Risk, reward, fear and nurturing a startup culture

Paul Boag

Many large organisations are so terrified of risk that it hampers their ability to operate in a digital world.

Digital favours smaller companies. It provides them with a platform to compete with larger, more established organisations. It makes it easy to rectify the mistakes you make when starting out. And its rapid rate of innovation undermines the advantage of having mature products or processes.

Ranjay Gulati, an organizational growth expert and professor at Harvard Business School said:

“the problem these companies face is, as they get bigger, as they scale, things slow down. They lose speed because they have so many systems and structures and processes.”

This is a dangerous place to be in the fast moving world of digital and they know it. A growing number of larger businesses are realising they are not agile enough. General Electric, The UK government, Dell, all look in envy at the startup culture of San Fransisco.

It is not easy to have a startup culture

But even if there is a recognition of the problem and desire to change, overcoming cultural legacy can be challenging. Let me give you an example.

I am currently working with an organisation whose management team have embraced digital transformation. From the top of the organisation there is a focus on becoming more agile and using digital tools to speed up the way they operate. They want a startup culture.

Among other things I have been helping their comms team explain to staff what digital transformation is. We are instigating a program of employee education.

One of my first suggestions was the creation of a blog. A place the comms team can share digital best practice, update staff on progress and provide education.

To speed up the creation of this blog I suggested using Squarespace. This would enable us to have something up and running in minutes. An approach much in line with the desire to be more agile.

Unfortunately despite the directive from management this got bogged down in organisational bureaucracy. Squarespace was a new platform for the company and so needed to be approved by IT. Also legal needed to check over their privacy policy and terms of use.

What if the system was insecure? What if the terms of use had a clause in that compromised the organisation? What if…

Of course these are all valid concerns. There are risks involved in using a third party service like Squarespace. Surely it is sensible to have checks in place to prevent disaster?

The problem is that large companies are so risk adverse they stifle innovation and prevent agility.

Risk vs. reward

Yes there were risks in using Squarespace. But how big were those risks? A startup would have approached the problem from a different angle. They would have made a judgement call. They would have seen that Squarespace has millions of users and concluded ‘it was probably okay’.

Yes that is a riskier approach but it is what allows them to remain agile, to respond quickly and move forward. What has taken my client over 2 weeks to resolve could happen in 10 minutes at a startup. That is a risk worth taking. The return outweighs the theoretical risk.

A lack of trust

But there is another factor at work here too. It is also about trust. A startup will trust its employees to make a judgement call or at least have the intelligence to ask for help if they feel they need it. Larger organisations do not.

Of course the more employees you have the higher the chance that one of them could do something stupid. But again if you want to maintain momentum that is a trade off you must be willing to make.

It is possible to challenge and update these processes. But that will take time too because the process for reviewing them is in itself time consuming. Stakeholders will need consulting, committees formed and new standing operating procedures agreed.

Overcoming the biggest cultural barrier – fear

Yet it is even possible to cut through that problem if one cultural element could be overcome – fear. In the example I gave above it would have been possible for the comms director to have opened a Squarespace account anyway. She could have made a judgement call based on an informal chat with somebody from IT and legal. Yet she feared what would happen. Would she get in trouble? Would she get fired?

That is what most larger organisations need to overcome. They need to overcome the fear their staff have of messing up. Only then will they be willing to take risks.