Soonicorns, Unicorns and Legacy Leaders: How much of a difference is there really in how they go about things

At Class35, we’ve spent half our lives with some of the fastest-growing scale-ups and half with the most established industry leaders. Our venture-backed clients have raised more than $1.5bn between them, and some are the poster children of the venture world. Our incumbent clients are fully-paid members of the FTSE 100, S&P 500 and DAX, employing hundreds of thousands between them and some of the most recognisable brands in their markets. 

This makes for an interesting working life. Whilst many of the challenges that scale-ups and incumbents are facing are similar in nature, the way they approach them varies a lot. The experience of working with leaders in both types of organisation throws up quite a few observable differences, some of which you mightn’t expect. 

Singularity of vision 

Many of the scale-ups we’ve worked with are founder-driven. Whilst the role of the founder may have diminished through various fundraising rounds and chapters of life, their vision is more often than not emblazoned into the mindset of all of the employees that followed them. The most successful ones still use this vision as a “northstar” for making decisions. The articulation of the vision often matters less than the sentiment, and knowledge of it is somehow more tacit - it’s not printed on the walls, or on stationary, it doesn’t get reshaped and relaunched with a big bang every year, it just somehow becomes pervasive knowledge even as scores of new joiners arrive. 

Conversely, if you talk to a corporate about their vision, it is often manicured, polished and copy-written. The result of a consensus, and factoring in many stakeholders - investors, employees, customers, suppliers, even government. The words matter enormously, and they are insitutionalised through internal comms, posters, laptop wallpapers and office signage. Sometimes even a meeting room name. The vision has much less of a bearing on the day-to-day and rarely gets mentioned in projects. What is a lot clearer in corporates, however, is the “middle layer” of company strategies - pillars, initiatives, measures that ladder up to the CEO agenda. These can be a lot more prescriptive than directional, and form a key role in ensuring (where possible) that people can keep up momentum without fear of overlap or redundancy. 

In our experience, there are initiatives within businesses (big or small, new or old), where it pays to think like founders and entrepreneurial businesses, and times where it pays to behave more like a corporate. Indeed, these lines are getting increasingly blurry as innovation and venture teams within corporates operate with an enrpreneurial mandate, and scale-ups are forced to grow up as they manage multiple products, markets and priorities for the first time. The most successful companies that we’ve worked with have been able to “mode select” in this way and  are able to apply the right amount of governance scrutiny for the mission. 

Attitude towards experimentation 

When it comes to experimentation, adopting “lean” principles, “failing fast”, “building to iterate” and all of the other innovationisms, corporates all talk a remarkably good game. But when it comes to the reality of making change that is visible to the world, it never quite happens. Embracing the principles of experimentation in the purest sense requires a similar level of comfort in getting things wrong as it does confidence in adapting or responding quickly. Neither of these are synonymous with having an entrenched market position to protect and an extreme level of stakeholder scrutiny. 

For scale-ups, the principle of experimentation is pretty much par for the course. Many scale-ups started life with a different product than the one that ultimately made them successful, so the idea of getting something not quite right comes quite naturally, and with a positive frame. However, where many struggle (and engage us) is when they are required to think about new products, markets or customer segments. Experimentation is a lot easier when there is a little potential to create dissonance for the market that made a product successful. 

Experiments work well, irrespective of company size or stage when the parameters are clear. Successful experiments that we’ve been part of carry clear hypotheses, born out of deep customer insight, and are very clear in what they are trying to prove or disprove. This is much a point on methodology as it is size of company. 

Relationship with data 

You would probably naturally assume that bigger corporates are far more data-driven than scale-ups. Being more risk averse and established, with better tooling, and more data to work with, it’s quite a sensible assumption. Similarly, you might assume that scale-ups are more led by intuition and opinion than data. In our experience, it’s actually the reverse. 

The tech stack for scale-ups to manage their product stack has evolved significantly over the last few years. There are tools for everything - watching back user sessions, analysing conversion data, multivariate testing, identifying and nurturing prospects, getting granular insights on product usage. This level of sophistication was reserved for enterprise clients not very long ago, and now it is available to almost anyone - and scale-ups have adopted them with glee. Conversely, corporates have a lot more data, but it’s generally a lot less malleable, and can take weeks or months to be returned upon request, but is often far more revealing of the “big picture”. 

In my experience, they have different data behaviours - corporates have a more sensible but slower moving dataset, and scale-ups have a fast-moving but often fragmented data picture. The result is interesting on projects - we spend more time convincing scale-ups not to rely solely on a narrow window of data, than we do convincing corporates on the value of not using data prescriptively. 

Understanding of customers 

In the scale-up world and venture community, there is a very refined understanding of customer behaviour. The world is organised around unit economics, and other measures of customer engagement and commercial success. There is a shared understanding and vocabulary around the importance of the customer - from “ideal target customers” to “customer lifetime value”, to complex segmentation. Where many fall down is complimenting the “what” with the “why” and forming a qualitative understanding of customers and what drives them. 

At the other end of the spectrum, some of the most established corporates still struggle with a common understanding of who their customers are and how to get more out of them. Many have made multi-million pound attempts at building a 360 degree view of the customer, but still struggle to embed it into their decision making. They are, however, far more interested in and adept at building a qualitative understanding of customers through individual or small group research. 

Getting a textured understanding of customer needs and expectations is vital to aligning products, services and even organisations around meeting those needs as effectively (and profitably) as possible. Whilst most companies are aligned on this, every organisation is on a different path to achieve that - irrespective of size and stage. 

Product decision making 

Perhaps the most important aspect for us in what we do is how product decisions get made within our clients’ organisations. Having gone end-to-end on product initiatives dozens of times, we can honestly say that the level of empowerment of people making product decisions has the biggest impact (for good or bad) on the overall outcome of an initiative. 

This varies significantly by organisation. Some things are universal - corporates have the most “religious” product development principles and methodologies in place (often punted by big consultancies), scale-ups are more comfortable with rapid decision making and single points of ownership - but the implementation of product organisations comes down largely to culture. 

If an organisation has a culture of empowering its people to make decisions, this makes for the best conditions for delivering initiatives. If an organisation has a culture of micro-management, isolated, top-heavy decision making, this makes for the worst. This is ultimately a question of good leadership. The best product organisations that we’ve worked with invariably belong to the best leaders.