“It’s sometimes referred to as a ‘burning platform’. They can’t just sit about doing what they’ve been doing forever, they have to nail it and they have to nail it fast.”
Morle isn’t suggesting you dismantle your business model. He wants to teach big companies how to set up another one that’s self-sustaining and positioned to succeed. And then take a risk with it.
He says companies tend to over-invest in their internal start-ups, making those involved too comfortable.
“We’ve found frequently when companies fail to do start-ups well they say: ‘Great, I’m going to put Simon the middle manager in and give him all the resources he needs to get that done… And then he’ll be more likely to succeed’,” he says.
But the discipline required in a start-up can be lost if you make the scenario too comfortable: No stress, no innovative solutions.
“[The solution] is the opposite,” Morle says. Internal start-ups need a gung-ho attitude. Whoever you get to lead it shouldn’t have to often report to their manger.
“[He or she] should be fully empowered to hunt down value with a limited set of resources. There should be enough support to make it possible, but not so many that people just go in and do a job where they’re focused on perfection, too scared to go out of the building and talk to customers.”
This has the added benefit of not putting the larger company at risk. “If you deeply limit the resources that are given to your start-ups… the financial risk is limited.”
The next step is to establish some distance between the parent company and the start-up.
“It would be very difficult for Telstra to try out a sloppy new product, as an entrepreneur would, with the Telstra branding all over it,” Morle says. “You should find ways to quarantine the business out of the company.”
However, although Morle says you need to be strict, he doesn’t want you to put your larger company at unnecessary risk.
Morle says larger companies could stand to learn from the discipline of start-ups.
“At big companies you can be forced to have extra levels of compliance integration, relationships and systems, and start-ups just don’t have that burden. So they’re going to outrun them.
“Of course you can have incredible discipline in big companies [but it’s] operational discipline; defining what the process is and making that process incrementally more efficient over time. There isn’t that obsessiveness which is determined to unlock that at all costs; at the end of the day, it’s five o’clock, I haven’t got it, I’ll go home. The entrepreneur inside a start-up has a different set of urgencies.”
This article first appeared on LeadingCompany.
