A recent Wall Street Journal article talked about a large technology company hiring MBA graduates from elite business schools by the truckload, in an apparent attempt to make the company more startup-like. The logic given was that such fresh MBA graduates will have a greater appetite for risk, and take decisions that will make the larger company scrappy like a startup. I am not entirely sure this is a great idea, knowing what I do of MBA students from top B-schools — they tend to make safe choices always, but this need to be scrappier and more agile is a universal desire among large companies, both abroad and here in India too.
The usual approach that companies take to achieve this is to create one small secluded department within the larger company, slap fancy words like incubation, innovation, or worse, made-up words such as intrapreneurial as part of the name, fill it with people who seem to be coming up with relatively more new ideas when compared to the average employee, and try to have it function independently as a startup within the larger bureaucratic set up of the company. Almost every large technology company has tried this strategy. Microsoft, Yahoo. Even Indian IT service behemoths such as TCS. Even companies that aren’t really technology, but are behemoths nonetheless have this too. Airbus, for example.
Does this approach actually work? Do these tiny islands of startups result in the sort of disruption that the larger company is looking for? In my experience, it works more for the employees who want a taste of startup life while still having the safety net of a large company. But not so much for the company itself. Yes, they put some of the smartest people in there. And yes, these smart people also come up with a lot of really smart ideas. But these ideas struggle to escape the confines of the island they were incubated in. Large companies bring with them too many people in a position to veto something; too many people who have learnt over years and years of corporate life that the path of least resistance is the one where they do not try anything new. Even when there is a mandate to try something new.
Having spent time at both a large company and at a startup, my take is simply this. Large companies should not try to become like a startup, for the simple reason that they cannot. They have a very important role to play in the startup ecosystem though, something that is central to their own businesses. By mentoring startups that are relevant and opposite to what they do, they can become an important support system to a lot of early stage startups. As investors, as customers, as service providers even, and ultimately as a viable exit for the startup. And this is probably the most efficient way for large companies to ensure that new competition does not catch them totally off-guard.
In this weekly column, we discuss the startup workplace. Thejaswi Udupa heads product and technology for an online building materials marketplace
