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Building Products: Small vs. Large Companies

Comparison of product building between larger companies and startups is a little tricky. There are similarities and differences between team structures, lifestyle, and product focus. To understand the differences between the two, we must understand that a startup is building a product as their lifeblood, as their chance to continue being a company, where an established company is building products under the assertion that the new product will not make or break the company. Neither a startup nor an established company is a scaled version of the other. Rather, the entire ideology behind building products is distinct in each.

Urgency

Urgency drives product innovation at startups. They’re essentially operating with a gun to their heads, constantly keeping an eye fixed to the burn rate. For that reason, startup CEOs want to get products in front of customers, fast. Startups want to make products quickly, so they can measure and adapt to keep their company alive.

Large companies aim to deliver repeatable products, revenue, and profits. No one is losing their job if one product doesn’t pan out. Creating repeatable products demands a company culture that supports processes, procedure, and incentives.

The urgency in a startup and the lack thereof in an established company obviously creates some very different culture and lifestyle circumstances. Because a startup is dependent on the success of a product, it’s unavoidable for everyone to have quite a bit of responsibility and accountability. That also means anything you do to contribute to the product will have impact — good or bad. However, startups usually emphasize lean methodology which favors agility and speed over cautiousness. Mistakes are learning mechanisms, not grounds for punishment.

Customer Development V. Design Thinking

Normally, startups are a result of a visionary with an idea for a product, who needs to find customers to support his/her idea. Steve Blank came up with this process of customer development which is driven by a technology product and a need for speed. Characteristics of customer development include:

  • Getting a MVP FAST for learning purposes
  • Finding potential customers to test hypothesis
  • Customer drives product market fit, not the product
  • Favoring speed over certainty
  • Operating under the assumption that hypothesis will be wrong, ability to pivot and iterate quickly
design management

via wikipedia

Design thinking is a little bit different, and it’s a luxury only afforded to an established company. Design thinking still takes into account the potential needs of customers, but the motivation and strategy are entirely different. Without the visionary product idea, companies set out doing ‘need finding’ supported by rapid prototyping. There will be a much larger investment in time and money, so there is much more focus on minimizing product risk.

Design thinking has an ‘inspiration, ideation, & implementation’ solution based approach. LOTS of time & money are put in, so the cost of failure would be enormous. Emphasis is placed on understanding customer needs before building the product. There is less urgency, and perhaps years go into prototyping and testing.

Structure

The process and ideologies of building products at startups vs. established companies are different because their motivations are separate. But what about team structure? While teams at startups and established companies are no less talented or smart than one another, the two differ in their need for generalists vs. specialists.

Although specialization is still important in a startup, it’s generalists who excel at building a startup product. With a company so small, it’s pivotal that the engineers are able to put on many different hats and get a job done. Normally the small team size and generalist approach means that there won’t be a lot of structure when it comes to who does what. Everyone’s role at a startup is to get the product out of the door; they don’t have the luxury to create specialized teams yet.

On the same note, generalists don’t do well at larger companies. Companies want you to be really, really good at one thing that you can spend all of your time on. Midsize and larger companies have room to pursue depth. Mature companies create teams that are separated by skill, and teams will usually work separately to fill different roles within the company. Its simply a higher level of organization that is natural in a company’s growth process. Facebook, for example, has over 50 core engineering teams who take on niche roles such as: design, search, messaging, feed, etc.

As startups mature, they too gain more and more need for specialization, and startup employees must adapt and specialize or move on.

Politics

Startup product managers, or CTOs, normally have complete autonomy over product decisions. There may sometimes be one or two people they must consult with before making huge decisions. A lot of times, the founder is the one making the product, therefore they have complete control over product decisions. While this method doesn’t lend itself to quality control, it does contribute to more agile and streamlined product development methods.
Mature and corporate product managers generally have to navigate within a sea of politics before decisions are made. There are many departments the product manager will have to influence in order to gain approval. Nothing moves forward until sign offs and eventual final approvals are granted. From a quality and design point of view, this is important because you get many eyes on a single problem, normally resulting in higher quality decisions. Things move much, much slower under these circumstances, which can be a major headache for a product manager trying to meet a deadline.

Building a product operates under one umbrella motivation: solve a problem for customers. Yet, the process of building a product in a startup and a mature company are going to take different paths in product building — startups build in a sense of urgency, while established companies take their time and put far greater emphasis on minimizing risks. That translates into strategy, politics, and team structure, but in the end, a product flies or flops at the hands of customers.