More Signals vs. Causes: Business Edition

In the Wall Street Journal, Rachel Emma Silverman reports on efforts by large company managers to learn from startups.

A couple of the observations made me think of the signals vs. causes thread.

Mr. Osifchin also took note of startup-company quirks, such as the large bell that staffers rang to gather colleagues and magnums of Champagne feathered with Post-it Notes encouraging workers to meet deadlines so that the bottles could be opened.

More likely, the large bells and Champagne celebrations reflect milestone celebrations for folks that are heavily invested and stand to benefit a great deal from the company’s true success.

That success probably represents something larger than the standard large company 10 – 20% bonus that is predicated on factors other than your team’s success — like if the rest of the company delivers, or someone limits your payout to get more for their buddies.

In other words, they don’t work better because of the bells and champagne. They work better because of the incentives. The bells and champagne just help them blow off the steam that comes with that kind of effort.

Here’s another one:

After comparing notes, the executives found that senior managers at the startups spent a significant amount of time in product meetings, says Brad Smith, Intuit’s CEO. That observation led the company to decide its executives should spend more time in the product-development trenches, says spokeswoman Cassie Divine.

More likely, senior managers at startups are the original founders of the product and they have a good idea of what they want it to become.

Senior managers at large companies achieved their status with bully bureaucrat skills, not delivering what the customer wants. Put these guys in the trenches and they’ll feel the need to dominate the discussion and show all the underlings why they’re the big-shots.

What is your company focused on? Startups fail. Big businesses fail. Big businesses were once startups that got a hold of a valuable enough value proposition to sustain itself.

But, if you want to learn something from successful startups, learn this. They respond and evolve to what customers want, not what a steering committee full of empty suits who are far removed from their customer base wants. They have to survive.

The senior leaders of startups are closer to their customers. They probably started off solving a problem they were experiencing and discovered others experienced the same problem and were willing to pay for a fix.

Leaders of steering committees will say they are focused on what customers want. They don’t recognize what they really mean is they are focused on the stylized, segmented, homogenized interpretation of what the steering committee members want the customer to want.

Want to replicate a startup? Remove as many obstacles to getting a true read on the customers’ response as possible.

Then, get the startup people out of corporate and give them some rope. If they succeed, the rewards should be rich. If they fail, they shouldn’t get a paycheck. They should lose something.

From the story, I’ll give credit to GE for doing more than mistaking signals for causes:

General Electric Co.’s “GE Garages,” created in partnership with four tech startups, are roaming workshops that allow GE’s own workers and visitors to tinker and noodle together on new products. GE also began a companywide venture-capital initiative earlier this year, making the firm an investor and partner in some 60 startups.

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