A great idea or savvy investor pitch might be enough to get a startup off the ground, but scaling and continuous innovation are much more challenging. Successful startups like WeWork, Rent the Runway, and General Assembly have all figured out how to grow and scale without losing the innovative edge that defines them.
At a recent event hosted by Catalant, leaders from each of those organizations shared how their organizations approach innovation at scale. Their insights should help leaders at other organizations — including enterprises in any industry — understand the fundamental behaviors that allow agile organizations to create and maintain growth.
While WeWork, Rent the Runway, and General Assembly have unique markets and products, they each focus on three key behaviors:
- Customer obsession
- Rapid experimentation
- Identifying internal growth agents
While established businesses get preoccupied with competitors and market conditions, fast-growing startups maintain a laser-like focus on customer needs.
General Assembly started life as a co-working space, evolved into a coding academy, and now works with over 10,000 hiring partners to help them upskill and reskill their workforces. GA has managed that growth by cultivating a deep understanding of their customer’s needs — far beyond what some might expect from an organization like GA.
“One thing is you’ve got to stay ahead of the market by maniacally listening to your customers, and sometimes actually telling them what they need to be doing. Some of them tend to look only at their business or technology stacks, but we’re looking at the total landscape,” says Charlie Schilling, General Manager, Enterprise Business at GA.
This customer obsession meant GA could be a strategic partner with organizations beyond the Human Resources function. Many of GA’s most passionate customers are CFOs with a broad mandate to effect transformation in their organizations.
“The argument to a CFO is very easy: ‘How much do you understand about how much your organization is spending to acquire talent?’ It’s usually exponentially larger than any training or development budget,” he says.
You’ve got to stay ahead of the market by maniacally listening to your customers, and sometimes actually telling them what they need to be doing.”
At Rent the Runway, a subscription fashion service that grew to a $1 billion valuation in 2019, customer obsession is baked into nearly every process, starting with onboarding. Every Rent the Runway employee spends their first week in customer service and operations, listening to customers talk about their pain points.
The company also requires customers to answer several questions at the end of each rental before they can rent again. It’s a small inconvenience for customers, admits Chief Analytics Officer Vijay Subramanian, but one that ultimately leads to better product and strategic decisions.
“Somebody could say it’s a crazy idea — why would we make them go through this? But they get some value from giving us feedback, and we can collect that feedback and make sense of it and improve our product. So it’s baked into our DNA,” says Subramanian.
Direct feedback is one way startups maintain customer obsession, but don’t forget about the insights front-line employees can provide, says Sam Lee, SVP and Head of Growth at WeWork.
“Putting in the time as a leader is important because it sets an example. Your front-line employees can help you triangulate around both how you’re serving customers today and where the next opportunities lie,” he says.
Fear of failure is a common cultural challenge at established organizations. People worry that failed projects will negatively impact their careers and growth, so they minimize risk and de-emphasize innovation. Successful startups, meanwhile, spend a lot of time cultivating a culture of experimentation even as they continue to thrive.
GA is constantly testing new ways of identifying and matching skills employers need (for example, teaching actuaries the skills they need to be sought-after data scientists). Rent the Runway built its growth engine on rapid experimentation and rigorous testing and reporting, maturing as it progressed and grew.
I’ve worked in mature companies and I’ve worked in turnarounds. And testing and learning is something you can use in any of those contexts. It starts with developing a hypothesis based on data.”
“As an early startup, your strength is just speed. And I use the word speed very carefully, because we didn’t know what direction we’re going. We were just running, doing a lot of crazy things and hoping that things work out. But then at some point we had to double down and figure out my logistics, because that’s where my economics works. So then speed becomes more about velocity, where we knew what direction we were going, but still wanted to move fast,” says Subramanian.
Frameworks like the Lean Startup methodology exist in part to formalize the process of testing hypotheses as a small organization grows. However, larger and more established organizations can borrow from these ideas to foster the right kind of culture, according to Lee.
“I was doing that at work before I’d even read the book, because I was also doing it at AOL and Goldman Sachs. I’ve worked in mature companies and I’ve worked in turnarounds. And testing and learning is something you can use in any of those contexts. It starts with developing a hypothesis based on data,” he says. “We’re doing some things in the physical world and other things in digital, but it’s about creating a controlled experiment to the extent you can control it. And then when you see things working, trying to instantiate it into systems, right? And that’s where startups don’t always do a great job but big companies are generally better.”
Identifying Internal Growth Agents
There’s no standard model for sustained innovation at large organizations, but successful startups do a great job of nurturing internal growth agents who can drive cross-functional alignment. At some organizations, this is a formal team. At others, it’s simply an identified group of people who are tapped to work on special projects.
Sam Lee spent months interviewing some of the most successful growth officers in Silicon Valley and beyond, and says the one common trait they shared was a centralized team responsible for growth. At WeWork, Lee built nine different growth-focused teams, each focused on a different area (customer experience, analytics, strategy, operations, etc.) to incubate, launch, and scale the company’s big bet initiatives. Lee says growth-focused internal teams are the mechanism through which companies like WeWork can maintain agility through massive growth.
It’s very hard to control outcomes. All you can control is who you’re hiring and how you are operating.”
“Change is our superpower. At exponential growth companies, things are always changing — whether it’s your market, your product, your geographies — and they’ll change faster than at most companies,” he says.
Rent the Runway takes a similar approach, building out autonomous “pods” of “magical” people who can be trusted to lead new initiatives. Each pod includes a cross-functional mix from engineering to marketing, and are given wide latitude to pursue their mandate. The skill, he says is in identifying the right people.
“We look for people we can get around a goal and run experiments and be nimble and agile. And really, it comes down to finding these people. They can be functional leaders, but we relied on early employees who knew the company really well and were able to flex cross-functionally and run these teams,” he says.
In many ways, successful, fast-growing startups retain their agility because they understand that fundamentally that work, outcomes, and people are inseparable — that the behaviors that make them successful include understanding the skills they have and need, and how to put people in the best position to succeed.
“Ultimately,” says Subramanian, “it’s very hard to control outcomes. All you can control is who you’re hiring and how you are operating.”
Join Us for a Future Event
Want to network with others focused on innovation and agility? Join us for an upcoming event.