“Test Fast, Fail Fast, Adjust Fast” — Golden Rule of Startups at Enterprises
Startups thrive in the current world, using this golden rule. Startups embark on the journey of experimentation to find the mechanism to beat the incumbents at their offering in the same market. I firmly believe that this is the case because large firms are unable to act meaningfully on this golden rule. Here are examples from my own experiences while observing and discussing the same topic across organizations.
At large firms in general, they suffer from analysis paralysis, decision paralysis and action paralysis. These three types of paralysis make it challenging to test fast, fail fast and adjust quickly.
“Incumbents are worried about experimentation” is a surface level analysis and borderline myth. They are more worried about the variation needed to run experiments. They have thrived and excelled at reducing variation and improve efficiency to scale rapidly. However, experimentation demands the complete opposite. Experiments are carried out with significant variations to find a successful one to scale. The startups excel at the experimentation before settling on the final one. The adaptive nature of startups to experiment is their fundamental differentiator and also their comfort space. In summary, Startups test fast.
“We need tolerance towards failures and resiliency” is another famous myth at large firms. Often, it's the inability of management to let go of initiatives, products, and processes when presented with counter-evidence. It becomes a political issue and, in some cases, a personal reputation issue at times. The resiliency is selectively used and causes even more damage. The same is the case with failures, and there is a discrepancy between talking and practicing. Practicing tolerance towards failure is difficult because it demands differentiation between a mistake, oversight, and incompetencies. The startups are very good at handling failures and bringing needed accountability. In summary, startups fail fast.
“Digital Transformation at the top is needed” is another shallow analysis. All organizations would like to thrive and not only survive or react. The aspiration is evident at the top level, and they are willing to change and adapt. Despite the good intention of change leadership, the culture change to do experimentation and embrace uncertainty will make it extremely difficult. Do first and analyze later is the motto at startups, while incumbents analyze first and do it later, leading to fatal analysis paralysis. No amount of leadership changes at large enterprises can bring these cultural aspects, which is another significant advantage for startups. In summary, startups adjust fast.
The startup lives in the real world, and they build a hypothesis of it to verify by experimentation. While large firms live in a hypothetical world and they want to build real products.
The large firms need to embrace the golden rule in their thinking, and execution, which needs to be supported by leadership and culture.
