Perhaps the biggest misimpression/misunderstanding I had about Fortune 500 tech companies and start-ups was that start-ups are more agile at developing product.

In fact, it’s quite the opposite.  Every tech leader has tons of talented engineers.  In fact, every tech leaders has more surplus talented engineers — surplus — that you have in your entire start-up.  By that, I don’t mean people with nothing to do, but people who can be repurposed to a new product.  So they can build anything they want.

Furthermore, within a department, or a product team — there are almost no barriers to agility.  As long as you don’t need cross-functional resources (e.g., sales, marketing, corporate, etc.), you can build things amazingly efficiently.  In fact, because you don’t have to worry about running out of money or getting distracted — you can actually build cool stuff more quickly in a big company.  Really the only downside is whatever restrictions there are around pushing out code (e.g., security, code review, etc. — the apps the big guys put out are 2-10x more secure than anything a start-up pushes, out, because they have to be).

So what goes wrong then?  Are people at Big Cos. just stupid, unaware of what is happening in the market?  Hardly.  In fact, with the extra strategic bandwidth that comes with a layer of true management, my learning is the top execs at Big Cos all know exactly where the markets are heading.  Generally as well or better than you do.

The BigCo problem is a combination of (x) impact/runway and (y) cross-functionality “unagility”.  Here’s where start-ups can execute so much better.  Let’s look at each in turn.

Impact/Runway: Look at all the cool products Google (and even Yahoo in the old days) has pushed out, quickly and nimbly – -and then killed.  What happened?  Not enough post-launch scale relative to other opportunities.  Resources are then deployed to higher value projects.  Basically, in a BigCo, if it’s not core, you launch and get 12-18 mos. to prove the value.  Then, if you don’t impact what is a very large business in some fashion in a relatively short timeframe … the resources go away.  But start-ups will keep going far after 12 mos.  For years.  Because they don’t have anything else to do, no higher ROI opportunity …

Cross Functional Challenges/Fiefdoms:  Your own team in a BigCo can build anything you want.  Quickly, elegantly, nimbly.  But what if you need sales or marketing resources from other functional groups?  Convincing them to help can take years.  Years.  This is where things get bottled up.  New BigCo product launches.  But who’s going to sell it?  Manage the customer relationships?  Get on a plane?  Maybe no one … once you cross fiefdoms, it just gets too hard to push something new.  Building a new cool product in a BigCo?  Very easy.  Organizational change?  Close to impossible, let alone to support a nascent product.

So don’t be cocky about your nimble dev team.  That is deeply and perilously misguided.  Be cocky instead about your 72 month commitment to your market.  About being able to bring together engineers, product guys, a sales team, a marketing team, a client success team — all dedicated to your product and your market before it’s truly at scale.   That’s your real competitive advantage.  Because anything in software can be copied.  And if there’s already a template – it can be copied awfully easily.

{This is also why at the end of the day, in SaaS, acquisitions are best post-scale.  Because you need the whole package.}

Scrum tattoo image from here.

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