Startup vs. Non-Startup

by Krishna on July 14, 2007

There are a lot of useful books and articles on business management. But many of them have a particular problem: The advice works only in a startup or a non-startup, but not both. Unfortunately, many articles do not clearly explain the context under which the advice is applicable. This has the result of confusing readers, who then go about implementing wrong policies in their organizations.

Every company or market goes through 3 distinct phases: rising, stable and declining. The declining company is not of interest in this article. So let us focus on the rising company (or startup situation) and the stable company (or non-startup situation).

Here are some fundamental differences between a startup situation versus a non-startup situation

  1. A startup is about creation: doing something new. A non-startup is about sustaining: maintaining something already created (in addition to any creation work).
  2. A startup has nothing to lose. A non-startup has a lot to lose.
  3. A startup dies by not making decisions. A non-startup can die by making a wrong decision. Sometimes, the best thing for a non-startup is to do nothing.
  4. Every second and every dollar counts for a startup. A non-startup can afford to accept imperfection and wasted time and money.
  5. Lack of passion in a startup can lead to delayed product launches. Passion in a non-startup can result in costly mistakes and cleanup.
  6. You need people with intelligence and ingenuity in a startup. You need people with the ability to follow processes in a non-startup.

Consider an example of the startup vs. non-startup mentality from real life, namely, youth vs. old age. When you are younger, you can take more risks in life because time is on your side. But as you grow older, you start accumulating things and it is much more difficult to make a clean break. Take a look at the following questions:

  1. How much of your wealth are you willing to lose in a disaster? Is it 10%, 25%, 50% or even 100%? When younger, you have more time and opportunity to recreate the wealth you have lost. As you get older, your tolerance limit keeps going down.
  2. How willing are you to relocate to another job or city? Yes, the grass is always greener on the other side. How much greener does it have to be for you to start grazing there?
  3. How difficult is to say you were wrong about a deeply held belief, related to religion, culture or politics? You find the older people get, the more conservative they become because saying you were wrong has a greater cost in social and professional acceptance. Young Turks are not old. 🙂

These answers vary from person to person. That is why you have so many different opinions about anything, because each person has a different ratio of startup versus non-startup mentality. The more a person wants to create, the higher the startup mentality. The opposite is true if the person has already created and seeks to maintain.

When you come to business management recommendations, they follow the same pattern. Recommendations that focus on leadership and innovation are meant to increase risk and are ideal for startups. Recommendations that involve management of people, projects and processes are meant to reduce risk and are ideal for stable organizations.

Depending on your personal outlook, you may feel that the startup mentality is better or worse than the non-startup mentality. It may feel good to be the dynamic, risk-taking adventurer or you may like to be the mature, option-weighing strategist. But logically speaking, the choice has been already made for you.

Action is the default choice when you or your company has nothing to lose. Planning is the default choice when you have a lot to protect or maintain. Changing the default choice is an emotional choice that has no foundation in logic.

For example, a startup that spends months implementing internal processes that guarantee excellent quality code is foolish, because it is not creating anything of value that would bring revenue. A stable company that ignores internal processes to speed up work will drown in customer complaints and lower their market share.

This sounds depressingly like a Greek tragedy, where people don’t have any control over what they should do. But I think these are just guidelines for better management and have room for initiative. Here is how I interpret it. Startups grow by doing more and taking on greater risk. Non-startups grow by doing better and reducing risk. In each situation, there are many things people can do that can manage the company’s destiny.

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