I’ve had the privilege of working on the entire spectrum of clients, from bootstrapped startups to corporate juggernauts. One thing is certain; there’s no magic formula for success.
Each business is unique, and whilst lessons can always be learned from elsewhere, the sustainable survival and growth of a brand depends on nurturing customer advocacy and optimising the most successful marketing channels.
One of my clients has total assets which would rank them somewhere between Finland and Chile’s annual GDP totals. Another client is just getting off the ground; struggling to distribute limited budget and resources into the most pertinent channels.
It’s fascinating to experience the contrast between these two worlds first-hand. It got me thinking about whether there are lessons that each side can learn from the other?
A common challenge amongst FTSE clients surrounds the lengthy and complex internal struggle with process and risk mitigation. There are issues with legacy systems, personal agendas among the myriad of stakeholders, and the time-intensive resolution of internal conflicts and varying perspectives.
At the other end of the spectrum, bootstrapped startups have a limited take-off strip wherein their main concern is having enough fuel (money) to catapult into the stratosphere, whilst making sure the rocket stays intact. Founders experience immense pressures not dissimilar to a high-velocity launch into outer space.
If a startup somehow manages to cross the chasm of an effective minimum viable product (MVP) into the product market fit pit of despair, they need to figure out the economics of acquisition and how to scale to compete with giant businesses via marketing channels that are saturated by competitors with an uncompromising bidding model. This is critical, despite the misconceptions of being able to build a winning business by hacking growth alone.
Often (at least from what I read), there seems to be confusion that a large business is a more mature version of a startup. That’s not how I see it. As in physics, the rules of quantum mechanics don’t apply to Newtonian laws. This is echoed by Steve Blank in his excellent HBR article about lean startups:
“Start-ups are not smaller versions of large companies. They do not unfold in accordance with master plans. The ones that ultimately succeed go quickly from failure to failure, all the while adapting, iterating on, and improving their initial ideas as they continually learn from customers.”
The same applies with startups and corporates.
There are a few fundamental elements in these governing laws that I’ve come to observe, and here’s my hypothesis for your consideration (and feedback!).
The law that applies:
In a startup it’s tactical first and strategy later.
In a corporate it’s strategy first and tactical later.
The above law affects:
- Work methodology, tactically and strategically
- The view on resources, the allocation of them and perception of success
- Attitude to customer service
- The perception and pursuit of innovation
There are, of course, similarities between the two types of businesses:
- Concerns with brand perception in the marketplace
- A focus on winning, reflected in developing a competitive advantage
- The economics of acquisition and importance of retention
In the following sections, I will explore some ways in which the two can learn from one another.
What can startups learn from corporates?
Fast-growth startups can learn a lot from corporates. Here’s my view on this.
According to a report by Cleverism, 30% of startups fail because their management is not experienced enough to handle finances, hiring and marketing.
Corporates recognise and value specialists in a way that startups don’t. The common claim is a lack of resources, but often what I see is the perception that more hours from a junior will somehow compensate for less hours from a specialist – for the same amount of money.
I believe this stems from a lack of trust, and more so an inability to assess the skill or talent of a specialist vs. generalist. You don’t know what you don’t know.
Corporates incorporate processes and systems. In fact, they’re often encumbered with many old ones – one of my clients has over 4000 systems! It doesn’t make sense for a startup to do this to the same extent as a corporate (not that they could due to resource constraints).
It’s overkill, and I’ve seen it happen with agency owners taking processes to a different level, thereby reducing efficiency as they become too internally-focused. I made that mistake myself. It was fun but costly. A great example is $6000 on a BI tool we didn’t really need.
The incorporation of some fundamental processes can lead the way for a startup to improve effectiveness in the short and long-term.
Priorities should be:
- KPI and metric delegation, giving someone a KPI to own
- Internal ongoing meetings, and an agile-sprint methodology with experimental mindset
- Strict and consistent planning methodologies with ongoing weekly and monthly reviews
It seems obvious regarding planning, but what actually happens is a black hole of internal meetings, being overwhelmed by white-papers and eBooks, and generally the attempt to be perfect.
A few I like:
- Sostac (Digital marketing framework)
- Growth experiment software
- Growth machine – (DIY)
- AARRR (Tracking metrics)
Unfortunately, there isn’t an easy way to assess which process you need or at which stage you are in your business, but here are a few top level guidelines:
- Are you finding a lot of tasks going missing in the aether?
- Is the quality of what’s being produced (content wise) not consistent enough?
- Are results erratic or it isn’t clear where they are coming from?
- Is it not clear who owns what tasks or responsibilities?
I spoke to growth marketer and advisor, Depesh Mandalia. He has a lot of experience in working with processes at early-stage startups.
“In terms of process, I’d say the biggest disablers have been poor data setup and dev processes. We talk about marketing being able to test and learn fast, but when data isn’t setup efficiently or the dev process is slow and cumbersome it’s hugely impactful. For example imagine you land a positively impacting marketing campaign with proven impact on performance. You then find that there’s a bug and needs tech to fix it; 3 weeks later you’re still waiting to restart the campaign. That’s 3 weeks of additional revenue lost.”
“A larger company with more resources and better processes would have had it fixed earlier but your startup tech team is overstretched. That’s based on a true story and one which I’ve seen more than once at different companies where tech and data become bottlenecks for growth.”
3. Brand value
Often the concept of brand-building is fragmented and perceived differently by different business leaders; the risk-averse banker, the innovative engineer, or the visionary entrepreneur. The experience of these respective leaders changes the way that they view the value and meaning of a brand.
My suggestion is that a brand is a reflection of its core values, as spoken about by its respective customers. It’s not solely the positioning of language, values, or the ethos that is crafted internally – a brand is the buy-in of the vision by its customers.
For the most part, startups want to build a brand. Corporates want to protect the brand equity they’ve built. The common challenges I see when I help out as an interim head of growth or CMO are:
- The marketing channels aren’t aligned with the specific target audience
- The marketing messages aren’t mapped to a customer’s journey
- There is a hyper focus on immediate conversions rather than taking into account the full funnel and attribution modelling
I spoke to a number of people who’ve had direct experience of both worlds. No matter where you look, most of the lessons for startups to learn are process/protocol-driven; administrative, structural, and operational. This is where the corporate world stands tall and gets it right.
Rachel Carrell is the CEO of successful VC-backed startup, Koru Kids. She previously worked at a £30 billion revenue company, and set up her new childcare technology venture after having a baby.
“While a startup might be able to ‘get away’ with things at a small scale, corporates are dealing with millions of customers and have to expect some things to go wrong. So my time at a corporate taught me the importance of setting up robust systems with very high standards, even very early in the startup’s life. Another thing I learned is the vital importance of brand strength, and what it takes to build a strong brand. I was working for a corporate with a really strong household brand, and it was easy to see the benefits that gave them in terms of customer trust and the perceived value of our service”
Startup marketing and business strategy coach Brenda Gabriel highlights record-keeping documentation.
“One thing that startups could learn from established corporates is the need for systems and documentation. I used to work for the CPS where procedure and documentation were standard. I was shocked when I worked with couple of startups that didn’t work the same way. It meant they were always vulnerable when it came to staff absence or staff loss. There was never an easy way to deal with handovers and procedure.”
Richard Tidswell, a consultant and regional director at Business Doctors, talked about budgeting, performance reviews, and target-setting. He also cites the corporate emphasis on risk management as something that could be adopted more readily by startup businesses:
“It’s easy to fall into the routine of managing the day to day and responding to what is happening in the moment. But taking the time at regular intervals, even if it is every 6 months, to step outside of the business and review the overall environment in which you are operating can help to anticipate and manage change. For example, assessing risks associated with changing rules and regulations, changing market conditions and competition, the economic landscape as a whole, emerging trends within the sector you operate.”
Something that startups and corporates both suffer from is success myopia.
Psychologically, this is translated into a strict focus on results; which encourages reductionist language that doesn’t take into account the most important thing to any business – your customers.
- There’s a lack of experience with the process
- There’s an overestimation of the ability to be successful
- There’s a disconnect between the customer and the production of the solution
The reason this is dangerous is because I’ve now seen multiple companies burn through £2million to validate an idea that can be tested with £50k, and still get 0 traction.
How can you overcome success myopia?
- Closely examine the ratio of time you spend in internal meetings compared to engaging with the customer’s issues and pains
- How much time are you spending on vision, values, team morale? If it’s more than 10-15% and you aren’t head of HR, that’s probably way too much
- Is monetisation or the product and customer’s pain the common conversation occurring?
- Is there investment into systems and processes to scale and automate before there’s enough customers?
Unfortunately the only way to really answer the above successfully is through direct experience.
You can call a customer a lead, or a prospect. You can also call them a sale wons or brand advocate. The problem is that the mental model creates a rift between your business agenda and your customers. For fans of linguistic relativity, this essentially means that our language creates our reality.
How can we improve on this?
Firstly, don’t let business jargon and acronyms become entrenched in your internal comms unnecessarily. People work with people, and retaining your humanity in a world of automation and reductionist language can set you apart.
Furthermore, it’s important to foster relationships internally by allowing yourself to be vulnerable, honest, and accountable. Break down the barrier to communications with customers and the internal team. Meet them more, talk to them more, get them involved in your process more. Specifically, focus on uncovering their pain points.
What can corporates learn from startups?
What can the big multinational corporates learn from the startup world? We’ve all seen the beanbags and ping-pong tables, but what about the most tangible and impactful business approaches?
For expert insights about this topic, I spoke to Tom Pullen. Tom was previously Global Marketing Director at Danone and is now CEO of Innovinco; a Paris-based innovation consultancy which helps large companies accelerate growth and adopt a startup mindset. He knows his stuff.
During our conversation, he split the lessons into three areas; agility, proximity, and prototyping.
It goes without saying that smaller businesses can operate on more nimble toes. Without the complex hierarchy and competing agendas, pivots are more fluid and innovation is quicker. According to Tom;
“The speed of today’s business world is fundamentally different from that of even five years ago. Startups have fully understood this, operate quickly and flexibly in this new context, and fully embrace the many innovative value-creation opportunities that this new supersonic world brings. This new world is typically more challenging for long-established FTSE 250 companies, however.
They need to transform entrenched old-world mindset and sluggish processes to become nimble and ambidextrous enough to protect & defend their existing core businesses, whilst also defining an accelerating their future sources of growth. Only companies demonstrating such agility will be able to survive the 21st century. Design Thinking can be a quick, simple and very effective way to start to inject increased agility within large organisations.”
Design Thinking… isn’t that just another buzz phrase? As Ben Davis says for Econsultancy, it can mean different things to different people.
Lawton Ursrey defines it as the following in his Forbes piece about business strategy development:
“Design thinking combines creative and critical thinking that allows information and ideas to be organized, decisions to be made, situations to be improved, and knowledge to be gained. It’s a mindset focused on solutions and not the problem. A primary element of design thinking is simply thinking and ideating on a solution to address a problem or better meet a customer need.”
In most cases, this involves bringing the customer into the fold, involving them comprehensively in the innovation process. I spoke to Sunny Joshi of Accenture, who has taken Design Thinking into Microsoft.
“Microsoft has used design thinking to give us better products in recent years, but none of that happens without first applying design thinking principles internally. Last year we partnered with Microsoft to help redesign a unified learning experience for their global learning workforce. Our goal was to first assess pain points in the existing learning ecosystem at Microsoft, identify opportunities in people, processes, platforms, and implement a sustainable solution to address future needs. We conducted a two month design thinking exercise that included user interviews, persona building, brainstorming sessions, prototyping, and building a MVP.
As a result, more than 45 prototypes of the solution were built for our highest influenced personas addressing the most important needs. By bringing in all the key stakeholders together early and using the design thinking framework, we created a customized solution to improve the culture of learning and experience at Microsoft.”
I also caught up with Pete Sayburn, CEO at proposition design consultancy, Market Gravity. He’s hugely experienced at bringing these startup-like principles into large organisations.
“Design thinking should be at the core of the innovation strategy of businesses of all sizes, but traditionally, large organisations have struggled to change direction and embrace new technology to drive change. This is where design thinking comes in. Bringing your customers into the heart of proposition design helps businesses unlock innovation, creativity and cultural change, making their offering more flexible, responsive to their customers’ needs and ultimately, giving them a competitive edge. Not just through insight and research at the start of the process, but all the way though. Businesses should immerse themselves in the customer’s world, imagining new ideas with them, co-creating and co-designing new solutions, and rapidly prototype, test, iterate and improve.”
I asked Pete about how he’s implemented these approaches, and where customers have made an impact for innovation projects in major corporations.
“We worked with Clydesdale and Yorkshire Banks on the launch of B digital bank in London, which came about as a result of design thinking and intrapreneurship. Before B was launched to the public, over 10,000 people told us what they wanted from a bank to take the hassle out of money and make life a bit easier. We listened, learned and took their advice throughout the process to create B – a product designed by customers for customers.
We then worked with the bank’s innovation team to launch the UK’s first design-driven banking innovation lab, open to the public – Studio B. This takes design thinking to the next level as the lab encourages the public to take part in short sprints to apply their perspective to challenges to create solutions to customer problems and work with and design technology and innovation teams to meet the needs of the next generation of banking customers.”
“Within many big businesses there are talented people with brilliant new ideas. The challenge is working out how to realise these opportunities and bring the ideas to life, ahead of competitors. The way big businesses discover and implement innovation is shifting, with the launch of venture teams, accelerator panels and internal ‘incubators’ bringing a startup mentality to corporate organisations using design thinking. The concept is employed by some of the world’s most successful companies, for example, Apple, IBM and Nike, and it’s this design-led approach that helps them unleash creativity and develop innovations quickly and effectively, meeting customer needs and solving problems.”
I’ve said before that it’s critical for corporates to spend more time with customers. Sustainably success relies on involving them at every stage to understand pains and needs, rather than obsessing about competitors or brand perception (although these have their place too).
Tom Pullen echoes these ideas;
“Most startups don’t think twice about directly asking their consumers or users for input and feedback. This is typically the most valuable source of insight for them to build and refine their value propositions – after all, it’s quick, easy and completely free! In stark contrast, many large FTSE companies have got into the bad habit of outsourcing all of their consumer and user intelligence work to external research agencies, thus losing the intimacy and depth of understanding that they once had…
Large companies can easily start to address this through scheduling short weekly ‘connect’ events for consumers or users. Especially when these are sponsored by senior management, these initiatives send out a very strong and visible wake-up call to the whole organisation regarding the need for consumer/user-centricity.”
This also taps into an emphasis on small data, which has become more recognised in recent years as big data skyrockets ahead in popularity. I recently published an article about how this granular information can be used to accelerate business growth.
Workshops and connective events are beneficial, but how else can you get closer to your customers as a large corporate entity?
Part of the answer also lies in technology. The effective use of CRM, customer service tools, and social media listening such as Social Mention, Klout, and TweetDeck (others listed here) can help bring a corporation into more meaningful contact. But remember that technology is the means, not the end.
I spoke to Aisha Ejaz, Strategic Business Change Consultant at Zenith Street. She spoke about how live streaming and real-time service can bring businesses closer to those who matter.
“Most corporate social media platforms have two profiles; one which relays company information and the other a ‘customer care’ profile for complaints, etc. These are managed by customer service departments but the care is still often delivered offline. Though these profiles do give the impression that the corporates are close to their customers, it’s not close enough.
Corporates must embrace the live platforms – Facebook Live, Periscope, Insta Live, Snapchat, and others. Informing clients of this service will not only work to instil confidence, but will also ensure those who lag behind in adopting technology keep pace to retain a personal hotline with the corporation’s representatives. Lives usually occur in groups, but can also be conducted on a one-to-one basis if required.“
Most corporate professionals will agree that they attend far too many meetings (with anywhere between 25-50% of time in meetings labelled as wasted).
Furthermore, a common complaint among those who move from startup to big corp is about too many layers before it’s possible to get something done. In a nutshell, red tape.
“Startups systematically prioritise ‘make & do’ over ‘discuss & debate’. It is far more effective to quickly mock up a new idea or business model, and start asking people to react to it, than spend hours, days, or months discussing it in internally-oriented, navel-gazing meetings.
These prototypes do not need to be expensive or elaborate – a prototype for a new mobile app can easily be made in one hour, with nothing more than Post-its, flipchart paper and a block of polystyrene! The most highly performing startups will then quickly transform feedback gained from prototypes into the next iteration of their idea, in a rapid and cyclical fashion – thus sharpening and strengthening their proposition with each cycle.“
Aisha Ejaz agrees with Tom;
“Rigidity is both a strength and a weakness. Whilst being process-led does ensure consistency and stability to an extent, the corporate culture often does not facilitate entrepreneurial mindsets which prefer quick decision-making. Innovation is integral to maintaining a competitive edge which requires nimbleness in thought and action. Whilst startups can test and succeed or fail fast, pivot and move on from projects, corporates often take substantial time and resource to reach a plug pulling decision.
“Corporates would do well to run their various departments as startups with their own lean operational models, enabling quick decision making and flourishing with an entrepreneurial workforce.”
This advice isn’t to be taken lightly. It’s a huge operational change and requires serious planning for a FTSE 250 to work as multiple startups within one organisation.
On this theme, Pete Sayburn talks about the idea of “intrapreneurship”;
“Big businesses can adopt a startup mentality with ‘intrapreneurship’ – entrepreneurial activity within a large, established business, usually to address a new market opportunity or develop a new way of doing things, outside the normal scope of activities. Intrapreneurship is a change of mindset – thinking like an entrepreneur: to see new opportunities, being completely customer-driven, making the most of limited resources, and above all moving quickly.”
This is also reflected by Aga Nowicka, the co-founder and product director of language learning startup, Langu. Hailing from a corporate career at Ernst & Young, Aga talks about how corporates manage time and measure team KPIs. She cites the typical day-to-tay management tasks as dubious accomplishments and promotes a more impactful approach regularly seen at startups.
“I’ve started to think in terms of ‘managing’ versus ‘moving the needle’. Managing is the type of stuff you get good at in corporate jobs – responding to emails, staying organised, all the stuff you just have to do. Moving the needle, though, is what really matters – the stuff that might seem tedious or potentially a waste of time, but that actually starts bringing in users.”
Observations on brand advocacy
One area in which startups often excel is in generating true brand advocacy.
Again, there is a huge element of proximity involved here. But this is about proximity to customer emotions and developing a true appreciation for their compelling narrative. Storytelling is key here; tapping into a popular discourse to ensure that customers feel part of a meaningful mission.
Corporates can create brand advocacy by shifting from a purely transactional relationship to expressing a common vision. Brands such as Monzo and TransferWise do this frequently by referring to their ethos, or talking about their community. TransferWise damn the banks to hell. Monzo is less combative but talks about building the bank of the future; neatly wrapped in a vibe of togetherness.
Also read: How to Build Employee Brand Advocacy For Your Startup (Business2Community)
Customers do buy from you because you offer a superior service, and they also buy on price. One could always argue that customers buy on value. But customers also buy from you because they identify with your values as a business, and the vision or story that you’ve told them. This cannot be understated.
Fresh startups are famously good at telling this story. Established businesses are not. This piece by Gareth Simpson on Startup Grind looks at how some big brands have succeeded in developing brand advocates through emotional marketing.
To fend off relentless competition from nimble startups, corporates must adopt some of their principles. Modern startups are (or should be) all about flexibility, innovation, and problem-solving with the customer at the heart of everything they do. Corporates can sometimes be accused of resting on their laurels, moving slower, and suffocating innovation. This is very dangerous in today’s heated competitive climate.
Startups can definitely learn about processes, operational structure, the value and impact of specialist consultants, and the benefits of brand value. The corporate setup is solid, established, and proven. Simultaneously, corporates can learn about the process of innovation, the value of prototypes, and adopting a more fluid entrepreneurial (intrapreneurial) approach.