large competitors. This is aided by cloud infrastructure, social sharing and crowd sourcing. They can also massively disrupt entire markets, recent examples being Uber, Airbnb, Snapchat and even SpaceX. Nagji and Tuff recommend companies invest at least 10% of their innovation budget within the disruptive space.

The Strengths of a Startup with the Advantages of an Established Company

Internal startups (incubators) are used by large companies such as General Electric, IBM, MetLife, MasterCard, Tyco, Coca-Cola, Cisco, American Express and Microsoft to drive innovation and create profitable new ventures. These companies hold innovation contests, ideation workshops and utilise growth boards to create, develop and deliver new programmes.

Developing original ideas, forming small, dedicated and focused teams that are free from red tape and not afraid to fail is critical to success. A single team can sit and work together with all of the required people to bring the vision from concept to cash. The team collaborate on identifying markets, rapidly developing a minimal viable product and validating it with customers by getting out of the building.

If your company has the infrastructure, skilled people and high-level buy-in to make this a reality then all you need is focus, seed funding and a willingness to move forward and try new things. If you are not out to grow and disrupt your own market then you can expect an unpleasant surprise soon from a student with a brilliant idea, a laptop and a latte.

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