Constraint-Driven Innovation
Why less is the CFO secret to more...
In the early days of Mozilla (Firefox), we didn’t have the budget of the Google Chrome team. We didn’t have the headcount of Microsoft’s Internet Explorer (IE) browser team. But we did have something most big tech companies didn’t:
We forced constraints.
This one “a-ha” moment has been in my personal arsenal of “First Principle CFO Philosophies” ever since. And, I’ve used the headline philosophy of “Constraints Drive Innovation” as a key mantra during executive strategy sessions, all company planning sessions, and specific department/team final prioritization decisions.
One of the best ways to understand any concept is to also understand the opposite of the concept. What’s the opposite of constraint-driven innovation? Look no further than the classic “no constraints” eras of the Dot-Com days (1997-2000), the “Growth At All Costs” days (2015-2019), and any other company that raised way more money than they’ve actually needed for their stage of growth. In most cases, “no constraints” ends badly.
At Mozilla, constraints helped us focus on which products to build and when; helped us hire high-quality teams and not just “bodies”; and forced priority setting. We developed constraint-driven innovation out of necessity, and it worked brilliantly.
We set hard boundaries by:
Staging and gating investments (mostly headcount) for any new initiative
Establishing clear milestone-based metrics (the “gates”) before unlocking more investment.
Creating realistic dollar caps for project milestones before funding the next milestone
The amazing ex-founders and entrepreneurs who were attracted to Mozilla also knew that constraints force clarity… so we led with the critical concept from the very early days of building Mozilla’s culture… while maintaining a highly innovative and creative culture.
Why Constraints Work: The Three-Step Logic
Constraints force focus.
When resources are limited, teams must ask: What’s the one thing that actually matters here? The classic question of “If we could only afford 1 new hire, who would it be, and why?” is a great constraint forcing function.
At Mozilla, this led to a laser focus on Firefox speed, privacy, and user-first design…rather than chasing every flashy feature.
Focus forces choices.
You can’t do 10 things well as a small team.
Constraints force prioritization.
Prioritization is the key to focus and execution.
At one point, we paused all non-core browser experiments so we could reallocate our top engineers to creating the first mobile Firefox browser.
That single decision led to even more innovation, which we called “Boot to Gecko”.
Which in turn led to what was almost an industry game changer - Firefox OS. Our constraints forced focus. Our focus forced innovation. Our innovation almost changed the world… but that’s another hard lesson learned.
Choices force critical thinking.
With real trade-offs on the table, you start asking better questions.
Is this really worth it?
How do we measure success?
What’s the fastest way to course correct if we’re wrong?
This is where innovation actually happens. What starts in whiteboard conference rooms ends in tough, tight trade-offs and forces clarity to deliver real products in front of real customers.
Constraint-Driven Innovation Is a Great Early-Mid Stage Strategy
Too many startups think that more capital, more people, or more time will lead to better innovation. What it most often leads to is lots of interesting experiments that never leave the lab.
“More capital, more people, more time” usually leads to worse decisions and worse outcomes. Companies chase too many things because they “can afford to”… they have “too much money”. These companies fail to prioritize. They fail to say “no” or “not now”. They fail to focus. They eventually burn money out of control, do massive re-orgs, and ultimately fail in a surprising death spiral.
But when leadership sets constraints up front, it unlocks the best behavior in the system:
PMs get sharper.
Engineers scope more creatively.
Cross-functional teams stop turf wars and align around actual outcomes and actual customers.
At Mozilla, our constraints and our underdog status were our north star. They kept us pointed toward what really mattered while fighting the giants of Google and Microsoft.
Your Role as CEO or CFO: Be the Architect of Constraints
As a CEO or CFO, this is ultimately your job. You need to design key priorities and boundaries to create focus. This focus will allow you to ship faster, learn and course correct faster, and ultimately innovate faster.
As a CFO, set fewer goals. Cap more budgets. Shorten more timelines. Make your teams choose.
The magic isn’t in the brainstorming. It’s in the brutal, beautiful clarity that constraints demand.
As CFO, you are not the “CFO of no”. You are the CFO of Focus. Use the budget process to surface which bets matter, not just which ones cost less. When you force prioritization, you don’t kill creativity and innovation, you actually compound it.
The Flip Side of Constraints: “Get Big Fast” and “Growth At All Costs”
If Constraint-Driven Innovation is the discipline that forces clarity, then its nemeses are two VC-fueled mantras that have taken down more startups than bad products ever did:
“Get Big Fast” (1997–2000)
“Growth At All Costs” (2015–2020)
They sound different. But they both ignore the same thing: that focus, trade-offs, and critical thinking are the real drivers of sustainable success.
What Happens When Constraints Are Removed:
When capital is cheap and ambition is high, leaders stop asking:
“What’s the highest-leverage thing we can do?”
And in a frenzy start asking:
“How fast can we scale? Damn the torpedos…full steam ahead.
Many times, they end up raising even more money with no clear use of funds, and arguably don’t really need or can be efficiently deployed right now.
If you see this type of frenzied activity inside your company as CFO, it’s time to have a delicate conversation with your CEO on what the new money and amount of activity should really be solving for; and to storytell the risks are of bloating a company’s Op Ex too early.
“Get Big Fast”: The Dot-Com Playbook
During the late ‘90s, startups raced to IPO on the promise of eyeballs, not earnings. You were rewarded for burn rate, not business model. Many forgot basic product fundamentals because scale was rewarded as “success.”
Webvan built out $1B in logistics infrastructure before proving unit economics.
Pets.com spent more on sock puppet marketing than it earned in revenue.
Both were gone in under 2 years.
Just get a website launched. “We’ll IPO and figure it out later”
Note: We saw this again during the 2021 SPAC craze. Yes, history doesn’t always repeat itself, but it certainly rhymes.
“Growth At All Costs”: The SoftBank Playbook
Fast-forward to the 2010s, and history played a similar tune. This time, with even more capital and less discipline. Founders were coached to skip steps, to hire faster, to expand globally, to build for valuation, not viability.
WeWork raised over $10B with no checks on operational leverage. This was the growth at all costs poster child. Everything was about money and scaling fast. There appeared to be very little focus on creating profitable facilities and compounding those profits over time. More was met with more… until more collapsed under the weight of needing less… and ultimately into bankruptcy.
Uber spent billions subsidizing rides to claim market share while losses mounted. What was seemingly a no-brainer winner ultimately took several years to recover, including a new CEO, and a new profitability strategy led by Dara (the new CEO). We are just now witnessing a long-term successful business model that started with Dara forcing constraints onto Uber.
The rise and fall of Peloton and GoPro were 2 other prime examples of simply spending now and figuring it out later.
Unchecked scale usually ends badly. Unchecked scale is usually the result of no constraints on decision quality and no focus on priorities.
What Both Eras Missed: Constraints Are Your Operating System
When there are no financial, structural, or organizational constraints:
Prioritization breaks down.
Critical thinking takes a back seat to velocity.
Product-market fit becomes an afterthought.
Leadership teams avoid saying “no” because why would they?
Too much capital doesn’t create clarity. It typically destroys it.
And by the time the market reality appears in the form of a missed quarter or a failed product launch or a customer crisis, it’s too late to fix the bloated headcount, scattered roadmap, and crumbling culture. The emperor truly had no clothes, and the nakedness is startling.
Mozilla’s Counter-Example: Constraints as Innovation Engine
At Mozilla, we had no choice but to operate within constraints. Google had 10x our resources. Microsoft had 10x our distribution. Our strategy couldn’t be “get big fast”…it was simply “be a faster, easier, and innovative browser.”
By limiting team size, scoping key features, and a relentless focus on release milestones:
We shipped tighter products.
We focused on real user needs (privacy, speed, openness).
We forced critical product trade-offs and saved some new features for the next release.
Get Big Fast vs. Growth At All Costs vs. Constraint-Driven Innovation
CFO Sidebar: The Role of the CFO in Both Eras
As CFO, you’re not there just to protect the runway. You are there to align the team’s priorities and, by doing so, creating the runway required.
“Get Big Fast” and “Growth At All Costs” are seductive because they offer a false sense of certainty and winning. Who doesn’t want to be part of a rocket ship that’s clearly going to outer space… until that rocket doesn’t make orbit!
The CFO antidote isn’t pessimism. It’s strategy-meeting, structured constraint!
“Stage and gate” your investments. Cap hiring plans to align with milestones.
Stage future investments based on leading indicators.
Build “Go / No-Go” Gates that force leadership teams to decide.
Above all, don’t let your teams keep punting critical decisions down the road.
Turn “Spray and Pray” and “Strategies of Hope” into key milestones with corresponding success metrics that can compound over time.
And finally, above all, stand firm and confident, don’t let the loudest yellers in the room shame you as the CFO who is killing innovation. Double down with your own mantras that they already know, such as “small teams win,” “customers come first,” and “product quality above all else,” and save them from the seductive illusions of infinite possibilities.
Being a CFO is easy in a growth-at-all-costs and get-big-fast world. The best CFO’s (and CEOs) aren’t the ones who spend the most; they are the ones who know what not to spend, where to save dry powder, and where to supply pressure through constraints.
If you want an in depth exclusive CFO Guid to Setting Constraints, I’ll be posting this next week for Paid Subscribers. In that post that non-paid subscribers won’t see, I’ll go into even more real-world examples of how to specifically set constraints from the CFO seat and we can fire up a conversation in the Substack Chat to learn from each other.
