Established mid-market companies could learn a lot from Silicon Valley’s lean, ambitious and innovative start-up culture
Silicon Valley start-ups have to stay focused to survive. They are small – at least to begin with – and the loss of a single client can be enough to send them to the wall. They are also ambitious and determined to push aside large incumbents and rival entrepreneurs to stake a claim in the market.
“They do all this by running lean,” says Shannon Lowther, who spent years working in Silicon Valley before joining Grant Thornton as Director of Valuations in London. “They focus on their customers, their core products and their core technologies, while outsourcing their corporate administration functions for as long as possible.” One side effect of this, she notes, is that HR outsourcing businesses are some of the hottest new ventures in town.
But it’s not just start-ups using this strategy; established mid-market businesses around the world can benefit from thinking and acting more like their California counterparts, says Lowther. So what should they be doing?
Four lessons for mid-sized businesses
1. Focus on the customer
Stay focused on the customer by asking questions such as “are customers getting everything they need?” and “would our customers recommend us to other people?”.
2. Empower employees
Empower employees to prioritise customer needs by having relatively flat structures that give individuals autonomy to run with ideas and make quick decisions.
3. Make time to innovate
Take staff away from the office for intensive innovation sessions to see what new products and services they can come up with. Some start-ups run weekend hackathons; others hold half-day ‘white space’ sessions; Facebook runs legendary all-night hackathons.
4. Outsource non-core activities
Outsource non-core parts of the business to free up individuals for more strategic activities. For instance, in HR you might outsource benefits management and background checks but keep a team in-house to deal with strategy.
Time to change
While a Silicon Valley attitude can be a useful tool for established businesses, instilling such a corporate culture won’t happen overnight.
Business leaders attempting to do this may run into resistance simply because people do not want to change the status quo, or because they have failed to get buy-in from the right people in the company.
“Getting this right is all about communicating with the team,” says Lowther. “You need to set the groundwork by sharing the message that this is for the benefit of the business and employees more broadly. Start slowly. Don’t just walk in one day and say: “I have outsourced our entire back office function.”