No to go all Master Po on you, but it is almost always helpful to explore the underlying questions before diving in to answers.
In the last post, I compared when big companies and startups innovate. Before we dig in to how they innovate, it’s worth looking at the product development pipeline because it will provide some insights.
To clarify, by “product” I mean the end result, such as something the company produces/sells such as a physical product, a digital download or a service; or some other kind of thing.
Here’s a handy graphic showing the typical pipeline for a big company and a startup.
The first thing you should notice is that both processes have the same steps. Scale and details may vary, but the basic steps are the same. The second thing you should notice is that although they end at the same place (sales) the order is radically different.
A big company usually starts with analysis (SWOT or some other tool) to identify an opportunity, or a “market fit”. Then they seek out an idea. From there they make a product and go sell it.
Most big companies pride themselves on their analysis. They will spend a lot of time on market fit before any other work gets done. They may even do a pre-study to identify the study area before it gets studied. I imagine somewhere, there is a pre-pre-study going on right now.
As a result of all this studying, the idea is inherently constrained by the market fit. The idea is a child of the opportunity and it will almost never be bigger than the opportunity allows. That’s not bad per se, but it does place constraints on just how radical the innovation will be.
It’s the difference between asking “Where would you like to vacation in Massachusetts?” and asking “Where in the world would you like to vacation?”. Asking the latter question is far less likely to result in a trip to Martha’s Vineyard or Cape Cod, no matter how lovely those destinations are.
Once the big company has established the opportunity, then they seek out ideas. This is often done by committee. As a wise person once said: “A camel is a horse designed by a committee”, or as Winston Churchill once said about his chiefs of staff (and I’m paraphrasing) “Take the most brilliant individuals and put them at a table together and what do you get? The sum of their fears”.
A committee is fundamentally incapable of creating a pure idea. That’s not to say they can’t function, but the output of a committee will always be a compromise, not a bold innovation.
Once the big company has selected their golden idea, it moves into the product phase. This is where the terrible NO-bodies take control. A NO-body is someone with the power to simply say NO. Who knows what history of childhood neglect got them to this sorry state, but every corporation is full of them. Instead of looking for a reason to move forward and succeed, they are always looking for a reason to stop.
The NO-bodies are the secret corporate killers, stifling ideas before they draw breath. Row after row of empowered NO-sayers will beat the idea to a bloody and useless pulp before a product becomes even a hint in a doting parent’s eye.
We’ll talk more about NO-bodies in a future post.
But let’s say that the idea has run the gauntlet of the NO-bodies. It has survived the whims of engineering, HR, marketing, sales and any other department with a committee vote. Once a big company has a product, they can start to sell it. Sometimes, they can do that rather well.
Now let’s look at a startup.
Most startups begin with a burning idea for a product. The idea itself has almost no constraints. It is usually owned by just one person and they defend it fiercely.
Before the paint is even dry on the idea, product development begins. If the founder is good at being a founder, they’ll find people who share their vision of The Idea. They’ll come together, being agile and lean, and get some product made. The first version is usually awful and ugly, but like a wrinkled, screaming, poop-covered baby, it’s theirs and they love it.
Now that they have given birth to their ugly baby (I guess I’ll just stick with that metaphor), they have to find a home for it. This is where life gets hard. It turns out that products have to fulfill a need. Even worse, customers don’t like to pay for things they didn’t know they needed. In a startup, In startups, Market Fit is where products go to die.
NO-bodies don’t work at startups. But startups have their own demons in the form of the anti-marketing Build-it-and-they-will-come Engineer. BIATWC Engineers hold a lot of power in startups. They truly believe that customers will want something because it is clever or elegant. It doesn’t have to work, it just needs to be cool and the world will beat a path to your door. They despise marketing and sales (is there a difference?) and believe solely in the power of cool product.
But despite the BIATWCs, startups often eventually get products to market and start selling. It’s usually chaotic and messy, but like a squirrel after a nut, they’ll keep on banging away until they figure it out.
Both approaches have strengths and weaknesses. The focused nature of big companies means that products are usually well defined. It also means that new products are almost always iterative not revolutionary. The freewheeling approach of startups means that ideas have no limits, but that also means that new products can be utterly impractical and tough to sell.
I truly believe both groups could learn from each other. There are parts that both do well. A big company’s structure and focus can be invaluable. A startup’s clarity of idea ownership, disregard for market fit and speed of execution can be too.
Big companies and startups are creatures of habit and habits are hard to break. Knowing which habits you need to break is most of the battle. Look at the questions you are asking before you rush to your answers!