Here is a brief excerpt from the transcripot of a podcast in which Stacey Haas, Brian Quinn, and Julie Baskin participated, featured in an article for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.
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We’ll share conversations we had with the people behind the meal-kit company Plated, the performance dress-shirt company Mizzen+Main, the jewelry company BaubleBar, as well as Uber. The leaders of these companies told us stories that may at first sound like start-up adventures that don’t translate to more established companies, but we believe there are valuable lessons in their experiences.
First though, we’ll join a conversation I had recently with my colleagues who specialize in strategy and innovation. Brian Quinn is a partner in our Chicago office, and Julie Bashkin is a senior adviser based out of New York. We met in Chicago to discuss the key questions our clients tend to ask us most frequently about how large companies can drive growth through innovation.
Julie Bashkin: I’m noticing this issue with clients where they’re having a “head slap” moment. Five years ago, they were thinking, “Start-ups? Who? We don’t care about them.” And now they’re calling it the “bee swarm” or sometimes they call them “ankle biters,” where one start-up is not a threat, but many of them combined are threats. And they seem to have come out of nowhere, and they seem to be moving fast with no resources. And they seem not to be weighed down by the baggage of their own success, like our big clients are.
Brian Quinn: I think it’s been something of a painful lesson for most incumbents to see just how much growth start-ups have been able to take. If you look back over a five- or seven-year window, despite the top 25 manufacturing roughly 50 to 40 percent of the overall category sales volume, they’ve driven somewhere between two to five percent of the growth. All of the growth has generally been ceded to start-ups. The first thing is there is something we actually have to learn about what are they doing and what are the ways that they’re playing that actually enable them to have that kind of success.
The biggest thing that makes most start-ups move really quickly is urgency. They are running on the amount of capital and the amount of funding they have at any given moment. And if they cannot get to a next milestone, whether that is actually getting to enough sales to start self-sustaining the enterprise or get to a next milestone with a venture funder, they’re done. And that level of urgency, that degree of fuel to move quickly, just doesn’t exist inside most large organizations that I’ve worked with.
Stacey Haas: Before we go on to hear from the start-ups we talked to, I want to pick up on Brian’s point about start-ups facing urgency with few resources. Those conditions necessitate moving quickly to go to market and scale. Start-ups have to be creative and scrappy about how to do this. The story we’ll hear first, from Daniella Yacobovsky, the CEO and cofounder of the jewelry company BaubleBar, illustrates this well. Daniella worked in investment banking and private equity before starting BaubleBar in 2011, selling on-trend fashion jewelry through pop-up stores and other methods. Today BaubleBar has multiple brands that are sold through large retailers as well as directly online. Speaking at our Digital Consumer conference in New York recently, Daniella describes how she and her partner elevated the creativity and scrappiness we’re talking about to an art form when they were figuring out channels for selling their jewelry.
Daniella Yacobovsky: When we first started in 2011, we were gifting every fashion blogger there was for free. And they were posting about it for free, because no one would’ve ever thought to have asked us for money. We were like, “Ha, we don’t have any. Joke’s on you!” We got a lot of really strong organic placements, a lot of strong organic support. When you don’t have money, it’s just guerrilla warfare. Amy and I would be everywhere with bags of jewelry just putting it on people. Like, “I think you’d like this necklace.” And we were just throwing it at people. We would do whatever it took to get on our jewelry on the right people.
And I think that our team was really great about thinking through our social strategy. And how are we connecting with our community in a way that feels really organic and authentic? I’m not going to say that it was necessarily planned that way, because I don’t think anybody necessarily planned it that way. We were a really tiny team. It wasn’t possible for our social content to go through multiple layers of approval and discussion. And is that the voice? And is that the tone? And do we feel comfortable with that? And we also were not a target for legal anything at the time. I mean, we were ten people sitting in a room just like, throwing around jokes. But we were moving really quickly. And if we thought something was funny, we put it up on social. And if we thought something was aesthetically beautiful and in line with our visual, we put it up on social. And we saw how people reacted and we just kind of went from there.
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Here is a direct link to the complete article.