This article is written by Brian Malika, a Contributor Author at Startup Istanbul.
Tim Draper is the founding partner of Draper Associates and DFJ. He has made a number of investments including Skype, Hotmail, Tesla, Baidu, Indiegogo and AngelList among many others. He is also the founder of Draper University, in which real experts from different fields in order to teach the students rather than teachers. He is the creator of viral marketing, a marketing method for spreading a software application from customer to customer. Tim was a guest speaker during Startup Istanbul 2017, he delivered a speech where he talked about choosing the right startup to invest in.
Why big companies need to transform into a start-ups
By now, you probably understand that the world is changing at a very fast pace to the point that a new technological innovation today could be deemed outdated just in a span of 48 hours!
All over the globe, we have business innovators working around the clock to stay ahead of the pack by promising better quality services or goods at the most competent price and of course with minim cost of production.
Also, the aspect of concentrating on making money alone in business is being challenged in the current competitive market. As such, it is demanded that businesses should have a value based system where human-centered approaches are incorporated in the process of doing business.
But you have to note that companies that have existed for long and which have been used to enjoying the monopoly of the traditional business models risk shutting down because the environment for doing business has infancy changed and customers are becoming more and more complicated every day.
So, older companies that are supposedly bigger by now are realist every day the need to cope up with the ever-changing business environment demand. Talk of making payments through bitcoin digital currencies or storing files via blockchain technology. These are a trend that traditional companies that have been in the field for long are striving to cope up with.
Emerging business trends are even challenging bigger companies that have been in the field for long to change their missions, vision, goals, and values towards embracing social change and human empathy.
Remember that customer taste too is changing and you must revise your guiding principles.
The results from all the emerging business demands is that big company have to go back to scratch and work on more current strategies so as to remain relevant. And this is where the aspect of a big company becoming a start-up emerges. Just as I will explain in the paragraph below.
5 Steps on How Big Companies Become start-ups
First, before I show you the steps, it’s important for a big company to realize where they have come from, where they are and point out in Clear terms where they will be in the future of the ever-changing business field. Again, this talks must be initiated by all the stakeholders in the company who include the investors and the founders.
Additionally, as you brace to make impotent changes to the company that will make you regain your reputation in the changing world, it would be very wise to do research on your target customer spectrum and hear their opinion if you were to make changes in your products or services.
Never forget the customer who is your number one reason for existence in the first place. Just remember that customers they pay you.
Now lets move to the key steps in transforming your Big Company into a start-up :
(1.) Point out which areas your company is lagging behind and imagine if by doing away with such traditional business models whether or not you will be effective as we head to the future.
With the fast business trends penetrating the market, am sure you will discover that your traditional business models will not work in the future.
(2.) Come up with all the lists of new business trends in the market that you propose your company should embrace. This process should be backed with concrete research findings with the help of experts. You don’t wish to get it wrong here.
(3.) Agree as stakeholders to commit to embracing change in your company towards being relevant in the changing business marker. This idea of change should not be owned by a few heads. Everyone should take part in it.
(4.) Decide whether you will contract experts or train some of the stakeholders to practically steer the change that will make your new company be effective in the dynamic business market.
(5.) Come up with a new company that will execute the change that you want to see inform pf a partnership. Even though you really need your company to change and meet the emerging business world demands, it’s equally important to ensure that you don’t change your brand that you have spent years with lots of efforts to build by introducing new changes in whatever form.
So, be wise. Form a new company with a. The new name that will bring change to your old company. Then explain to your customers that you remain loyal to bettering the service experience and that nothing has changed in terms of quality of goods or services. Just that you’re having a partnership to increase the market base.
Note that this new company that your old company will form to execute your mandate to meet the business marker demands is what we call a start-up.
The most important thing for you as an investor of a big company is to always evolve with changing times. Seek to learn how the market is doing on a frequent basis. Let not the comfort of today’s business success that your experiencing inhibit your future success.
As your business succeeds today, be a smart investor and strive to develop ways to even succeed more in the future.