10
Feb 11

On startups and innovation

Throughout my career I’ve worked at numerous organizations, large and small. Last 5 years I’ve spent doing startups, the previous years were spent at large companies. I prefer small organizations, specifically startup environments, for reasons I’ll discuss later. There is something that can be learned, good and bad, from both types of organizations. I’ll start with some positives.

Startups

I’m going to use the word “startup” to not only refer to companies that are just launching or haven’t been around for a while. In my opinion startup is now synonymous with a company that operates like one. They are always in launch mode, always looking for new adventures and opportunities, and always innovating.

Not all small companies are startups. Many small companies have been around long enough to amass some or many startup antipatterns, which is in most cases rather detrimental to its growth. Large organizations can bear some of these antipatterns for years, as they lurke and hide behind large bureaucracies and/or residual revenues. Large organizations also have different priorities.

Startups are the innovation backbone in this country and others. Their beginnings usually involve individuals who have knowledge and experience in a particular area and/or they see a need to fill a gap. Sometimes it’s not a gap, in terms of a complete void, rather it’s a gap in terms of doing something better. These individuals are motivated by their idea and the vision of making a world (as they see it) a better place, glory, recognition, etc… There is also monetary motivation, but the product or service motivation is usually higher (at least in the ones that succeed). Also, there is drive and the drive has to be strong. I mean, in lots of cases, these individuals give up good paying jobs and benefits, put their quality of life and possibly the quality of life of others in jeopardy, without any guarantees, all for this dream. A lot of these folks have worked at other companies and they’ve decided that they can form a successful team and eventually bear the fruits of their labor (again not only in monetary compensation). Wow, that’s inspirational and also… “scary”.

During the initial stages of the startup, there is no time for bullshit. The bureaucracy and overhead that plagues established companies has to go. They have to get shit done, they have to do it good, and they have to do it fast. They don’t want to rush to sacrifice quality, since this is the reason they formed this alliance, to create a “quality” product, better than their competitors. This is also the time when creativity is at its highest. How else can you stay in business when you’re competing with a company that has 10 times as many employees, has been adding features for years, has an established brand, and more money.

Now the more technical side (I’m mostly writing about tech startups here, as this is what I’m more familiar with).

There are many things to do, design, architecture, programming, testing, deployment, etc… Choices need to be made and these choices have different priorities than in large companies. Stuff has to be done fast, so there is no time for the “Enterprise” stuff. Whatever that word at one point signified, it’s now become synonymous with “clueless pointy hairy bosses”. There is not time for commercial product evaluation, negotiations, and life cycles. Open Source Software usually rules in successful startups. It allows them to benefit from quality code with the ability to resolve bugs, add features and augment the software as they wish. They often built software using open source platforms and frameworks and themselves greatly contribute to open source. Many times the tools that they built, that aren’t specific to their business and don’t contain any intellectual property, are released to benefit the community. Now others can use that as a tool to benefit in their endeavor. The cycle continues.

I’m going to refrain from discussing specific examples of what I’d consider sensible choices. Every business and motivation has different priorities and in many cases what I would consider a suboptimal choice, would actually be the best choice for a task/dilemma at hand. One thing’s for sure though, open source software rules and beyond the brilliant people that make things happen, is a big contributor to the success of these companies.

Because people are smart, they have to get things done, and they put their blood and sweat into it, they take their time to create fun and productive environments. I mean, who wants to work a lot and not have fun doing it? Or who wants to give up the security of a full time job to fail?

Large companies

So I actually won’t talk about large companies here. I use the name mostly to refer to practices that are prevalent in larger organizations. I’m mostly going to look at the shift from an efficient, fun startup, to a bureaucratic mind draining organization that has lost its ways.

This happens all the time. The talent looses its interest and usually scatters to other companies or to start their own. The company is left with a product that’s aging and a leadership team that’s focused on maximizing the profit from the product it has. Nothing wrong with maximizing the profit, but not at the cost of stagnation. The talent drain is prevailing and the leadership for the lack of better judgment blames this on the lack of a process. “We’ve lost our ways, we’re not productive any more. We need to put a process in place that will get us going.” they say. I’m not going to judge these folks at this point, I mean their core competency isn’t innovation, it’s stability. The two are polar opposites.

Then havoc wreaks. Process after process is established; Feature after feature thoughtlessly gets added to the product; Documentation and processes take priority to common sense and productivity; Code base grows unmanageable; More time is spent talking about doing, than doing. Sometimes more and more people get hired, with less and less qualifications or for qualifications that aren’t critical to success. Sounds familiar?

This happens all the time. The bottom line is that most innovators don’t spend their lifetime chasing an idea (especially these days). They innovate and then when they don’t see any more room for innovation and fun, they leave. Yes, they have what some would call ADHD when it comes to stability and work ethics. They probably do, but in a good form, they are chasing their dreams and refuse to waste time on something that won’t make them happy.

This is not to say that innovators are better than “stabilizers” (I just made that one up). There is room for both, but stabilizers need to understand how to maintain the level of competitiveness and innovative spirit in the organizations. They should recruit and motivate the brightest, not the workaholics per say, not the conformists, but free spirited minds. These are the folks that make shit happen. These folks of course have to be kept in check by the stabilizers, but not by getting in their way. Actually, the total opposite, by getting out of their way. Give them room to do what they do best.

Conclusion

I don’t think it’s ever too late for a company to change its ways. Get back to a startup environment. Large organizations might have a hard time doing this. They have too many people and they can’t just start over. Small companies are great for this. They can start afresh. They can retain talent, pay them well, make them happy, and most of all, I’ll say it again, get out of their way. If you hired a development team to create a product, let them do it. The more shackles you put on them, the less likely they’ll succeed and the more likely they’ll leave ASAP. Intellectuals are always in demand and it really bothers me to see companies treat such employees as sweat shop workers. We pay you, you do as you’re told. That’s a recipe for disaster.

If your developers are more productive with language x and platform y, unless their choice is completely ridiculous, let them use it. They’ll thank you later, with a better quality product, more productivity and generally a more positive attitude.

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6 comments

  1. Ashish Bhandari

    There are many factors that can turn an efficient, fun startup into a place that drains your life force just thinking about it. Limited budgets due to the economy, the sudden departure of key talent, or even the inability to realize that any successful startup must eventually “grow-up” to move to the next stage.

    Yes, these companies can, and should, retain an atmosphere that encourages innovation and free thinking. But with their success, usually comes growth which comes with a monthly price tag. Those expenses must be paid and the customers are the ones paying them. Customer demands/requests must be met or they will go elsewhere and the support structure for all that innovation will collapse.

    In these difficult times, many companies find themselves in similar situations. The choices are to ride out the lean times, fold-up, or buckle down and try and break ahead of the pack with innovative new products or services. Breaking out is either expensive, or requires a sacrifice from the employees in a position to make it happen.

    You mention that a smart company would “get out of the way” of developers. What “way” is that? Are the developers running the show? Are they drumming up business, listening to customer needs, analyzing requirements, monitoring and steering industry trends, designing system architectures, doing business analysis to identify needs and opportunities, etc.?

    Without great developers, any company is at best destined for mediocrity. However, you could put 100 great developers and $50 million dollars in an office and they aren’t going to get very far without sales, marketing, SQA, IT, and management to mention a few. Show me an investor willing to do that and I’ll show you a broke investor.

    The key is not to say, “Get out of my way.”, but rather to challenge process that is put in place for the sake of process and insist on a sensible business justification for each. Just because startup developers are not used to formal documentation or processes does not mean that they should be exempt from them forever.

    There are very good reasons for process and documentation, not the least of which is requirements validation. What good is a brilliant piece of code that does something no one needs, or does only half the things that the customers needed?

    That’s just the tip of the iceberg, but process has it’s place in efficient, and yes, fun organizations. Innovation is not a process, it’s an art form. Some have the talent, some don’t. Those that do, can innovate in any environment.

    • Hi Ashish :-). Thanks for the reply. My replies are below…

      There are many factors that can turn an efficient, fun startup into a place that drains your life force just thinking about it. Limited budgets due to the economy, the sudden departure of key talent, or even the inability to realize that any successful startup must eventually “grow-up” to move to the next stage.

      Yes, there are unique challenges in startups, but as I mentioned, I use the word “startup” to refer to businesses that maintain that spark and some practices, not referring to the precise definition that many think of it as. To me, startups are synonymous with innovation, efficiency, productivity in all regards. Apple is a startup in that sense, so was Google until a few years ago, and many others that have surpassed the traditional thresholds of startups, like longevity, size, financing, etc… Google is loosing it and although it doesn’t yet show it in their stock price and revenues, it will soon. Much chatter lately about how their software is starting to suck and that opens the door for a more innovative/creative startup.

      Yes, these companies can, and should, retain an atmosphere that encourages innovation and free thinking. But with their success, usually comes growth which comes with a monthly price tag. Those expenses must be paid and the customers are the ones paying them. Customer demands/requests must be met or they will go elsewhere and the support structure for all that innovation will collapse.

      Startups also have customers. Again, I’m not referring to organizations that have no revenue or customers and are building their product with funding. It is true that with growth come challenges, specifically on how to manage and track progress. It is true that as a company grows, processes change, but the truly successful ones retain some of the startup qualities and vigor. Customer’s pay bills, but implementing customer’s requests just because, is the biggest issue plaguing software companies and in my opinion the biggest precursor to their demise. Apple satisfies their customers, but they sure don’t implement everything the customer “thinks” they want. “Thinks” is the key word here. Most customers aren’t innovators. You gain a lot more by observing them than actually having them come up with the solution. Read some of Jason Fried assays and his book “Rework”. Actually, I’d highly recommend anyone in business read “Rework”. His company has a very successful suite of products and the reason they are successful is because they didn’t budge to make it more complex with a barrage of requirements, instead they made it good enough for many folks who are willing to pay for it. Enterprise software is usually the opposite, it’s ridiculously hard to use, has all the features that anyone will ever need and no one will ever use.

      You mention that a smart company would “get out of the way” of developers. What “way” is that? Are the developers running the show? Are they drumming up business, listening to customer needs, analyzing requirements, monitoring and steering industry trends, designing system architectures, doing business analysis to identify needs and opportunities, etc.?

      In many large organizations, they focus on salary and skills, but because of hiring practices and attractiveness of projects, that don’t attract anyone that’s self motivated and creative. Again, I’m generalizing here, but it’s a trend. Lots of these developers need hand holding. Processes are in place to ensure they work a particular amount of time, and detailed specifications need to be put into place and handed to them to ensure they do less thinking and more coding. This doesn’t work very well, just look at “enterprise” software again. In startups, there is no resources to hold hands, developers have more responsibility. Doesn’t necessarily mean they have to work more, they are just usually smarter, more skilled, and more motivated to do the job, so no need to track or hand hold. They need to understand the task (requirements) in some form, but don’t need details specs. They are not coders, they are artists. They have the vision and they set out to create. They aren’t treated like code monkeys, they aren’t, they are actually pretty smart and without them, no matter the idea, biz dev team, funding or any other outside influence, the company wouldn’t succeed. I’ve seen many successful tech startups started by programmers that developed great products that caught the eye and became a success, I’m yet to see any started by biz dev guys that didn’t recruit great programmers on the team.

      I once worked at a large energy company that had a poster that said “Process over people”. I’m not kidding. It wasn’t a software company, but this statement is ridiculous in any organization that thrives on people’s creativity.

      Without great developers, any company is at best destined for mediocrity. However, you could put 100 great developers and $50 million dollars in an office and they aren’t going to get very far without sales, marketing, SQA, IT, and management to mention a few. Show me an investor willing to do that and I’ll show you a broke investor.

      Great developers are usually very smart folks that can do more than monkey coding. Usually they are the brains of the software company. They are analytically smart and creative at the same time. In larger organizations that isn’t the case, as they have to cut corners to fill their vacancies. It is absolutely true that a company needs many roles to succeed. Everyone’s important, at least one hopes that it’s that efficient. Lot’s of companies hire sleuths of folks that they don’t necessarily need. Look at the last few years, companies where failing, they laid off up to 50% of their staff, sometimes even more, and it was still business as usual. Now that’s scary.

      The key is not to say, “Get out of my way.”, but rather to challenge process that is put in place for the sake of process and insist on a sensible business justification for each. Just because startup developers are not used to formal documentation or processes does not mean that they should be exempt from them forever.

      Agree.

      There are very good reasons for process and documentation, not the least of which is requirements validation. What good is a brilliant piece of code that does something no one needs, or does only half the things that the customers needed?

      Yeah, I didn’t insist that we just program blindly without requirements. Of course not. I’m all for requirements and documentation. I’m for everything that makes sense and has value. But value sometimes is put on things as a matter of habit or formal processes that specify them, not because there is true value. Avoiding it is key.

      That’s just the tip of the iceberg, but process has its place in efficient, and yes, fun organizations. Innovation is not a process, it’s an art form. Some have the talent, some don’t. Those that do, can innovate in any environment.

      Yes, some process is needed, but it has to be an efficient, not superfluous. It is not true though that one can innovate in any environment. Processes should be built around people, not the other way around. Great companies spend lots of time and money creating environments where the valuable people they hire thrive. Otherwise we can just stick folks in a sweat shop and call it a day.

      • Ashish Bhandari

        I expected to have to respond to a lot, but after reading your response a couple of times, I actually think we agree on most points. Where I think we differ are two key areas.

        1. Definition of a Startup I understand that you are using this term in a non-conventional way. But only after much explanation and back-and-forth. Wouldn’t it be easier to say “innovative and efficient” or “competitive and forward-thinking” rather than startup? By using a well defined word in a very different way, you undermine your own arguments as a result of people’s entrenched ideas about the term.

        2. Customer’s Ongoing Requirements I think we are only slightly apart here in that you assumed I meant that any customer request should be granted. No. Again, analysis, justification, cost benefit, must all be done before deciding if a request is one that should be granted.

        At the same time, on occasion, the good will benefits of granting a non-critical request outweigh the cost. This is where what seems like a waste of time is actually an investment in a relationship.

        Striking that balance is difficult and getting everyone in a organization to agree on it is even harder.

        But in the end, the central point that I think we both feel strongly about is that process is a necessary part of running a company, but that it must be justifiable and it must not end up becoming process for the sake of process.

        Putting procedural obstacles in the path of developers is the worst thing that an organization can do. However, there are certain procedures that benefit the developers and/or the organization as a whole enough to justify the time it takes to carry them out.

        Keeping those in check is both a logical and political battle that has to be waged tactfully (and sometimes in measured strides) in order to keep all sides productive, happy, and challenged.

        Ashish

        • The idea of a word, which I believe to be overloaded, isn’t important. I explained that to me, startup is a mentality, that lives on, mostly for good. It lives on in companies that size-wise are way beyond a startup, but they continuously innovate like one.

          I think the problem I have with large companies that have crossed the chasm of manageable size, is that most decisions are made based on immediate cost benefits. Well, good things in life aren’t immediately rewarded and most of them take time. Sometimes an investment in a glimmer of hope idea in order to bring change is what makes a difference in the long run. Just ask your CEO about patient recruitment. 3 years ago the idea supposedly was dumb, now he flaunts it around as some forward thinking idea of his. There is a big difference between companies that truly innovate and ones that follow. At one point Nextrials innovated and I’m proud to have been a small part of that.

          I agree with you on most of the process stuff.

          Hope you are doing well. Keep in touch.

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