When Kira Talent released its first platform, it was little more than a prototype, hampered by a rudimentary interface and numerous bugs. It was, however, enough for the needs of its first customer.
Co-founder and CEO Emilie Cushman wanted to help companies screen job candidates using video. Instead of the conventional practice of optimizing the software and then risking it all on the market, Ms. Cushman chose to work closely with a core group of customers and make incremental improvements based on their feedback.
Today, she still doesn't pretend to have all the answers. The close interaction continues, and the ensuing feedback is used to continually optimize Kira Talent's platform, which has undergone many iterations since its inception.
Ms. Cushman is part of a growing group of entrepreneurs who value experimentation and trial and error over the traditional approach of honing products for months before introducing them to customers. These companies understand that innovation is a messy, unpredictable process.
This thinking is starting to spread to established companies such as Canadian Tire, Sobeys and Telus, who are tapping the startup community for new ways to increase market share, drive innovation and improve profitability.
"There's a lot of buzz around the startup community in general," says Chris Eben, partner at Web and mobile development firm The Working Group, whose company works with both startups and established businesses. "Larger companies are finding they can learn a lot from them."
"The structures that are put in place for good governance [in larger companies] sometimes become a hindrance for innovation," says Chris Thatcher, a CPA and partner at Deloitte. "Large organizations need to get much quicker at making decisions ... particularly in a world that is so dynamic at the moment."
The experience of startups is useful in several ways. Because they operate in uncertain environments with limited resources, extreme flexibility is needed for survival. This means capitalizing as quickly as possible, for example, on emerging market opportunities, or reversing major decisions based on customer feedback.
Ms. Cushman says their target market has changed numerous times, and they have had to adapt continually. "We would start off with a target group and try it out," she says, "and if that didn't work, we'd try another group over there."
Change can happen in the course of an afternoon. "We can talk about a plan, and it might be in the market by the end of the day," says David Singh, vice-president of strategy and operations at Kira Talent. "It's that quick."
This is a far cry from larger organizations that can spend weeks pinpointing a market need, assigning responsibilities and hashing out departmental differences.
Long-term business plans that rely on predictive models and generic research are another problem area. For one, they are exposed to variables like market demand, changing technology and personnel changes. They also often rely on questionable data and speculative assumptions; for example, customers may indicate in interviews and surveys that they are receptive to a product, but are then unwilling to pay for it when it comes to market.
Successful startups mitigate these risks by valuing experimentation over carefully planned execution.
"It's okay to do pilots with small subsets of groups to determine whether this is something that could be interesting, or that customers would be willing to pay for," says Matthew Saunders, Entrepreneur in Residence at the Digital Media Zone and president of Ryerson Futures Inc. at Ryerson University. "It's a matter of making small bets with a subset of your business to determine whether something is innovative, or that your customers are willing to pay for."
A trial-and-error approach requires a different kind of corporate culture – one where people are given free rein to experiment with new ideas, and aren't punished if they come up empty handed.
"You have to let [creative people] do what they do," says Walid Hejazi, associate professor at the University of Toronto's Rotman School of Management. "You can't just say, 'Be innovative.'"
Interestingly, this approach appeals to younger workers, who tend to value autonomy and flexibility over job security, have a high tolerance for uncertainty, and are keen on having their voices heard. According to a Bank of Montreal study based on an online survey released in September, 46 per cent of Canadian students see themselves starting their own business after graduation.
Startups need to be flexible, efficient and resourceful if they want to survive. The following practices can help companies create a startup-like work environment, according to consultants, business leaders and academics:
Reduce risks by quickly testing ideas against the market, and making incremental improvements based on customer feedback. Feeling comfortable with uncertainty, and understanding that failure brings valuable lessons, are key.
Speed and flexibility
Jump quickly on market opportunities, cut out red tape and dispense with formalities.
Strive for ways to do more with less, and push to get the most out of existing resources.
Entrust workers with deeper, more cross-functional responsibilities that push them to perform at their very best. Managers should hold their workers to high standards while encouraging open-mindedness and trusting them to get the job done.
Articulate visions, mission statements and value propositions clearly and succintly, and share them with all employees.