There are plenty of management books and articles that repackage start-up wisdom for the leaders of established companies. This article isn’t intended to be yet another addition to the genre, but instead an examination of one specific lesson from the start-up world that legacy business leaders can apply to potentially solve a whole host of challenges they face today.
The lesson derives from a defining characteristic of start-up culture – fast operational cadence. By definition, start-up leaders have to engage in rapid, nontraditional thinking and make decisions with less-than-ideal amounts of data. They don’t have time to thoroughly analyze problems; time constraints and competitive pressures force leaders to render judgments in hours, not weeks or months.
By contrast, larger and more established companies use a waterfall approach to tackle major projects. Important initiatives begin with an in-depth analysis that can take months or even years to complete. Teams move forward only after the company has spent a massive amount of time and resources on market assessment, risk analyses, and budgetary planning.
In the typical waterfall scenario, there’s little room for creativity, experiential learning, and on-the-job training. The approach mitigates risk but creates its own set of problems because businesses that operate this way are less agile and innovative. That’s why leaders of larger companies should borrow a page from the innovator playbook and use a start-up operational cadence instead. Especially now.
Navigating through the fear cycle
Why is changing up the operational cadence important now? Businesses are navigating a fear cycle due to sustained economic uncertainty, and how they come out of it will determine future success. In this environment, the traditional approach is counterproductive and even harmful. Smart leaders at companies of all sizes should shed the compulsion to thoroughly vet every major undertaking because changing the operational cadence now can mean you exit the fear cycle in a much stronger position.
It’s a mindset change where you adopt a quick rollout, “fail-and-learn” technique because that can be just what your company needs to thrive in uncertain times. Some of the world’s largest brands are experimenting with this approach. Pepsi’s hyper-experimental “Pepsi and milk” campaign at the end of last year is one example; it rolled out with a commercial featuring Lindsay Lohan and the #Pilkandcookies hashtag.
The campaign asked consumers to try this unusual combination and share their favorite recipes, offering cash prizes and highlighting recipes that might appeal to adventurous revelers. Maybe it’s a reach (and an unappealing food pairing, at that), but the campaign is a great example of how an established brand can generate buzz and let the market add value through engagement.
Elon Musk’s activities at Twitter are another example of a major brand taking a “fail fast and iterate” approach. Love him or hate him, Musk is like a kid in a candy shop when it comes to using innovation to reinvent one of the most high-profile communication brands. He is not afraid to iterate on ideas in real-time, such as Twitter Blue, the platform’s new subscription service that was paused a few weeks after being announced, was modified, then recently re-launched.
Making faster decisions and course corrections amid market volatility
Remember that start-up-style agility doesn’t have to be as in-your-face as the Musk approach at Twitter. For example, the Boston Red Sox organization adopted an approach that leads to faster decisions and more frequent course corrections; it’s a quick-iteration, money-crunching strategy similar to the famous “Moneyball” discipline the organization uses to reduce financial variance and volatility.
I’ve spoken with the Red Sox CFO, Tim Zue, about how their organization’s financial analysts are able to collaborate on budgets and quickly model various outcomes to manage cyclical uncertainty that impacts crucial unknowns like future ticket sales, concessions, merchandise, and even TV revenues. Planning technology helps analysts align with department heads and make spending adjustments quickly where necessary.
National DCP, a supply chain management company that serves the foodservice industry, is another example of an established company effectively applying start-up operational cadence to speed up decision-making and achieve agility. They are also using planning technology to analyze scenarios and apply the latest projections to align with indexes and improve accuracy in an inflationary environment. By collaborating across the company to make financial performance management a team endeavor, National DCP identifies opportunities to increase profits and cut costs.
Finance leaders at their company estimate that they have reduced the time required to close the books each month, and generate management reports and insights, by 40%, which gives top executives the ability to respond to market changes more quickly. The experience of National DCP and the Red Sox organization is a good illustration of how it’s possible to adopt a start-up cadence that drives agility across the organization.
When failure IS an option, success follows
Keep in mind that you can start small when implementing a high-cadence culture, applying the start-up technique to specific projects and issues that can benefit from a high-turnover approach. A hyper-experimentation approach to problem solving requires three preconditions for success:
- A commitment to the core tenets of how the team will operate and the idea that this will be a high-volatility, high-uncertainty environment.
- An understanding that the organization’s historical record and behaviors will not be predictive of what might happen in the future.
- Agreement that everyone on the team will get things wrong — not just once or twice, but a decent amount of the time. It’s critical that leaders acknowledge this as “part of our agreed process” and to reinforce the rapid “test, learn, adjust” ethos.
This approach does require higher degrees of risk tolerance, however this is offset by the experimental approach that reduces the impacts from each risk. Keep in mind that your established company doesn’t have to act like bootstrappers all the time to achieve start-up levels of agility. Pick a challenge that is filled with uncertainty and apply hyper-experimentation to topics that are relevant. Choose an initiative and tell your team to change the paradigm, giving them permission to test, fail, learn, and adjust. But… all of this must be done fast.
We’re operating in an age where businesses are beset by one obstacle after another. Traditional methods developed in a different era won’t give established organizations the agility required to succeed today. A start-up-style operational cadence might just be the way out of the fear cycle — and a path to peak organizational performance, whatever the conditions.