The 14 Micro and Macro Corporate Forces That Affect New Products and Ventures

Getting new products and new ventures off the ground in massive companies requires overcoming enormous hurdles. There is a substantial amount of knowledge available on overcoming the technical hurdles – desirability, viability and feasibility – but there is limited information to be found on overcoming the at play in massive companies. These corporate forces are arguably the biggest hurdles a new product venture faces. corporate forces Big companies have a . They’re great at doing more of what made them successful at scale. Large organisations can , hire 100,000 workers or process millions in transactions without blinking. deep-rooted tendency to create operational efficiency ship millions of devices The systems, people and processes at play that make these enormous feats of achievement possible have a way of wrapping their tentacles around new product ventures then slowing them down, impairing them and, sometimes, killing them off. What’s fascinating is that often it’s not through lack of technical knowledge that new products struggle. Big companies have the resources to access the best minds, leading thinking and proprietary data in ways that a startup often can’t. Big companies will bring the latest in new venture frameworks research, they’ll have excellent trainers involved, and they’ll tap people that have done it before. Plus there is so much startup knowledge that is freely available and accessible now. Where new product ventures come unstuck is that the corporate forces at work are mostly left unstated, unchallenged and unaddressed. Other times, when they are challenged or stated they are rebuffed. There are many reasons why people in big companies don’t want to lean into these, but that is a whole topic in itself and a topic for another day. Instead, what I’m going to focus on in this article is providing a framework for more tactfully stating, challenging and addressing the corporate forces that will hurt your new product venture if you’re building it in or with a big company. Given the emotions and egos often on the line, a framework like this can lead to a more collaborative discussion grounded in some objectivity rather than a clash of opinions. Corporate forces deserve just as much attention and diligence as you would take to developing a Value Proposition or a Business Model. You need to work out how to overcome the forces that are most likely to derail your new product. This article is exclusively focused on the interplay of corporate forces with major new initiatives, like a new product or new venture. It doesn’t look at, for example, the way corporate forces may help or hinder the doubling of an existing business unit, or the use of capital investment to massively reduce costs in the long run. While there may be some overlap, this scoping is important because of the nature of different types of initiatives and how they play out in large companies. I’ll explore the corporate forces by first coming at them from a macro point of view, looking at the net result of all the micro forces at play. Then we’ll come at it from the bottom up, looking at the small forces that combine to create the macro effects. Source: Giphy Macro Corporate Forces At a macro level, there are three forces that affect new products and new ventures: Slowdown Force Complexify Force Cost Creep Force There are exceptions to this, but they are the infrequent exceptions that prove the rule – like COVID forcing work from home. But you’re better off operating on the assumption that these macro corporate forces impact your new product and be pleasantly surprised when they don’t than to assume your initiative will be different. will Let’s explore the macro corporate forces in more detail so that you can understand them. Slowdown Force Big companies generally slow new initiatives down. This is the result of all the micro forces listed further below at work. Specialisation means more collaboration is needed, more context setting, more people to engage. Hierarchy means multiple layers need to be traversed on any meaningful (and often meaningless) decisions. All of this takes time. Even CEOs can’t skip good governance processes in large organisations. A product manager I know was tasked with leading a new strategic product venture of high priority and value to a massive company. He needed to run landing page experiments to test the desirability of their product. He had a favourite tool he’d used before at a previous company. It took him three weeks to be allowed to use a tool that cost $99/month to test three different landing pages. The tool had to be analysed by legal; he had to say what he was going to put on the web, and procurement had to get involved due to data privacy needs. I just want to reiterate that what we’re dealing with here is new initiatives. When it comes to initiatives that are underway – like existing businesses – doing more of what they are good at then corporates can move at lightning speed. Practical Tip: My completely non-scientific, based on anecdata only, rule of thumb is that it will generally take a big company 3-5 times longer to complete a task than a smaller company. Complexify Force Big companies generally tend towards complexity, often unintentionally. This almost always comes with the side effect of increasing rigidity. Complexity comes about because of the number of requirements and constraints that apply to almost any activity. These requirements and constraints have usually been developed to help avoid costly problems and create operational efficiencies at scale. While they serve a valuable purpose at scale, many requirements and constraints are commercially unproductive with new products and ventures. Arguments about dropping complexity usually fall flat because it’s someone’s specialty or someone’s career/risk on the line. It’s harder to say no to a corporate policy or addition that negates a risk than it is to say yes or take the risk, but every time this happens complexity increases. Complexity means more moving parts that need to be discussed, thought about and managed as the new product evolves (or fails to). It’s time spent dealing with non-functionals (IT speak for things that don’t do anything directly useful for a customer or the business, but rather make the useful thing, sometimes a hygiene factor). Complexity shifts the focus from what customers want and getting results towards the periphery or supporting aspects of a product venture. Then with complexity comes rigidity. The more layers of constraints and requirements you need to meet, the harder it becomes to change course and to change course is an essential part of building new ventures. Being rigid . creates fragility and reduces the ability to benefit from randomness, volatility and uncertainty Comment: Yes, complexify is a real word meaning “to make more complex”. I also did a double-take. Cost Creep Force Big companies generally make new initiatives more expensive than they probably need to be. The tendency towards more complexity and to take longer are key contributors to increasing the cost and effort of new products and ventures. There is also a contribution from the generally higher costs that big companies pay for the same (or similar) benefit. For example, a big company will usually end up paying more for the same software due to “corporate requirements”. One can argue they got more features but was the 2x increase in price to meet your security team’s single sign-on requirement really necessary for this new venture? Usually not. This same logic applies to adding people from different functions. You need input from legal, marketing, finance, security and more. Each one adds costs. There are cases where big companies gain a benefit from their size in pricing. Still, these discounts often aren’t useful to new products until later in their lifecycle when the corporate forces have abated. Source: Giphy Micro Corporate Forces Behind the macro forces are smaller forces at play within large companies. Sometimes these micro forces can be advantageous, some need to be managed, other times you need to live with them, and sometimes you just have to pretend they don’t exist (if you’re being politically pragmatic). The approach taken to listing these was to attempt to get a mutually exclusive, comprehensively exhaustive list however developing a mutually exclusive list proved somewhat difficult, so I erred on the side of comprehensiveness. The micro forces are listed in alphabetical order. Business Model Force An organisation’s business model will work to force new ideas in the direction of the current state of affairs. If a business is geared towards selling to consumers, going through partners, having a sales team, selling at low cost or high cost, going for volume, going for high touch services or whatever the model is then it will tend to select or push ideas towards what is working for the business regardless of whether that is the right thing for the new venture or the future. This can be a force for good, pushing a new product into a form that will gain strategic advantage from the existing organisation or it can spell immediate death. Business models can make ways of thinking about investments or operating so foreign to what might be needed for the new venture to succeed that the new venture is really dead in the water before it begins. Certainty Force Large companies tend to look for high certainty in decision making. Often this certainty is possible because the part of the large company that is successful operates with some amount of certainty (e.g. if we spend $Y on marketing then we get $Z results over the year, we know this because it’s happened for the last five years). Ambiguity is difficult for large companies to wrestle with, and it’s especially difficult for committees (the usual way of decision making in large cos). This means that there will always be a force pushing you to provide high levels of certainty before you act. Whereas in new venture land, ; And you need to act in order to gain certainty. uncertainty is more common than certainty Coordination Force Due to the number of people, teams, divisions, business units, products, committees etc., big companies need to put more effort and energy into coordination. Coordination – or the need for it – results in plans and plans need certainty. Certainty is often the thing you have the least of with a new product or venture. Coordination can also force time delays. People need time to plan yet at certain points in the product lifecycle, doing is more productive than planning/coordinating. Additionally, large organisations plan in a more time and a resource-consuming way to small teams. On the flip side, the force of coordination can work in a new corporate product’s favour if the new product requires some initiative at scale. The strength of a large organisation’s ability to coordinate becomes the new product’s advantage. Collaboration Resistance Force Organisational silos and differing individual goals result in resistance to collaboration between parts of the organisation. Even within organisational units, teams can be fighting with each other for prestige. At the less extreme level, teams can get along but just not be aligned as they have different priorities. Dogma Force Organisations that have been around for a while develop a history of what has worked and what hasn’t. This history is often a huge source of strength. It can also result in beliefs that were true at some point and now are not. The force of dogma is about those beliefs that are held with unquestioningly, which an organisation has become unable to discuss rationally. As , a large company “will convert a belief—which they may even have validated (correctly or incorrectly) at a certain point —into long-lasting dogma whose validity fades with time.” Shreyas Doshi puts it Doshi gives the examples of: Google Hangouts (everything in the browser) vs. Zoom Microsoft (mobile is for serious business) vs. iPhone/Android Individual Ego Force Within big companies, people and their decisions and activities are often somewhat removed from the end benefit or result. This has a way of shifting the way people approach problems and opportunities to being right or appearing to be right instead of a focus on the best path to a result. Being aware of the force of individual egos and how they will impact your new product will help you succeed. This is in no way meant to be read as a criticism on having an ego. A healthy amount of ego is necessary to push change through. Ego, when harnessed well, can be an excellent driver of results. Hubris of Huge Force Big, successful companies deserve to feel confident and have a sense of pride, but this can go too far, especially about something new or a bit outside the norm for the organisation. When it goes too far, it becomes hubris: an excessive sense of pride and self-confidence that can exert unneeded forces on your new product or venture. This force often works to push poor decisions – “we’ll succeed because we’re BigCo”. It can also work to undervalue and undermine the contributions of partners, especially when they are smaller. Hierarchy Force The force of organisational hierarchy acts in different ways. It can add layers to ideas, slow decisions down, reduce collaboration. These layers can be helpful, unhelpful and, more often than not, a bit of both. Hierarchy is good for the organisation of large scale work, but with new ventures, the net result is often to slow the venture down. Decision making needs to happen at speed and with context. Hierarchy exerts a force that reduces both. Scale Force Large organisations are dealing with large numbers. The folks making decisions are generally thinking “how do I move the needle on $80m or $2bn of revenue?” The answer to this is usually in the form of something that can apply to a lot of customers. This scale can force a new product venture to broaden its offering, dilute the value proposition, target a macro trend rather than a real problem, or fail to see the light of day because “it isn’t big enough”. I’ve covered this in a bit more detail in a previous post on . how scale impacts market sizing for new corporate ventures Even at smaller scales, this law still applies – moving the needle on $10m of revenue requires activities that will result in millions more. Often a new product venture doesn’t have a clear pathway to this type of impact. Just be aware of how this scale will bias thinking around the new venture and force it in different directions. Specialisation Force Large organisations are mostly made up of specialists, and specialists rightly bring deep knowledge to a task. This deep knowledge can end up being a huge advantage to new products. Specialisation is often source of new products. Someone deep in a particular field within a specific industry will have a unique viewpoint, especially if they are solving and seeing problems at the scale of large organisations. the Specialisation can also result in tasks being overdone. Overdoing it is typical where supporting specialists with the greatest intentions bring too much of their process or framework to bear. Additionally, specialisation can result in people coming to a task with only part of the picture. For example, a security engineer is only told a subset of the overall problem because “they don’t need to know about the rest of the business, just the security part”. This results in answers that aren’t considerate of the full picture (if not managed correctly). The challenge here is that once a narrow view from a specialist is given organisations have a hard time overturning them because people become fearful of taking a risk that might damage their career (“you didn’t follow the advice of the expert”). Strategic Priorities Force Priorities, decided long ago in a business plan far far away, in big companies drive budgets and decisions for months and years to come. The force of these priorities is, rightly, strong. Every organisation needs to choose where they will focus to get the best results, and every organisation needs to see initiatives through. The force of priorities is one you cannot fight with a new venture (rarely is the new venture so prominent and powerful that it can sway the organisation’s core priorities). You need to find ways to work with them, especially early on. Final Words Getting an understanding of the forces is the starting point. A topic for another day is what you can do about each of them. Also, credit to Shreyas Doshi’s Twitter thread on Gorilla taxes that came while I was working on this, the thread helped solidify my thinking. I love how he refers to some of these forces as taxes, you might want to think about some of these forces in the same way as taxes. We know we have to pay taxes but, as Doshi says, “it’s smart to figure out how you can minimise them”. Also published at https://terem.tech/blog/14-corporate-forces-affecting-new-products-ventures/