November 09

How to scale (1 of 5) – the journey from garage band to Glastonbury

“Software ends up being shaped by the structure of the organisation that develops it”

Conway’s Law

One of the most animated discussions I often have with founders, CEOs and other product leaders is how to structure product teams when a company grows.  While I think this is incredibly important (as Conway noted) I feel it misses a wider point.

Four things break when you scale – People, Process, Technology and Culture.  Each of these will break at different times and in different ways.  While the structure of product teams (in People) will help, there are other areas that need to be addressed.

In his new book ‘Blitzscaling‘ (which I will review soon), Reid Hoffman uses company size as a proxy for stages in a companies growth.  While I love the book and the metaphor, I will use a music industry as an analogy as I feel it better matches the struggles faced by companies as they scale.  Just to bring it to life a little. The four stages are:

  1. Starting a band
  2. Becoming famous
  3. The ‘gap’
  4. Glastonbury baby!

 

Starting a band.  You start making music in your garage with a guitar.  The music is terrible.  You may find a partner in crime or just play on yourself.  Through focus and practice, you start improving.  You get your first shot at a local bar, and it goes ok.  You start building a following, and slowly you start attracting attention and a following.

I love this analogy with a successful startup.  It shows the focus and passion driven by a few individuals around finding something that other people value.  The band analogy is also more realistic, as it shows that it is only through time, dedication and feedback that successful start-ups find product-market fit.

 

Becoming famous.  Success!  Your band is famous.  You are in demand, and people are asking you to play at their venues and festivals.  Your team has grown, you have people to set up the stage, manage your diaries and grow your brand with marketing.  You are a tight-knit team optimised to get downloads and sell tickets.

In start-up terms, you have now found ‘business model fit’.  You grow super-fast and things start breaking, but you have a good core product, you are in such high demand that you can begin to make money.

 

The gap.  This is where most companies fail, predominately because they do not realise they need to shift from being a great band to creating a system for finding additional bands.  In simple terms, you need to extract value from your core product (or ‘cash cow’) while making bets on other products/services.  The success of these bets will depend on:

  • Do these additional products make sense to your customers?
  • Do you have a strategic or temporary advantage that makes your offering better or differentiated?
  • Whether customers will pay for these products

 

The is where the music analogy breaks down – very few bands morph into festivals.  However, they find other ways to add value to their fan base (concerts, perfume etc).  I use this analogy exactly because it fails at this point to reinforce my argument that the shift at this point is radical.

 

Becoming Glastonbury.   You did it, you know run the show.  You are the ‘go to’ venue for successful bands.  To make sure you remain relevant you mix old favourites, with up-coming potential stars, and then sift out and invest in the successful.  You start having network effects, and you expand your customer base as you appeal to more customer segments.

This is my favourite part of the analogy, as it describes the huge mental leap needed, need to move beyond doing one thing well, to create a system for making successful bets on the future.  One of the biggest changes is what the executive team focuses on.

One product Multiple products
Find product market fit Balance cash generating products with future bets
Prioritise features Prioritise products and projects
Manage a team Manage managers
Solve problems Create a system to find the right people to solve the right problems

 

I hope you found this helpful.  As ever these are my thoughts formed from my own experience.  Please leave a comment if you agree or disagree or would like to start a discussion.

In my next post, I will look at the advantages and disadvantages of different product team structures.