Can large companies adopt the agility of startups?

Whether big or small, there's an argument for businesses staying open to innovation. Here's are some tips on staying agile.

Image: iStock/Dario Lo Presti

Analysts in a recent session with IBM delivered a clear message: More large companies need to reinvent themselves with startup thinking if they are going to survive an unexpected and perilous turn of events in their industries.

The slang term that is going around for this phenomenon is uberization. It is a derivative from ride sharing service Uber, which revolutionized the taxi and chauffeur industries instantly and now threatens their existence.

The idea of bullet-proofing your organization from uberization by becoming fleet of foot with innovation is tantalizing in whiteboard discussions—but how easy is it to do for large companies with layers of product and idea vetting processes, regulatory and political constraints?

In a LinkedIn post, entrepreneur and investor Yann Girard, wrote that corporations are too riddled with red tape, regulations, protocol, politics, CYA and fear of risk for their employees to take on the unknowns associated with the practices of startups, where immense rewards loom on the distant seashore but the waters that must be traversed to get there are laden with sharks.

Digital music history provides a good example. Once upon a time, Sony dominated the electronics space. As far back as transistor radios, through the iconic 1979 Walkman cassette player — and on through CDs — Sony was the premium name. By the time the 2000s closed in, the brand everyone wanted was Apple, not Sony. Apple stepped in with iTunes and the iPod, and soon virtually every listener was plugged into the iTunes ecosystem. Although Sony had more resources than Apple, it was also burdened with long product development cycles and slow communications between its various operating divisions. This lack of coordination delayed Sony's efforts to develop MP3, and it allowed Apple, with its startup, quick to market culture, to get there first.

So, if you're a CXO in a large company and you want to infuse more startup philosophy into the organization, what can you do?

1. Give employees sandbox opportunities

When we talk about a sandbox, we're usually talking about an IT area (like big data) where employees can experiment with different theories with the understanding that while a great idea might bubble to the top, more often than not, many experimental efforts will fail. If employees know that their superiors understand this, it cures the fear that employees have of failure and allows them to create. There is also no reason why this sandbox concept can't be extended to non-technology areas such as customer service, manufacturing, purchasing and even HR.

2. Develop internal functions into external lines of business

If your IT department provides hosting and application support for a large system that other smaller companies would like to have but can't afford, why not extend the reach of your IT to provide outside SaaS services to these clients and charge them for the service? A number of large and medium sized banks have successfully done this, spinning off areas of their IT into separate companies.

3. Reward for creative work

If an employee comes up with a concept or an idea that brings something new and better into the organization, the organization should recognize it. Employees need to know that the company values creative innovation.

4. Invest into your creative achievers

Individuals who demonstrate remarkable creative talent should be cultivated and encouraged—and not stuck in line functions that bore them until they leave. Remember, your intellectual capital (in the form of people) is your most valuable asset.

On a concluding note, it is also appropriate to acknowledge the wisdom behind why so many large companies operate the way they do. Most have become and are large because they have products and services that customers want. Some, like companies in medical, financial, insurance and pharmaceutical industries, by necessity must adhere to regulatory standards and carefully vet products before they can be sold on the open market. Lastly, risk taking and mitigation, even in startups, should be a regular exercise. Nonetheless, there's still room to foster innovation, no matter the size of the organization.

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Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

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