Creating a Tech Startup Culture in Traditional Companies

By Anna-Lee Muck, Editor-in-Chief

“Hey, where did you get that t-shirt?”

When Allstate set off to infuse a tech startup mentality into an 85-year-old business, the first action item was not to design a t-shirt. Even so, it became a symbol of empowerment and trust as the insurance company transformed its IT, business, and organizational culture.

“I canʼt tell you what having a leader stand up in front of an organization with a hoodie and t-shirt does to cultural change. It all of the sudden makes it OK for everyone within that organization to participate in change,” said Matthew Curry, Director of Cloud Engineering at Allstate.

The Old Faces of Today’s New Tech Companies

As digital disruption continues to turn entire industries on their heads, companies across sectors – from insurance to transportation to fast food – are not merely looking into digital transformation initiatives, but actually publicly positioning themselves as technology companies.

“I canʼt tell you what having a leader stand up in front of an organization with a hoodie and t-shirt does to cultural change. It all of the sudden makes it OK for everyone within that organization to participate in change.”

— Matthew Curry, Allstate

Ford is no longer just an auto company, but also a mobility company. Volkswagon is a software services company. Allstate aims to be thought of for its software and recently launched a tech startup. And Domino’s is as much a tech company as a pizza company.

Whether or not you buy into the re-categorization of these traditionally non-tech companies, there is no denying that they have gone beyond thinking of digital in terms of projects to fundamentally rethinking how digital can change the business.

“Digital isn’t merely a thing—it’s a new way of doing things. Many companies are focused on developing a digital strategy when they should instead focus on integrating digital into all aspects of the business, from channels and processes and data to the operating model, incentives, and culture,” according to a McKinsey report.

Programming the Business

Of the 800 employees at Domino’s headquarters in Ann Arbor, Michigan, 400 are in technology roles, including software and analytics.

“What customers have shown us is that they want access to the brand through technology, and they want it anytime, anywhere they are no matter what screen is in front of them, whether they’re driving their Ford, in their living room or on a laptop or mobile phone,” Domino’s CEO Patrick Doyle told Chief Executive magazine.

So while you will still discover a pizza inside of that delivery box versus a shiny piece of tech, there is a lot of technology behind getting it to your doorstep. Odds are you ordered that pizza via custom-written software – on your mobile device, smartwatch, by voice, or by emoji.

This isn’t a fad – 72 percent of business executives are boosting their software development capabilities according to the Dell Technologies

There are many terms used to describe the movement toward speedier software development – agile, DevOps, cloud-native to name a few – but no matter what you call it, the goal is the same: delivering valuable features to users in the form of custom-written software that is continually improved through rapid iteration.

Translation: Delivering features your customers want, before they know they want them. Developers and product managers can conceive an idea for a new service on Monday, roll it out to early adopters by Friday, and observe and improve it continuously each week thereafter.

“A DevOps strategy brings better coordination between customers, line organizations and IT,” said Rob Enderle, principal analyst for the Enderle Group.

“The result is something that’s created that’s different than the way it used to be decades ago where developers got their requirements from line and then went off and built something,” Enderle said.

Michael Coté, Director of Technical Marketing at Pivotal Software, sums up the objective of the DevOps approach to software development, “It gets to that goal of having a programmable business where it’s not so much that you’re doing IT – it’s that you’re running a business, and you’re using custom-written software to help you run that business.”

“The result is something that’s created that’s different than the way it used to be decades ago where developers got their requirements from line and then went off and built something.”

— Rob Enderle, Principal Analyst, The Enderle Group

Creating the Software Development Culture

Lest you think we’ve moved solely to a technology, or even software, discussion, take note… the shift to a software-driven organization is a culture thing. It requires a rewiring of not just the IT department, but the entire business, especially for venerable companies like Allstate and Ford. After all, trying new things – and trying them quickly – is risky, and risk is downright antithetical to the mission of insurance and car companies.

In the world of ride-sharing and autonomous vehicles, Ford Motor Company CIO and Vice President Klevorn told CIO Magazine, “We need to iterate, take more risks, learn. That requires a different culture. Our culture is very risk averse, and rightfully so. But we need a different way of thinking of IT and the way we do business.”

Ford followed through with the launch of a new business unit, Ford Smart Mobility, LLC, designed to operate like a startup. Its debut platform, FordPass, will unlock your doors, remote start your car, reserve and pay for parking, schedule maintenance, and even offer concierge services.

Allstate created a distinct group within the company, called CompoZed Labs, with the goal of being able to develop software at extreme speed. Within a year, CompoZed was working on seventeen software products and Allstate’s most strategic initiatives.

So how are these organizations instilling a startup mindset in their traditionally risk averse corporate cultures?

Walking the Talk to Change Management

Perhaps the most difficult aspect of a successful digital transformation to a software-driven organization is change management, and it requires a top-down approach. According to Coté, “In studying how change happens in large organizations, Iʼve found that the most sustainable change begins and ends with management.”

Leaders can cultivate support for transformation across the organization in various ways:

Get the business on board: Doug Safford, Vice President in the Allstate Technology & Strategic Ventures Group, describes the importance of finding the right partners within the business, “Find the right early adopters. We needed… people that didn’t want to avoid the risk and wanted to jump off the cliff with us early, both in business and technology. Now CompoZed Labs is an entire technology effort and a business transformation.”

Communicate clearly, again and again: While weʼd like to think individual staff members have a clear understanding of how their daily work helps achieve corporate goals, thatʼs not always the case in large organizations. It’s up to leadership to communicate the organizationʼs strategy, explain how a software-driven approach supports the execution, and continuously promote successes. A good guidepost of whether they’re getting it is to pay attention to your complainers—how many people are asking, “Why are we doing this?”

Champion a quick win: According to Coté, “Choosing these first [software] projects wisely is also important for internal marketing and momentum purposes: the smell of success is the best deodorant, as they say, so you want your initial projects to be successful.” Early software projects should be meaty enough to provide business value, but low risk. In Home Depot’s cloud-native initiative, the team chose applications for projects like managing tool rentals and running the in-store custom paint desk.

Encourage continuous learning: On the flipside of a quick win is embracing learnings from fast fails. As Stephen Bird, CEO of Citi Global Consumer Group puts it, “In order to grow Citi, we have to grow our own perspective, skills and capabilities… Our curiosity, our openness to learning and trying new things, our ability to adjust and adapt quickly and our willingness to fail fast and fail small are the essence of a culture that innovates and exposes new value to our clients in real time.” To support continuous learning and experimenting, leadership must remove the roadblocks that prevent it, possibly even de-emphasizing metrics for the first year of the transformation… at least, traditional project management metrics that come in red/yellow/green.

Build excitement and evangelize: Allstate went so far as to brand their transformation effort, complete with a logo, website, and swag. At the 2016 Cloud Foundry Summit, Matthew Curry, Director of Cloud Engineering at Allstate, described the branding, “What we really care about is embodying the behaviors and the ideals of a Silicon Valley startup and transplanting that within our organization. So we loved this name CompoZed because it gives us visual indicators of an orchestra and a conductor and all these people working in harmony to something that’s of a greater good.”

“In studying how change happens in large organizations, Iʼve found that the most sustainable change begins and ends with management.”
— Michael Coté, Pivotal Software

Whether repositioning themselves as technology companies or just embodying that spirit by putting digital transformation at the core of the business, traditionally non-tech organizations face the challenge of converting a risk averse culture.

When speaking about Patrick Doyle’s leadership style, Bill Taylor, author and co-founder of Fast Company magazine, captures Doyle’s argument to his colleagues at Domino’s, “To get to [success] is to tolerate lots of false starts, setbacks, disappointments along the way. The only way, particularly in technology innovation, you succeed is trying a lot of things that fail and eventually you get to what works.”