What Can Bigger Companies Learn from Their Smaller Brethren (and Vice Versa)

Our company is lucky to have a unique perspective – gained from engagements with companies that range in size from startups to multi-billion dollar enterprises. Abstractly one can say “business is business”. However, there are many lessons to be learned from companies all along the size spectrum.

Lessons for Large Companies: Stay Nimble

Given the rise in innovation labs among large enterprise leaders (Google has two), it’s clear that fostering entrepreneurial thinking and a ‘start-up/agile’ mentality is attractive to large companies.

Today’s business climate is rife with nimble market disruptors, so larger enterprises strive to innovate faster, make decisions in a more streamlined fashion, and take advantage of new opportunities.  But they must contend with the startups and smaller businesses that often execute all these things well. In large part, this ability to be more nimble is driven by an absence of organizational complexity; smaller companies lack the bureaucracy, management layers, and obstructions that can hinder visibility into problem workarounds. Although they possess fewer resources, they can more easily impel employees to identify and pursue opportunities faster than their larger counterparts.

Smaller companies are inherently closer to the customer and this closeness reduces the time it takes to identify the problem/opportunity and develop a solution. Smaller companies tend to hire ambidextrous, multi-taskers across their organization. In either case, larger companies trying to emulate this structure and approach can adopt one of two strategies.

  • They can establish a “lab” type of environment that incubates ideas, exploits new technologies and tests new customer segments to determine idea viability without having to navigate the corporate approval chain. Although tech giants such as Amazon, Google, and Apple have been doing this for years, in the past two years, firms like JPMorgan Chase, CVS, and Home Depot have opened labs as well.
  • They can invest strategically in smaller firms that can perform this function, and if it makes sense, they can acquire the company in the future. Cisco has successfully implemented this approach for decades.

Lesson for Smaller Companies: Use Enterprise Tools

In the past, companies needed to be of a certain size to leverage enterprise technologies such as CRM, ERP and collaboration platforms. Today platforms like SalesForce, HubSpot, and NetSuite are growing their revenues by catering to the needs of all companies, not simply global enterprises. This focus on the needs and pricing preferences of smaller organizations allows small businesses to acquire the same or similar tools as the big guys.

The same is true for telecommunications—consider the advent of hosted phone systems and video conferencing. Not that long ago, it was unusual for small companies to use sophisticated phone systems or video conferencing capabilities. But now, powered by cloud-enabled services and platforms, the “everything as a service” model allows smaller companies to buy only what they need. Opportunities presented by cloud-based technologies vs. the older on-premise model that makes you buy both the expensive system and the infrastructure to run it allows most businesses to use enterprise-class tools for modest monthly subscription rates with little or no upfront investment.

The same is true for broader communications/collaboration platforms. The ability to have their teams be geographically distributed and highly productive was traditionally reserved for larger enterprises that could afford the infrastructure. These hosted offerings can be used by one person companies as effectively as 100K employee companies.

Finally, investigate how to harness on-demand infrastructure as you grow. Larger organizations figured out long ago that they can buy the computing power they need from vendors like Amazon, Microsoft, and Google. Amazon Web Services (AWS) pioneered the concept of ‘on demand’ infrastructure.  While startups have figured out that they can operate on the same industrial strength infrastructure as better-heeled larger organizations, smaller companies often lack the human capital to research and understand the myriad sophisticated offerings from Cloud vendors. However, a whole new crop of service providers has sprung up to service this growing market.

We’ve covered only a few ways that small and large companies can learn from each other. As you move along the growth curve, try to keep the core dynamic of agility and innovation as you scale, but recognize what will need to change as well in order to serve the company well into the future.