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Big Whales Swallow Smaller Fish

On December 21, 2017, in HR Technology, HR Trends, HRExaminer, by John Sumser

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You can see it in the acquisition patterns of former upstarts like Facebook. There’s no question where innovation comes from – it’s imported when they buy the next upstart.

Whale Eats Fish

The difference between bravery and foolishness is hard to distinguish in the sorts of people who are willing to bet it all on their ideas. Small-scale entrepreneurs and the founders of startups all share a kind of temperament that makes them a bad fit in larger organizations. Clarity and focus are less effective in political environments.

As the economy continues its evolution, big companies are less able to be at the heart of product innovation. Moore’s law, the force behind technological and social change in the 20th and 21st Century, drives movement faster than hierarchical organizations can run. 

You can see it in the acquisition patterns of former upstarts like Facebook. There’s no question where innovation comes from – it’s imported when they buy the new upstart. Big fish swallow smaller fish who swallow smaller fish and so on. Big always seems to mean wealthier and slower. Smaller can sometimes mean smarter and more adaptive.

There’s a rhythm to startup life that you’ll recognize from your own work. At the heart of venture creation is the desire to discover alternative solutions to tough problems. Great startups are solution factories that generate a series of approaches to a resilient problem set.

When you first encounter a problem, it almost always looks simple. This is where an entrepreneur’s enthusiasm starts to percolate. “This is so simple,” they tell themselves, “I can’t believe that no one has solved it before.” All problems look like this on first viewing.

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John Sumser is a Principal Analyst for HRExaminer

It’s never that simple.

Under the hood, intractable problems have all sorts of complexity. What looks obvious turns out to be structural. What looks trivial is actually hard. It’s usually the case that things are the way they are for really good reasons.

The first level of startup brilliance emerges when the company overcomes the complexity with a solution of equal complexity. When you listen to emerging competitors talking about job boards, this is the essence of their critique. The job board, they notice, is an equally complex solution to an old-fashioned problem.

It’s possible to build a ‘monstrous’ company (or a dozen of them) without ever having solved the problem itself. Often (as is the case in a lot of technology stuff), simply moving the problem to a new platform is enough to make it rain money. The first generation of performance management software was like this. Simply moving the same old forms online was enough to create several companies worth billions.

Still, the problem remains essentially unsolved. Complex solutions to complex problems create the feeling of change but leave the essential pieces in place. Markets (like all of HR and Recruiting) remain open to massive disruption because the solutions have made the problem ever more complex.

Great solutions turn the solution on its head. The complexity disappears and something better emerges in its place. They hardly ever happen in the world where big whales swallow smaller fish.

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