Does having too much money discourage a company from being agile? Why are cash-starved start-ups often much better at it?
Over the years I’ve found that larger companies struggle at being agile whilst it is almost second nature to start-ups. Within big organisations, blame is often directed towards “old-school managers”. Although that may sometimes be true, I think there is another problem which is hard to overcome even for an experienced agile advocate: the megacorps often have too much money!
Start-ups are typically funded by investors (such as venture capitalists) who agree to fund an idea, but drip feed the funds to the entrepreneurial endeavours upon incremental delivery of a product; the funding stops if there’s no delivery. Therefore, to succeed, the start-up must deliver regularly or they cease to exist.
Meanwhile. Megacorp Inc. is required to submit up-front budget requests which, if successful, get signed off by the board. Success to them is using all of the money and time that they stated on their projection.
If I am given £1m for a project, which of the following fits better with agile:
- I am given £1m upfront and told that I have 10 months to deliver the project; or
- I am promised £1m upfront, but I am told that I will receive £100,000 each time I deliver one tenth of the product (ideally monthly) and there is evidence that customers want to use it.
The first option just doesn’t encourage me to be agile. There is no protection from a “dead dog” being taken to completion. This is why projects in larger firms are sometimes completed even when it’s known that they won’t deliver the expected value. The second approach not only encourages regular delivery, but will also protect investors against poor ideas because they can stop funding an idea when it ceases to prove worth further investment.
I hear big corporations say “we think like a start-up”. Maybe they should start funding their projects like them?