Startups are the corporations of the future, so I have long believed that entrepreneurs who study existing corporate models, rather than ignoring them with disdain, will likely profit from the exercise. In today’s fast-paced world, that means recognizing early and capitalizing on the changes that are bringing many big companies to their knees, before that company is yours.
We see evidence in the news every day of these irresistible forces of change, like the pervasive global penetration of the Internet, the impact of terrorist activities even to peaceful countries, the power of social media in building business relationships, and the depletion and pollution of natural resources. These are all huge challenges, as well as huge opportunities, for entrepreneurs.
A classic book by global business consultant Diana Rivenburgh, “The New Corporate Facts of Life,” highlights these challenges and opportunities to the corporate world, but I believe they need to be understood as well by every startup. Here is my interpretation of Rivenburgh’s forces for the entrepreneurs out there:
Disruptive innovation. This occurs when a new product, service, or business model renders the old way of doing business obsolete. It used to happen only a few times per century, but now I see disruptive innovation highlighted in almost every business plan I read. That means if your new startup doesn’t plan for continuous innovation, the company may never reach corporate status.
Economic instability. Financial uncertainty today threatens all countries, industries, and people. Our hyper-connected world links economies around the globe, so manufacturing moves to emerging nations, and tiny country woes ripple quickly to impact the most innovative companies, like Apple and Nike. But instability is also an opportunity to prosper.
Societal upheaval. Poverty, pollution, unemployment, limited education, and inadequate health care are sparking some of the biggest opportunities for social entrepreneurs today. The best startups also see these as opportunities for brand recognition and viral marketing, to simultaneously benefit people and boost the bottom line.
Stakeholder power. Customers and employees are the new stakeholders for every business. Public companies have been too focused on Board members and shareholders as the only stakeholders with power, leading to unintended consequences. Explore new models like Conscious Capitalism™ and Benefit Corporation to win with all stakeholders.
Environmental degradation. The old model that humans can plunder the earth at will and suffer no consequences is obsolete. Negative perceptions of a company’s impact on the environment decrease brand value; positive perceptions increase it. Going green doesn’t always hurt the bottom line, and investors now look for startups with sustainability.
Globalization. Markets are now hyper-connected, where communications technology and rapid transportation link all citizens of the world together. We now talk about “reverse innovation,” where customers in developing countries adopt new technologies first, and global reach allows scaling of young companies to happen almost overnight. Be there.
Demographic shifts. With more people on the planet, and faster shifts from one demographic to another, more products and services are consumed, from basics to high technology. Luxury goods flood into emerging nations, and urbanization brings needs for sustainable development. Startups can win carrying less baggage onto this playing field.
The new facts of business life will not go away any time soon. These facts will increasingly determine whether you will succeed or fail as an entrepreneur. So every time you make a business decision, whether large or small, local or global, strategic or cultural, you must consider the implications with respect to the new business facts of life.
For every startup, a key step is to design a resilient organization from the start. Organizational resilience means building in the flexibility to manage anticipated as well as unanticipated challenges, putting in place a future-oriented structure to distribute accountability, linking functions with networks to get thing done, and a heavy focus on the best people practices.
