Mr. Feld’s 3 Machines – Alternate Proposal
The Man Behind the Curtain

I am intrigued by Brad Feld’s three machine concept of how a business should be run. Its simplicity is tantalizing, to be sure. The more I thought about it, the more I’d like to posit an alternative.

As I’ve understood it to be laid out, the concept has three components (not just a clever name): a Customer portion, a Product portion and a Company portion. While it’s easy to guess what the first two do, the third, the Company’s role, is to run everything else that goes into the function of a firm as well as to oversee the other two. I’m thinking that this layout is good for a snapshot in time of a business, but over time it could become a bit of a hazard to the continued growth of the company.

Call me a bit grizzled in terms of corporate structures, but after being in a few of them and having to work with or compete against others in various roles, a common setup you’ll see in firms is that they’ll have a product group – and that could be made of engineers, product designers, programmers or a combination of those, and then you’ll have a sales group filled with usual marketing and sales suspects. Much like Mr. Feld’s plan, there’s someone that runs each of those with either a D, P, or C in the title. The common situation that develops is that these sorts of structures create ‘silos.’ Maybe it’s because of creepy land-grab politics or the trappings of too lean an organization but your silo leader tends only to focus on their own areas and are not excited about reaching beyond it. Over time, I figure that the Three Machines will yield similar silos that operate for their own interests just like any other corporation in the US with a sales department and an engineering/product department.

What will this situation look like? Well on one hand, you’ll have sales devolving into customer relationship/cost model tactics and you’ll have the product group developing products they *think* the market will need – without much input beyond the company’s walls. This is basically the corporate dystopian world of the Innovator’s Dilemma.

What I’d think would be a better system would be to have a Customer/Application group and a Market research/Development group. They would essentially break down to into the classic short-term (~1 year) and long-term (>1-5 year), respectively. Then, much like Mr. Feld’s model, you’d have a corporate group that determines the objectives and intensity that each would receive over time.

The goal of the split would be to, in the short term, have a group that can focus on your current customer’s needs and desires utilizing your current products (Customer/Application group). That focus will manifest itself in tweaking the current product, pricing or marketing from customer feedback and quarterly market forces.

The Market research/Development group would then be a product development partnership driven by longer-term movements in the market. The group will develop new products for where the market will be heading in the long term. These new products would be ready when current products move from “Stars” to “Cows.” This would make sure the company both has attention on its current customers as well as to position itself with new products in the future.

The Company group works to ensure that the firm is appropriately focused on either the near term or the long term as necessary and to make sure the firm will remain financially healthy in the meantime. Its other goal is to choose when to introduce the new products and de-emphasize the older. Being that the company group is distinct (and maintains that distinction) from the other two groups, it should have a more impartial view that would lead to a better strategic decision making.

Taking Mr. Feld’s lead, I think I’ll revisit this a bit. Maybe I’ll make some MacPaint graphs to show off my design skills. And finally, if you, Mr. Feld, do read this, just know that I’m riffing on your thoughts…and I obviously read your posts as a fan!

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