The Simulated Startup: Meet the Innovative Startups Inside Mammoth Companies


MasterCard Employee

MasterCard employee demonstrates ShopThis! with MasterPass which will allow consumers to buy products directly from Intel’s Virtual Shopping Experience – a fully interactive 3-D virtual fitting room app at MasterCard’s Innovation Showcase event.

“Agile methodology,” “failing fast,” “pivoting”—all concepts commonly used in startups—are increasingly being put to work inside the walls of large, well-established companies. This is because executives at Fortune 500 companies have realized that the natural limitations that face startups—limitations on time and financial resources—can actually be boons, resulting in fresh ideas and fast execution.

So a handful of large public companies, including General Electric (GE) and MasterCard, have created startups within their own mammoth companies. In 2013, GE created FastWorks, an internal startup entity. Its mission was to develop products using the “lean startup” approach, codified by Eric Ries in his book, The Lean Startup. (This means constantly experimenting and regularly getting feedback from customers to avoid building products that customers don’t want.)

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At the time FastWorks was born, CEO of GE Appliances, Chip Blankenship, issued a challenge to the fledgling team for the design of a new refrigerator: “You’re going to change every part the customer sees. You won’t have a lot of money. There will be a very small team. There will be a working product in 3 months. And you will have a production product in 11 or 12 months.”

Blankenship was simulating the conditions of a startup inside one of the world’s biggest companies. And the results were astounding. A year after creating FastWorks, GE Appliances’ program costs were halved, the team moved twice as fast, and they were selling at over twice the normal sales rate.

Chief Learning Officer at GE, Raghu Krishnamoorthy, wrote in a Harvard Business Review  piece this year that FastWorks, which is still going strong, has influenced the entire company such that processes evolve faster and performance evaluations are more continuous as opposed to annual.

MasterCard is another example of a giant company that has embraced the startup mentality in order to create new products, faster. With MasterCard Labs, the company’s internal startup founded in 2012, dozens of new products are iterated at once. A few of the notable products that have emerged from MasterCard Labs are: ShopThis! and Qkr. ShopThis! is a platform that allows people to buy products directly from a digital magazine without having them leave the page, and Qkr is an order-ahead payment app for restaurants, which launched in March. Qkr was born out of a 48-hour contest hosted by MasterCard Labs called Innovation Express.

Startup agility was also at work when Maytag Commercial Laundry approached MasterCard Labs last year. Maytag asked MasterCard Labs if they could help improve the customer experience at their laundromats. According to the Head of Innovation Management at MasterCard Labs, John Sheldon, four and half days after Maytag’s request, a team within MasterCard Labs developed a way for people to pay for the use of washing machines and dryers with their phones. The technology also alerted the user to when their laundry was done. Ordinarily, it would likely have taken at least a week just to register the request from Maytag; instead, the solution was devised in under a week.

Might you want to work for a startup inside a big company? These jobs have a lot of the same freedom as a startup, but provide the stability of working at a major company. They are competitive jobs to get, but they are growing as large companies recognize the value of having a startup under its roof.

Even if you’re employed at a large company that doesn’t have a formal startup inside of it, experts who consult companies on maintaining growth advise employees to demonstrate an entrepreneurial spirit. Executives at large companies are being told by consultants to foster work environments that encourage risk taking and allow for failure.

It is well known that large companies that stopped innovating, like Borders, Blockbuster and Pan Am, stagnated and failed. So big companies are increasingly incorporating entrepreneurial/startup methods (sometimes known as intrapreneurship) to keep up with competition. This could translate into more opportunities for job seekers who want the excitement of a startup as well as the stability of a corporate job.

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