Six differences between how startups and corporates innovate

Corporates want to replicate the good traits of startups, often for good reason. Yet, the cultures of the two types of organisations and the reasons why people work in them are remarkably different.

Corporates are seen as offering security and solid career paths. Staff want the enterprise to be successful, but are more motivated by their own remit and how that may fit into their career goals.

Those in startups are much more inclined to be driven by the shared passion, energy and the feeling of freedom… or living on the edge! Joining (or founding) a startup is more like an act of faith, based on the idea that the company or idea will eventually become a sustained commercial success. It’s for those reasons that startups operate with such homogeneity.

Having worked with a number of clients across industries and having been part of startups ourselves, six key differences have been observed in relation to innovation.

1. Risk appetite:

Inherently different in a corporate vs startup, is the attitude to risk. A corporate staff member fits into the rules that are already part of the fabric of the business. A startup team member creates his or her own rules as the weeks or days go by.

Relatively speaking, the corporate straight jacket limits creativity and creates a fear of failure. Failure is talked about and is said to be acceptable, but there’s invariably huge reluctance in admitting something wasn’t successful. Were learnings achieved? Yes. Did we fail? Yes. Let’s be honest.

If you’re in a corporate, how might the risk appetite not constrain innovation?

2. Budget:

A startup quickly adapts to working with close to no cash at hand. The founder(s) learns to hone their negotiation and networking skills like never before. Creativity in how to use limited funds and how to focus effort with extreme precision becomes part of their DNA.

On the contrary, corporates have too much money, really. We’ve all seen situations where the working dynamic suffers from complacency, self-justification and things need to be documented to death.

How might teams work on initiatives if there was half the budget and no more?

3. Ownership:

When an initiative in a small company is not successful, the emotional impact on the individuals is significant. Some of the tasks done are core to the survival of the team. People feel they completely own the process and potential success, but also if something is a complete failure. And the figures show that happens to most.

In contrast, if a project is not a winner in a large enterprise, people are quick to deflect the reasons on to others. Almost with a blink of an eye, it becomes a blip on the radar and part of the history books that are rarely opened ever again.

How might true ownership of successes and failures be created?

4. Evidence required:

Speed from idea, to concept, to production is radically different. A corporate will spend the same amount of money on crafting a business case as a small company would in a whole year (or more). Corporates force their teams to provide so much evidence it can suffocate a great idea that could have been successful if it had seen the light of day. And had been given the chance ‘Pragmatic evidence’ is rarely seen as enough.

In a startup, if something fails, there may be no other project to move on to. It could possibly result in the end of the company, or one great pivot.

How might requirements for evidence be reduced whilst controlling for risk factors?

5. The pivot:

Pivots are part of the typical week in a startup culture and it’s inherent in the expectations of all those involved. Some of the famous applications we know well today, began with a radically different remit to what they morph into.

Corporates are talking about pivots more and more today, but in reality the road they’re on is a long and winding one. It takes a long time to arrive at the destination and they’re more likely to keep to the path mapped out, as people justify assumptions and arguments previously put forward.

How might there be an unstructured structure put in place that actively encourages pivots?

6. Continuity:

The very nature of a startup means an initiative is driven by an individual throughout the whole process. The ‘T-Shaped’ skill set may well have a very wide ‘T’ and that person remains involved from start to finish.

In a large enterprise projects are more likely to have specialists dive in at the deep end for a period of time before they step back and let others become more involved. If not managed well, this approach can easily result in inefficiencies and inconsistencies.

How might consistency be achieved when there are more people involved? Ultimately, there’s no one approach. Whilst startups are quite constrained in the way they operate, corporates do have choices, if it chooses to pursue them.