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“Chapters”]New Entrant v IncumbentMinimum Viable Politican. A/B testing by tweetMarketing. New Entrant v Incumbent. Trump v ClintonThis post isn’t about politics.
The recent Presidential campaign is ideal for a repurposing to a discussion of entrant vs an incumbant, market leader. This is because campaigns are constructed as collapsible corporations, in startup jargon they are short-lived unicorns. This is the start of a post-mortem, we’ll break the campaigns and apparatuses into small pieces, examine what happened, why and consider alternatives.
Because this would otherwise be long and tedious for the writer and reader, I am segmenting it, a little today, a little tomorrow.[vc_empty_space]”Fat vs Lean startup. Does too much money cause indigestion?”][vc_column width=”2/3″][before_after before_image_id=”10037″ after_image_id=”10035″ start=”.30″ angle=”0″ arrows=”true” arrow_color=”#bfbfbf” arrow_gap=”12″ arrow_offset=”12″ border=”true” border_width=”12″ border_color=”#d6d6d6″ scrollbar=”true” scrollbar_pos=”left” scrollbar_color=”rgba(209,14,14,0.3)” scrollbar_thickness=”20″ scrollbar_button_color=”rgba(214,96,96,0.8)”]Through-out the election, until mid September, I had regular social visits with both campaigns.
Because its my mother tongue, lets talk in Startup.[vc_gallery interval=”5″ images=”10257,10256,10255,10254,10253,10252,10251″ img_size=”full”][vc_gallery interval=”5″ images=”10250,10249,10248,10247,10246,10245,10244″ img_size=”full”] Trump is the new entrant. Clinton is the incumbent.
Let’s incompletely examine the philosophy of each…
Incumbent. Fat
Building too high: The incumbent knows, fairly precisely, the requirements for a national campaign but might anticipate too much forward. Prematurely they breed a small circle of generals and lieutenants, radiating from those are sergeants and further from those are lots of filled desks. From the outset assembled as a hierarchy, it resembles the bureaucratic, inefficient, structure seen in government.
Productivity: Excess employees is brute force. This is utilized situationally, a great strategy when willing to compromise quality for quantity. In a professional services organization it is common to overhire in sales during recessionary times so you can get as many ‘looks’ as possible. When the economy turns you thin sales force out by forcing attrition, implementing a rigid quota system, rewarding those you achieve it , implicitly punishing those who don’t. However this strategy, when applied in the wrong situation, is reckless. Without quotas employees can easily confuse the most bare minimum requirements of the job with a job well done, it all looks the same. You lose an incentive for discretionary effort.
Sub-optimal time usage for a too large group: Staffers with little to do is a major cause of poorly structured and overly long meetings that initiate with a vague agenda and complete later with an agreement for another vague meeting.
Creating fiefdoms: Over staffing marketing, clerical, branding, and all the other cogs of a business quickly fortifies into fiefdoms, and fiefdoms create a dual allegiance, to the fief to which you belong and secondarily to the employer.
Discourages ‘out of the box’ thinking. In a stratified workforce employees adopt a group think, they all reinforce each others soundbites. This is not to say members within the group wont raise their hands during meetings, but the query or observation stays within the bandwidth of the acceptable, it keeps within a range of M to P, anything outside that is shunned and the managers view this as a decaying of their management structure and purpose.
Loss of reflexivity: Too much democracy is dangerous. Companies of a smallish side should be a benevolent dictatorship. Some ill prepared generals might perceive consensus as lowering risk ‘we all agree’ and each participant will defend a poor group decision. Such a strategy, in fact, increases risk of failure.
Manager overload: Permitting managers too much responsibility for hiring and firing is a major problem for a company that is built to large. Managers are usually poorly trained themselves, instead they try to recreate their former employer or an academic course. They will soak up your teaching and rules, but will also try to recreate their former employer.
Too many evangelists: There are strengths to brute force: It is a display of firepower, this has an effect on your opponent. Businesses are emotional things that have anxieties and such a large show of force will be intimating. Typically brute force has a residual value, as you pare down the employee count, those opportunities ae converted by those that remain. Another benefit is that brute force puts a lot of evangelists on the streets. However in the instance of HRC and the NYC HQ, this was actually detrimental and a significant drain on their resources and allocation of time, money and thruput. Those staffers were largely from NYC and were already HRC voters, as is their radius of family and friends, persuading the persuaded is unneeded redundancy. Geography matters with brute force, if they are densely packed your forces will collide with each other.
Hoarding: Frequently this can become a vanity metric and worse, can become a risk of a different type. It’s hard as f**k to fire employees and people will benchmark themselves against the minimal performer, rather than the maximum.
New entrant. Lean
Building low: Hiring fewer people lowers risk of firing people, which is, of course, very disruptive to a small company.
Flat: Iterative learning encourages change. However, if changes are done on a whim it can cause neglect to something that is promising but requires only tweaks. Because of the small staff employees can be quickly responsive to new information and directions. It must be cautioned that those forward facing employees should not become client advocates, rather they should be limited to a feedback loop. When employees have close proximity to the CEO their work can be more closely aligned with their personal identity, they gain impactful acknowledgment rather than a company paid gift card. This is also a good lean assembly when you expect to be rapidly changing job descriptions.
Desk cost: If an organization is kept lean more exacting calculations can be formulated per job type. This is an imperative.
Overdosing on low hanging fruit: Market leaders will typically incorporate a counter strategy of  winning by attrition, starving the new entrant. They will likely have the cash, resources, ancillary products and operational excellence to withstand most challengers. A market leader will allow new entrants to gobble away territory on the periphery, they will be tolerant of losing ‘low’ hanging fruit, particularly if those accounts have already had a long enough stay to have recovered the cost of acquisition and long past the point of profitability. Yet, by being willing to not compete for a segment of clients they may be poisoning the well of their new entrant competitor. Smaller accounts can be wildly unprofitable, you don’t learn this until very late and its difficult to fire clients nd have holes in your revenue. Additionally it can deplete the capacity of the service team.
Staggered hiring: Hiring behind the curve can mean that catchup a new employee training can be burdensome. It will take long to get the employee to full productivity. However it does have strength in that the internal culture can be built on proximity to the founder and that cascades to the aspirations and discretionary output of the employees. It is quality rather than quantity, this becomes much easier to ratchet up their performance, they quickly become the tenured employees. Those employees are usually tasked with additionally being responsive to the market, they are listening to demand rather than offering only supply of a fixed product. The entrant, by staggering its hiring can also preserve its ability to hire, it can grown while as the incumbant cant shrink, it can only make adjustments and reallocation of staff to accommodate changed priorities.
Pride: The new entrant can adjust quickly to create a premium product. Within the organization it must be continually echoed to avoid any risk of ‘pride of authorship’, those employees who don’t want to let go of yesterdays effort.
That’s all for now, next post will be some more rambling lessons…

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