Det er ikke nok at imitere en start-up

Organizations have been around for several thousand years. Some point to the Sumerians (5000 B.C.) as the first civilization to have formed actual organizations. Surprisingly, management theory is a rather newly found science, only dating back to the late 19th century. Perhaps this is the case, as organizational structures and the goals they wanted to achieve were less complicated in the past, or the general level of competition in the present has intensified, which requires a more systematic and sophisticated approach to management.

Either way, management has become increasingly popular in the academic world as well as in firms operating in commercial markets, which makes perfect sense. Think of how much value can be added, if we can figure out an optimized way of organizing people, in order to achieve a given objective.

The core of modern management is arguably concerned with how organizations should be structured.

Lately, horizontal, cross-functional and virtual network structures have become very popular, probably because each of them imitates some of the strengths that small, agile startups possess. The story is the same with decision-making processes like the Garbage Can model, which resembles how startups solve problems quite well. With all these tools at their disposal, why do large corporations keep getting beaten by smaller startups?

The legendary GE executive Jack Welch wrote in his bestseller “Winning” that the small companies who do well, are the ones who accept that the only way they can survive, is by finding a strategic position where they are invincible. What if the small companies’ strengths do not lie in a particular structural advantage, but rather in the way that the external pressure affects them – the fact that better resource allocation is the only way they can survive. Could it be that not having economics of scale forces startups to act differently and demand smarter solutions, simply out of necessity? I believe that this is the case – instead of only trying to imitate startups' internal structures, larger corporations should try to expose themselves or part of themselves to the same external situations as startups are exposed to.

I propose that if a corporation is facing an issue, which they would like to resolve (this could range from product development to inefficient workflows to departments who cannot reinvent themselves etc.), the corporation should create a team of either employees or external personal. This team should be treated as a newly formed startup, where the corporation in question act as the investor. There are several criteria for this to be a success, but I would like to highlight the three, I find most important: 

1. Creating the same financial structures as in an actual startup. This means that the salary should be highly scaled with the performance of the team. The team could even be partly owners of the project. This also means that there should not be endless funding for a project that shows no results.
   Shut it down, start over or abandon the problem.
2. It is important that the team works completely independent of the rest of the company. Whether the solution is compatible with the rest of the company is largely irrelevant, as this will slow the process and complicate the solution. The compatibility issue can be solved later.
3. The projects that produce a result should compete with the existing iteration that is already implemented in the company. Whether it’s a product, workflow or department there should be some sort of actual comparison between these two, before adapting the project into the company.
   Maybe the original way of doing things just needs a little nudge in the right direction, which can possibly be triggered by competition.

There are some obvious problems with this. Even successful projects will lead to short term inefficient use of resources, as the project in question and the already established alternative will compete, which will require extra resources. There’s also the danger of internal disunity, as strong competition within the firm might create an unwanted, unpleasant cultural atmosphere. It is vital for the company to clearly communicate that this procedure is not done in the search of the best employees, but rather in the best way of doing things. The friendly competition serves a common goal.

The main point of this essay is that instead of trying to imitate how startups are structured internally, large companies should try to create situations, where the external environment is similar to what startups experience, as this might be the thing that creates the foundation for entrepreneurial spirits and the necessity to reinvent the business.