The quest to better understand how our business society advances and adapts in a digital age is a common conversation these days. We tend to compare large, global organizations to the nimbler, more agile entrepreneurial ones as a way of saying that these younger businesses and their respective models will wildly disrupt the way we have always done things. To some extent, this is true. We see many traditional business models being subverted by clever uses of technology and finer detail around customer experience.
That said, I have yet to speak to the CEO of a large organization who has not told me that they’re not doing similar things. They’re taking financial risks in the hope of profit and most are implementing more agile ways of working to compete effectively and embed an entrepreneurial mindset in the business. In fact, look in any common dictionary and you’ll see that they define being entrepreneurial as taking financial risks in the hope of profit. Isn’t that what all businesses actually do? Are large companies different than small ones in this regard.
Is the question we’re trying to answer one of large vs. small or traditional vs. modern? The issue around an entrepreneurial society or culture is less about the size of the company and the taking of financial risk and more about changing how we work in order to accelerate our chances of success and quickly identify our risks of failure. It’s about solving the massive talent gap that exists in our societies that crept up on us so quickly. The shift to a digital strategy demands that knowledge workers abound and that modern skills are being utilized in place of the legacy thinking that many organizations still suffer from. It is, in fact, a focus on the cultural mindset and behavior of the organization itself that will drive the level of entrepreneurial spirit.
The smaller, more agile companies that have saturated the market in the past 3-5 years coupled with the growing number of freelancers and contractors is all a result of the need to do more things faster, with better quality and improved financial results. Interestingly, many of the people fall into the category of freelancer/contractor are ones that have left large companies in recent years for various reasons and have re-trained themselves to re-enter the market with a focused skill set that those same large companies are now looking for. In some cases, they have hired previous staff back but now as a freelancer in order to access those specialized skills.
The people that make up these segments bring with them skills and capabilities that offer immediate value to the larger, more complex companies that struggle with solving the problems that will get them into a more competitive state. Yet there is room for all players now since the emphasis is more around subject matter expertise and gaining access to skills that are current. One great example is the UK Government. In an effort to level the playing field they introduced G-Cloud, a services framework that was exclusively designed for small, boutique firms to sell their services to UK Government Departments without necessarily competing with the larger firms that have a firm grip in the public sector. This entrepreneurial approach on the part of UK Government has created a dynamic and thriving sector amongst the many talented early stage companies in Britain.
To make this more practical, let’s get specific and consider an area in all businesses where innovation and entrepreneurialism are supposed to happen but often fall short – product management (development). No single role in the company has the impact to drive an entrepreneurial culture as much as this one. For years, the dilemma of solving the alignment of business and IT has existed in this one area and has gone almost unnoticed.
As Harvard Professor and author of the Innovators Dilemma, Clayton Christensen reports: “Over 60% of all new-product development efforts are scuttled before they ever reach the market. Of the 40% that do see the light of day, 40% fail to become pro table and are withdrawn from the market. By the time you add it all up, three-quarters of the money spent in product development investments results in products that do not succeed commercially.”
Why does this happen? Simply because large, traditional organizations remain stagnant and aren’t as deliberate around introducing the learning and skills that will modernize the way they manage and develop products. Areas like exploring and sizing the market, understanding feedback, prioritizing value, designing experiments and validating a hypothesis using modern principles – are all neglected or under utilized.
It’s important to note that organizational strategies are not going to solve the problem. The entrepreneurial mindset that many seek, especially in large businesses, isn’t going to be resolved by changing an org chart, decentralizing or centralizing people or services or even by introducing a new methodology. It’s all about the need to drive change in how people think about their work, not only how they behave or do the work. This is the elusive culture topic many of us talk about in our companies. The three legged stool here is mindset, mechanics and measures. It’s how we think that leads to what we do that leads to how we measure its value.
I suppose in this context it is best to quote Drucker himself…
Most of what we call management consists of making it difficult for people to get their work done. – Peter Drucker
About the author:
Chief Executive Officer, Emergn Ltd.