Maturing Product, Process, and People for Startup Success
Learning from the big companies
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Today's topic addresses a common perspective that I’m finding in the Startup world that they are somehow unique in how they execute and how they need to focus on shipping features at high velocity and, more often than not, overlook the product, process, and people maturation that is essential to long term growth.
I’ve had the opportunity to mature my career through a series of very large companies such as Honeywell, Raytheon, and Lockheed Martin. I’ve had roles in process optimization, business analytics, and advanced technologies where I’ve been able to see into all the nooks and crannies and dark places of these huge organizations. From corporate six sigma projects to a portfolio of cyber, directed energy, and electronic warfare to emerging technologies and more, I’ve seen the cultures, the styles, the processes, and the behaviors that worked and those that didn’t.
Often in these large companies, they felt restrictive and bureaucratic because they were established and structured. Many employees long for the ‘freedom’ of the startup mentality to execute and innovate. When I joined a startup, I expected things would be different…freeing. What I found is that there are a lot of lessons that these large companies have learned that explain their structure and processes. It’s been interesting to see just how similar they are and what I learned about both.
What’s in a huge company?
As a baseline, I came to fully appreciate how a company like Lockheed Martin is a macrocosm of an entire product space. It is not a monolithic 114,0000 employee, $63 Billion in revenue, monster. It’s broken down into business areas, product lines, and products where each product executes like its own business. Further, these companies have advanced technologies branches within each business area that seed blue sky technologies, perform basic and applied research, receive seedling funding from defense research agencies, and work to mature these into programs of record. They basically act as their own VCs, using their own investment funding, working to get customer funding and maturing technologies into an ‘IPO’ as a program of record. In effect, they run portfolios of start-ups maturing them into franchise programs. The products that succeed and win the competition are those that figured out how to transition from a ‘scrappy’ startup into a ‘real’ company. In my experience, every program at these companies has had to make this transition. Some do it well, and others struggle. The same goes for any independent start-up.
When I joined a ‘scrappy’ startup and began assisting with the transition toward IPO, I started researching how other start-ups succeeded or failed. What intrigued me were the patterns that emerged between what I learned at the big companies and what would allow this company to succeed. I believe the following three lessons apply to any organization working from an idea into a successful company. These are the lessons the big companies have learned (and need to remember) and are the lessons a startup can learn from to mature their Product, Processes, and People
Lesson 1: Product
Transitioning from feature push to scalable pull.
Start looking beyond immediate feature release and start planning further ahead. Quarter-to-quarter planning, when your funding is basically quarter-to-quarter, is a survival mechanism, not a long-term success strategy. Planning needs to start looking two to three years out and envisioning the realm of the possible. Short-term planning on major products at big companies is one year. They develop clear three-year plans, and they have five-year planning structures. Advanced technologies often look ten to fifteen years ahead to help articulate maturation roadmaps and competitive placements. I’ve worked on blue sky development on immature technologies with a look ahead of 20 years! A tech startup isn’t so different than an advanced technology program and as they transition towards IPO, they certainly should have a strong idea of what the future could look like then document that vision and share it.
As you start to look ahead you also need to look across and ensure intentional integration between features and functions with a system of a systems perspective. Bubble gum and bailing twine might work for a proof of concept or low-rate production but small teams piecing a prototype together to test a concept does not scale into long-term success. Instead, diligent systems thinking needs to be applied.
Systems thinking can be achieved by documenting, modeling, and reviewing the current state design architectures. These artifacts enable holistic systems architecture and facilitate the discovery of the very features the organization is driven to deliver. Taking this step doesn’t mean diving into the highest fidelity models and requirements documentation but it does mean looking at the systems and data architecture to ensure scalability, the future ability to create digital twins, an architecture that allows composability, and data architectures that allow advanced analytics.
A key product maturation focus is to ensure the early application of Risk-Driven and Client-Driven Iterative Planning. This focuses the goals of the design iterations around identifying and driving down the highest risks and building visible features that customers care about.
Another challenge to the product is that often, being first to market was based on technologies that are now obsolete. When a new technology emerges, new market entrants aren’t burdened by the ‘success’ of their competitors and can apply the new technologies to clean sheet designs. As the graphic below demonstrates, if a company waits too long to adapt to the new tech, they quickly run the risk of a challenging remediation to keep up with the competition.
Focusing on customer-valued feature releases, looking at the design with a system of systems perspective, and identifying the opportunities to mature the technologies across teams and systems enables the painful and difficult work of retiring tech debt.
The key to product maturity is to focus on “slow is smooth and smooth is fast".” The products that successfully transitioned at the large companies took it slow, made it smooth, and achieved success faster. The products that tried to go fast were too fragile and continuously struggled to get up and running. Sometimes the right answer is to pause, smooth out the systems, burn down the tech debt, and upgrade to the state of the art.
Lesson 2: Processes
Evolving from Ad-hoc bottoms-up to disciplined, agile, and aligned.
Diligently work to establish disciplined processes. My Six Sigma experience can attest that nothing gets better on its own over time. Trying to transition large, established programs toward a digital transformation is much harder than taking a less mature program and transitioning before the wrong foundation is laid. This discipline requires balancing process anarchy against process paralysis, and this isn’t a binary decision. Disciplined execution isn’t just process-focused, but also accountability, vision, adaptability, and flexibility. In fact, the most efficient systems often have the least processes, but those processes are clear, accountable, and executed with discipline.
Processes may start from a bottoms-up approach when the organization is small and learning, but they need to transition into structures that are driven from the top - down and across the organization, just like metrics and goals. This ensures a consistent and cross-organizational application enabling improved execution. Just like the product should lead with a design focused on customer value, so too should your processes be instituted with a design focused on business value to avoid ad-hoc processes.
Process maturation also requires a recognition that other industries have already solved many of the process problems. Most startups are already covered with enablers from the Capability Maturity Model Integration (CMMI) to the Baldridge success criteria, to traditional lean principles. All of these can be applied quickly with ample case studies to base success on.
DevOps is one great example of a software development method that’s actually rooted in Lean Manufacturing principles. A wonderful case study is in the book The Phoenix Project, which relates a very enjoyable story of applying lean manufacturing to software development by capturing the customer value, small batch sizes, kanban design, takt time, and other methods of Lean. The Scaled Agile Framework (SAFe) is another great example of applying lessons learned from large companies as it is largely based on the Toyota Production System.
A final, and very important, consideration of processes is that large companies also have phased maturity programs like Raytheon’s Integrated Product Development System. This seven phases system has gate reviews for products transitioning from concept to program of record. These gates serve as go/no-go reviews to ensure a product doesn’t get too far ahead of its processes in the drive for delivery. Applying similar phased process maturation expectations within a startup can also dramatically improve the success of the organization.
Lesson 3: People
Maturing from scrappy to elite.
Third, and one of the most important lessons, is recognizing that the success patterns of the past, in the ‘scrappy’ phase, don't scale with growth. Skills that were adequate soon become limited. Success is not only maturing your product and processes but maturing your people. Doers need to be complemented by planners. Engineers need to be complemented by architects. Grit and gumption need to be complemented by dutifulness and strategy. Ad hoc needs to be complemented by intentionality. System design needs to be complimented by ecosystem analysis. Engineering-led research and development need to be complemented by customer-led value definition.
Conway’s Law further expands on the idea of maturing the people through organizational design.
Any organization that designs a system (defined broadly) will produce a design whose structure is a copy of the organization's communication structure.
— Melvin E. Conway1
Simply put, organizations design systems that mirror their own organization. If your organization is fractured, communications are ad-hoc, roles and responsibilities are ill-defined and intentional, and cross-organizational collaboration isn’t occurring, you won’t see an efficient product design either.
None of this should imply a lack of talent or improper behavior. It’s recognizing what is needed in the future to continue success. It’s also recognizing that the innovators, ideators, and visionary personalities cluster toward the startup programs, and the more pragmatic, disciplined, and focused personalities are clustered toward the more mature programs. To bridge a startup from hypergrowth to IPO, the skills and talents of the team will have to be balanced.
In this transition period, there will naturally be a clash of personalities. This will be especially true in any fast-growing organization which will rarely get out of the storming phase of the Tuckman Model. In this chaotic time, it’s imperative to drive for structures within the teams as well. This conflict is also healthy and should be managed, not suppressed because it provides refinement and helps balance the process anarchy against paralysis. Also, if your culture starts to look too homogenous, it might be time to Embrace the Divergents and expand perspectives and build diversity of thought.
Maturing Products, Processes, and People are the key to growing any organization and is essential whether an independent startup or a research and development program at a Fortune 100 company. My recommendation for the start-ups is to look to the big companies which represent a portfolio of successful technology developments where they’ve learned how to continuously repeat the processes.
The biggest difference between a big company and a start-up is that there’s a lot less forgiveness for failure in the start-up because they aren’t supported with established processes and structures or the institutional budget to bridge products that struggle. Independent start-ups don’t have the luxury of believing that they can avoid learning these three lessons.