Week 91

We worked very closely with a big corporation and its attempt to reinvent itself.

My second tweet this week was this:

Large corporations should not pretend that they can behave, act or build anything like a startup.

I never bought the premise that large corporations should pretend that they can act as something that they are clearly not. There is a reason why the goal of a startup is to become a large corporation and that is mostly: scale. Startups can create innovative, adaptive products and services. That’s what they are good at. Large corporations are good at scaling something that is already tested, adopted and accepted by a significant amount of people. The line between those worlds is blurry, but it is there and I don’t see it as dissolved.

The lessons that some consultants derive from the work at a startup – focus, agility, empowerment – are natural byproducts of the size of a company and the ecosystems every single company is embedded into. It is easy to recommend a large corporation to act like a startup, but I rarely see any valuable advice that tells the people inside those companies on how to actually achieve that.

That’s because mostly, it is impossible. Large corporations and their scaling machines are deeply embedded into a financial structure that doesn’t encourage and/or allow the high risk that a startup can take. Most departments inside a large corporation don’t run on VC money and those companies do have shareholders that want their money. While I agree that this is not the best virtue to operate under, it is rather effective in establishing a certain culture that makes risk as possible as finding a unicorn.

The first time I came in contact with the famous quote “Never change a running system” was while inquiring on how to update my Windows about 15 years ago. That’s not because the new system is not superior, but because it is very hard to change something that is already running and unless we, as consultants, know on how exactly a large corporation can become innovative, we should be very wary of giving them advice to become more like a startup.

My passion for this topic derives from working closely with a new client of ours on how to develop a new business model for the company. It’s a sensitive, very difficult problem to tackle inside of a company that is currently generating north of 200 Mio in revenue. While that seems like a lot – and maybe enough to prevent real change – they realized and feel that whatever they are doing right now is coming to an end. It needs to change, the company needs to reinvent itself. Telling them that they need to act like a startup would not help them, because they would need to fire many of the long time employees to make it happen. So whatever comes out of this process of reinventing a large, well established company with a known brand needs to help to sustain the old business while at the same time building a future opportunity.

With that, I wish you a great, productive week full of scale.

P.S.: Johannes just told me, that in the whole month of June we did send out 8 faxes. While this is a record for us, I would be careful in predicting the return of the fax machine.