The Two Types of IT Companies
There are many ways in which someone can categorize IT companies. The most common one takes into consideration the internal organization and company culture: startups, established companies and large corporations.
In this article, I’m proposing to you a different categorization, one that takes into account the freedom and the decision-making power that companies offer to their employees.
So we divide IT companies into two categories: “HOW” companies and “WHY” companies. In fact, the long version of the categories would be: “How do we do that?” and “Why do we do that?”.
HOW Companies
The question that an employee of this type of company puts on a daily basis is “How do I do that?”
And the answer is given by the bureaucratic procedures of the company, which exist for anything, that the employee must follow in order to achieve the desired result.
These are process-based companies. Employees are wheels in a complex, well-engineered and documented mechanism. The employee is asked to do exactly what he is asked to, no more, but no less.
Decisions are taken by high-level management and employees only have the responsibility to execute them. Activity is based on reward and punishment. You do your job well, you get a reward; you don’t do your job well, you are punished.
The employees, because they feel insignificant parts of the mechanism, don’t get enough satisfaction from their work, so they have to be encouraged with increasingly higher reward. So the material rewards offered by this kind of companies are usually significant.
Like any mechanism, this too has to be optimized, and the ideas for improvements from employees are desirable. But because people don’t naturally desire to suggest ideas for improvement in such a company, there are all sorts of mechanisms to encourage this: prize competitions for ideas, an email or a physical mailbox to which anyone can send an idea, an annual feedback form, etc.
The organization is rigid, organized by departments, and roles cannot be easily changed. A developer who realizes that he has world-class designer skills cannot simply try this role for a while. There is a clear career path that must be followed by an employee in order to be able to reach the higher positions, those responsible for decision making. There are also strictly respected salary scales.
“HOW” companies are characterized by a lack of desire for personal growth on the part of employees. They are not motivated to take responsibility for the quality of their work or to try to increase it, as long as their work product is within the limits set by the company.
The way these companies are developing is through numbers. Either they turn to more resources, or they optimize processes, thus increasing KPIs.
In IT, most of these companies are outsourcing companies, mainly due to the business model: continuous flow, well-designed processes, predictable results.
WHY Companies
The question that an employee of this type of company puts on a daily basis is “Why do I do that?”
The employees try to understand as much as possible what they want to achieve, what is the purpose and how they can help the company.
The employee in such a company finds himself in a continuous innovation process, both in his work and in helping the company. Having innovative employees, continuously looking for improvement, such companies are perceived to be dynamic and innovative.
“WHY” companies are looking for the “superstar employee type”, one that has cross-skills and it’s able to see things as a whole. A highly appreciated skill in such companies is the entrepreneurship, which leads to innovation and risk- taking with, sometimes, great result.
This type of companies gives employees a free hand by encouraging them to use their creativity in order to improve their company and increase their work satisfaction. Because, from a human point of view, the reward comes first and foremost from the satisfaction of your work.
Because the satisfaction of daily work is high, material rewards are not as important as they are in a “HOW” company. “WHY” companies encourage more courses and training, in order to develop employees abilities and indirectly benefit from their development.
Roles can be easily changed in a “WHY” company. A developer who wants to change from back-end development to front-end for a while can do this easily, while taking into account the wishes of other colleagues and putting the company’s interests in the forefront. This encourages responsibility for their own actions. This shifting and blurring of roles can look from the outside as an apparent disorganization. And dynamic roles mean there is no clear career path.
In IT, most of the time, “WHY” companies are product-based companies. The way in which such companies are developing is through improvements: Improvement of the product, of the employee’s work, of the employee’s satisfaction.
Which one is better?
There is no consensus on“which of these types of companies is better and probably will never exist. Although the current trend considers that “WHY” companies are the future, due to being more human, “HOW” companies have a future as well. There are people who simply feel better engaged in a company where they are encouraged, rewarded and pushed from behind -they will always choose a “HOW” company. While others get satisfaction from their work and this matters most for the — they prefer “WHY” companies.
How do I apply this?
The next time you apply for a job or get a job offer, take a few minutes to understand what kind of company you are facing. It’s a “HOW” or a “WHY”? A simple way to find out is during the initial HR interview. When you’re asked if you want to know something about the company, ask the following question: “If my mouse breaks, what do I do?” The “HOW” company will respond as follows: “You open an issue for the support department, and an employee will bring you a new mouse, and you hand over the old one to the same employee.” The “WHY” company will respond as follows: “You go to the cabinet where the equipment is held and you get a new one. On the way to the cabinet, throw your old mouse in the trash.”
Before you make a decision about your future job for the next X years, perform also a personal analysis on yourself. What do you want? What motivates you? Do you want to have stability, a clear role and to hide in the crowd? Or do you want to show what you can do, stand up in the crowd and help the organization?
