How ByteDance Became the World's Most Valuable Startup

Roger Chen and Rui Max from Harvard Business Review explain how ByteDance became the world's most valuable startup. What's the secret? According to the editors, it's the company's shared-service platform, or SSP, which it uses to power innovation. From the report: Bytedance uses its SSP platform differently from most companies. The company's product teams or units don't control their own operating resources. Instead, many common business, technology, and operating functions (among them HR and legal) are centralized and organized into corresponding teams. The teams are highly specialized, so that the right people can be found and flexibly deployed as needed to each new venture. Cloud and shared operational tools, some of which have been developed in house, allow ByteDance to maintain this seemingly complex organizational setup. Product and related teams still focus on serving customer needs, but they rely on different SSP teams to accelerate development and growth. For example, when ByteDance tasks a new venture team with investigating user needs and market opportunities, the team can go to the user-research specialists at the SSP for data support, saving time on market analysis. In other companies, these tasks are undertaken by the product team, which is rarely best equipped for such information gathering. Subsequently, when a use case has been identified that justifies developing a new app or product feature, the product team is paired with engineers at the SSP level to develop the new product or feature. In some cases, product teams customize existing technologies that have already been developed by the SSP. Algorithms are a case in point. Product teams at ByteDance work with SSP algorithm engineers to fine-tune their enormously powerful recommendation engines. The SSP has also brought together other important teams: user-growth teams, which help identify and acquire desired users; content teams, which establish partnerships to acquire new content; analytics teams, which help to develop deeper user insights; and sales teams, which drive monetization. As expected, because so many capabilities have been centralized into this large SSP, the actual product teams tend to be small and focused, especially in the exploration stage. Douyin, for example, began with just a handful of employees, and the education team began with just two. Importantly, the relationship between the SSP and market-facing teams is symbiotic and mutually beneficial. It's this virtuous loop of continued discovery and improvement that has enabled ByteDance's success. Relying on its SSP, ByteDance has developed unique innovation and growth strategies. These strategies have five main characteristics: [broad exploration, rapid iteration, selective focus, maximum-capability cross-pollination, and productizing platform services]. [...] ByteDance's SSP strategy -- accelerate new projects by providing instant access to best in class technology and operations -- has been so successful that one would expect many other companies to have embraced it. Yet few companies have managed to replicate ByteDance's success with the strategy. Why? Because they have not put in the organizational enablers that helped ByteDance overcome fiefdom mindsets, which inhibit collaboration. Three of these organizational enablers are particularly important: [OKR system, explicitly flattened hierarchy, and data-driven culture]. [...] ByteDance's SSP-based innovation strategy has clearly played a key role in its first decade of explosive growth. It has allowed the company to incubate rapidly and broadly and to scale efficiently, by using centralized but flexibly deployed technical and operational stacks. This strategy has served the company well in part because of the similarity among its various algorithm-driven products. ByteDance is now exploring other product categories and is refining its strategy to be more suitable for its evolving organizational model and processes, but no matter how the company evolves, its SSP-based innovation strategy is sure to play an important role.

Read more of this story at Slashdot.