Startups in India have been making as many headlines lately as larger established businesses, considering the country is now the third most prolific country in the world of startups.
It is a good indication of how important startups have become in a country largely dominated by home grown corporate entities, government supported public sector enterprises and giant multinationals till now. With a growing young population, such entrepreneurship endeavours seem to be the answer to our growing needs for job creation and economic growth. But, what are chances these newbies have vis. a vis. the well networked, established companies with deep pockets who have been driving the economy till now?
Google’s co-founder, Larry Page said in an interview, “One of the primary goals I have is to get Google to be a big company that has the nimbleness, soul, passion and speed of a start-up.”
This is an apt summarisation of why startups are so relevant today inspite of the odds they face.
More agile
In an era of rapid technological strides and cutting edge innovation, startups have a greater edge over corporate and large businesses. They are much more agile and fast in developing new technologies, services and products unlike larger corporates with huge hierarchies and bureaucratic processes. Mostly entrepreneurs have a closer relationship with their customers, and so, are more clued in to their needs. Moreover, they are not trapped by the brand or image of their product unlike the ones created by high profile campaigns of the larger businesses.
Understand the pulse of customers
Larger corporations are dependent on independent market surveys to understand customer preferences and rely on test launches before bringing in a new technology or product. But, a startup founder has firsthand experience of how the pulse of their customer beats, and hence, is immediately able to implement and changes, if required.
More responsive to market conditions
Did you know that a start up can complete seven developmental cycles in the time it takes larger companies to complete one! This ability and appetite to adapt and create fast is what gives a start up significant edge over larger competitors.
In fact, startups are far more swift when it comes to market responsiveness, since they have smaller teams and more flexible operations. Moreover, they are, in general, more open to adapting to change as compared to larger companies where implementing any change itself can be a time-consuming process and one that needs a lot of time and effort to get people to even change their mindset.
It is this swiftness of operations and ease and speed of adopting and adapting to change that is the need of the hour in today’s dynamic market scenario where change has become the only constant. So, startups have a definite edge over larger companies on this front.
Lower overheads = Cheaper products/services
The lean, mean structure of a start up also allows it to offer its products cheaper than its bigger counterparts. They have much lower overheads in terms of paychecks, production and administrative costs, which translate into comparatively cheaper product or services. This is a big advantage for startups, since it allows them to make inroads into the markets of their bigger competitors with lower prices. They are also able to make inroads into new markets which were either ignored by larger conglomerates or were price sensitive.
Innovation is part of their DNA
Greater innovations come out of the startup stable as they attract brilliant talent that is looking for more meaningful pursuits than just a huge paycheck and are keen to take ownership of their skills.
It is in a startup that they have more freedom to create, experiment and fail without any guilt, thus encouraging more innovation. They are more driven to seek, develop and disrupt existing norms as they understand it is the key to the long term survival of the startup and themselves.
Moreover, the members of a startup are aware of the limited financial resources and know how to make the most of them to keep the ball rolling. Team members are also more flexible to go beyond their current role in order and do what is in the best interest of the startup. In established businesses, on the other hand, there are clearly demarcated responsibilities and people are most focused on achieving their individual goals.
Conclusion
The coexistence of startups and large establishments has thrown up some interesting symbiotic relationships. Larger companies are now trying to leverage the advantage that startups have to offer by outsourcing non-core processes to them, since they have deep expertise in those areas and can deliver within faster turnaround times.
In fact not only do startups seek large companies as their customers, larger companies too are looking at startups to increase their customer base. For instance, Amazon’s cloud unit is trying to win over startups to use its scaleable infrastructure services and has snagged RedBus and BookMyShow as its customers. For such companies, it has become important to engage and acquire startups to accelerate their growth at a faster pace than if they were to do it solo. Cisco, Google, Facebook and Intel are regularly acquiring startups directly or indirectly to keep up with the latest technology and expertise.
So while many aspiring entrepreneurs hesitate to take the plunge fearing competition from the ‘biggies’ in the industry, it is, infact, the other way around, since the startups are far more geared to keep up with the ever changing market environment and deliver. It is for this very reason that the ‘biggies’ too are looking at startups to find greater synergies and boost their own operations, thus opening up more horizons for them.