Don’t compete with start-ups like another start-up. Instead, beat the insurgents by thinking like a counterinsurgent.
The biggest threats faced by established companies are not from other established companies, but from smaller players with charismatic founders and big dreams. These insurgent companies succeed because lower barriers to entry and more agile operating models enable them to zero in on consumer needs that are overlooked and unmet by bigger companies.
More of these small players are ahead. The next generation of entrepreneurs grew up in the shadow of 9/11 and the Great Recession, and so they came of age more resourceful, more vigilant and more hands-on. They know exactly what they want in their products and services, so they build businesses to get it.
The business ecosystem leans toward these sorts of insurgent companies. Only 2.5 percent of VC-backed companies ever grow to $100 million or more in revenue.1 In other words, small companies stay small, and thus there is no let-up in the pace and volume of always-evolving ideas that they bring to the marketplace. This makes it difficult for big companies to keep up.
For many big companies, the rallying cry of late has been to think like a start-up. But that is not the right approach for most big companies. It is simply not possible for companies with thousands of employees to think like a start-up with a few dozen. Big companies need a model that fits their strengths, in particular one that leverages scale against insurgencies, like the model for the modern military.
The irony is that many big companies flourished in the late 20th century using principles learned from the two world wars of the first half of the century. Yet, as the corporate world was using conventional leadership models to drive global expansion, military leaders were evolving their understanding of the strategies needed to succeed in the 21st century. Wars in Korea, Vietnam, Bosnia, Afghanistan and Iraq taught military leaders the need for a new model that can manage far greater uncertainty and complexity.
As conveyed through the testimony of veterans and updated military manuals, the lessons of counterinsurgency offer key takeaways for business leaders. The general idea of business counterinsurgency is not about quashing entrepreneurial efforts. Rather, it is to emphasize that the best strategy for big companies is to act differently from small companies, not the same as them. Here are some topline thoughts:
1. A deep understanding of local culture and people is an imperative. Insurgencies succeed because there is a social void — in business jargon, a pain point that leaves people unhappy and dissatisfied. Start-up businesses commit an incredible amount of passion to address these unmet needs. Current military doctrine sees cultural integration and understanding local populations as paramount to counterinsurgency. One military commander put it this way:
“The people will determine the outcome. Winning over the people in the popularity contest — for that is what this is — will require us to understand the dynamics of a complex culture and constantly be working at our relationships with them — empathizing, interacting closely, and always showing respect.”2
Net, net, counterinsurgency theory warns against making generalized assumptions about populations and asks us to look deeply into microcultures. The most important drivers of business success come from understanding culture and people.
2. The principles of Mission Command & Commanders Intent. A clear strategy and stated values are key to decentralized flexibility of decision-making. The command-and-control model that many business leaders now disparage as old-fashioned has been evolving within military circles since the 1980s. The current model is an updated version called Mission Command, a leadership approach and organizational design that promotes the innovation and flexibility necessary for effective counterinsurgency.
The U.S. Army defines it as “[t]he Army Approach that empowers decision-making and decentralized execution appropriate to the situation. Enabled by the principles of … Competence | Mutual trust | Shared understanding | Commanders intent | Disciplined initiative | Risk acceptance.”3
This model builds strategy around the idea of Commanders Intent, a principle that allows soldiers the freedom to exercise adaptive decision-making without disregarding behavioral expectations. Counterinsurgency theory emphasizes the need to have a great strategy at all levels, ensuring that each person knows their part and their value in the process. Many big companies face the challenge of embedding the values of their mission statements into their corporate cultures. In the most successful modern corporations like Amazon and Google, they accomplish this by embedding values in personal incentive systems.
3. Prepared People. The counterinsurgency military philosophy puts people at the center — trained and ready staff led by highly capable, personally invested leaders. The highest value is on harnessing and enhancing unique human skills. Leaders must understand their responsibility, ready their teams and be prepared to make decisions in the moment. Rank-and-file soldiers need to be highly trained with the right skills across a range of potential scenarios. Big companies need to build people like this, too. By adopting a “think-like-a-start-up, figure-it-out-as-we-go” mentality, modern organizations have neglected to give teams training needed in modern functional skills or to build personally invested, flexible leaders at the VP level.
4. Continuous feedback loops of planning, intelligence, risk management and execution. Contemporary conflict zones are fluid, complex and full of paradox. Counterinsurgent forces manage these situations with a structured approach to information management, planning and decision-making. Instead of a linear approach to gathering information, developing plans, and taking actions, modern militaries execute these activities simultaneously, as seen in the Design Model shown here.
Two critical things enable a continuous cycle of information, planning and execution that ensures sensible risk management. The first is a continuous assessment of the local environment, using all available intelligence to frame and reframe the marketplace while testing and iterating through various solutions.
Second, intelligence is the glue that holds it all together. Gathering, assimilating and disseminating intelligence is the cornerstone activity for guiding decisions effectively, understanding the full picture and properly managing risk. Intelligence goes up the chain of command at least two levels in order to share risk and prevent individuals from shouldering too much responsibility alone. This keeps people moving quickly, rather than stopping to protect themselves from second-guessing.
In particular, it is never assumed that a perfect answer has been found. Environmental paradoxes are identified and embraced. Assumptions are always being questioned. As communicated internally by the U.S. Army, “Doing Nothing is Sometimes the Best Action” and “ If a Tactic Works this Week, It Might Not Work Next Week; If it Works in This Province, It Might Not Work in the Next.”4 The military rule-of-thumb is that one-third of time should be spent in planning and two-thirds in delivering, but the time should be measured in short cycles. Businesses, too, should rethink the traditional annual planning cycle. With a strong game plan and continuous assessment, quarterly planning adjustments make more sense.
These four principles, while an over-simplification of military practice, form a starting point for useful discussion. Big businesses cannot just copy start-ups. Like the military, they need a tried and tested approach for dealing with uncertainty and complexity.
The words of a seasoned counterinsurgent commander say it best. These are extracted from his Mission Intent as he deployed his command into a highly volatile, modern military theater:
“We will employ mission command, according to the principles [I have laid out] in this design, but we will trust our people because they are prepared and superb and we cannot be everywhere; we will encourage them to innovate and be unorthodox. Embracing risk is fundamental to success, reckless gambling is not … We must be humble towards and ready to learn much and quickly. Consider this operation design carefully and then go drive your piece of the campaign to success.”
If you would like to discuss these approaches for building a modern flexible organization, please give your Kantar account representative a call. You can dig into the rest of our organizational and capability thinking at the Ready-Set-Grow page at Kantar.com.