The image of the modern startup has changed a lot, just five years ago HBR described joining a startup team as “an act of faith” rather than a sound career move. These days the landscape looks quite different.
Startups are so ubiquitous in 2016, they’ve forced us to rethink our perception of what a healthy business looks like. The old standard of the mighty, massive enterprise driving innovation forward with huge teams working to create new products — it’s no longer how the most exciting products come to be. The new innovative company is a small, young, agile startup, willing to push the envelope and take calculated risks.
In fact, the business world has become so startup-centric that larger, more established companies are beginning to clamor for better support systems. The kind of accelerators and incubators that have become commonplace for startups. And it’s no wonder. Startups now have access to a large network of support and a wealth of data to help them navigate the business side while remaining on the cutting edge. It’s the best of both worlds.
Startups are good for economies and good for jobs. So much so, in fact, that last year, the UK government launched StartUp Britain, a traveling campaign designed to encourage new startup growth and publicize the country’s many successful entrepreneurs.
Startups turn every challenge into an opportunity
So what is it about the startup environments that fosters innovation so well? Part of the answer lies within the obstacles of launching and growing a startup.
First, startups are notorious for being bare bones outfits — Without the resources of a larger, more established company, startups have to fight hard to stay alive. In order to stretch resources, the entire team has to think creatively day in and day out. And all that practice thinking creatively and turning limited resources into opportunities is great practice for thinking outside the box when it’s time to build new products.
Speaking of limited resources, startups also tend to have smaller teams where each employee is expected to wear many hats. Small teams are powerful forces and don’t get enough recognition for all they can accomplish. A well run small team is able to collaborate easier with less mess and minimal miscommunication. Small teams also tend to foster a strong sense of accountability. This fosters driven, close-knit teams that learn to collaborate in order to push the mission forward.
That brings us to our last point: Purpose. Mission-driven organizations are much more successful. Purpose is a powerful motivator, unfortunately only about 40 percent of workers can pinpoint their organization’s purpose and differentiators, meanwhile startup employees will go on (and on) about their mission and how their company is going to “revolutionize” some corner of the market. And, true, a large portion of the population won’t succeed in their mission, but that kind of idealistic tunnel vision has proved effective in creating products that genuinely solve problems.
The Trappings of the Modern Enterprise
Headlines don’t usually tell the whole story, and when it comes to business, those who make the most noise aren’t necessarily the ones doing the most work. Despite the fame of Silicon Valley, the U.S. doesn’t lead the world in startups or innovation. In fact, innovation is down in the States. Last year Gallup announced U.S. was 12th in global startup activity, lagging behind European countries.
There are so many misconceptions around startups and enterprises that even the world’s perception of where innovation happens is way off. So what else does conventional wisdom get wrong about business? Well, despite deep pockets, famous brand names, and a lot of smart and dedicated employees, enterprises have to fight against their very structure in order to innovate at all.
Enterprises tend to foster a linear type of thinking that makes innovation harder, while startups tend toward more exponential thinking leading to those outside-the-box ideas that spark big leaps forward.
Because enterprises have a history, a large suite of products, and massive number of employees to keep organized, linear thinking tends to be the easiest way to build new products. But that’s exactly the issue: Great innovations happen when companies set out to solve a problem rather than build a product.
That’s hard for an enterprise to do, especially when they already have so many other products to consider. What if the new innovation doesn’t fit in with company products already on the market? What if the product competes with products already out there? Enterprises have to consider the logic in releasing a product that could be ill fitting or downright competitive with other products from the brand.
It’s more than an issue of size, it’s an issue of legacy. For a young startup, there isn’t a long history to consider or an established brand to uphold. Startups are just out solving problems wherever they see them, with any tools on hand, using any approach that can get the job done. Today’s enterprise just can’t work like that.
The exception and the rule
Now, that’s not to say that it’s impossible for an enterprise to be truly innovative. But whenever the argument about enterprises and innovation is brought up, someone tries to argue that Google represents the innovative potential in the 21st century enterprise.
It’s more than a little hard to swallow the idea that Google represents most enterprises in the world today. Google is not your standard enterprise — this is the company that overhauled how the entire internet was organized, this is the company that (through SEO) continues to dictate how everyone in the world designs their sites. So while it’s true that the tech giant is still making big leaps in innovation, they’re not exactly the common enterprise.
It’s also worth pointing out that, for Google (and many other large tech companies), most of the innovation is sparked through the purchasing and absorption of startups, rather than the designing new products from the ground up. In this way, Google isn’t so much building products, but connecting complementary startups and incubating innovation.
And that’s no accident. Google knows that small, agile startups are the perfect environments for game-changing innovation — so why not let them create innovative new products and then take the best of the crop and infuse them with Google’s resources, name recognition, and product knowhow?
No matter how you look at it, startups are perfectly poised to trounce enterprises when it comes to ingenuity, resourcefulness, and creative problem solving. But that doesn’t mean that they can’t contribute to innovation, because they absolutely can. Just ask Google.