Bigger enterprises need to learn from small startups and even steal their innovative agile methods to stay in contention
Marriott International has a basic goal: to fill its empty hotel rooms. When the obvious routes are exhausted, such as cutting prices, holding promotions and so on, it needs to get creative. But how?
Last year Marriott tried something rather clever. Working on the principle that entrepreneurs and small firms are far better than multinationals at dreaming up wild ideas, it founded the Canvas Project to fund startups with room-filling concepts.
One idea to win funding was Notch, a pop-up rooftop bar on top of the Marriott Park Lane in London. It served Japanese street food and pop cans of homemade cocktails. The decor was reclaimed school tables, scaffolding and swings. It’s the sort of concept miles away from a Marriott. With £35,000 in funding, Notch took £500,000 in three months. Marriott is now expanding the Canvas Project internationally.
The logic behind the scheme is sound. Small companies are indeed more creative than large ones. They lack the bureaucracy of big firms. There’s less at risk. Senior management may be younger. So they out-think, out-innovate and outpace larger rivals.
So how can large companies harness the energy of small and medium-sized enterprises (SMEs)? One key area is to mimic the high risk methodology of startups.
Nick Taylor, managing director of Accenture Strategy UK and Ireland, observes: “Experimentation and a ‘fail fast’ attitude are essential to organisations looking to get ahead in the digital era.”
Startups usually start with a clean slate, which gives them a big advantage
Mr Taylor advises creating a “skunkworks” to play with risky ideas. He says: “This is where the company has a separate unit which creates ideas and is not encumbered by the infrastructure, governance, processes or controls of the parent organisation. It enables the company to be nimble, test ideas quickly and decide if they are brought back into the company.” Marriott, for example, made sure its Canvas Project had operational independence.
Startups usually start with a clean slate, which gives them a big advantage. Look at new mortgage company BlueZest, launching this autumn. It is using new technology to cut mortgage decision times to 60 minutes, down from the normal two-to-four-week timeframe.
BlueZest chief executive Russell Gould says: “Big banks and mortgage providers have historic and outdated systems that often prevent them from being agile and evolving to meet market needs.”
NatWest, for example, is only just starting to e-mail brokers with decisions. Customers and solicitors will still receive notification by post. If banks want to compete with fintech startups, they too need to begin with a blank sheet of paper.
Apps to promote collaboration can help large firms cut bureaucracy. The best startups routinely use apps to do this. Just look at Ted Nash’s remarkable firm Tapdaq, named Global Mobile Innovator of the Year at the Mobile World Congress last year. It’s an in-app advertising platform.
At the age of 17, he hit one million downloads on the App Store and runs his company with maximum agility. “We use Slack, Jira and Google Hangouts to communicate internally, and Skype to communicate with those outside the company,” he says.
“Slack is something we couldn’t live without. For example, we have a team member in Japan at the moment, yet we’re still able to communicate as a team instantaneously via Slack. What we like about this tool is it gives us the ability to interact all in one place. This aids our ethos of being completely transparent as a team, and company.
“Another great thing about Slack is integration with services we already use. From Intercom, Mention, Help Scout and Google Drive, Slack is a one-stop shop for a lot of the services we use and need. Whether you’re on your laptop or mobile phone, Slack is very accessible.”
Cost is not a factor. Google Hangouts costs nothing, yet promotes efficiency company-wide. Mr Nash adds: “Google Hangouts is something we use for our bi-weekly company update and stand-ups. It enables us to have some face time with each other, which is great in keeping that strong connection we like to have as a team.
“The screen-sharing feature in Hangouts is extremely useful in that it helps us showcase what we’ve been working on. For example, we have a designer based in Prague who has just shown us some really exciting designs he’s been working on and it’s made so simple using Hangouts. Again, this is really accessible as it works across laptops, Android and iOS.”
Perhaps the easiest way for large firms to imitate the creativity of smaller rivals is to watch what they do and copy. The business press is full of profiles of brilliant startups with different ways of working.
One business getting a lot of column inches is Fudge Kitchen, founded in Blackpool, now with a small chain of shops, and products stocked by 200 shops including Harrods and Selfridges.
Fudge Kitchen won a Food Manufacturing Excellence Award last year and has amassed eight Great Taste Awards. The company offers larger rivals a long list of lessons in innovation. New product development is in-house, so the team can experiment non-stop. As a result Fudge Kitchen launches new products relentlessly; 60 are on the market right now, translating into more than 20 ranges.
It’s a high energy place to work. The AGM is described as “a few drunken days of fun”, including the Fudgympics. Staff are picked for their quirkiness. Many play in bands and a handful moonlight as stand-up comedians. Fudge Kitchen employs Fudge Ambassadors to visit key accounts and undertake training and demonstrations.
Creativity is harnessed company-wide, through the FudgeNet intranet. A reward system called WOWs can be cashed in for prizes, including holidays.
There’s a sense of purpose which pushes Fudge Kitchen across borders. It attends trade shows, exporting to 15 territories including France and the Falkland Islands. Like many small firms, Fudge Kitchen isn’t afraid to ask for advice. It asked the government’s Manufacturing Advice Service for help and visits other manufacturers for insights into lean techniques.
There’s nothing to stop a large company stealing these ideas. The merit of leveraging the creativity of small companies is proven beyond doubt. IT consultancy Infosys has launched a $500-million innovation fund to invest in startups to glean their secrets.
When survival depends on creativity, it will soon be clear that enterprises need to move as swiftly as startups. The alternative is obsolescence.
Top image: Marriott’s Canvas Project funds innovative roomfilling concepts, such as the popup rooftop bar Notch at Marriott Park Lane (Newscast/UIG via Getty Images)