Innovation at Companies Big and Small

If you want to innovate, should you hire someone from a large company or a small startup?

Not surprisingly, people from both sides tend to underestimate each other.

Directors and product managers at big companies tend to dismiss the skills of their startup brethren and sistren. They often say things like, "I've managed a product with more revenue than that startup has made since it was founded. And I was leading up a relatively minor product for us. These startup people have no process, and it's a miracle they can ever launch a product, or that it works when they do."

Meanwhile, in startup land, founders often look back with equal scorn. "At big companies, it's a miracle innovation ever happens because there's too much bureaucracy. People may have impressive titles, but they don't have the authority to do anything without endless meetings and processes. I've launched products, changed them, relaunched, and gotten a writeup by tech bloggers faster than these bozos have gotten approval for their requirements document."

I've hired teams and helped launch products at both large and small companies. And, as usual, there's some truth to both sides' perspectives.

Large companies have many advantages:

  • Skilled staff: Most of the development, manufacturing, marketing, legal and other staff have already been hired and are waiting to add your project to the queue
  • Internal funding: The funding process is well-defined: make a business case that's more compelling than other internal projects. As you reach product milestones, the money continues to flow in
  • Process: You have one, along with templates of all of your documents, and project managers who can keep everything on track
  • Established customers: As an established company, you already have customers. You can cross-sell to your existing customer base, or expand a little along one dimension to broaden your reach. 
  • Cross-selling: With even a small percent of your customers giving the new product a try, you can get some real revenue
  • Brand guidelines: You have wide brand awareness built up, along with marketing assets, style guides, collateral, templates, relationships with ad agencies and more.
  • Marketing lists: You have customer list you can market too, as well as a sales pipeline of contacts to market to via email or online ads

A startup has its own set of advantages, including:

  • Freedom: Without bureaucracy, you can move quickly without following some heavy-weight process.
  • Customer development: Without existing customers or marketing lists, you're free to find the right customers, without worrying about the effect on your larger brand.
  • Hiring: You can and must hire the people you need, without worrying about who's already available, because no one is. You're not competing for budget with other projects because the whole company only has one project.
  • Multiple funding options: You can fund the project from any investors who are willing, without being forced to take the plan to one funding body that will say yes or no. 
  • All value is additive: Any revenue model is fair game, and you don't have to worry about cannibalizing other business lines. 
  • New branding: You're not held back by the existing company brand. You can invent and reinvent as needed.

The type of candidate you should hire depends on the situation, and there's more to it than matching your company size to what's on the applicant's resume.

When to hire a startup candidate to a big company:

  • You need the domain expertise
  • The project is isolated from the larger bureaucracy and has freedom to set its own rules
  • You're willing to train on the process

When to hire a big company candidate to a startup:

  • You want to sell to large companies
  • You're growing up and need to bring in more process
  • You're willing to provide more guidance than usual

These are but a few considerations to keep in mind. What else should we add to the list? 

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