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Lessons Startups Should Learn from the Corporate World

In the start-up world we tend to think big corporations are evil.  If you’ve worked for a large corporation and are now an entrepreneur, you might even hate your past corporate experience.  But there are some things that large corporations do well that start-ups can learn from.

I’ll take a step back a number of years to when I was right out of college.  I had graduated with a degree in Computer Engineering, but after a couple years decided that I was much more interested in business.  I sped through the DePaul Kellstadt part-time program in two years and received my MBA in entrepreneurship and finance all while working for a fairly large corporation (~$1B, 7000 employees).  I was really lucky in the opportunity that came my way.  I took a position in my company’s New Business Development group (which was a two person department, including myself and my boss), where I was responsible for evaluating new business ideas for the company.  My job was to research them, look at the feasibility, resource requirements, identify potential strategies, and then provide my recommendation to executives.

But the role got better… a business idea crossed my desk that we really loved.  My boss, who was based in Italy, and I really thought this business could have enormous potential.  Most of the other ideas we evaluated were new service lines or extensions to existing offerings.  This was a huge new business that built on our company’s core competencies, but had to be built from scratch.  I spent a long time working on the business idea, from concept through implementation.  To make this long story short, I lead the spin-off of the company into its own entity, built the entire company from scratch, and for a couple years ran Global Operations with employees in the U.S., Europe and Asia.  It was my baby and I really enjoyed working there – it seemed like the utopic entrepreneurial state…  Working for a big company with a lot of resources and money, but being able to do things your own way, building something from scratch, and not having to adhere to most of the corporate policies and politics.

Of course, that was too good to last. During my stint with the large company, my entrepreneurial bug again began to itch.  The company was becoming more political and filled with red tape as we grew and the corporate headquarters wanted to be more involved.  There was not a lot of upside potential working for the corporation either, as I had no equity in the spin-off, just a half-decent salary.  A company in the industry came calling for an opportunity out in San Francisco.  I would have the ability to build a team and lead business development.  It was a few year old startup with what I thought was a great product and some heavy hitting VC’s behind them.  So I packed up and moved out to the Bay Area to partake in my dream of living in the startup world on the West Coast. Looking back on my experiences now leads me to a lesson I have come to appreciate:

There is a lot startups can learn from corporations.  In the entrepreneurial community we come to think of big corporations as the bad guys- they are slow, inefficient, wasteful and don’t fully appreciate their customers.  Most of these adjectives describing corporations are true.  But I’ve also learned that corporations do some things right that startups should emulate.

  1. Having standardized documented processes is a good thing.  I don’t mean creating 100 page SOP’s, but documenting what you are doing, how things should be done, what policies should be followed, etc… is very helpful for a startup (and can be done in a way that empowers employees).  It seems like there isn’t enough time to worry about this in a startup, but I believe it is critical.  Having worked in a startup in San Francisco that completely ignored processes, I can say firsthand it leads to increased business and legal risks.  Different employees do the same things in different ways resulting in different outcomes, employees tell customers different things in the same situation, customers get angry because you are doing things differently for their competitor than you are doing for them.  Not having a standard policy caused us to be threatened with legal action from a major retailer, which ultimately hurt our credibility, ate up much more time and money on dealing with the issue.  Not to mention the difficulty in training new employees as you grow without any processes in place.
  2. Not pivoting too quickly, stay focused and aligned.  “Pivot” is the big buzz word these days… how can startups pivot when things aren’t working.  But I have seen too many startups pivot without giving things a chance.  Especially on the West Coast, it seems like startups try something for a couple weeks and if it doesn’t work they need to pivot.  The problem with that is that it doesn’t give you enough time to have all of your resources aligned.  To really test out an idea in the marketplace, you need to ensure that your engineering team is aligned with marketing, is aligned with sales, is aligned with customer service, is aligned with the science team, is aligned with your executive team, and so on.  Just telling your sales guys to go out and try to sell something without everyone else internally aligned, will almost always result in poor results.  On the other hand, corporations make sure to align all departments on a new service line before going to market and may test out a new service line for months or years before giving up.  The key is to find a balance between these two.  It most cases, you can’t test out a new idea in a few weeks (and if your CEO tells you to, you should push back, because otherwise you will always fail).
  3. Defined responsibilities and accountability are important.  In a start-up there are many jacks of all trades and everyone takes on many responsibilities.  This is necessary for the small things, but when it comes to the large strategic roles, there needs to be responsibility and accountability.  The responsibilities and accountability needs to be clear between everyone so that people know what is expected of them, what their roles are, and perhaps most importantly- how they could help their co-workers.  Just as important, these responsibilities need to be aligned to the company strategy.  If you have a small start-up and you have three different people doing various aspects of marketing without an alignment of goals, your company is probably wasting a lot of resources chasing its tail without maximizing the output.
Do you agree with these?  Do you have your own lessons learned from the corporate world that start-ups should adopt?
  1. November 19, 2011 at 12:35 pm

    What’s up, just wanted to tell you, I loved this article. It was practical. Keep on posting!

    Hi there, I just wanted to mention, I disagree. Your point doesn’t make any sense.

    Hello, how’s it going? Just shared this post with a colleague, we had a good laugh.

    Touche. Sound arguments. Keep up the amazing spirit.

    This text is priceless. When can I find out more?

    Highly descriptive article, I liked that a lot. Will there be a part 2?

    Stunning story there. What happened after? Take care!

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