How a Start-up Evolves

"Businesses grow from start-up to conglomerate in three distinct phases, each of which is driven by a different type of person. The differences and conflicts between these waves of activity help explain why so many small companies self-destruct as they grow, and why so many large companies are so bad at doing anything new.

Chapter 12 of Robert X. Cringely's Accidental Empires gives an excellent analogy between the growth of a company and a military operation. He talks about three waves of expansion, each with its own characteristics and each one driven by people with very different sets of skills.

The first wave to hit the beach when entering new territory consists of commandos. These are people who, in Cringely's words, 'Work hard, fast, and cheap.... Their job is to do lots of damage with surprise and teamwork, establishing a beachhead before the enemy is even aware that they exist.' Simply put, they create something out of nothing, turning an idea into a product. A commando can literally do the work of a hundred normal employees when they've got the right problems to work on. A start-up without commandos has nothing to sell.

The second wave consists of infantry, exploiting the opportunity created by the commandos. These are the people who turn a promising start-up into a profitable business with systematic development, manufacturing, and sales efforts. They provide structure to the company that allows it to grow beyond an activity shared by a half-dozen friends into a real business. As Cringely says, 'While the commandos make success possible, it's the infantry that makes success happen.'

The third wave consists of police. Once the business has grown into its market niche, the third wave is an occupying force intent on holding territory. Author Eric Raymond describes middle managers as "conservators of the stability of the organization," which makes the presence of middle management a clear indicator that the third wave has arrived. A middle manager's job is to say no to ideas that don't originate from on high, somewhere near the CEO. This prevents the enormous size of the company from tearing it apart..."

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