5 Ways Startups Die: Why Big Company Managers Fail (How to deprogram it)

TL;DR

Big-company managers can fail at startups because corporate scale, established customers, revenue streams, and layers of management can conceal weak individual results. The transcript says corporate bureaucracy costs about three trillion dollars per year in productivity and argues that startups have no comparable “air cover”: if the product or service is poor, the company dies. Read on for the corporate habits founders must recognize and deprogram.

Transcript

we have too many managers and not enough doers it's not your fault this is just how it is we need to talk about your tps reports yeah the cover sheet i know i know uh bill talked to me about it yeah did you get that memo yeah i got the memo and i understand the policy and the problem is just that i forgot the one time and i've already taken care of... Read More

Key Insights

• 💰 Corporate bureaucracy costs companies trillions of dollars each year in lost productivity.
• 🚚 Startups should be cautious about adopting traditional corporate practices and instead focus on delivering results.
• 👀 Avoiding mistakes that make your boss look bad and promoting a culture of accountability can help prevent the negative effects of corporatism.
• 🎯 Startups need to prioritize making a positive impact on their target market and providing tangible value to customers.
• ❓ Embracing a results-oriented approach is crucial for startup success.
• 📈 Startups should avoid blindly following buzzwords and trends and instead focus on solving real problems.
• 🛀 Promoting a culture of credit-taking and avoiding unnecessary risk can foster a healthier startup environment.

Questions & Answers

Q: Why do big-company managers fail at startups?

Big-company managers can become disconnected from creating because an installed customer base, sales force, brand name, and large revenue streams help produce outcomes regardless of an individual’s effort. At a startup, there is no such support, so looking busy cannot compensate for a product or service that fails.

Q: How can founders deprogram corporate habits that hurt startups?

They should reconnect work to actual creation and judge decisions by whether they produce results. The transcript also suggests removing unnecessary managerial layers and choosing the best available tool instead of rebuilding something internally merely to demonstrate skills or follow a trend.

Q: What is corporatism in the context of startups?

Corporatism is presented as a set of big-company habits that can infect and eventually kill a startup. These habits include work that only looks productive, excessive layers between decision-makers and doers, and internal projects driven by promotion incentives rather than company needs.

Q: How much does corporate bureaucracy cost in lost productivity?

The transcript cites a 2016 Harvard Business Review statement estimating that corporate bureaucracy costs about three trillion dollars per year in productivity. It also says reducing the number of managers can produce more productivity and output.

Q: Why can bureaucracy kill a startup?

A startup lacks the installed customer base, major brand, large revenue streams, and backup personnel that can hide failure inside a big company. If its product or service is poor, the startup dies, so employees must create real results rather than merely appear active.

Q: Why are too many management layers harmful?

Management layers can separate executives from the people doing the work and slow information as it passes through many hands. Using a scene from Ford v Ferrari, the transcript argues that a company cannot win a race by committee and questions whether an army of intermediaries is necessary.

Q: Why do large companies rebuild tools that already exist?

The transcript says Uber took years to switch to Slack because it had invested deeply in an internal version called YouChat. Engineers and managers may prefer building internally because creating a trend-driven project can demonstrate skills, support promotion, and provide job security.

Q: Why do managers become attached to their own ideas?

The transcript cites an experiment by Professor Dan Ariely in which people proposed solutions for climate change. Participants rated solutions they created as more important, useful, and creative, and they were willing to devote more time, energy, and thought to them.

Summary

In this video, the speaker discusses the detrimental effects of corporatism on companies and emphasizes the need to deprogram it. They address issues such as excessive managerial positions, corporate inefficiencies, the dangers of "not invented here" syndrome, and the importance of taking credit for one's work. The speaker also provides insights on how to avoid looking like a failure, the significance of tangible results in startups, and the necessity of changing one's surroundings and mindset to succeed in the startup world.

Questions & Answers

Q: What is the main problem with corporate bureaucracy?

Corporate bureaucracy tends to have too many managers and not enough doers, leading to a decrease in productivity and output. The Harvard Business Review estimates that corporate bureaucracy costs about three trillion dollars per year in terms of lost productivity.

Q: Why do big companies often prioritize management over actual work?

Big companies often have a culture where employees are disconnected from the act of creating and are more focused on looking busy rather than actually producing meaningful results. Additionally, at large companies, employees have the luxury of backup troops and support systems, which can cover up failures.

Q: How does transitioning from a big company to a startup impact individuals?

Individuals who transition from big companies to startups face a major shift in the way work is done. They may have been accustomed to relying on the efforts of others and taking credit for their work. In startups, individuals are solely responsible for their own success and need to work hard to make things happen.

Q: What is corporatism and how does it affect companies?

Corporatism refers to the mindset and culture that often infects companies, leading to inefficiencies and ultimately killing them. It manifests in excessive managerial positions, disconnection from the act of creating, and a lack of focus on concrete results.

Q: How can startups avoid the pitfalls of corporatism?

Startups should be aware of the dangers of corporatism and make a conscious effort to deprogram it. This includes prioritizing tangible results over looking busy, avoiding the "not invented here" syndrome, and creating a culture where credit is given to those who do the work.

Q: What is the importance of taking credit for one's work?

Taking credit for one's work is crucial for career advancement and recognition within an organization. It is often rewarded in corporate settings, with individuals being associated with successful outcomes even if they were only tangentially involved. This behavior can also be addressed by senior leaders who actively promote a culture of recognizing and praising the efforts of those who do the actual work.

Q: How can startups avoid the "not invented here" syndrome?

Startups should resist the temptation to reinvent the wheel if there are existing tools or solutions available that can serve their needs. It is important to be open to using external tools, frameworks, or software to streamline processes and avoid unnecessary internal development.

Q: What are the risks of blindly following buzzwords and trends?

Blindly following buzzwords and trends can lead startups astray, as they may end up focusing on popular concepts without fully understanding the market or solving real problems. Startups need to go beyond buzzwords and ensure that their products or services truly make a difference and provide value to customers.

Q: How can startups prioritize tangible results over empty actions?

Startups should focus on concrete numbers and measurable outcomes, such as user growth, customer savings, or revenue. By constantly evaluating and striving for results, startups can avoid getting caught up in meaningless busywork and instead focus on actions that drive real impact.

Q: What are some key takeaways for startups to succeed?

Startups need to prioritize results, be aware of the dangers of corporatism, actively promote a culture of crediting the work of individuals, and avoid blindly following trends. It is also important for founders and executives to model the behavior they expect from their team members and create a supportive environment that encourages learning and growth.

Takeaways

Corporatism in companies, characterized by excessive managerial positions, disconnection from the act of creating, and a focus on looking busy rather than producing meaningful results, can be detrimental and even lead to the demise of organizations. By deprogramming corporatism, startups can prioritize tangible results, avoid the "not invented here" syndrome, ensure credit is given to those who do the work, and focus on creating products that truly solve problems. The key to success lies in a culture of action, results, and continuous improvement.

Summary & Key Takeaways

• Corporate bureaucracy costs companies approximately three trillion dollars per year in lost productivity.

• Startups, in particular, need to be aware of the pitfalls of corporatism and focus on results rather than conforming to traditional corporate practices.

• Avoiding mistakes that make your boss look bad and promoting a culture of accountability and credit-taking can help prevent the negative effects of corporatism.