In IT, Bigger is NOT Necessarily Better

by drjim on August 6, 2008

In IT, small teams can get things done quicker

In IT, small teams can get things done quicker

Way back in my young & foolish days I had the opportunity to work at a couple of startups. I came to them after having worked for very large firms such as Boeing, Siemens, and Alcatel. Needless to say the environment, attitude, and overall energy level at the startups was completely different from the large established firms.

One of my friends from those days, Charlie, has moved on and the startup that he’s working for can no longer really be called a startup: they’ve got 800 employees and have been around for almost 10 years now. Thanks to LinkedIn we’ve reconnected and we got to talking about the “good ‘ol days”. What caught my attention is that Charlie told me that he’s been put in charge of a project to rekindle the “startup spirit” within his company. When I asked him how he was going to go about doing that, he said that he had no good ideas.

Charlie’s firm is struggling with the same issue that Microsoft is just starting to deal with: how can a large firm with lots of resources learn to operate like a smaller, more nimble firm? Everyone realizes that Google, Facebook, Salesforce.com, etc. weren’t born inside of a large firm. Instead, they started life as a startup and because they had a great product and lots of employee energy, they got lucky and have become successful. Just about every large company would like to find a way to infuse itself with that kind of “startup energy” (a.k.a. innovation).

Janet Rae-Dupree
wrote a piece dealing with this topic for the New York Times awhile back. Some interesting observations came out of this article. The first is that just about everyone agrees that when it comes to IT and innovation, bigger is not always better. Specifically, smaller teams that are made up of staff from different departments seem to be able to move much quicker than larger traditional organizations. Specifically decisions get made much faster and so the entire team is able to move on to the next-next-next thing. I can hear collective HR and Legal departments gasping at the thought right now!

I almost hate to say it, but the TV show Survivor has proved this point. When forced to, people can work together to solve complex problems in unique ways. Yeah, yeah – there will always be backstabbing and alliances formed; however, when the team’s survival depends on its success this can overcome many of these personality issues.

As Charlie and I wrapped up our talk, I pointed out the Survivor analogy to him. He pushed back and said that he liked the small team idea but didn’t want to be kicking employees off of an island each week. I told that he didn’t need to do that, but what he could do is limit the resources available to a team (time, money, etc.) and tell them that they need to reach a milestone before one of their resources ran out. If they didn’t then the team would be disbanded. Everyone works better under startup-like pressures.

So what do you think? Was my advice to Charlie any good or did I send him down the wrong path? Can the best parts of a startup (innovation, sense of ownership) be replicated within a large company or is this a fool’s quest?

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{ 6 comments… read them below or add one }

Julia August 8, 2008 at 2:10 pm

I like the idea of a smaller cross-functional team, but only if it’s got a shot at being successful in that organization. Even if the small team is fast and nimble, if they still have to work within the “structure” and processes of a larger organization, they’ll fail. One of the things I noticed from working at some “large” companies (vs startups) was that most people don’t question and revise processes that are already in place. “This is how it is done.” “These are the 34 steps and 12 forms you must fill out to launch a new product.” And one memorable job – “you must wait two days so this one person can perform 3 of the steps – which by the way, were completely unnecessary to the launch process.” So my advice – promote a culture where people are encouraged to ask questions and change for the better. In startups – you don’t necessary have any processes to begin with! But you quickly have to make them up and nobody’s got time to waste on inefficiencies.

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Dr. Jim Anderson August 9, 2008 at 7:33 pm

I think that Julia hit it on the head. The one thing that I can add is that in a startup job descriptions really don’t mean a thing – you’ll do what you have to do when it has to be done. Whereas at larger firms, union rules apply and don’t you even think about doing something that you don’t have authorization to do. Sounds like Julia got it right when she was asking for a culture change…!

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Jay August 21, 2008 at 1:19 pm

I agree with Julia’s recommendation for a cultural modification, but even that aspect requires support I feel larger firms will find difficult.

Cultural change will never institutionalize without some core components: infrastructure, management, strategic intent, and customers.

Because the cross-functional team will probably need to operate in a less restrictive capacity, a larger firm may explore a de-centralized approach to satisfy the infrastructure problems they will undoubtably face supporting a rogue element within the traditional culture.

I would also suggest ‘new’ management for the team that is not obligated to deliverables within the traditional business model and culture. This will reduce the number of dependencies that could enforce those long-standing norms and traditions on the new group.

Establishing strategic intent for the new group will allow them to focus on the corporate vision for a future-state, while leaving them a measure of freedom to explore and set their own goals to reach it. The boundaries established within the strategic intent will provide the centralized control structure the direction necessary to ensure the group is working issues that relate to the overall corporate vision.

Customers, whether internal or external, will play a significant role in the success of an innovative team. There is an inherent danger in establishing a counter-culture within an organization, even if it fails in the end. Especially if the failure is related to lack of support or vision. That reflects back on the management’s ineffectiveness to embrace and foster change and further institutionalizes traditional norms even when they should be discarded.

So how does a large firm take on the characteristics of smaller, innovative firms and benefit from the advantages while maintaining consistency in the traditional culture? I think a key factor is in how the de-centralized group’s innovations are fed back into the centralized structure. Centers of Excellence can often serve this purpose. Best practices and innovative approaches to processes, products and services can be archived into such a center and tapped by centralized business units when new or existing functions require modifications.

Just my thoughts…

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Dr. Jim Anderson August 22, 2008 at 3:42 pm

Jay, ok – I think that we are closer to agreement on this one! Ultimately, just like quitting smoking, you’ve got to want to change. Having others tell you to change is not good enough. Julia had brought up the point that change happens very slowly in big companies and I think that that is because all too often there is no communicated need to change.

I’m not necessarily recommending that you “create a crisis”, but something along those lines sure would help to kick things off…!

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Jay August 28, 2008 at 2:03 pm

I agree commmunication could play a role in lost opportunities for changes, but I would also like to point out that core competencies could also play a role in slower reaction to market change as well.

With everyone, especially larger firms jumping on the ‘outsource’ bandwagon, there is the potential risk of outsourcing a core competency. Or conforming so strictly to existing norms and processes that a larger organization can form rigidities in those competencies and either dismiss or ignore market indicators that suggest change is needed.

A shift in competencies or selecting projects that are core competency-destroying would provide just the right type of uncertainty if the project wasn’t properly researched. Typically though, companies that either hold a dominant design, or have obtained a status of industry/market leaders are usually more in-touch with their core competencies and tend to select projects that re-enforce those skills and build on the tacit knowledge base.

You could also consider the methods of transfering that tacit knowledge throughout the company as a contributing factor as well. If companies take on competency-enhancing project but fail to disseminate the ‘lessons learned’ afterwards, you could loose sight of possible market opportunities.

I believe the ‘want to change’ is where we encounter some related issues. If the upper management isn’t as savvy regarding company competencies and recognize market opportunities, and they are plagued with ineffective communication channels, it is almost certain innovative opportunities are going to be events they must watch from the sidelines as they go by.

Lol… I don’t really want to open up the market strategies associated with ‘late comers’ or attempting to build strategies to compensate for technological leads because of a failure to realize innovation early. Let’s just say it is a good conversation for another day.

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Dr. Jim Anderson September 1, 2008 at 9:01 pm

An interesting point that I happened to stumble over the other day was in an article that stated that one reason that some companies are so slow to react to market changes is that they have promoted from within too much. Basically, there is no one onboard who can see the changes happening.

Your comments would lead me to think that not only skill sets of existing workers are important, but perhaps having the right mix of managers from both outside and inside may also play a role…

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