How big business can innovate like a startup

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How big business can innovate like a startup

[Blog post] Inside the Spotify model.

A true startup is like an artist, in that it is driven by an undeniable passion for its craft and an endless curiosity. The art is the goal, and the money and other trappings of success are a mere consequence.

It is not surprising therefore that big business struggles with innovation.

Enterprises are designed to be factories of repeatable and scalable business processes, whereas startups aim to change the world.

Unfortunately, this repeatable and scalable business model is not an agile and flexible one - it's the opposite.

One advantage of startups is they have the concept of a minimum viable product down pat - a working prototype that is stripped back and likely to be missing functionality. It's there to demonstrate the concept, and doesn’t have to be perfect.

Those working in enterprises know that big business tends to be sucked into the trap of making services ‘production ready’. Stakeholders want to see the full system, and there can be severe pressure against conducting a simple proof of concept.

In startups, the driver to achieve a MVP is simply a greater hunger to make that first sale, because until they do, they are burning cash. Enterprises just don’t have that same motivation and as a result find it really hard to build a minimum viable product.

It's not all bad news, however. Some organisations such as Spotify are leading the way as enterprises that get it. They have adopted approaches to use the stripped-back startup model and make it work for the big end of town.

The answer?

Spotify is a music streaming organisation that provides a freemium model with a paid option. It has 60 million users of which 15 million are paid members.

Spotify has used agile approaches to deliver innovation for a global company with multiple offices around the world.

It has tried to emulate how a startup works by forming teams into ‘squads’, which have a clear objective and are a part of larger incubators called 'tribes'.

To allow cross functional learning, Spotify also has guilds where experts can share and learn across different tribes. To allow for the reality of the enterprise, there is another construct called the 'chapter' - which in effect is line management.

Using this home-grown methodology, Spotify is able to create a high performance team within a successful and growing enterprise.

David Gee will explore the Spotify case study further during his CIO Strategy Summit keynote address on February 13th at the Grand Hyatt in Melbourne.

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David Gee
David Gee is an accomplished consulting and technology executive who has held CIO roles in Australia, China, Japan and the US. He explores the role of the CIO and the transformation journey. Other favourite topics include digital innovation, analytics and big data and the financial tech ecosystem.
Read more from this blog: G Note

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