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The Startup vs. Big Company Mindset

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The Startup vs. Big Company Mindset

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Paul Graham wrote a great post on startups that is definitely worth reading (in spite of its length). One of the interesting quotes in this text is: "if they aren't median people, it's a rational choice for founders to start [startup companies]".

As I work for a big (or better huge) company, I always think of the difference of people working at both types of companies. I don't think there's a definitive set of personality traits that define whether you should work at one or the other, especially as you see people working at some point of their lives in one type of company and then moving to a different type.

However, it's interesting Paul's quote on "median people". I think it is along the lines of my post on Working at Big Software Companies. Due to the size of big companies, they must have the rules for the average professional, and try to minimize damage to the outliers (either top or underperformers). But there's no magical silver bullet that works perfectly, so there is always some collateral damage.

One example of collateral damage. Let's assume that you have a few top performers, who are capable of doing the majority of work well and faster than others. And then you have many average or good (but not really top) performers on the team. What are the criteria to divide the work? If you're focusing on efficiency and getting the work done more quickly and better, you would probably assign most of the items to the top performers, or at least the critical ones, and have others taking care of the less important stuff. That would guarantee efficiency, but probably you're risking having a lower team morale as most of your people will not be working on the "meaty" or interesting stuff.

In big organizational structures, more often than not, as a manager you're not being measure by the most efficient output, but to have MORE output than your peers. Another point is that, as a manager, you will be measured by what the teams thinks of you (MS Pool is an example of that at Microsoft). Given all that, if you focus on your career, you're better off by not delivering the most you can do - by purposefully not assigning features to top performer and/or slowing them down (*) - and guaranteeing a high team morale among the average professionals than guaranteeing that the top performers are indeed happy and that you're really very effective.

Actually, because of the typical peer comparison when it comes to performance evaluation, it is interesting to see that it can hurt the overall company's performance. Of course, one could argue, that if everybody is producing like crazy, this system would force all to catch up and keep up with other's performance. But if the company is profitable and there are not enough incentive between producing slightly better than peers vs. producing to your potential and, on top of that, producing to your potential may cause more liability and risks that will be detrimental in that culture, then I'm a firm believer that the rule will be to be (or at least look) better than peers, but not to the extent that it can cause risks.

Risk is another interesting aspect of big company mindset. I've seen more average people being promoted and rewarded for not "getting themselves into trouble" than top performers that were bold and had courage to be brave and take the risks, whatever they were (like trying to shake the existing status quo, trying to get the most efficiency of the team, attempting something new). It's just like any other contest one sees on TV, the ones that keep moving forward and even sometimes win are typically the ones that are not bottom performers and do not make huge mistakes that put them on the spot. If you keep going with an average result (better than someone else), do not take much risks (incl. pissing others off), there's a better chance of moving forward in your career.

The biggest perk for those who stick around is that, over time, it's very unlikely to be fired from these companies - it's possible, but unlikely unless you screw things up very badly. So, once you reach a good salary and all the benefits that come with tenure, it's very hard to jump ship and try something new. In particular, for those interested in focusing on some other aspects of their life, as over time you get comfortable in the position, without requiring a lot of effort on your part to keep going.

With this mindset, it's not surprising that the innovator's dilemma exist and that, unfortunately, most of the innovation will not come from these big companies. Actually, there will be innovation there, don't get me wrong. But it's the kind of innovation that requires an enormous structure in place or ecosystem that anyone new to the area can't afford to such large investment or tap into any potential returns. Also, the big companies will not be the most efficient, unless there's really a market force driving that. But its survival is not a matter of really being efficient, but just being more efficient than competitors - if these can't not bought out or driven out of the market somehow.

(*) On the slowing down top performers, I've seen that happening and couldn't believe my eyes. The same is reported in the book "The Peter Principle". Essentially, from management perspective, having someone "too good" makes others feel bad, so one needs to manage these professionals and, oftentimes, it's better to get rid of them. Yes, it seems an absurd, but that happens.

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