Should CIOs be Replicating Start-Ups?

CIOs are increasingly under pressure to switch to a more modern, “start-up” culture, should they give in? The new approach has many demonstrable benefits, but some remain skeptical.

Operationally, startup culture values creative problem solving, open communication and a flat hierarchy. This approach directly contradicts key aspects of traditional business. Creative problem-solving means that long-held beliefs and ways of doing are cast off and this can be unsettling for more conservative figures. Open communication means a severe reduction in privacy and increased scrutiny. A flat hierarchy undermines the tiered decision structure that dominates conventional industry.

However, there is merit in each reform. Creative problem solving provides new, more efficient ways of doing things, open communication ensures transparency and reduces knowledge inefficiencies and a flat hierarchy allows bright ideas to emerge and fosters a more meritocratic system. If big business wants to compete with the young disruptive upstarts, it should be open to learning from them.

Another element of start-up culture that poses a challenge to CIOs is the lack of formality. Business institutions such as the “dear sir” and the suit are a rare sight in Old Street or Mountain View, and for established companies this can be discomforting. Formality is widely associated with professionalism and its dismissal therefore represents, to some, a dismissal of professionalism. However, even in conservative industries change is occurring. Investment Banks like JP Morgan and Goldman Sachs have relaxed their dress code specifically to attract more top tech talent. CIOs may have no choice but to follow if they want to poach the best workers.

One way that established companies are trying to integrate start-up culture into their businesses is through in-house incubators. Large companies offer fledgling businesses space and resources in return for the chance to learn from them and, if they go well, acquire and integrate their product. Atkins CIO Richard Cross commissioned a digital incubator that generates ideas, products, services and business models using lean startup tools and techniques. Companies like Atkins are using incubators to experiment and test new ways of doing business and are reaping the benefits that start-ups can bring.

Start-ups are a valuable source of innovation and are changing the landscape of work with their culture. If CIOs want to remain competitive both in the services they provide and in hiring top talent they would be wise to mirror their new, disruptive peers.