Big businesses are catching on: startups are cool, fun and there's a method to their madness.
Eric Ries defines a startup as "an organization dedicated to creating something new under conditions of extreme uncertainty". My interview with Ries revealed a vital element to any business' success: to approach product development in a manner that "emphasizes fast iteration and customer insight" simultaneously. In other words, businesses should be "testing their vision continuously, to adopt and adjust before it's too late".
The Lean Startup was the "aha!" moment companies needed to rethink their ridged, outdated business innovation principals. According to Fortune Magazine, 90% of millennials today would rather choose a startup over a fancy corporate job in a high-rise building, a statistic keeping Fortune 500 CEOs up at night. In order to stay ahead of the game and to appeal to millennials, big companies are slowly beginning to mimic startups and investing more money in innovation. Who said corporations can't be trendy and innovative?
What may be surprising to Fortune 500 CEOs is old news to entrepreneurs. Startups focus on rapid iteration rather than long product development cycles; there simply isn't time or resources to perfect a product without showing it to the public for immediate feedback. Business plans are hardly perfect and the businesses that ultimately succeed are the ones that rebound quickly from experience to experience, all while adapting and pivoting along the way.
Take Chairlift for example: this HR performance and feedback management platforms has worked with big name companies such as Buzzfeed, tumblr and Polaris to reinvent the performance feedback cycle. "We applied the Lean Startup methodology in designing a new generation talent management tool which, among others, helped companies like Buzzfeed redefine the way feedback is given," says Leon Ginsburg, founder of Chairlift.io. "Chairlift enabled Buzzfeed to go beyond the traditional cyclical performance cycle to give everyone within the organization the ability to gather and receive continuous, real-time feedback."
Here are 4 Fortune 500 companies who are also looking to innovation to drive change:
- Nordstrom's Innovation Lab--Launched in 2011, this lean startup focuses on one-week long projects such as new marketing opportunities and the Nordstrom app. Nordstrom hardly qualifies as a startup: they're currently ranked #245 on the Fortune 500 and rake in $9 billion in revenue. Simple, rapid experimentation is one way Nordstrom combats rapidly-growing small businesses who have the technical know-how and freedom to innovate at will.
- General Electric Enlists Eric Ries' Help- Keenly aware of competition from Google and Facebook, General Electric CEO Jeff Immelt worries about "staying relevant" with the younger generation. GE enlisted Eric Ries last year to improve and develop GE's products while keeping costs low and GE's Fastworks Initiative was born. Perhaps the biggest challenge this Fortune 500 giant faces is whether or not millennials believe GE is the workplace for them.
- Proctor & Gamble's Connect + Develop--P&G actually drew their inspiration from Thomas Edison and Henry Ford to launch their Connect + Develop program, systemizing innovation and growth. Innovation is the backbone of P&G's growth and their collective creativity has seen annual division revenue double in just a decade.
- Coca-Cola Combines Scale and Agility- Coca-cola is a $46 billion beverage company that works with outside entrepreneurs to problem-solve and encourages managers to become explorers. Embracing the idea of a lean startup, the beverage tycoon hosts idea-pitch parties where employees discuss mistakes made and collaborate on concept prototypes using the least amount of resources.
The thinking behind the lean startup methodology is hardly new but when applied to big businesses it alters how we approach companies like those in the Fortune 500. Ries outlines the methods of a successful lean startup while emphasizing that every business must invest in innovation; in other words, people need to start measuring their productivity differently. Eliminate uncertainty; work efficiently not harder; build a feedback loop you can measure; validate your learning. The traditional methods of running a business no longer guarantee success. In order to keep up with the fast-pace culture of small businesses and entrepreneurs, big businesses need to adopt lean startup methods to stay ahead of the curve.