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HOW TO THINK LIKE A STARTUP

Wed Nov 11 2019 Michael McQueen

If you ask any high school teacher what the biggest killer of class productivity is in a class of students after lunch they will tell you, in more or less the same words, it is inertia – the tired drag of disinterested students who will not act unless acted upon by an external force, often in the form of a frustrated teacher. The same goes for large and mature organizations. In business, just as it is in nature, size is almost always inversely related to agility, and inertia is the biggest killer of progress and productivity.

Some of the key reasons for this inertia are the hierarchical models of leadership and the bureaucratic structures that interrupt the necessary productivity of an innovative business.

Despite the common promotion of decentralized models of management, most leaders and large organizations continue to cling to 19th century leadership hierarchies. Although a rigid bureaucratic approach may promote discipline, alignment, consistency and predictability, there is nothing that kills creativity, productivity and agility more quickly.

Added to this, large companies can be easy places to hide. You can have the façade of being busy but produce very little. It’s easy to fill your day attending meetings, writing reports and crafting beautiful strategy documents but actually not get much done.

In contrast, when you look at small startup businesses, they are fast-paced, willing to adopt new ideas, and think creatively. Most importantly, they are inherently action-oriented and necessarily productive. The question then is whether it is possible for large businesses and mature organizations to mimic the agility and responsiveness of a nimble startup.

London Business School Professor Gary Hamel suggests that while this is challenging, it is definitely possible. However, he suggests that the core challenge is that many large organizations don’t have agility built into their DNA.[1] To address this, efforts akin to gene therapy are required. What’s necessary is a re-work of the way power, information and authority are distributed in an organization. Mindsets need to be examined, assumptions challenged and systems reset.

‘Silicon Valley is a mindset, not a location’ – Reed Hoffman

In the early 2000's Jack Welch famously challenged his executive team to imagine themselves as technology startups entering the marketplace to challenge GE’s various business units. In this exercise which he dubbed “Destroy Your Business.com”, he encouraged each business unit to think about how they could kill their own products and revenue models using web-based resources and emerging models.

After each executive had presented their cannibalization strategy, Welch asked the business leaders to go beyond hypotheticals and actually apply the thinking, tactics and technologies they had contrived to their own real-world businesses. It was a transformational experience for GE.[2]

This visionary exercise exemplifies the creative success of a startup mentality in a group of leaders who were in anything but startup mode – each them was responsible for sprawling enterprises, billion-dollar budgets and many thousands of employees.

For the majority of large businesses, the fundamental shift needed if a startup mentality is to be attained is the transition away from a hierarchical and bureaucratic management model. The core attributes that empower the agility, creativity and innovation of startups is their natural need for productivity and their ability to move quickly and easily in the face of disruption.

For any organization, the key is to cut the bureaucracy and cultivate this action-orientation, hunger and agility characteristic of startups. After all, innovation is more than just planning, analyzing and strategizing – it is about doing.

In my homeland of Australia, one of the nation’s biggest banks, the ANZ, is in the process of doing just this: transitioning away from the hierarchical model of old for the sake of productivity and agility. According to ANZ chief executive Shayne Elliott, the goal is to take a leaf out of the books of Haier and W.L. Gore and “take an axe to the bank's hierarchies and bureaucracy.” Elliott’s goal is to “shift the workforce into ‘agile’ teams, mimicking the way businesses such as Google, Facebook and Spotify operate” in order to launch new products faster.

In the new structure, the bank will be re-organized into teams of 10 people ‘squads’ that will group together into ‘tribes’. Beyond the limiting of a team’s size and the adoption of new language, the ANZ will also overhaul the company’s approach to leadership and authority. Squad and tribe leaders will be appointed based on their adaptability and capacity to work across multiple teams rather than their tenure or career experience. Day-to-day activities will change too. Team members will be asked to view project delivery timelines as 6-week sprints and their accountability for progress will be gauged in daily stand-up meetings. According to ANZ’s Head of Product Katherine Bray, some vestiges of roles from the past will remain recognizable but the “underpinnings of hierarchy (will be) totally blown apart."

The prioritization of action and agility often found solely in startups is being wholeheartedly embodied by a large, established and mature organization. ANZ will be the first major Australian company to make such a drastic change to work practices and it doesn’t come without its dangers. In the process of moving away from the traditional command-and-control hierarchy, risk management and regulatory compliance will remain vital – especially for a bank.[3] However, these moves away from bureaucracy and hierarchy are exactly what the company needs if the productivity and agility of a startup is to be made possible.

The cure for the inevitable inertia that takes hold of large companies is a startup mentality. Taking on a startup mentality means breaking down bureaucracy, prioritizing productivity and aiming for agility. It is these very qualities that will future-proof the large companies of tomorrow, as they embrace a more humble approach to business in thinking like a startup.

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Michael McQueen is a trends forecaster, business strategist and award-winning conference speaker.

He features regularly as a commentator on TV and radio and is a bestselling author of 8 books. To order Michael's latest book "The Case for Character", click here.

To see Michael speaking live, click here and for more information on Michael's speaking topics, www.michaelmcqueen.net/programs.

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[1] Hamel, G. 2012, What Matters Now, Jossey-Bass, San Francisco, p. 131

[2] Ashkenas, R. 2012, ‘Kill Your Business Model Before It Kills You’, Harvard Business Review, 2 October

[3] Gray, J. 2017, ‘ANZ Blows Up Bureaucracy As Shayne Elliott Takes The Bank Agile’, The Australian Financial Review, 1 May

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