Many books and articles have been written on what corporates can learn from startups — how to build an agile culture, foster creativity in the team, and ship products quickly. However, the opposite is also true in many cases.
There are areas that a startup can learn from a well run corporate. Implementing these lessons early on will help a startup immensely along its journey to be a large well-managed company.
When I moved from a corporate life to the world of startups, what took me by surprise was the similarities between the two regardless of some fundamental differences. In the corporate world, I worked for a 150-year-old multinational bank (at the deep end of one spectrum).
There, I observed strong hierarchies, embedded processes, a culture built over years of tradition, rewards, and unwritten corporate norms — the typical picture when one thinks of corporate life. The bank is a well-known brand in many markets and the employees are highly regarded in the industry. In other words, a good career choice for a man.
And then I moved to the world of startups. Here, companies have a history of a few months to a maximum of a few years, nonexistent brand recognition, struggles to survive another day and meet the payroll, and practically no hierarchy. On paper, there was almost nothing similar between the two.
I am often asked whether the transition from managing thousands of people to a few was difficult. As a leader, the answer is no. The challenges were not that different. The following are lessons and tactics that can be implemented straight from a corporate world to a startup.
There is this old saying “without followers, there is no leader.” An important element of leadership is to be able to relate to the team.
The challenges of managing a team between a corporate and a startup are not materially different. At the end of the day, people are driven by the same desires, ambitions, and fears. Being able to navigate through these emotions in a team environment is an important tool for a leader.
There have been cases where senior leaders in my team fought tooth and nail to protect their territories and I have seen the same in a startup. I have seen how a breakdown of communication happens and the messages get misinterpreted in both worlds.
Building and managing a strong team remains a core deliverable of a leader regardless of the organisation. In the corporate world, there are a lot of lessons on effectively managing a team, and a good leader can migrate these learnings in a startup environment.
Performance spins the wheel whether in a billion dollar organisation or a company with a few thousand dollars in revenue. Closing sales, managing leads, meeting customer demands, delivering a better experience — these are all part of an organisation’s efforts to keep the lights on. The pressure for performance is very real.
The discipline around a well-run sales organisation is identical. The discipline around a well-run product organisation is identical.
It is about identifying what to measure and having the processes to measure those regularly. A startup founder who establishes sales and performance discipline — an idea from the corporate world — early on will significantly outperform her peers.
This is critical for all types of companies. Many startup founders do not take the time to establish financial discipline and end up paying a high cost for this mistake. A publicly traded large corporate needs to follow all regulatory requirements and have external bodies to ensure that these are being met. That rigour may be lacking in some startups.
In the long term, a startup with the right financial and accounting discipline avoids unnecessary issues and benefits when they raise investments.
There are startups that have gone bankrupt because the founders did not establish the basic accounting principles and suddenly realised they do not have the runway they thought they had.
As Tim O’Reilly, founder of O’Reilly media, said: “Money is like gasoline during a road trip. You don’t want to run out of gas on your trip but you are not doing a tour of gas stations.”
As startups continue to raise funds and have external investors, it needs to establish a proper governing board. A good board can be a powerful ally to the founder — board members can guide founders through difficult situations, make important introductions, and help raise next level of funds.
Properly run board meetings help the company to steer in the right direction. Board members are usually also in unique positions to observe different stages of other startups simultaneously and can step in when required.
At the same time, choosing the wrong board member can have long-lasting negative impacts on the company — oftentimes making board meetings pointless and confrontational.
Founders need to actively engage with the board members and establish a good operating rhythm to make the board effective.
There are many good lessons from the corporate world in terms of board governance — from selecting a member to how a meeting should be conducted.
A founder spends a good portion of her time in recruiting and managing the people in her company. As the startup continues to accelerate, human resources become an important function for the success of the company.
Implementing proper processes in human resources helps avoid many complexities down the line. Many founders ignore some of the basic areas so they can build a free-wheeling culture. This is not to say I am advocating a complex HR process that can stifle the ethos of the startup.
But at the same time, it is important to have clear guidelines on rewards and benefits and how the organisation will build the structure and recruit new team members. At the end of the day, these practices are what eventually shapes the culture of the company.
One of the areas corporate does well is managing large scale operations. They have strong processes in place around the complexities of managing cross boarder, cross-functional operations. Most of these processes are well documented and help avoid rookie mistakes. Startups can learn how to incorporate these processes into its DNA.
When a startup achieves product/market fit and is ready to scale, the biggest challenge is to manage the operational details in a larger landscape.
Things change very quickly and the old way of managing operations do not work anymore. Founders of startups can borrow the processes and operational learnings of the corporate world as they embark to scale.
Going back to my career at the bank, I have also seen it try to reinvent itself to address the opportunities and risks that come from a digital world while also meeting the challenges of a changing regulatory landscape.
This is true for a large number of corporates out there. As a startup continues to grow and turn into a large company, it will face the same challenges — new upcoming players and intense scrutiny from regulators. It will be well advised to be ready for the future.
Feature image: Hayato.D via Flickr.