Smaller is Better? No, Start-Ups are Small.

Before, I knew everyone by name. We were a close-knit team and everyone knew what everyone else was up to. Now I spend all my time managing stakeholders. DIA Pharmaceutical Industry Survey+ Participant

Smaller is better in that you are often forced to manage people instead of just managing ‘the work.’ You can’t hide from your responsibilities. The problem comes when you try to take a large organization and break it into smaller units.

Did you hear about the Dutch town that outlawed the red light district and turned the whole town pink?

Bad habits learned in the large corporation are brought along into the smaller unit, turning the whole town pink. Administrative burdens are not taken away. They’re merely spread across many smaller units, with the promise of improve technology to not make the burden any more costly than it was in the larger organization. The tumor of bad management is not excised; it’s merely shrunk and made more virulent.

The can-do spirit found in many new smaller start-ups is do to the fact that everything is new: the rules haven’t been written. We get to build a way of work that is unique to our spirits. We each feel we have contributed to building our own culture: it’s fun to have to pitch-in when something just ‘needs to get done’. Slicing larger organizations into smaller misses this advantage. There is nothing new: the old is merely replicated on a smaller scale. Each organization is not unique. It’s merely a copy of many other similar organizations. The sense of having a start-up is missing. Administrative tasks are performed because someone else requires them, not because they contribute to the effectiveness of the smaller unit.

Ideally, the approach taken in World Class R&D is to sit down the leadership for each of the smaller sliced-off units and challenge them to come up with an approach that will be an order-of-magnitude more effective than whatever their percentage represents of the larger unit. What will you do different from how we practice research today, and how will that difference lead to much greater success? Mere freedom from the large organizational chart is not enough. What’s the secret ingredient that will distinguish your newly formed research unit from anything we’ve ever seen before? What unique sine qua non will the visitor see or sense when they visit your unit a year or so from now?

Slicing off smaller organizational units is not abdication of responsibility by the larger corporate powers-that-be. They retain the responsibility of making sure everything possible is being done to make each of these smaller units successful. This is a positive contribution. For example, what is it our corporate legal department can be doing to allow our researchers more freedom and latitude in how they pursue commercial opportunities? How can we help each unit identify and capture additional sources of funding so they have greater resources to extract as much value as possible from their areas of expertise.

Once a unit is sliced off it is not much different from any other Investible Unit+. What we do to make each of our IU’s successful applies just as fully to any units we spin off from the larger whole.