Three lessons for large corporations from startups

A few weeks back I was at the TITAN campus in Bangalore, sharing the story of “3M

Car Care” stores business. In attendance for the event were a couple of managers from

different 100 year old pedigree MNCs. The story telling session was to be followed by

a panel discussion. The proposition under scrutiny was "Entrepreneurs are born, not

made".

It was surprising for me to find that a good number of audience felt that entrepreneurs

are born, not made. Over the next few days, I spoke with a few friends in the start-up

world and learned that this was quite contrary to the way professionals working in the

startups thought. They often identified themselves more as entrepreneurs than

employees. It was not uncommon to see employees of start-ups go on to start their

own business.

The reason for this, a startup founder told, was that good startups steep their

employees in a culture that helps develop that entrepreneurial streak in them. The

founders are quite careful about nurturing a work environment that constantly

mitigates an “I am an employee only” mentality and promotes the feeling of being

part owner of the company.

So what can large corporations learn from startups?

I posed this question to a visiting Executive Director of 3M from St. Paul, a frequent

visitor to the Silicon Valley for meetings with VCs and startups. I got an interesting

quip on this. He said that often startups want to become large corporations and large

corporations want to become more like

startups. So each camp had a thing or

two to teach the other. In the following

paragraphs I encapsulate 3 ideas from

conversations with some people in the

startup world and my thoughts on the

subject-

1. Adopting culture vs. adopting practices

Often large corporations tend to adopt certain startup practices rather than adopting

culture. While adopting practices might be a good start, adoptingcertain cultural

values may have a more profound impact on large corporations.

BMW is a great example where they have built a new entity from scratch through its

“BMW i brand”. It is an effort to almost create a new culture that competes with the

existing business and is run in a very different way. It focuses on projects with

partners from the fields of art, culture, design and architecture or with other premium

brands offering products that complement BMW i vehicles.

3M itself has a very inspiring New

Growth Venture (NGV) program where

employees across the world can pitch

new business models or products. This

pitch is made to the absolute highest

management called “the NGV Board” in

Minneapolis. Much like the seed funding

round in the startup world, the employee has to make a case for funding the venture.

This funding can be as low as a few hundred thousand dollars to a million or more. In

case the funding is approved, the venture leader has to keep up with the KPIs to get

continued funding.

2. Measuring start-up culture

Large companies do a great job of creating measurable operational KPIs. This is a

must do to run a large corporation. What they can additionally do to breed the startup

culture is to develop KPIs that measure innovation and creativity.

Companies need to be careful in defining such metrics. Example, number of

innovation patents filed may not be the best metric to measure startup culture. Some

good metrics could be - What part of the year’s revenue for the company came from

products or business models launched in previous 3 years (this is a very important

metric at 3M) or how many people submitted formal proposals for funding new

businesses or product launches within the company. Even a crazy metric like how

many people left the organization to start their own enterprise may indicate the vitality

of the culture in a company!

3. Auditing and dumping antiquated policies

Penalizing people for getting late to work, frequent flier miles belong to the employer

not employee, bell curve performance reviews etc. are some policies that are common

in several large corporations. In today’s world, an employee works long hours on

weekdays and sometimes on weekends; traveling is a toil,you leave your family and

life to spend countless hours in planes,

airports and taxis. Why would a

company insist on keeping these

miles? Bell curves accept the fact that

the company has a large number of

average and poor quality employees.

Why would companies not eject them

and have the best employees only?

Companies should look at each policy

with a hand lens and tweak, modify or dump policies that are stopping their

employees from achieving brilliance.

Some fantastic lines from a post “ Why I hope we always remain a start-up” by

Naveen Tewari, founder of Inmobi sums up the essence of this article. This is how it

goes-

“I believe that when processes take over passion, when the spirit of entrepreneurship

begin to flicker in people, when culture becomes just a poster, happiness and fun

become a concept, and people become machines - that’s when a company ceases to be

a start-up”

Large corporations, make a move!