Startup thinking: building businesses fit for the new normal
Are we trying to manage 21st Century businesses with the management thinking of the 1800s? NEXT 14 speaker Lee Bryant thinks so - and he has solutions.
He didn’t beat about the bush. Sticking “social business” technologies into many existing businesses was simply putting lipstick on a pig, he suggested. We need to much more fundamentally rethink how we organise our businesses, to make them fit for purpose in the new normal.
Lee has a long history in the area of social business. His second company – Headshift – was a pioneer in the space, but was sold to the Dachis Group, which chose to go down the social media marketing route, and was eventually sold itself. Lee and his business partner Livio Hughes have returned to the space with a new company, Post*Shift, which launched just a few weeks ago.
What separates the two businesses?
Headshift missed that we need to be braver about the organisation of companies.
You only get so far by grafting social technologies onto traditional business – you actually need to reshape the business in ways that the new technology facilities to make this work.
And this – he suggested – is a rich time to do it. The classic idea of the firm – as a means to reduce transaction costs by bringing all the necessary skills into one company – no longer holds.
It’s got easier and easier to arrange a network of freelancers, cheaply and fluidly. Oh, and managers do not employ bureaucracy rationally – they build unnecessary complexity into structure to protect their positions.
21st Century tech in 19th Century businesses
We are, in short, using 21st century technologies in business structures designed for 19th century industrial manufacturing. On one extreme, we have people from big corporates doing “innovation tourism”, by visiting and interacting with startups, then taking the wrong lessons back into their businesses. On the other extreme we have startups sleep-walking towards the management structures of the 19th century because it’s the “grown up” thing to do, not because it’s the right structure for their business.
That’s what Lee’s new business is designed to do – both to incubate startups, and help them determine the right structure for their business, but also to mentor teams from within much bigger companies, helping them restructure themselves in was that match their operating needs – and take that learning back into their business.
Lee gave plenty of examples, too: businesses with parallel structures, for example, with the admin and support teams in a traditional hierarchical arrangement, while the product and creative teams work in much more free-form, project-based structures. Many of the models revolved around small teams, or pods, of workers, whose size is determined by the minimum needed skill sets to get the job done. As Lee pointed out, as these tend to be around 12 people, once you get to 12 pods – you’re pretty much at Dunbar’s Number – and that makes it an ideal size for a business or business unit.
The Physical/Digital Interface
Lee concluded with a vision of the future – one that was touched on by a few of the sessions at last year’s NEXT – that suggested that we’re yet to really start exploiting the potential of start-up thinking. The interface between the app-based startup world and the physical infrastructure of our lives is a fascinated, and ill-explored frontier, he suggested:
Software will be everywhere. But it will not be everything. I need food and clothes and heating, and it turns out that apps don’t do that.
The question he wants to explore is what can the big, physical manufacturing and infrastructure businesses learn from startups – and what can startups learn from them? A critical question for making the most of today’s tech, I’d suggest. How can start-up/app thinking reduces costs or increase efficiency of these huge businesses? They operate at a scale where even marginal improvements can be worth very large sums of money, so the revenue potential in this area could be vast.
Equally, these businesses have experience of manufacturing, management and processes at vast scale, and exacting levels of detail. As scaling remains one of the great challenges for startup businesses, what could increased dialogue between these two sides bring us?
As we’ve suggested before, bringing startups technologies to the infrastructure world could really revolutionise the world in the way that many apps never will. That’s a shift worth fighting for.
Lee Bryant is speaking as part of the Future of Leadership workshop at NEXT14 next week.