We get a lot of press releases at FLT; most of which I’m happy to receive, even though they very rarely result in a story. It’s just hard-working media relations people trying to do their job. I can’t blame them for not having any relevant news.
And so today, when I saw the announcement “Telstra announces new Global Applications and Platforms business” pop-up in my inbox I skimmed it quickly, assuming it wasn’t anything of interest. Which was true for the first few paragraphs, about a Global Applications and Platforms group, within the Innovation, Products and Marketing business unit. You get the picture; lots of People Making New Teams Out Of Mostly The Same People And Capitalising It All To Make It Look Important.
Then a statement by Group Managing Director Kate McKenzie caught my eye, and instantly inflamed it. McKenzie was quoted, saying: “The new business will operate as a startup company.”
Given she had also said it would “draw on the considerable assets of the broader organisation”, “have global accountability”, and “be built over the next three years”, I couldn’t see how this could ever be a startup.
Telstra’s Kate McKenzie, aiming to operate like a startup
Let’s look at this statement in detail —
Drawing on the assets of the broader organisation must surely mean “asking other business units to work with us”, which presumably they’ll do with the same layers of bureaucracy, to the same leisurely delivery timetable as the rest of the telco.
Global accountability sounds like “we will have a complex matrix of people to report to, who will have conflicting priorities, and we won’t just be allowed to take risks, or be creative, or experiment.” In other words, the Legal, Brand Marketing and Finance divisions will be checking every step of the way to make sure this new division is forced to lumber through the same obstacle course of clearances as everybody else.
Built over the next three years sounds may be one large enterprise’s idea of moving at startup speed, but most of Australia’s genuine startups will have setup, completed an MVP and several pivots, raised capital and spent it, achieving either success or failure in half that time, on average.
But I’m not helping Telstra to think like a startup by listing all the ways this Global Applications and Platforms business isn’t one. So, here’s my shortlist of ideas for Kate McKenzie and the incoming leader of the business, Charlotte Yarkoni:
- Find a better brand name.
Granted, http://globalapplicationsandplatforms.telstra.com appears to be available, but how about spending a little time finding a brand name and domain that people might associate with a tangible product benefit? Something shorter so it can be typed quickly on a mobile phone? Something that describes what you do? (Sadly reorg.com.au is taken. Let’s call you SameOld.com.au for now.) - Take personal risks.
Yarkoni and McKenzie’s compensation packages aren’t disclosed, but I bet SameOld.com.au would behave more like a startup if the compensation of the senior team was adjusted to, say, 50% of industry standard, in line with typical startup founder ‘ramen budget’ salaries. It’s hard to issue shares in a business unit subset of a large enterprise, but you could tie 50% of compensation to revenue generated in the first two years (any longer and they don’t really need to work startup hours). - Set the budget up-front and ask the team to borrow money from family.
For most Aussie startups, it’s a constant battle to make headway on product, customer and revenue goals while raising more new capital and meeting the expectations of existing investors (especially when those investors are friends and family). I see none of that pressure for the team behind SameOld.com.au. So what if the founding team was required to borrow from friends and family and fund the first six months of operation themselves? How about if in that timeframe, they must also pitch and win the next 24 months of operating budget from other divisions at Telstra. Will other divisions have sufficient faith in the team’s ideas to reduce their own budget to invest in the success of SameOld.com.au? If not, why? - Create a startup work environment.
Fortunately, having to borrow money from friends and family will be all the motivation you need to avoid the mistake of setting up SameOld.com.au in the same enterprise-quality digs as the rest of Telstra. How are you going to expose your team to the latest thinking and outside-the-box creative minds if your whole startup sits deep inside one of the most-inside-the-box cultures in Australia? Bust out of Telstra’s acres of beige and rent desks at Fishburners, Workben.ch, York Butter Factory, Tank Stream Labs or the like. Put some cash on the beer fridge. Start training for table tennis, foosball and geek trivia nights. Get off the corporate intranet, scoff at any talk of VPNs, equip everybody with outlaw BYOD MacBook Airs, run Google Apps instead of Outlook, and set up on Heroku. - Be open and communicative.
While we’re terrifying Facilities, HR, Finance and Infrastructure, let’s freak out Public Affairs and Brand Marketing too: let’s start practicing open communication with customers, potential customers, staff and the rest of the startup industry. Write a blog post at least weekly, and then tweet it. Be honest about the things that keep you up at night, the ‘known unknowns’ and the things you wish you’d known six months ago. Share your best ideas with everyone, even your competitors. Celebrate the advances your team makes, even when they’re not advances worth millions of dollars, but just because they’ve been clever. Publicly thank customers who help you knock the bugs out. Show the frickin’ product before it’s frickin’ ready for prime-time. Validate your hypotheses while they’re still just mockups and landing pages. - Start with a product idea.
Hiring an expensive executive, waiting for them to hire an executive team, waiting for them to hire people to do the actual work, is not the way to work like a startup. A startup team comes together around an initial idea for a product. That product need not survive much critical scrutiny for very long, but it brings together people who’re excited about the same kind of customers, about the same sort of service segment, about solving a problem that matters. By hiring the team first, you guarantee the team will come together to work on their only pressing problem: how to keep their jobs. That doesn’t foster innovation, unless you count ‘finding clever ways of fooling the rest of the company into letting you keep your jobs’ as innovative.
Can an enterprise behave like a startup?
Absolutely, but only if it’s focused on solving a real customer problem, is centred around a product idea, is open and communicative, creates its own separate startup environment, takes personal and corporate risks, and has a separate startup brand identity.
If you’re not prepared to do that, I’d really rather you didn’t describe yourselves as operating ‘like a startup’ — that’s a special badge of honour, and you don’t just get to wear it because you want to.
Enough from me, you’re the startup community: what should a team within an enterprise have to do in order to call itself a startup? Let me know.
Leave.
See, I think this is perfect evidence of how big enterprise can’t (or ‘usually won’t’) operate in agile, startup-like ways. There’s too much cruft and too much ego on the line.
I reckon every big corporate who’s trying to be ‘innovative’ and ‘entrepreneurial’ and ‘startup’ – or whatever the buzzword of the week is – would do themselves and the Australian ecosystem a favour by going out and funding some real startup teams to solve their problems at a fraction of the price.
(As opposed to ‘three year corporate culture change plans’ and ‘bringing innovation in-house over the next four years’)
While I agree with the sentiment of your article, I think maybe there is more to the nuance of the words “startup company” vs “startup”. You’re talking about a “startup” which is more of a state of mind or a way of working (like you describe, which I subscribe to). Like you said, “Start with a Product Idea” – which isn’t even a company or entity yet.
To be fair, I think the article’s use of the words “startup company” was poor, but reading it as you described it, it feels to me as though they’re referring to it as a “new company within a company” when they mean “startup”, not necessarily run like something straight out of Startmate (for example). Everything has to start up, or begin – it’s just these days the term “startup” now has connotations attached to it that incite articles like these.
Ryan – Agree, its a state of mind. But its very difficult for larger companies to obtain that startup state of mind.
Alan – yep, its a bad name! Its not the same when your only source of income is from your startup. Take away their corporate salaries, give them no resources and see how they fare 🙂