Startup thinking: CIOs face challenges tapping entrepreneurial spirit

These days, mega-successful entrepreneurs dazzle the public imagination in much the same way rock stars and top athletes captivate admirers. CIOs -- and the enterprises they work for -- are also enamored with entrepreneurism, or, more specifically, startup thinking and the startup mindset. Incorporating the way of the startup has become a goal for enterprises on the edge of digital disruption.

But the startup path isn't quite the glamorous, next-stop-Mars journey that some envision. K.P. Reddy’s recently published book, What You Know About Startups Is Wrong, aims to dispel the myths around entrepreneurs and startup culture. As it turns out, running a startup is hard labor and an endeavor that can disrupt family relationships and endanger one's health, as Reddy's own experience attests. Reddy, in addition to being a serial entrepreneur, is also a former CIO and CTO. Reddy spoke with SearchCIO to discuss his views on startup thinking and the CIO's capacity for applying it successfully.

Based on your background as a CIO/CTO, and the research behind your book, what are some common misconceptions about startups that CIOs should be aware of before incorporating startup thinking in their organizations?

That is why corporate innovation hasn't worked out that well. You have to have this downside risk if you really want to be structured and focused.

K.P. Reddy: A lot of companies are asking me to come and give this startup point of view, the 'think different'  approach. The first [misconception] is what they believe the cultural issues are. They get super fixated on 'We're going to build a cool space … and have a relaxed dress code.'  Being in a startup takes risk. When you are a corporation … they say, "Let's do something innovative or disruptive or startup." They are not saying, "Everybody take a 50% pay cut and if it doesn't work out you need to find your next thing." Part of … how you start to inform your psychology [is recognizing] you have to get this done -- build the product, sell the product -- one way or another. And if I don't get this done in the next two weeks, I don't get a paycheck. If you don't have that edge a little bit, you are not going to be successful. This is why corporate innovation hasn't worked out that well. You have to have this downside risk if you really want to be structured and focused. Taking the risk -- It drives a lot of the psychology in the book.

What startup philosophies and best practices do enterprises and enterprise CIOs have the best chance of successfully incorporating? How do they adopt startup thinking and a startup mindset?

Reddy: I think it is kind of a hybrid approach. The idea that we are going to convert people who are very corporate into thinking about startups -- they are not going to leave Coke or IBM, but [instead] spend time either investing in or working with startups. If you are really trying to get that energy of innovation and speed, a lot of the … CIOs I have worked with on these projects will look at the problem statement and say, 'If we build this solution in this corporation it will take three months.' A startup … will say three weeks. It's really the exposure to how [startups] do things. If there are other people who are doing things faster and cheaper and better, maybe we can learn through some of that.

K.P. Reddy

So the key is exposing corporations and CIOs to how startups work?

Reddy: And the mindset of startups -- how they think about the resources around doing things. I've been working with a pretty large company for the last few years and their CFO is revising the budget for the startup we invested in and the accounting and finance budget line item was $1,000 a month. So the CFO looks at it and says, "How do you get anything done for $1,000 a month? We have hundreds [of people] in accounting and these guys are getting away with $1,000 a month to manage the books. "

 [The startup] can't afford more than that -- they have a part-time comptroller. [Corporations and CIOs] need to start to understand when you are as resource constrained as a startup, [you] push the limits when you start deciding what is necessary and what is not necessary.