The Effects of the Inverted Triangle on Product Innovation in Large Corporations vs Startups

For context, I’m a bootstrap startup guy, so it doesn’t take much to considered larger. But to help build some guard rails on large, imagine it in the context of people more than money. Think an organization that has 250 + people (but certainly one with 1,000+).

At its core, I attribute one of the key problems effecting product innovation in larger corporations to be directly tied to what I call the Inverted Triangle problem, specifically with People.

The Inverted Triangle Dilemma

The A triangle represents startups, while the B triangle represents corporations. What you notice is that as an organization gets bigger the triangle gets inverted.

Startups typically start very lean at the top, Sucuri for example was relatively flat (very little middle management) until our exit. Contrary to what you might hear from investors, flat organizations have a tendency to move much faster. Hierarchies are great for giving your investors the assurances they require, the bench as they call it, but can be disastrous for actual progress as it pertains to the product.

Corporations on the other hand are on the complete opposite end of the spectrum. They have already fallen into the people rat race, which in turn has forced the triangle to invert. It inverts because as new layers start getting added, complexity gets introduced, and eventually you have more people thinking about what to do, then people available to actually do it.

The Inverted Triangle and Product Innovation

Larger organizations will often confuse product innovation with marketing novelty changes. Novelty changes are things like repackaging of a product on the front of site, but in reality it’s stapled together in the back with gorilla glue. Or maybe it’s pricing fanciness and sleight of hand, but no real product value add. It’s using new phrases to position the same product, essentially putting lipstick on a pig for lack of a better analogy.

Product innovation, as I think about it, is this idea of introducing a new way to tackle a problem – new or old. Lots of folks confuse product innovation as purely about tackling a new problem, but I whole heartedly believe that old, existing problems, still have a lot of room for innovation. It’s also not tied purely to a product you take to market, it can absolutely be tied to a product that solves internal woes.

The Inverted Triangle Presents Three Key Challenges

The inverted triangle presents three key problems that I have seen stunt product innovation:

  1. Too much bloat.
  2. Disassociation from the problem.
  3. Flow of Ideas

1. Too Much Bloat

Too many people thinking of what needs to be done, not enough people doing the things they come up with.

They are exceptionally good at filling the pipeline (love them some Jira), and adding complexity to the entire process (i.e., can I get a presentation for that?). But very bad at helping to get the work done, yet amazing at expanding the scope of work.

While I can appreciate the processes, and frameworks, they add so much “stuff” that it takes the excitement away from actually building something. It’s honestly not worth the hassle of getting approval from a team that is so disconnected from the problem.

What’s extremely weird is how crazy it gets at the top. So bloated with managers and directors and VPs and SVPs. All the while it’s a team of two engineers actually building this thing, and neither of them part of the actual conversations at the highest levels.

The ability to build and tackle ideas requires space and time, and in many instances it’s built on a very simple idea that stems from a simple question – “what if?”. A thread that when pulled builds something exceptional. You don’t always know where it leads, but it is almost always just as much about the journey as the end result. We’re not building for home runs, and yet that’s what the bloat ends up optimizing for – the homerun – leaving very little room for incrementality (a special ingredient to innovation).

2. Disassociation from the Problem

A startups success is tightly correlated to the teams intimate experience with the problem.

At Sucuri, Daniel and I lived our problem. Worked hand in hand with our customers up to the point of our exit. Our decisions were almost always tied to the experiences we held close to our hearts. It forced us to think of ways to improve, be better.

A great example is the history of how the platform evolved. We started monitoring. Thought it was interesting. Then people started asking, “hey, can you clean this too?”. Sure, we’ll give it a try. So we started remediating. Then people getting hacked, and that was very inconvenient for us. So we built a WAF to stop the repeated hacks. But security without speed wasn’t going to work, so we built a CDN. And on went the cycle.

At a larger corporation that is practically impossible.

3. Flow of Information

This actually dove tails into information flow nicely. Although bigger organizations like to think this doesn’t happen, and they implement “processes” to ensure information flows up, I have rarely seen it work well.

Product innovation comes best from those working in the trenches. They are touching the problem, feeling the problem, engaging directly. But when it comes to raising an idea they hit a glass ceiling, often because of the latter issue with bloat and reviews, with gatekeepers.

Gatekeepers come in all forms – product managers, project managers, direct managers, shift supervisors, etc… now think of that in terms of layers, Managers on top of Managers, Directors on top of Managers, and Directors on top of Directors. Somewhere in the process the individual with the idea has to navigate the labyrinth to figure out how to actually get something done.

It’s also why some of the best innovative product ideas you see actually come from one individual, or a small team of folks, just building something with little insight from senior leaders.

I personally saw this first hand out of the care team at an organization. They were non-developers, but were having such a hard time, that they immersed themselves in the problem and built themselves a small app to help solve their problem. Everyone in leadership was overwhelmed with excitement because of the efficiency gains it introduced, but had it been originally pitched (which it was) it would have been denied (which it was) because tests had not been done to qualify the idea.

Is Complexity just Par for the Course?

These are not unique to any one company. I have seen similar experiences in different organizations I have had the privilege of consulting for and in almost every instance I ask myself what is the correction for this. How did it get to this point?

I can’t help but think that it all starts at the most basic levels of mindset.

Most startups are just mentally in a different place. For better or worse. And most larger organizations have evolved from their earlier years. It leaves me wondering if it’s even possible to change the mindset. Larger organizations compound their people problem with the money problem – must keep growing financially! It is the rat-race of money, growth, market expectations, market pressures, investor returns that inevitably changes the culture of an organization. What you end up with is a highly optimized leadership team that is far removed from the pains of their customers, or the problems the product are designed to fix, but keenly tuned to financial optimization.

This is further complicated by the scale of your operation and product portfolio. It’s easy for a startup, focused on one problem, but when you’re an organization focused on multiple problems. At the highest levels there has to be a way to measure, forecast, the business. The byproduct, however, is almost always death to product innovation.

This doesn’t mean they don’t have ways to introduce “product innovation” but that is a subject for another day.

Daniel summed it up best, “To start, you need to innovate. Once you are big, you need stability and security.” < maybe I could have just said that in the post.. haha