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How major corporations can mimic startup-like agility
A key to success for businesses is to adopt a digital culture, one that embraces technology and online communication—and agility.
Some organizations are learning how to be agile by looking to tech-savvy startups—many of which thrive through innovation and a willingness to embrace change.
In a recent podcast, consulting firm McKinsey & Co. talked to Silicon Valley leaders about what big companies can learn from agile startups and how startups can stay nimble while learning to become more stable as they grow.
Digital cultures are those that welcome new technologies and online communication as a way of shaping how employees interact, think, behave and converse, experts say. For example, as SHRM Online reported recently, companies that use internal social media platforms built by Facebook, Yammer or Jive are embracing a digital culture.
The benefits are many. According to Raising Your Digital Quotient, a recent study from McKinsey, companies said they expect digital initiatives to deliver annual growth and cost efficiencies of 5 percent to 10 percent or more in the next three to five years.
"If you're a startup, you don't have a choice," said David Lee, chief operating officer and chief financial officer at the Redwood City., Calif., startup Impossible Foods. "You have to be agile because you have to create something that's never been seen before. But as you scale, it's critical to put the foundation in place in finance or in risk management in order to create reliability and repeatability."
Lee, whose company develops "meats and cheeses" made entirely from plants, said closeness to consumers is more important than size in achieving nimbleness, which is an area where startups may have more of an advantage.
Technology Sometimes Aids Agility
"In startups, when there's an opportunity through technology to leapfrog to fulfill an underlying consumer need, you have to be agile, particularly the closer you are to the consumer—in product, in marketing and sales, in the way you interact with consumers. But for the functions that are further away from the customer, stability's required to enable it," Lee said.
Pavan Tapadia, chief product officer at San Francisco-based enterprise social networking firm Yammer, which is now part of Microsoft, suggested that startup agility isn't always beneficial.
"I think there are real trade-offs. Small companies are agile, but it's unplanned agility because there's a lack of process or a lack of thoughtful agility. In every element of your business there are trade-offs between stability and agility. You need to identify which elements need to change frequently and which elements are the structure to support that change," Tapadia said.
Many big businesses have become so stable in their existing structure or systems or so comfortable with stagnant technology that it's hard to be agile even when they should be, experts say.
If big-company leadership finds that their corporate culture is "fundamentally out of sync with the requirements for success," Lee said, they need to understand that they face a "very long-term transformation."
HR Often Leads Transformation
Whether a company is in Silicon Valley, the Midwest or on the East Coast, the fundamentals of good business and good leadership matter, Lee added.
While opening a corporate innovation center in Silicon Valley might expose a company to ideas about openness and transparency that can help build a digital company culture, it wouldn't, in itself, change the culture, Tapadia agreed. In startups, Lee said, certain functions, such as HR, finance or people operations, can lead the way to agility rather than just providing support. In stable companies, however, those functions often focus on minimizing risk rather than building digital cultures and betting on growth, he said.
Many tech companies have tapped into startups through investments, acquisitions, in-house innovation centers, collaborations or other avenues.
Imaginatik, a U.K. innovation consulting and software firm with U.S. offices in Boston, released survey results in July, along with nonprofit startup accelerator MassChallenge, showing that 67 percent of responding corporate leaders prefer working with early-stage startups to explore new technologies and business models. The survey found that most corporations view interactions with startups as being at least somewhat important.
Dinah Wisenberg Brin is a freelance reporter and writer in Philadelphia, covering the workplace, entrepreneurship, personal finance, supply chains and health care.
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