Berthold Baurek-Karlic wrote a guest article for die Austrian New Business Magazine and shared his view on the relationship between startups and corporates.
The hype about start-ups has been with us for several years. More than 100 so-called unicorns (companies that are less than ten years old but have a valuation of more than one billion euros) have been born. Profits are often not the priority in such companies and are therefore a rarity. Valuations are mostly based on future potential, a good dose of imagination and luck. For traditional entrepreneurs, unicorns therefore largely trigger a lack of understanding.
So what can we really learn from the young guns, from their experimental approaches and their often invoked agility?
Lesson 1: Time pressure and little capital
Established companies have risk and control systems, compliance and other rules and regulations to manage the different entrepreneurial risks as optimally as possible. Startups sing a different tune. There is experimentation, and what doesn’t work immediately is quickly discarded. What seems chaotic has a system.
Lesson 2: Decentralized working
Since the COVID-19 pandemic, the world of work has also been in flux in the traditional economy. Many offices are now partly empty as employees continue to prefer home offices. Startups have been practising decentralized working excessively for many years – by design.
For example, there are talents who travel around the world as digital nomads and work from special hotels with strong internet connections. This phenomenon arose out of necessity and should not be misunderstood as a lifestyle. The “war for talents” – the hard global competition for the best minds in the world – has become one of the driving factors in the competition for innovation.
Lesson 3: Uncompromising data and customer focus.
A product that works has customers who fall in love. Sales and measurement of customer activity and satisfaction are 100 % digital. Startups evaluate quickly and continously whether the market accepts a new product or even a new feature. The customer has full attention.
A central instrument of corporate management in agile companies is neither cost accounting nor the budget. Here, measurement is done in OKR (Objectives and Key Results). This system orients towards a central “North Star Metric”. This means the one key figure that is decisive for the company’s success. This metric is always customer-focused and stands above all sub-goals in the organization.
Lesson 4: Experiments are the secret of success
Everything learned in a failed experiment is valuable and documented. Those who make mistakes inevitably drive the company and its success. Sounds paradoxical? Every scientist works like this. Only those who implement failure as a success factor in their corporate culture will ultimately succeed and allow employees or teams of outstanding talent the necessary freedom to develop.
Lesson 5: Paying Forward Mindset
The image of traditional industrial companies is a very dusty, rigid, self-contained and tight one in the eyes of young founders and talent who are increasingly choosing not to pursue a career in one.
In dynamic growth companies, like start-ups, people openly seek exchange in communities. People actively exchange ideas without the limits of the hierarchy in the company and even go one step further. They also seek direct exchange with their competitors.
The so-called paying forward mindset characterizes the most innovative companies within our ecosystem. That means a demand on oneself as well as on the community to be open and to support each other in solving problems. Sometimes this is a supportive act of networking, sometimes a commercial collaboration that is far from cost-covering, or even the sharing of experiences from failed experiments.
The original, more detailed article was published in German in the New Business Magazine from 25 November 2022.