Some of the biggest companies in the world are startups. Airbnb, Snapchat and Uber have all retained the label, despite being worth billions of dollars. The success of these companies has redefined the term, making many question whether it actually has anything to do with organizational growth.
What these companies have in common is their lifespan. Despite their envious valuations, none are over seven years old. While companies spanning centuries have to contend with outdated company cultures and entrenched structures, startup companies, on the face of it, are free from such problems.
The theory that bigger companies should look to startups for advice isn't completely flawed, but there are things that don't crossover. Human resource departments, for example, are often more efficient in larger companies, with pension schemes and medical coverage often included in employee packages. Out of necessity, startups don't necessarily need an HR function, which can cause employees to coast along without goals and objectives.
From the select few startups that do succeed, there are certain elements that established companies could look to implement. For example, risk taking is part and parcel of a startup's everyday operations, but in established companies there can be a reluctance to do this. This high risk approach to business wouldn't necessarily be justified all the time for large companies, but it would help when attempting to compete with startups which are attempting to disrupt industries which were one deemed untouchable. Look at the banking industry. Newly formed neo-banks, which concentrate specifically on digital transactions, are the latest challenge for high-street institutions, and to survive, they may need to take some big risks to keep their customers happy.
Big companies also have big budgets. They spend millions of dollars on advertising and recruitment campaigns, sometimes failing to achieve the required outcome. Startups don't have the resources to be as lavish, but produce results that are just as effective. As The Guardian states: 'Startups have the benefit of being free and unbound by the constraints faced by large corporates when it comes to advertising. Have some fun with how you choose to advertise your business and capture your target customers' attention.' By using this approach and combining it with creativity, more cost effective methods, primarily through social media, can be just as useful in the long-run. While larger companies do use social media, they still spend vast amounts of money on advertising which often fails, meaning that they can't concentrate on more traditional avenues.
The startup mentality isn't always the way forward, but there are certain things that can be transferred to the corporate environment. It's up to senior managers in these companies to be open to new processes as they look to fight against industry disruption.