The Lean Startup - Eric Ries [108]
Once the market for the new product is well established, procedures become more routine. To combat the inevitable commoditization of the product in its market, line extensions, incremental upgrades, and new forms of marketing are essential. In this phase, operational excellence takes on a greater role, as an important way to increase margins is to lower costs. This may require a different type of manager: one who excels in optimization, delegation, control, and execution. Company stock prices depend on this kind of predictable growth.
There is a fourth phase as well, one dominated by operating costs and legacy products. This is the domain of outsourcing, automation, and cost reduction. Nonetheless, infrastructure is still mission-critical. Failure of facilities or important infrastructure or the abandonment of loyal customers could derail the whole company. However, unlike the growth and optimization phase, investments in this area will not help the company achieve top-line growth. Managers of this kind of organization suffer the fate of baseball umpires: criticized when something goes wrong, unappreciated when things are going well.
We tend to speak of these four phases of businesses from the perspective of large companies, in which they may represent entire divisions and hundreds or even thousands of people. That’s logical, as the evolution of the business in these kinds of extreme cases is the easiest to observe. However, all companies engage in all four phases of work all the time. As soon as a product hits the marketplace, teams of people work hard to advance it to the next phase. Every successful product or feature began life in research and development (R&D), eventually became a part of the company’s strategy, was subject to optimization, and in time became old news.
The problem for startups and large companies alike is that employees often follow the products they develop as they move from phase to phase. A common practice is for the inventor of a new product or feature to manage the subsequent resources, team, or division that ultimately commercializes it. As a result, strong creative managers wind up getting stuck working on the growth and optimization of products rather than creating new ones.
This tendency is one of the reasons established companies struggle to find creative managers to foster innovation in the first place. Every new innovation competes for resources with established projects, and one of the scarcest resources is talent.
Entrepreneur Is a Job Title
The way out of this dilemma is to manage the four kinds of work differently, allowing strong cross-functional teams to develop around each area. When products move from phase to phase, they are handed off between teams. Employees can choose to move with the product as part of the handoff or stay behind and begin work on something new. Neither choice is necessarily right or wrong; it depends on the temperament and skills of the person in question.
Some people are natural inventors who prefer to work without the pressure and expectations of the later business phases. Others are ambitious and see innovation as a path toward senior management. Still others are particularly skilled at the management of running an established business, outsourcing, and bolstering efficiencies and wringing out cost reductions. People should be allowed to find the kinds of jobs that suit them best.
In fact, entrepreneurship should be considered a viable career path for innovators inside large organizations. Managers who can lead teams by using the Lean Startup methodology should not have to leave the company to reap the rewards