It never ceases to amaze me how frequently startups manage to beat large companies. I was in a big bank the other day, and couldn’t help but be impressed by the resources they had at their command. They have a massive customer base, huge profits, thousands of people and a well known brand. They could, if they wanted to, build a hundred versions of what, for example, our company BankSimple is building, test each of them on a separate population of existing customers and then spend $100MM to launch the best version internationally across all of their channels (branch, TV, direct mail, online, mobile, etc). If it failed, it would be a non-event; if they saw any sign of uptake, they could pour the gas on to that channel and that segment and build the momentum from there.
I don’t say this to pick on BankSimple. (In fact, quite the opposite, because those guys are going to light the world on fire this fall with their product, and I expect barely a whimper from the incumbents.) Most venture-backed companies these days create advantage more through execution than through intellectual property. They create equity value as much or more through inspired design than revolutionary technology. BankSimple falls into that category, and they are hardly alone. The phenomena does beg the question, though, of how and why big companies let this happen.
I have a theory, and it revolves around intentionality. Big companies have habits; they basically have to. Massive scale requires some degree of standardization, which engenders rules and regulations, which ultimately groove into immutable habits … habits of action and habits of the mind. Big companies do things without thinking of them; that’s just the way they do things.
Young companies do everything intentionally, not least because in many cases they are doing things for the first time. They may not (and I believe should not) step carefully, but they step mindfully. The logo is as it is, the brand is what it is, the office layout is what it is, all of the elements of the business are what they are because a small group of people deliberately intended them to be so … not because of inertia, or policy or precedent. Again, they may be wrong, or require changing, or grow outdated, but they are almost never casual and almost always done with great care.
If you run your business with intentionality, and add to that a fetish for measurement and a willingness to break glass and change things quickly that aren’t working, you have a massive advantage over your incumbent competition.