Startups are a force to be reckoned with. They face hash constraints on financial, material and human resources, they begin with no name for themselves. And yet those very constraints propels them. Their products evolve faster, they generate more buzz than anyone else and they gain market shares at an amazing speed. They call it “disruption” and if they can sustain it long enough, they will hurt you.

To be clear, I’m not talking about those startups with a focus on pure growth rather than profits in order to be bought off. Those will hurt you too, but they will disappears at some point. No, I’m talking about financially viable startups. Those are the ones that will be the mainstream companies of tomorrow. But the very way they operate means that tomorrow’s way of doing business will be very different from today’s.

It is crucial for any company to understand how those successful startups operate, regardless if you are a giant multinational, an established local company or even a startup yourself.

So, what makes successful startups so special?

They can sell an idea

Having to search for capital forces startup promoters to learn to sell. Early on, they might not even have a product yet, so they harness the power of storytelling to sell a compelling idea.

You see, no one really cares about a product or its features. Customers, like investors, care about their own story and realities. Like Kathy Sierra says in her seminal book Badass: Making users awesome, people don’t care about the features of your camera: they just want to take better pictures.

Learning to sell ideas through storytelling is a powerful skill. It requires refining a number of intangible concepts into one neatly packaged idea. This brings the added bonus of clarifying what the company is all about. It gives a clearer vision to guide the company and a sharper message to draw the targeted customers.

They have focus

Limited budgets and resources force startups to keep a clear focus. If they spread too thin, nothing will get done in a timely fashion and they will run out of money too quickly.

Sounds familiar? This exact situation happens pretty much everywhere. Many companies however have pocket deep enough to withstand a surprising amount of waste before they really start noticing.Startups keep a tight focus, which helps them deliver a clear message.

They are customer-driven

Most companies repeat like a mantra that customers are their most important concern. In the case of startups, it’s far more than rhetoric: both their company’s and product’s development are absolutely driven by their customers.

Instead of planning their products or services over several years, they use what their customers are saying and doing to understand pain points and drive improvements. They do not waste time or effort on services or feature that are not wanted or necessary.

Also, startups work in the open: when the spotlight is on you, secrets have a way to get out and get blown out of proportion. If you want to reduce the damage these secrets can cause, just don’t have any. Discuss your problems openly with your customers, ask for feedback and make your community work for you.

They experiment and learn fast

Innovation is key to staying relevant, and experimentation is key to innovation.

Startups favour numerous small and controlled experiments to increase the chances of striking gold, even in unexpected ways. Most larger companies will instead carefully plan and execute long experiments in order to test a specific theory, and often discard outlying results that can turn to be more profitable than the original experiment.

The difference between the two approaches is that between making many small bets and making a large one. With many small bets, you maximize your chance of having some success, and you drastically increase your learning opportunities.

They respond to change quickly

By innovating quickly and constantly using customers to test their products and drive their company, startups will change their plans quickly. Add a few other startups in the same space and the market itself will change quickly.

While this may sound like a nightmare to many is business as usual for startups. In fact, it is a good environment for them as they are built to adapt and they know that most other companies are not.

How fast can they adapt? Many startups working in software development will release into production several times a week to a few times daily. Those in the service industry use a franchise model internally to safely distribute decisional power across the company and provide customized reactions to events in real time.

They bet on engaged people

Most startups can’t afford to have an army of drones to execute senseless actions. They need people with initiative, who are creative enough to quickly find solutions to the problems that will inevitably rear their ugly heads.

Since they also cannot afford to have long chains of command, decisions are often taken locally. That means those running a startup must be able to trust your people to make the right decisions themselves with only the people around them to discuss it. That requires quality people and engaged people. And that, in turn, requires investing in people through mentoring, training and support.

There’s something exhilarating about working in a startup: to be part of something that grows and draws that kind of attention, to face a continuous stream of challenges and surmounting them.

People don’t join startups because of the hiring package. They join because they want to. They stay in the face of adversity because they feel they belong.

But… can we do that too?

Yes. Yes, you can.

Those characteristics can be capitalized on by all companies, regardless of the size, age, or revenue bracket. However, that capitalization will be done differently and at different level according to each company’s specific context.

All companies can become more reactive, collaborate with their customers, make their own employees amazing assets and true leaders. But it does require some change.

For companies who are using a model straight out of the industrial age, the change will be significant. Companies that are already people-first, developmental, podular, Agile or Lean will adapt much more quickly and easily. Still any company willing to undertake those changes can gain the vitality of a startup.

Maurice Lefebvre

I am a futurist, system thinker and organizational transformation expert, dedicated to easing our transition into Society 5.0. I am available as a speaker through the think tank Hivernité (www.hivernite.ca) as well as a trainer and organizational coach through Moabi Formations (www.moabiformation.com).

www.hivernite.ca

What I notice is that what differentiate these models is often far less interesting than what they have in common. We can see these commonality in their approaches to evolution and in their application in real companies.

A portrait of the new face of 21st century organizations is slowly emerging through the fog of competing models. At its core are the elements shared across several models, often completed by individual elements taken from different models to better customize the approach to a particular business context.

Characteristics of the 21st century organization

People-driven

Human beings come to the forefront of modern organizations. Employees now emerge as assets to leverage rather than resources to manipulate. This is made possible by energizing employee development and fostering leadership across the organization.

Employee development has moved from being an afterthought to being a core business strategy. Direct mentoring and coaching (two different things) are replacing the occasional two-days training seminar. Employees are exposed to a variety of situations and tasks, often across several domains, so they can learn from practice and increase their awareness of all facets of the organization. The more versatile M-shaped generalists and T-shaped specialists are replacing the I-shaped super specialists.

Such employees, with a better understanding of the organization’s realities and goals, need far less supervision to work toward the organization’s vision and are better suited to self-organize. The tendency is to start seeing them as adults rather than children, and to entrust them with the power to make their own decisions for the greater good of the organization.

It is the duty of every leader to foster the development of new leaders across the organization. With increased accountability (different from increased responsibilities, i.e. more tasks), motivation and talent comes into better focus, and emerging leaders can be mentored properly.

These new leaders are not necessarily moved to management positions. There is a tremendous advantage of having an organization strewn with leaders in every type of positions. It creates a more independent organization, better able to manage itself and react to change without the need for heavy rules and bureaucratic supervision.

User-centric

All work, regardless of its nature, is done for the benefit of another party. That party is called the user, a term coming from software development. Delivering value to users now becomes the focal point of our endeavours.

Users also becomes the driving force behind innovation: users have pain points and innovation efforts are meant to address them through user-centred design. Most approaches calls for a closer relationship with users to better understand their needs and some, such as Design Thinking and Lean Startup, advocate sending people to follow users on-site to better empathize with their experience.

The net benefit from going user-centric is to limit waste by avoiding doing work nobody needs (and different from doing what they want).

Evolving organisms

The metaphor of the company as a machine is done. People are not replaceable cogs and machines do not evolve and adapt: they become obsolete.

Companies are now seen as evolving ecosystems. Rather than fixed five-years plans, growth and direction are set much more organically. Growth occurs to follow markets and opportunities, and unproductive areas shrink naturally. That evolution is not necessarily the result of top-driven initiatives, but usually is the product of a multitude of micro-decisions taken at the local level to respond to market changes. The result is a constant adaptation and evolution, less traumatic to an organization.

Same goes for jobs and positions. The idea of flexible, transitory roles rather than fixed jobs is slowly emerging. These roles are like hats, worn by the best person for it at the moment. They are meant to move to another person as the context changes. People are hired for cultural compatibility and talent, and then developed for them to fit a variety of roles. Traditional management positions are absorbed by those roles, and managerial roles adopt a servant-leadership approach and focus on removing obstacles and managing systems rather micro-managing people or work.

Network of communities with distributed leadership

People organize in interconnected networks, not into neat hierarchies. Even in bureaucratic organizations, the most powerful relationships are not hierarchical: they are your connexions to the right people.

Modern organizations recognize that fact and organize themselves in small networked communities (teams, workgroups, friends), who interconnect with other groups along organic lines. Individuals can be members of several communities at once and act as natural bridges between them.

In such a model, leadership and decision-making is distributed across the organization. It does not mean that there is not a place for the people traditionally known as upper management. Their role however has a more outward focus, guiding the organization across far-ranging decisions in the face of market realities. While the final decision on important issues still lies with them, voices from the whole organization can be heard.

Self-management through platforms

Self-organization of individuals and small groups has been championed by agile approaches since the very beginning. As teams move from 3–7 people squads to semi-autonomous 10–15 people communities, both self-organization and self-management become a necessity. Communities are free (and accountable) to manage their own finances, personnel, and day-to-day activities. This allows for much faster response to emerging situations.

To give governance to those self-managed communities, a model similar to franchising is slowly appearing. A controlling entity (headquarters, board of director, or head of division) creates a platform consisting of boundaries, constraints, shared information and tools. Dependent communities “plug in” into this platform, adopting its rules, and are otherwise free to self-manage. Platforms can be stacked: an organization can create a platform for its communities, and some of those communities can create their own to regulate what liberties individual members can take.

The beauty of this system is its adaptability: scale can range from small teams to large companies, the level of control can range from broad strokes to very precise, and staked platforms can easily respect the boundaries of parent platforms. However, the platforms are not set in stone: the system works if the groups using those platforms can influence its evolution through a feedback loop.

Small scale experiments for innovation and risk management

Innovation and creativity are the lifeblood of business success. In our volatile, rapidly changing world, innovation is not a luxury but rather the path to continuous relevance and growth. However, innovation is traditionally seen as risky and many organizations either limit it in a debilitating way or avoid it altogether. An alternative approach? Think small.

The era of large tasks is definitively gone, and while large-scale endeavours are still being undertaken, they are conceived as small mostly independent pieces that each bring tangible value.

Little or no dependancies remove the risk of catastrophic, cascading failure. Reduced size reduces risks associated with costs. These factors allow for a greater resilience to the occasional failure, a faster recovery speed and thus a better tolerance for innovation-driving experiments.

Degrees of change

While all of these characteristics can be seen as desirable, not all organizations have the willingness or tolerance to adopt them all, especially at once.

Many of the approaches named in the introduction call for a complete adoption of all of their characteristics. This creates a severe trauma on even the best prepared organizations. The reaction seen all too often is the lip service adoption of these new precepts as an additional layer over the old structure.

Leaving models aside, it is possible for an organization to gauge its interest and capacity to adopt the six characteristics above. Sometimes only a handful of small changes can bring a lot of value to an organization and prepare it better for further changes down the line.

One thing to keep in mind is that organizational change works much better by subtraction than addition: removing bureaucratic hurdles, red tape, and unnecessary processes and regulations is far easier and less traumatic on the organization than adding layers of new processes. It also has the advantage of better preparing the space for new ideas and approaches.

Maurice Lefebvre

I am a futurist, system thinker and organizational transformation expert, dedicated to easing our transition into Society 5.0. I am available as a speaker through the think tank Hivernité (www.hivernite.ca) as well as a trainer and organizational coach through Moabi Formations (www.moabiformation.com).

www.hivernite.ca