Invest, innovate, evolve


3 ways to adopt an entrepreneurial enterprise mindset

Building an entrepreneurial culture is essential in today’s ever-evolving, highly competitive global market, as we previously discussed in Building an entrepreneurial enterprise.

It’s about more than innovation – businesses also need to be able to pivot and move quickly.

That’s what local legal disruptors LegalVision found when they initially started as an online legal document platform. Client feedback highlighted the need for highly responsive, qualified legal support at a competitive price. So the founders created a law firm with a difference: online service, fixed-fee advice from experienced lawyers, with a rapid turnaround.

Modelled on a software startup, LegalVision is now Australia’s fastest growing legal services provider.

CEO Lachlan McKnight says they now handle up to 300 matters per month, and are experiencing six to eight per cent revenue growth month on month. He believes the traditional partnership structure of a typical law firm could be limiting opportunities for long-term growth in an increasingly competitive sector.

“If you just want to maximise your (partner) returns, there’s no incentive to reinvest in growth. The traditional structure also prevents innovation because of the number of people that need to agree on something before it gets done,” he says.

He and co-founder Evan Tait-Styles have taken an agile start-up approach to a traditional market sector. So what should other professional services firms consider if they want to create an entrepreneurial mindset within their business?

First, it’s important to remember a start-up is not a smaller version of a big business. Entrepreneurs embody core principles of innovation – including risk and failure. Businesses are designed to execute ‘a repeatable and scalable business model’. Here are three ways you might be able to do both.


1. Invest in start-ups and technology

In a new era of digital disruption, it’s time to flip your thinking. Instead of viewing new technology in your own or adjacent sectors as a threat, see them as an opportunity to develop a closer connection.

KPMG’s recent research paper, Why are big businesses looking to start-ups for innovation, notes a shift away from traditional R&D investment. Instead, many established firms are investing in multiple sources of innovation outside their own organisation, from alliances with start-ups and incubators to customer-centric thinking.

In fact, according to GE’s global research, 77 per cent of executives say they are looking to start-ups and entrepreneurs as partners – a marked increase on 38 per cent the year before.

Bringing new thinking into your business can help you challenge the status quo. The trick is to do this without losing focus on your core competencies.

Here are a few ways you can apply this thinking to your business:

Invest strategically in start-ups: set aside a small percentage of your revenue, just as you would for R&D.

Get involved: consider becoming a mentor for an industry accelerator or incubator program, or by providing seed funding.

Create partnerships: Acquire or align with a start-up. For example, comparison site iSelect acquired three other market-leading websites to become the definitive resource for customers comparing household and financial products and services.


2. Learn to embrace failure

Innovation can be a risky business: Harvard Business School research shows that 75 per cent of start-ups fail. That might sound frightening if you’re used to waiting until a market is developed before investing your limited resources.

But wouldn't you rather be a ‘we were first’ business than a ‘me too’ one?

It’s time to overcome our collective fear of failure in Australia. The lesson from resilient start-ups is to fail fast and fail cheaply. Here’s how you can create a ‘safe to fail’ environment:

Embrace and encourage innovation: measure and reward staff and teams for experimentation, or give them a set amount of time for creative projects outside their day to day responsibilities.

Foster a lean start-up philosophy: ‘build, measure, learn’ – focus on fast idea development, market testing and customer response, and integrate new insights into the next development phase.

Learn from each failure: Take the time to assess what happened. Was it incorrect pricing, poor customer experience, a weak product feature, or something else?

Lastly, look to the global giants who have all demonstrated that innovation and failure go hand-in-hand – including Google, Apple and Microsoft.


3. Focus on the customer first

LegalVision’s inspiration came from understanding a clear client need, and finding a way to meet that need at scale. As our article on design thinking explains, a great business idea starts with ‘desirability’ – what do people need and want – before moving into feasibility and viability.

Creativity is the key to gaining a competitive edge, as start-ups know. So in addition to design thinking, here are a few other ways to embed a customer-centric mindset in your business:

Pay attention: Be prepared to quickly alter and improve your product or service based on customer experience.

Get out of the office: your customers aren’t there. Talk with clients, ask for feedback on features, distribution channels and pricing. Watch how they use your service or product, and ask staff (or friends) to be mystery shoppers.

Create flat structures: Small, focused teams can move faster.

Successful innovation requires more than fresh thinking. Adopting a lean start-up mindset, even for one part of your business, can empower your teams to quickly bring new ideas to market. Aligning with interesting new ventures, as an investment partner or mentor, can open the door to opportunities your competitors might miss. And that could make your firm one of the next disruptors to watch.

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This material has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 ("Macquarie") for general discussion purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service.