This contributed post is for informational purposes only. Please consult a business, financial and legal professional before making any decisions. We may earn money or products from the affiliate links in this post.
When Facebook moved from the motto of ‘Move Fast and Break Things’ to ‘Move Fast with Stable Infra,’ it was a sign that it had grown up and was ready to behave like the corporate behemoth it has become. It’s a familiar story with most startups where a rule-free rampant start finds its limits and tried, and tested business practices are introduced.
Suddenly there is a need for documentation, responsibility matrices, and contingency plans. An idea that used to be launched in a matter of days now takes several months to get off the ground. As a start-up scales up from a small team to a mass employer, the overhead goes up and the risk of failure weights heavier. Start-ups are making the transition to becoming more risk-averse. In a broader sense, the strategic direction needs to be more planned than impulsive.
Lack of a startup mentality going forward
What this means that everything in the company needs to be, as much as it can be, by deliberate design, as opposed to a start-up mentality where things are emergent. The terms deliberate and emergent are commonly used in describing software development and database design but are applicable in the broader business sense.
The previously mentioned motto change for Facebook is usually met with some form of ridicule, it is important to consider that Facebook is very much alive and kicking. There are plenty of examples where companies were unable to switch gears, either sticking with a new philosophy too long or changing to a deliberate design school of thinking too soon.
Other examples of startups ditching the label
Take Zynga for example, who, based on the success of games like Poker and Mafia Wars, found itself flush with cash. It started building out its infrastructure and build data centers worth hundreds of millions. They found they were getting ahead of themselves as they were unable to supply innovations to keep the attention of consumers.
On the flip side, there are startups that keep chasing new opportunities and lack focus. Most learned entrepreneurs and CEOs will tell you that focus is key to success, find a problem that people have and solve it exceptionally well.
Scaling at the right moment
Successful startups can scale-up at the right speed and at the right time. With the proper focus, you can become the single company that defines that industry. Balancing out production and fulfillment with autonomous R&D departments presiding over their own large budget seems the right thing to do.
But history has shown that incumbents struggle with innovation and disruptor danger comes from other startups. Incumbents have found a way to deal with their lack of new design: acquisitions.
Being the incumbent
One of the core benefits of being the incumbent is that you are usually not short of cash. Disruptors become temporary interruptions. By using the leverage of money, you can assimilate or kill things that threaten your business. This basically sets the boundaries for the players we have in the market.
1) The incumbents that can throw their cash around but are unable to innovate themselves
2) Those that are not looking to disrupt and follow the incumbent and are just content with getting a smaller piece of the pie. Take Yeti, for example, a U.S. company that was built on solving consumer problems, stuck to their principles and kept their emergent claws. Find their products on www.froutlet.com.
3) Startups that have successfully scaled up, but now are waiting to get bought out
4) Start-ups that rely on innovation but will fail because they can’t scale up in a timely fashion.