Beware of the "Startup Ethos" in new businesses

There's a time and a place for rapid experimentation; just be forthright with how and when you're applying these techniques.

Young creative business people meeting at office.

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Facebook,There's long been an element to the Silicon Valley ethos that a compelling idea, supported by the right backers and a small cadre of intelligent people, has a near-certain chance of success. 

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Many of the techniques that have helped the successful companies in the Valley quickly produce revolutionary products and services have found receptive audiences in more traditional corporations. This has occurred for good reason: Many a great idea has died on the vine in larger companies as months of analysis gradually strangle a good concept, and the push to "do" rather than "analyze" that's so common in the startup world is not only refreshing, but often generates better outcomes in the long term than "death by analysis."

Recently, the Valley ethos has been called into question. Successful companies like Alphabet, Facebook, and Twitter are no longer seen as companies that "Don't be evil," to use Google's former motto, and scandals like Theranos and WeWork, have added to a collective questioning of some of the lessons of the startup world that were once regarded as technology gospel. In the case of the latter two, the startup world's tendency toward a great story and promises of "growth at all cost" was taken to extremes that destroyed billions of dollars of investment capital in a matter of days. A bias toward action and testing and learning is a useful tool for quickly advancing projects; just be aware of the following caveats as you apply startup techniques in your organization.

Balance the story with the risk

It's one thing to tell a great story about a wonderful future when you're pitching the next social media app or an update to a non-critical back office system, but another thing entirely when key elements of your business, or worse, human lives, are at stake. Theranos, the now-infamous start-up that promised to run hundreds of blood tests from a tiny sample inserted into a tabletop machine, told a wonderful story. Diseases would be identified early, important medical tests would be more broadly available, and lives would be saved. Unfortunately, the technology to support this grand vision simply didn't exist, and rather than revise the story to reflect reality, Theranos' founder continued to spin a tale that ultimately put lives at risk.

If you have a grand vision for a new technology, make sure your articulation of that vision not only takes into account the tools available today, but the risks associated with your vision failing. Most technology leaders support systems that impact payroll, HR, or other critical functions that would cause real hardship if negatively impacted. Some of us even support tools that literally protect human life. An ability to tell a compelling story is a great way to make a case for action, but only when the risks and realities are included.

Don't ignore the business fundamentals

WeWork, the once-highflying shared office space company, recently saw its valuation slip from $47B to around $4B and is now neck-deep in restructuring efforts. By all accounts, former CEO and cofounder Adam Neumann told a wonderful story about a company that would redefine the nature of work, community, and collaboration, and was essentially more of a technology company than an "old-fashioned" real estate company. As stories of poor management and scandal emerged, analysts began to question all this lofty talk and examine the fundamentals of the business, which were surprisingly weak compared to the lofty valuation.

When you launch new initiatives, make sure the business fundamentals are clearly understood. This doesn't need to mean a dozen-tab spreadsheet or convoluted financial metrics, but rather if you can articulate the economic drivers for a new technology initiative and sell the benefits to the business rather than a smoke-and-mirrors set of hype, you'll ultimately have more success in the long run.

Fake it till you make it? As long as you're upfront

Perhaps the best tool to emerge from startup thinking is the idea of rapidly prototyping new technologies, business concepts, or other areas. The core idea is that rather than analyzing a problem, design a reasonable experiment that will guide your future efforts. In some cases, this might be as complex as simulating several parts of a new system or even an entirely new product or business model in order to test elements of it, and then successfully applying what you learn to build the "real" version of it.

The best experiments might even convince colleagues, executives, and customers that you have something "real" on your hands and may generate interest, excitement, and funding that can seem welcome. However, you should clearly articulate which elements of what they are seeing are experimental, and that you're still testing and learning in order to build something great, rather than nearing the final stretches of that process. A great prototype can be the ultimate "business case" to launch an initiative, but it becomes unethical when presented as something more mature than a prototype.

Like any effective tool or approach, elements of the startup ethos can be applied poorly or even unethically. That doesn't mean the tool is fundamentally flawed or should be cast aside; rather, articulate why you're using an approach and be transparent about how it works, and you'll avoid ending up in dangerous waters.

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