To raise capital, startups need to trigger investors’ fear of missing out (FOMO). And one thing that drives such FOMO is a company’s ability to win customers and grow revenues at double- or triple-digit rates.
Startup CEOs might be surprised to learn that big companies want investors to feel the same thing. But many slow growing large companies get investors’ cold shoulders.
My recent interviews with professors at Harvard, MIT and Wharton suggest that those big company CEOs lose sleep over something your business might be doing: using new technology to offer their customers a much more valuable experience at a lower price.
Here are four pieces of advice they gave to boost your company’s growth and my thought on how to apply them.
1. Form diverse teams.
Better solutions come from diverse teams. This is especially true if there is a big experience gap between the executives leading a team and the perspective and experience of their customers.
Harvard Business School professor Linda
To form diverse teams, it’s helpful to include people who have different perspectives and life experiences from those of the company leaders. Include people with the customer’s mindset and the experience of those who will help to manufacture, distribute, sell and service the new product.
As these teams gain insight into customers’ future needs, it’s critically important to listen carefully to the questions, perspectives and solutions that each team member offers and to integrate their views into a product that customers find compelling and the company can design, build, deliver, and service effectively.
2. Encourage timely communication between executives and innovation teams.
One of the things that slows down innovation in large companies is all the layers of management that some large companies impose on new product development teams.
When such a team is competing with a startup, it is at a significant disadvantage because it must wait — sometimes months — to get the go-ahead from senior executives before moving on to the next product development stage.
As Nelson Repenning, Faculty Director of the MIT Leadership Center, told me in a March 2 interview, “To do rapid cycles, you have to pay attention to how much work you take on. People who are working on projects have to wait three months to get to the boss to give them go/no-go decisions.”
He continued, “Companies should build in more frequent touch points early in the project to get those decisions faster. Companies should also hold daily 15 minute meetings to coordinate what will be done each day.”
3. Innovate to solve the customer’s problem, not to sell more of your current products.
The success of large organizations can slow them down. That’s because they set up formal organizations to sustain the success of their initial products — providing significant financial rewards to executives and sales people who can persuade customers to buy more of their products.
When a company’s old products no longer give customers a compelling set of benefits for the money, its revenues will slow down. The only way to fix the growth problem is to fight the organization’s natural inclination to push harder to sell those old products.
To overcome this inclination, company executives must require their innovation teams to solve the customer’s problem and stop pushing its outmoded products.
Hill studied companies that were making digital transformation in their supply chains — finding that success here depends on giving people the new mindset and behavior needed to take advantage of technology.
4. Use technology to create great customer experiences.
In a March 15 podcast, I discussed how many retail leaders who’ve been trained in merchandising struggle to conceive of how to use technology to give customers great experiences — not just great merchandise.
Many large company executives struggle to do this As Wharton Management Professor Nicolaj Siggelkow told me in a March 2 interview, “New technology enables ways to make the customer’s life better and to reduce the cost of doing it. A bank may see itself as competing with other banks. But technology enabled Kickstarter to offer businesses a new [non-loan] source of funding.”
Large companies should open their minds about the sources of innovation. “They could look to other industries for ways to give customers a better experience — for example, you order your sandwich at Wawa and as you get close to the store, your sandwich is ready.” Siggelkow said.
If you need to offer customers a better experience than competitors do, you must use new technologies and manage a diverse team to execute such a strategy.
Follow these four pieces of advice and your company will enjoy faster growth — giving you easier access to capital.