Digital transformation has happened. The world has not only changed irrevocably; it is in constant flux. The fact is, every industry is now driven by digitization, and the speed at which businesses are being forced to evolve, simply to keep up, has fast accelerated.
Sensors, the Cloud, and mobile (to name a few) are increasing the flow of information exponentially. Algorithms, run on ever-faster devices, can use that information to detect patterns, make predictions and solve complex problems.
The result is the creation of new markets and the reshaping of old industries and even old behaviours. Driving it all are customers who, encouraged by the speed of mobile and digital services, expect businesses to update and refresh faster than ever. The effect is being felt everywhere, from fashion to farming and beyond.
Ignorance is far from bliss
Some companies have ignored these changes (at their own peril). In the past, firms such as Blockbuster, Kodak and Nokia have paid the price for burying their head in the sand. Others are slow to react – think of Walmart’s tardy response to Amazon.
At the same time, household names such as Instagram, Warby Parker and Pinterest have exploded into life in less than six short years.
Successful company leaders now know that there is no choice but to transform their analogue businesses, so they can react to these powerful forces with speed and flexibility.
This has fostered a real desire within large corporations to work both with and like start-ups; so they can borrow the best bits of the start-up thinking for themselves.
Start-up, the grown-up way
Obviously a mature business can’t just suddenly become like a start-up. But they can behave like a start-up, the grown-up way. That means taking only the best of start-up thinking and applying that to big business.
US behemoth General Electric is a good example of an established company willing to embrace change. It is the only surviving member of the original Dow Jones Index of 1896. And right now, it’s reinventing itself in the digital space using the tried and true methods of agile start-ups.
There are at least five essential traits that perceptive big businesses such as General Electric must embrace.
Mindsets matter. Start-ups believe they can succeed and will stop at nothing to do so. They often also believe they are making the world better place.
Sometimes, that can sound corny, but properly motivated staff make a demonstrable difference. Purpose is everything in the modern workplace.
Accountancy giant and CAF client, KPMG, found that 94% of employees whose leaders discussed higher purpose said they were proud to work for KPMG.
The corresponding results for those who did not discuss the bigger picture? Numbers dropped to 66%. The actual turnover of these two groups was also dramatically different - 9.1% vs 5.6% respectively.
In the end, initiating real change comes down to the people and processes behind it. Believe you can and you’re half way there, right? Belief beats at the heart of a start-up.
Start-ups know speed matters. They have a sense of urgency and desire to get things done fast.
In large organisations, cumbersome processes, like lengthy approval requirements, can lead to prolonged lead times. When that happens, it’s impossible to iterate quickly enough to learn at the speed of a start-up.
Time to streamline. Put the energy back into where it counts most: creative thinking and doing.
The ability to fail fast - and fail cheaply - is a mantra in digital business. But companies that want to encourage employees to fearlessly take risks must also embrace the concept of “good enough.”
This is the art of the MVP – a term described by Eric Reiss as:
“The version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
Put simply: fail fast, fail cheap. Learn from mistakes and improve, in order to optimise your offering.
Start-ups don’t spend expensive weeks chasing the perfect solution when a good enough version already exists. They take ideas to market, quickly, to validate new concepts and improve their products continuously.
High-performing start-ups constantly look for new customer insights and adjust their approach as they learn more.
If you’re going to ‘fail fast, fail cheap’, then you’re going to have to be ready to change direction, fast, if consumers are telling you to do so.
When working with Ladbrokes, CAF employed its’ Innovation Lab, an always-on powerhouse of agile thinking based in CAF’s offices in Chelsea.
Using a combination of lean testing, data analysis, prototyping and MVP’s (Minimal Viable Product), the Innovation Lab was able to develop ideas, test them with real users and then iterate until they became a core part of Ladbroke’s mobile proposition.
The Lab generated more than 200 product feature ideas and 30 went live. That led to a 35% increase in turnover and a 50% increase in customer retention.
The ‘self-made’ start-up can do a lot with a little. It can spend wisely and make a small budget go a long way. All entrepreneurs think that way.
But digital entrepreneurs add something else. They often think about the business model and strategy for not just their own company but the entire ecosystem.
They build new platforms and reshape partners in that ecosystem in ways that would not be possible without the advances of digital.
It’s this big-picture thinking and pro-active doing, that many big businesses want hold of. Hence the drive towards Intrapreneurship – employees being encouraged to behave like entrepreneurs, while working within a large organisation.
"Everyone thinks of changing the world; but no one thinks of changing himself."
Leo Tolstoy was probably right when he said no one wants to change. But CAF is different. We believe in change. And we appreciate that it comes from within.
In today’s mobile-first world, businesses need to evolve rapidly - and continuously. Embedding some start-up behavior into your organisation is the first step on the road to digital transformation.
This is not about imitation; it’s about doing start-up the grown-up way. Taking the best of start-up thinking and applying that to big business.
Armed with the courage, culture and speed of a start-up, long established businesses – firms such as General Electric or KPMG for example - can initiate real innovative change.
Contact a member of Chelsea Apps Factory team and find out how your business can seize some start-up magic for itself here.