Wednesday, August 08, 2007

Lessons for a new age startup I - Subverting the Order

There are some interesting lessons to be learnt from the success of Google and some other up and coming companies in the valley these days. In this series I will put together a list of lessons that wannabe entrepreneurs like me cannot afford to discount.

There is no hierarchy, the old hierarchy is dead

In a period of 6-8 years, the old way of doing things has been completely subverted, and has been replaced by a new, egalitarian, non-hierarchical system which is revolutionizing the way people work these days. Having spent a month at Google, I have had the opportunity to experience this new way first-hand. I am not saying Google is the perfect example of this new order, but it sure it is nearer to this model than most other companies regardless of industry, location and sector.

Nothing is more evident in the new order than the lack of hierarchy. Sure, there are directors, Senior execs, VPs etc, but they are there to provide direction, a way to massage the processes so as to create efficiency which in turn helps scale the company. No one orders others about what to do. Hence, no one is beholden to anyone else. Work is accomplished through influence. In this new order, accounting, finance, marketing take a backseat to the most important MBA course one can take - "Managing People at Work" ( Hat tip to my Wharton professor, Mike Useem).

There is no bar for age or experience. You are respected for your work which may be a factor of your age and experience (and then maybe not). So we have high flying, young, out-of-school Associates doing wonderful things because they are allowed to, nay, because they just can. You are only held back by your ambition (and luck). Try telling others what to do, and you will be relegated to the back. The old school of Silicon Valley companies will have to change because the new age tech companies are empowering their employees and in turn, attracting the best ones to their folds.

Is this a mirage or is this really happening? My thesis is that this is what is going on around you right now in the Silicon Valley. The whole basis of the technologies that these companies are producing is empowerment of consumers.
Products like social networks, blogs, p2p, are harvesting the long tail and leveraging an individual's power to create an interesting era of techno-egalitarianism. How can they peddle these wares if they did not, to paraphrase Google, "eat their own dogfood", and implement the same thought-process and concept in their own internal systems?

Anyone who wants to be connected to this coming generation of companies whether as a VC, or an entrepreneur or an executive will need to learn how to work with this new flat order.

Look out for Lesson 2.


Anonymous said...

Not that there is anything wrong with that; but this is the problem with yuppie MBA types - the world seems new to their eyes. Google did not invent egalitarian work culture in the valley in the last 6-8 years. It furthered a hedonistic work culture that was started by the 90s .bombs.

The valley culture started with companies such as Fairchild Semiconductor and was famously popularized by Intel and companies that took flight in its wake.

Any New Age company can boast of a flat organizational structure. But only time will tell, how long that is sustainable as is the free lunch.

Punit Soni's Adventures in VCland said...

:) If you have worked here in the more typical tech firms of Silicon Valley, you would know what I mean. My comments were relative to my time spent in various big and small Silicon Valley firms before going to Bschool. Silicon Valley has always been more meritocratic and egalitarian than most industries/locations, I think Google has upped the ante though. The kind of egalitarianism and opportunity I have seen is definitely a new way of operating.
I agree about the last comment though. I am not sure how sustainable is the free lunch.
And I do think that your remark about yuppie MBAs was uncalled for. Most of us "yuppies" have been engineers, floor workers, managers "before" we were yuppized:) So just because we go to Bschools does not mean we forget our careers/lives before we went. The world is not new, our perspective is new. And that is a good thing.

Punit Soni's Adventures in VCland said...

Would love to hear other people's opinions on this? Do you think Google has reinvented the wheel and made it much more zanier, or is this kind of culture nothing new?
Am curious because I worked in typical Semi/software companies in Silicon Valley with relatively more rigid hierarchies and structure. (Relatively, it was still MUCH better than other locations/industries)

Bipin Preet Singh said...

NVIDIA is one company I can speak of with first hand experience. At the height of its popularity, before the bust that is, it was the "Google" of semiconductor space. Free food, biz class, fancy car deals, regular gifts etc etc. Culture wise also it was pretty similar. The bust changed things. The extended downturn reduced all the freebies and the open-ness of culture as difficult decisions were taken. Right now, Google is at the top. The true test of culture will come in difficult times. After all , businesses survive on cash, not on sentiments.

Punit Soni's Adventures in VCland said...

That is very true. But is culture the freebies?
I contend that culture is giving people the freedom to choose their projects, letting employees move between divisions, and encouraging creativity and transparency, by dismantling the hierarchy that plagues most large companies.
Google's biggest selling point should not be its free food. It is the way it minimizes hierarchy, encourages transparency, and cuts through the mind-numbing bureaucracy that was the hitch in most companies I previously worked with.
Finally, about the freebies (and even these characterstics are in some ways freebies!), you are right. The true test is when the downturn happens for Google.

Patrick said...

Bipin said it well.... it is very easy to look at a company like google, with acres of excess cash and praise how they operate managerially. That doesn't hold as well in the remaining 99% of companies that operate in a real world and have to be concerned about operating margins.

There is only one Google, mostly due to circumstances and some early smart decisions. Be careful not to assume that this model can and should apply everywhere.

One of the important things you learn in Bschool is contingency theories. Where there is no panacea and it really depends on lots and lots of different parameters.

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