The Software Architect Elevator

Chapter 38. Money Can’t Buy Love

Or a Culture Change

I need that feature by Tuesday

After transitioning from a Silicon Valley company to a traditional business, my new coworkers frequently reminded me that we’re a large corporation, implying that what works for Google wouldn’t apply here. My routine retort was that by applying the standard measure of market capitalization, I joined a corporation 10 times smaller. More interesting, my coworkers also pointed out that Google can do pretty much whatever it wants thanks to all the money it has. My view, in contrast, was that many successful traditional businesses suffer from exactly this problem of having too much money.

Innovator’s Dilemma

How can organizations have too much money? After all, their goal is to maximize profits and shareholder returns. To do so, companies use stringent budgeting processes that control spending. For example, proposed projects are assessed by their expected rate of return against a benchmark typically set by existing investments, sometimes called internal rate of return (IRR).

Such processes can hurt innovation, though, when new ideas must compete with existing, highly profitable “cash cows.” Most innovative products can’t match established products’ performance or profitability during early stages. Traditional budgeting processes may therefore reject new and promising ideas, a phenomenon that Christensen ...