Execution Is An Order Of Magnitude Easier Than Opportunity

I heard a fascinating one-liner the other day that I had knee jerk negative reaction to but when I thought about it more thought was deeply insightful, especially in the context of big established companies vs. new entrepreneurial companies.

A CEO of a very large, successful company said “execution is an order of magnitude easier than opportunity.” In the context of young startups, I often feel exactly the opposite. Opportunity is everywhere, but execution in a bitch.

But then I thought about this a little. For a big company that dominates a market, it’s totally focused on execution. The company is built for execution and, assuming it is built well, just cranks things out. What it cranks out might be inspiring, or it might not be, but it’ll keep cranking things out.

For these companies, finding the new opportunity is really difficult. The company is tuned to defend its turf, not go find new turf. Execution is all about defending market position, maximizing profit, expanding market share in existing markets, and allocating resources. In a few extraordinary cases, this activity is massively inspired, usually around companies that love their products (Apple) or their customers (Virgin). So – for most of these companies, “execution” is easy relative to finding the new opportunities. And many of these large companies don’t focus on finding the next opportunity, or expanding their existing opportunity, until their business hits major headwinds, is in decline, or is massively disrupted. I give you Borders, B&N, and Blockbuster as examples here – awesome at execution until what they did became irrelevant and then it was too late for them to do anything about it (other than maybe B&N, who might pull off their transition.)

In contrast, startups are totally focused on the new opportunity. Assuming they find it, and it’s a big one, execution becomes the main challenge in front of them. Their activity is all about scaling up the organization, hiring people like crazy, building a culture of shipping great product consistently, reacting effectively to early customer feedback, and continuing to evolve their products to meet the new massive opportunity they are going after.

From the eyes of a big company CEO, finding the opportunity is hard. From the eyes of a startup CEO, the opportunity is everything – execution is hard.

My insight is simple: “context matters immensely.” As young companies grow rapidly, they have to focus on becoming execution machines and recognize that at some point they’ll start struggling with identifying the next evolution of their opportunity space. Assuming the opportunity they are going after is massive, this won’t matter for a while. But the execution dynamics will. And when you find yourself executing well, dominating your market segment, and growing quickly, you’ve got to make sure you keep focusing on expanding the opportunity, especially since that’s going to get harder as you get bigger.

  • http://freepository.com John Minnihan

    “context matters immensely”

    Absolutely.  Possessing enough focus to know when your co. has hit the inflection point + thus be able to make the shift, separates the good->great CEOs from the spectacular->one-in-a-million ones.

    Edit; in support of that, I can think of one example where the founding CEO saw + seized the opportunity + brought in a more experienced, later-stage CEO at the right time. Unsurprisingly, that co. (Wily) had a tremendous exit and the founder has gone on to start another co. that (also unsurprisingly) saw + seized another huge opportunity.

    The difference between then + now is that he (Lew) today has the depth to lead the new co from inception thru the various stages of growth. And they’re killing it.

  • http://crashdev.blogspot.com Chris DeVore

    Great observation, Brad – I’ve been processing the “enterprise innovation gap” (or “opportunity” gap, in your framing) more narrowly – how enterprises access software-powered innovation, eg http://crashdev.blogspot.com/2011/10/future-of-work-what-happens-when-talent.html - but the problem is (as you describe) more general: how does an organization that excels at execution stay engaged in innovation (a la Amazon)

    • http://freepository.com John Minnihan

      Hey Chris – noticed your bio Re: Founders Coop.  I happen to be very close by + if you’re around, wld love to say hi.  Email jbminn at freepository dot com

    • http://www.feld.com bfeld

      Great post on your part. It’s a really complex issue and one of the reasons that some many “big company execs” make lousy startup CEOs / founders.

  • http://twitter.com/ranMargalit Ran Margalit

    Once again, thanks, keep the flow coming!

  • Anonymous

    I think one of the other things this brings up is that we need to look for better and more mutally beneficial ways to hook these two entities together.  Each needs what the other has.  If the big companies were able to peer out into the startup world to find the next opportunity – and then assist them in executing, and the little companies could look out into the big company world for experts in executing what they want to do – how can we make it mutually economically and culturally beneficial on both sides. 

    Right now large corporations are sitting on more cash than they’ve ever had.  What are the barriers to them using that cash, combined with their expertise at execution, to help fund and make successful the innovative entrepreneurs.  How can an innovative entrepreneur retain that flexibility, but still take advantage of the big companies expertise.  Interesting questions raised here – above and beyond the “growth” issue.

    • http://www.feld.com bfeld

      My experience through the years is that big companies really struggle with funding the entrepreneurial companies and then helping them effectively. Corporate venture groups tend to be ROI focused and often can’t deliver on any strategic benefit or operationalize the company to help. Corporate “startup business development” groups usually exist to sell products to startups / small companies.

      There are some notable exceptions. For example, Google Ventures is an awesome VC firm. They are a great investor, plus they are outstanding at bringing strategic value and operational help to their investments from across the entire Google organization. Microsoft’s EBT group (which created Bizspark) is another standout example. But these are few and far between in the giant corporate ocean of “hi – you are a startup, I’m a bigco, and I’m here to help.”

  • kate

    More evidence that execution is an order of magnitude easier than opportunity is the relative ownership  of company founder vs COO.  10:1 is very typical by the time first funding is consummated.

  • DaveJ

    Just one thing to add: execution is also about finding an efficient and scalable way to do a particular thing.  Big companies are good at execution because they have been doing that thing for a while and have figured out how to do it well – they have it wired, so to speak.  This creates an additional challenge for new opportunities, because most opportunities will break that execution model. Even if you see the opportunity, it’s hard to keep margins up, get your team to deliver it, etc. because they are used to doing the other thing.

  • http://petegrif.tumblr.com/ Pete Griffiths

    Agreed, but with one caveat which I know you are well aware of but is perhaps worth clarifying.  When you say:”In contrast, startups are totally focused on the new opportunity. Assuming they find it, and it’s a big one, execution becomes the main challenge in front of them. Their activity is all about scaling up the organization, hiring people like crazy, building a culture of shipping great product consistently, reacting effectively to early customer feedback, and continuing to evolve their products to meet the new massive opportunity they are going after.”This is true for ‘late stage’ startups.  This applies to startups that have that have conducted ‘validated learning,’ and been fortunate (or skilled) enough to find product market fit, for startups During this learning process the last thing that should be on your mind is “…scaling up the organization, hiring people like crazy…” Finding an opportunity, even a big one, is not something you can just ‘execute on.’

    • http://www.feld.com bfeld

      I agree with the caveat, although I don’t think it needs to be “late stage”. Just past the validated learn stage in Lean Startup speak.

      • http://petegrif.tumblr.com/ Pete Griffiths

        Exactly.  I don’t think we yet have a ‘term of art’ for that do we?  Hence my clumsy attempt at ‘late stage.’  I think it’s time for you to come up with something because this is a very real stage in development and ‘startup’ just isn’t finely grained enough. But if we wait a week or two Eric Reis will probably think of something for us. :)

        • http://www.feld.com bfeld

          Hmmm. I don’t think there’s a term of art for that. How about “post validated learning stage startup”. PVLSS. Nah.

          • http://petegrif.tumblr.com/ Pete Griffiths

            P2MF & I like POST-FIT

            (PreProductMarketFit) & (PostProductMarketFit)

          • http://petegrif.tumblr.com/ Pete Griffiths

            Thought about this some more.  As usual Grimlock shows the way.  The new terminology is
            prefit & postfit
            what could be simpler?

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          • JamesHRH

            Brad – a great post here.

            While GRIM is right – post fit is good – the stage is growth, isn’t it?

            I have always seen 3 stages for any startup: Form, Fit, Growth.

            There are more stages obv ( the next is Defend ) but you aren’t a startup by then.

            Each of the stages likely breaks out as well.

  • http://www.activetheoryinc.com Alex Gourley

    If you define execution as shipping products, hiring, raising money… I think opportunity is harder than execution for startups just as it is for larger companies. I think Lean Startup proponents have it right when they say features/hiring/raising is _not_ how we should define execution – it lets us pat ourselves on the back for the easy part. 

    The hard (and I think proper) definition of execution is finding the opportunity. 

    • http://www.feld.com bfeld

      Disagree, but although think we are now fiddling with how terms are defined. Just bucket the activities – call them whatever you want instead of “execution” and “opportunity”. And – finding the actual opportunity, whether you use a Lean Startup approach or not – is hard for everyone, but much harder for a “big company exec” than for someone who is wired as an entrepreneur and a heat seeking missile around a new idea (or set of ideas).

  • Guest

    Brad – we love this post!  This insight is exactly what keep us going here at GroupTalent (Seattle TechStars).  We have had similar observations – ie big companies built for execution have a hard time innovating, more importantly, creating teams that can innovate.  It has to do in part with the type of people they attract and the resulting DNA of the company.  
    We at GroupTalent believe one of the problems we are solving is exactly this one: making proven innovation available to large companies.  Since we spoke with you last we have  changed the website and the approach (take a look and let us know what you think grouptalent.com) and launched to a limited audience (http://news.ycombinator.com/item?id=3019508).  We are now a platform for top developers and designers (and of course a team of them) to find the most interesting work.  One of the avenues of demand we are exploring are large non-tech heavy companies who have a hard time attracting and retaining technical talent yet they have the same innovation needs as a more tech-heavy company.  Would love to get insights from you as to how to go about creating this demand in a scalable way.

  • http://one.valeski.org Jud Valeski

    neat insight. thanks. for everyone… ideas are easy. for small firms execution is hard, opportunities are easy (relatively). for big firms execution is easy (relatively), opportunities are hard.

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  • Mark Geller

    “Assuming they find it, and it’s a big one…” is a big assumption. For a very large company, an opportunity is only relevant if it is very large, say at least $1B. In this case, the CEO’s statement is pretty defensible. How many startups in the past few years have truly identified billion dollar opportunities–maybe five or ten, certainly less than 20 or 30. Yet several hundred startups have executed well enough on smaller ideas to have successful exits. So even for a startup it could be true that executing their current idea is an order of magnitude easier than identifying a billion-dollar opportunity.

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  • Erich von Hauske

    Context, context, context, this remembers me that there are good generalizations, but not absolute truths.

  • http://www.justanentrepreneur.com Philip Sugar

    I totally and completely disagree.

    Once you have a successful opportunity that has been successfully executed on a small scale: Execution is easy to the next level is easy,

    Once you see the answer to a question framed up the answer is obvious. Opportunities are hard, you don’t even know the question.

    Once I’ve built a business anybody can run it.  That’s why I leave.

    The first sentence is the key successful opportunity, successfully executed on a small scale isn’t hard, its damn near impossible! Its just like what happens to the smart kid in school when presented with a question that they haven’t seen before: They cry: we haven’t seen that question!. Guess what building out an opportunity is not even knowing what the question is: the smart kids head explodes.

    Big companies have 17 people at a meeting all trying not to make decision because if they make the wrong one somebody gets fired.  People go to big companies because they are risk averse, its exponential: its four times, not two times as hard to get something new done.

    Its not the idea or opportunity that is hard at a big company, hell somebody there had it before you at SmallCo did.  Its sticking your neck out at the initial execution phase where you are not sure it is gong to work, and you have haters, combined with the fact that you are risk adverse that gets your head chopped off, and prevents stuff getting done.

    I disagree even more as I write this.  Just partnered with a more than $10B company today and this could not describe the situation more accurately.  Ask her how many people she has that have one failed project, or one big change in execution that still work there: answer none.  We were laughing at all the screw-ups we did on the initial opportunity and how we took our iterations and threw them into the trash.

    You could tell the BigCo guys were squirming in their seats. One guy mumbled, somebody would have gotten fired over that first prototype. Sure once you know its successful opportunity because you can see the successful initial implementation its easy…..C’mon man!

  • http://www.alearningaday.com Rohan Rajiv

    Context is everything.
    And imagine how effective corporations would be if they managed themselves as many ‘small companies’. That way they would sniff out opportunities and have leverage to execute..

  • http://www.theequitykicker.com brisbourne

    I’m late to the party here, but a) want to add to the already numerous ‘good post’ statements

    and b) add that one of the reasons startups are better at finding opportunity that large companies is that they focus high quality resource before the opportunity is demonstrably large.  Big companies can only manage a small number of initiatives and hence have to focus on the more obvious areas.  As small opportunities morph into bigger ones at an ever increasing pace the world should get easier for startups.

  • Pjf

    For more on this topic, check out “The Other Side of Innovation” by Vijay Govindarajan & Chris Trimble.  http://www.amazon.com/Other-Side-Innovation-Execution-Challenge/dp/1422166961.  Good analysis and case studies.

  • http://www.breakbumper.tv Ramon B. Nuez Jr.

    I interview startups in NYC and I see this everyday — the capitalization of opportunity. Execution seems a bit allusive for a startup, I guess it’s because they are so opportunity focused.

    I think that big business needs an injection of entrepreneurship. As you mentioned, companies like B&N have become irrelevant. But what if there was a department lead by a “Chief Entrepreneur?” This persons sole responsibility would be to seek out those new opportunities.  

  • http://www.24pagebooks.com MartinEdic

    Brad, this post has been immeasurably valuable in helping me and some colleagues make a go/no go decision on a new business. The business is based on an existing software platform we developed so we know the execution piece. We recognize the opportunity and know we can execute if it is real, unlike a pure start-up that has to learn execution in order to learn whether the opportunity is real.
    Worst case scenario, we were wrong and we roll the execution team back into the existing successful company (which is small but at growth, not start-up, 50+ employees, profitable)Very insightful, one of your best.

  • https://www.lookstat.com/ Rahul Pathak

    Brad,

    Great post & insight. One thing I read by Bezos recently was that they focused on the customer, not on their skills. According to him, this allows them to keep evolving as a company. In a way, their execution is focused on finding new ways to serve customers.

    Rahul

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  • Vivek Chandrasekhar

    Great post as always Brad. I have often wondered how so many large companies do not want to take on new opportunities while many others happily embrace those and build successful businesses from them. On the same note, I have wondered why Bill Gross’s Idealab didn’t become one of the largest corporations we know . They seem to have exploited as well executed on multiple pioneering opportunities successfuly. Anyways, good for food for thought.

    Oh btw, I just saw the ‘I am a VC ‘ video, couldn’t stop laughing. Super Cool!

    • http://www.feld.com bfeld

      I haven’t studied Idealab and am not close to Bill Gross, but I always had the sense that they spread themselves too thin operationally. Rather than concentrate energy on a limited number of amazing opportunities, they went very wide and never had enough concentrated power in any of them to build something that dominated the segment. That said, there have been lots of interesting things to come out of Idealabs over the years and I’ve got a ton of respect for what Bill and team have done.

      • http://petegrif.tumblr.com/ Pete Griffiths

        I just wish they would move to the westside of Los Angeles and thereby increase the critical mass in that geography.

      • Vivek Chandrasekhar

        The Idealab example is something that has always fascinated me. To me, they are like the Berkshire Hathaway of tech startups – they hold on to dozens of great businesses, many of them operated independently . Yet the brand Idealab itself isn’t quite visible in the market place.(It also intrigues me why they never went public) . Over a 15 year period, they have dished out great products one after the other yet they didn’t become the Apple or Google of our times. Both these companies held on to one common brand , dominated with one or two core offerings and then went on to create so many derivative products. So I guess that validates your point about concentrating on one or two things and then doing a string of other things. IMHO, it is also a great case study on branding of disparate yet commonly controlled internet properties . IAC and Tencent holdings also  comes to mind, both are largely unknown as an internet company, yet they are almost in the same league as the big ones in terms of their breadth of offerings or market cap.

  • James Mitchell

    I suspect execution is harder for large companies than Brad describes. Large companies have huge internal communication issues, as it is simply hard to keep 10,000 people informed on everything they need to know. A startup has the luxury of being ultra-selective in whom it hires, while large companies by definition have to hire mostly average people, who addition to being average usually have a 9-5 (or sometimes even a 10-4) mindset.

    I regularly get annoyed at the idiots I have to deal with who work for large companies. The bozos at Comcast who could not diagnose a technical problem if their live depended on it, the sales clerks at Macys who do not even know the layout of their store. At the same time, I feel for their senior managers. If you’re running Sears, realistically how are you going to get even reasonably intelligent people to work in your stores?

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  • Anonymous

    Sounds like a restatement of the Innovator’s Dilemma. History has shown us repeatedly that small agile teams are the most competent at delivering disruptive technologies.

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