Key Differences Between Startups and Corporations – Intuition and Feeling Versus Strategy and Planning

A startup is a temporary organization in search of a business model that is repeatable and scalable, while a large company or corporation is a permanent organization designed to execute a business model that is repeatable and scalable. The key differences between startups and corporations are outlined below. 

Business Focus  

STARTUP: CUSTOMER

They are usually in search of customers to solve a significant problem. It is good if that impact increases and turns into a good business. They create quick prototypes or MVPs to showcase to customers, deciding on changes.

LARGE COMPANY (CORPORATION): PRODUCTIVITY

To beat the competition, they must focus on productivity. Efficiency is crucial for the company: achieving the best impact with the least resources. They work with budgets to understand how the company spends. They can calculate return on investment to decide on changes.

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Product Development

STARTUP: DIALOGUE

They develop a minimal version of their product – focusing on the core – and showcase it to customers (a few of them, those who are first available) as soon as possible – sometimes even before. Based on customer feedback, they take the next steps. 

LARGE COMPANY (CORPORATION): STUDIES

Investing at the beginning of the product development project creates better products. They usually invest resources in market studies to understand demographics and large market niches. They develop requirements to coordinate large teams.

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Decision-Making Foundation 

STARTUP: TESTING

Everything is uncertain around them; the only way to find out and decide is to test. Data is consulted, but intuition and gut feeling play a significant role in decision-making. Decisions remain small and are confirmed with customers.   

LARGE COMPANY (CORPORATION): ANALYSIS

In large companies, much is at stake. There are internal experts, and they consult with them for decision-making. Many people are involved in decisions. Effects are measured and monitored, and the decision-making process is as rational as possible.

Decision-Making Dynamics

STARTUP: FAST

The most valuable resource for startups is time. They have a limited runway – the time until they run out of resources – and must be quick to find a good business model. The shorter the iteration, the better: they focus on speed rather than fine-tuning.     

LARGE COMPANY (CORPORATION): CAREFUL

Predictability and control are seen as positives. Coordination is difficult due to the size of the company. Changes could affect many people who may have their work schedules. It is important to limit uncertainty in decisions and changes, which is why they take a long time.

Business Approach   

STARTUP: DOING

Startups have small teams that are not very hierarchical. People are usually specialized craftsmen with some specialization. Everyone learns something about everything because there are no internal experts. The way of operating is mostly defined ad-hoc.       

LARGE COMPANY (CORPORATION): PROCESSES

People and departments have clear roles and responsibilities. Most activities have clear processes that are optimized. This creates clarity and consistency in quality but can also create bureaucracy. Daily tasks function well and are predictable.

Communication 

STARTUP: TRANSPARENT

Communication is generally clear, short, and simple – both internally and externally. New ideas are shared with the outside as much and as quickly as possible to get feedback. Communication with customers is focused and bold to validate assumptions.

LARGE COMPANY (CORPORATION): CAUTIOUS

Communication is very carefully planned. There is often a specialized department overseeing from the outside. Product information is usually kept confidential to keep competitors at bay. Internal communication is written generally, so it applies to all stakeholders, and sometimes has an internal political agenda.

Error Management

STARTUP: FAIL FAST

The term “Fail-fast” has become almost a mantra among entrepreneurs. They usually pivot their business model several times, so it is good to test assumptions and execute them to fail as quickly as possible. They take risks and learn from experience. This increases the likelihood of success in radical innovation.

LARGE COMPANY (CORPORATION): AVOIDING MISTAKES

For them, the stakes are so high that they cannot afford to make mistakes. Plans are made to reduce the chances of any mistake reaching superiors or the market. Employees have areas of expertise for which they are expected to have accurate answers. Risks are identified and managed. This makes them good at innovations, but generally not in radical innovations.

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