Scale and agility. In today’s volatile and rapidly changing world, these are two essentials that every company needs to grow and remain relevant.

Every big, established company is at risk of having a Kodak Moment: watching their competitive advantages—the “moats” around their business—disappear seemingly overnight. They have scale, but what they lack is the agility to adapt.

Startups have a different problem. All startups have nothing but agility. What they need is scale. Trying new business models, repositioning their brand, and developing new products within weeks or even days—things big companies can only dream about—is not a problem. But building the right team, connecting with the right strategic partners, securing the right funding and scaling into the right markets are what keep most founders up at night.   

In 2013, Coca-Cola launched the Coca-Cola Founders platform—a new model for creating seed-stage startups. First, we partner with experienced entrepreneurs around the world. Then we unlock the “power of Coca-Cola—our relationships, resources, and reach—before the startup. Founders have a launch partner in Coca-Cola from day one.

The model attempts to create a win-win for everyone. Founders are given an unfair advantage through the power of Coca-Cola to help them scale. And Coke gets early access to new, fast-growing markets and solutions to challenges impacting our business.  

We’ve learned a lot from building startups. For the past year or so, we’ve been in “stealth mode,” releasing very few details about the new platform until now. We’ve spent the last two years experimenting and learning.

One of the most basic things we learned was an expanded definition of the word “lean.” Most people understand that lean has something to do with “less,” as in doing more with less or being more agile. But in the startup community, “lean” means two things: moving at maximum speed and eliminating waste. This is quite powerful. Doing more with less is not a new idea for most big, established companies. But a relentless focus on eliminating waste at startup speed is very different for most.

Co-founders pitch the 'one metric that matters' for each of their startups to the network during a summit in Berlin.

In our journey to create lean startups, we’ve learned many lessons. I’ll focus on five that have really made a difference:

1. Building startups requires new systems, skills, and structures.

Large, established companies are designed to execute, not explore. One way successful companies stay that way is by putting the right systems, people and
structures in place to flawlessly execute their business model at scale. With this focus on efficiency, there’s little room for experimentation and exploration; it’s all about execution. This is the best way for companies to keep operating expenses low and margins high, creating higher profits.

Startups are designed almost exactly opposite. They are designed to explore and experiment constantly. This helps them find a business model they can repeat and scale. In fact, the life of a startup includes thousands of tests to not only build a product, but even before that to validate the problem they’re trying to solve. This requires a massive amount of speed and flexibility that doesn’t fit in most big companies’ normal way of working. So we had to design a completely new operating model built around the founders’ needs and the way they work, not Coca-Cola’s. Big companies can’t just decide one day to “do what startups do.” It’s a structural thing—companies have to actually design the right structure to get the kind of behavior and results they’re looking for. That’s a huge hurdle for most established companies, including ours.

2. Start with problems, not ideas.

“How do you know which ideas to invest behind?” That’s basically the first or second question most people ask me. But a lot of the time what most people call “ideas” are actually solutions—solutions sometimes in search of a problem. Staying focused on the problem is one way startups stay flexible. At the end of the day, they are trying to solve a big problem a lot of people have, not design an app.

Inside large companies, it’s easy to fall in love with a solution rather than focusing on the problem itself. But this can be a black hole. What looks and sounds like “innovation” can often lead to months or even years of wasted time and money. We designed the Coca-Cola Founders platform to always start with a big Coke challenge and then connect the challenge to a larger problem with a big market around it. This ensures that the value of the solution can flow back to Coca-Cola as well as hopefully create a big business for the founders.

3. Launch, then plan.

Creating a business plan is not new. Every MBA student, manager or entrepreneur understands that you need a plan to run a business. The plan is the roadmap, the thing that gives direction to the team and allows everyone to track progress and measure success.

But another lesson we learned was that startups approach planning in a completely different way than most big companies, including us. Before they spend a lot of money, commit to a big deal, or hire a bunch of people, they get some real, tangible results—actual sales, real users, a few customer contracts signed and so on, then they plan based on real results—what actually happened in the market.

4. Use minimum viable products to learn.

Startups use “minimum viable products” to quickly test assumptions and learn. A minimum product is like a three-legged chair; it’s so minimal that it doesn’t help prove anything. “Viable” products are finished—fully designed and executed—with no room for exploration. A minimum viable product is the fastest, cheapest thing the founders can create that will help them learn and deliver value to the end user or customer. Their goal is to quickly determine if they can actually develop a solution that will sell.

This is very different from the normal product development process used by most large companies. Most use what’s called a “stage-gate” process for development. The stages go from idea generation, to building a business case, to designing the product and then, finally, to testing and launching in the market.

The biggest difference is that startups work almost exactly opposite. They launch something in the market on day one and iterate based on learnings. And then they do it over and over and over. They do this to de-risk their business model continuously. This allows them to quickly understand what works and doesn’t work based on realty. Less waste, more speed.

5. Focus on the one metric that matters.

“Don’t sell what you can make; make what you can sell.”

Lean Analytics, Alistari Croll & Benjamin Yoskovitz

That quote really sums up how founders focus on figuring out what people need and want to buy. But sometimes it can be very difficult to know what people want, especially for startups. Often times a startup is not only trying to solve a problem that doesn’t have a current solution but they are also trying to develop the market around the solution. In these cases, there’s very little historical data or experience to fall back on. That’s why startups and VCs use metrics as a way to discuss challenges and opportunities.

Using data is not new for Coca-Cola and most large companies. But the way successful startups focus on data is. They focus on a single metric that’s incredibly important for the step that they’re working on that hour, day or week. It’s the “one metric that matters” most to moving forward. But you don’t have to be a startup to realize the value in this. Using key performance indicators (KPIs) to measure lots of stuff is valuable, but focusing on the one metric that is critical to moving forward can create extreme focus and clarity for the whole team, business unit or company. 

Designing Irresistible Companies

David Butler
David Butler

All the world’s information and media is online. Mobile devices and cloud-based technologies mean that almost anyone can reach anyone, anywhere at anytime. We’re using the Coca-Cola Founders platform as one way to grow and remain relevant in a rapidly changing world. As we continue to build this platform, we don’t know what we don’t know and I’m sure we will continue to learn a lot. 

But our goal is not to simply jump on the startup bandwagon or get into the “startup scene.” We want to design what we have begun calling “irresistible companies.” Steve Martin once said, “Be so good they can’t ignore you.” We think that through this new model—connecting rock-star entrepreneurs with the “power” of Coca-Cola from the start—we can create the kind of products and companies users, customers, employees and investors simply can’t resist. That’s our goal. 

David Butler is vice president of global innovation and entrepreneurship at Coca-Cola. Follow him on Twitter @DavidRButler.