The following blog post (part one of two) is from Greg Phipps, our managing director of investment here at Innovacorp. Stay tuned... on Friday, he’ll offer up suggestions to sustain the start-up mentality (update: here's part two). (Yep – just like your Master Cleanse weight-loss in 2014 – maintaining it is the hardest part.)
I recently chatted with a manager from a large financial services firm and the conversation took an interesting turn.
The manager described how her employer enjoyed a solid reputation, boasted a 100-year history, and was well-respected in its industry and among its corporate and consumer clients. If asked to name a blue-chip company, this “brand” would undoubtedly be among the top picks.
The concern she shared related to the underlying reality that no financial services firm, regardless of reputation, size or market share, is immune to disruption by the alternative business models and cost-efficiencies that innovative start-ups offer through their digital, cloud-enabled, mobile-first solutions.
Consumer-facing financial services like mortgages, loans, retail investment management, and insurance solutions have largely become commodities. Incumbent leaders in these service-based verticals have all experienced erosion of their market dominance. And there’s more pain to come.
The question was posed: “How can a slow-moving, conservative, financial services firm with thousands of employees and a deep, vertical organization structure, react to market realities, remain competitive and fundamentally change the way it operates – internally and externally?”
My off-hand response was: “Act like a start-up.”
Now, I’m no oracle. This is not a revolutionary or original thought. Responsive companies of all sizes have embraced start-up culture and seen tremendous return on the investment. The reality is that companies from all verticals and of any size can adopt and sustain a start-up culture. In fact, I believe they must do so, to remain competitive and to stave off obsolescence and potential death of their brands.
What is start-up culture?
When we think of "start-up culture," we might picture millennials in cargo shorts and sandals, padding around an open-concept office space with bean bag chairs, scratching out plans on a whiteboard in between games of foosball.
A true start-up culture, however, involves much more than cool office space and free snacks. Companies of any size can embrace and sustain it. Having worked with more than two dozen start-ups over the last eighteen years, I can offer some insight into the fundamentals of start-ups and the cultural values common among the most successful ones.
It seems altogether obvious, but entrepreneurial start-ups always embrace the latest innovations. Be it hardware, enterprise software or mobile apps, start-ups ensure they leverage technologies that are cost-effective and enable more efficient planning and action, customer relationship engagement and management, product development and release, and marketing automation. Start-ups also use tools that allow employees to contribute and collaborate anywhere, anytime. If your company is still debating a policy on remote access to internal data, investigating moving from desktops to laptops or tablets, or assessing options for remote collaboration, you’ve got some catching up to do.
Passion is a hard quality to define, let alone find, among candidates for employment or internal promotion. Nonetheless, entrepreneurs all have a common trait — they live and breathe their business 24/7, and their passion shows in their engagement at work and among their peers. A start-up culture hires, develops, retains, celebrates, incents, rewards, encourages and promotes people who have a passion for the business and its success. The added benefit is that passion tends to be as contagious as the flu in an office environment.
Efficient and comfortable personal work space.
Start-ups create efficient and effective spaces for personal and collaborative output. The reason why start-ups value cool work spaces is that they want employees to look forward to coming to work and remain fully engaged while there. If you’re asking employees to spend much of their lives living, breathing and contributing to the company’s success, you’d better allow them to create and work in comfortable environments, with freedom to personalize their individual and collaborative work spaces.
Eschewing corporate rules and rigid work structures.
Start-up culture is often defined by a frenetic pace, long hours, conflicting priorities, and concurrent deliverables. It’s a juggling act, for sure. Rigid corporate policies and old-school structure is the bête noire to a start-up. Start-ups hold a philosophy of collaborating externally and across the org structure, finding ways to work smarter, and tossing outmoded, cumbersome corporate rules out the window – all to ensure efficient and effective, timely delivery of solutions to customers.
The ability to act quickly and decisively. One of an entrepreneurial start-up’s greatest qualities is its ability and commitment to react to market and competitive dynamics, ensuring longevity and market position. In start-up culture, there’s always a collaborative approach to solving problems, and employees are empowered to swiftly make decisions that can affect company performance and success, decisions they can “own” and be held responsible for. When people are empowered to make decisions and know their contributions are valued, they will step up and make a difference.