The garage located at 367 Addison Avenue in Palo Alto is famous for where Hewlett and Packard made it happen. It’s nothing more than a simple building with swinging doors – so what made it work?
Today, we continue our examination of this question with a look at how the element of low overhead plays a significant role in innovation. This is the fourth post in our series. If you need to catch up, you can start here.
How Economic Autonomy Drives Innovation
The economic autonomy that comes with working in a garage gives participants the freedom to focus on the innovation at hand — not the pressure of keeping a roof above them. There is an old phrase that says “make wide the narrow gate”. In other words, by giving participants the benefit of a small but flexible space, they’ll be more able to achieve maximum innovation within its walls. In fact, knowing you have a roof over your work — and a physical wrapper around it — is key to the critical germination phase of innovation.
The key reason why garages are economically autonomous, is because they are largely supported by the owners of the structure — not the occupants doing the innovation in them. In the case of a true backyard start up, the endeavor is being backed by mom and pop. In a larger organization, the “garage” space is hosted by the core business.
Both of these scenarios support the ability for innovation to move forward in what financial professionals call tranches, which are specific increments of spending that are released when a clear milestone is achieved. The initial tranche is usually comprised of money the founders can scrape together — often from supportive friends and family members. The next tranche is ideally customer funding, or in many cases, angel funding combined with customer funding, and so on.
How Constraints Drive Innovation
In the garage, there are two constraints present – physical and financial – and constraints are powerful drivers of the creative.
Suspending profitability (in a bounded way) enables garage endeavors by:
- Setting creative constraints. When you are self bootstrapping, there are visual and virtual limits to the amount of capital and effort that you can find to pour in. The garage provides healthy physical boundaries that lead to natural financial and human resource boundaries, as well. Because of this, you must think in a very specific and focused way on how best to accomplish exactly what you need to do with your limited time, talent and treasure.
- Forcing high leverage use of outside resources. When you are financially and physically constrained, you tend to be very creative in both using what you have and procuring outside tools and materials. As a budding engineering student, I recall learning to use the phone to network with large organizations for the purpose of obtaining key items for a vehicle we were building. We had very limited budgets and very high aspirations. (Side story – As part of the project, I rented an unlimited mileage vehicle and drove it continuously for 24 hours with my cohorts to pick up a donated engine two states away. I’ll never forget checking it back in 24 hours later with 1,000 miles on the odometer!) Gates and Jobs were both experts in how to leverage large partner resources to get what they needed for their embryonic firms.
- Encouraging quick pivots. Pivoting is the term used in the lean startup community when it becomes clear that the effort needs to change direction to steer into the meat of the customer need. Somehow when you are in the “garage” these decisions become much more natural and organic than they do in an established organization. Because there is low investment in the physical space configuration, resistance to change is minimized and actions are quickly taken. Team members need to have the “can-do” approach of an army supply sergeant – trading what they have for what they need.
- Enabling you to start over as necessary. When you need to start over, the trash bin is not far away — a stark contrast to working in a formal and well-developed facility, where you can’t simply hit control-alt-delete when the project calls for it. In the early stages of a startup, do overs are common. Being in a garage-like atmosphere allows people to let go and avoid the bias that over commitment brings. Large organizations are notorious for keeping zombie projects on life support. If you are interested in how that happens, see my post on The Big Miss.
What are your innovation experiences with garages — and in particular, the benefits of having a low overhead place to get started? Please leave a comment below or drop me an email.
