It’s pretty much taken as gospel in the startup world that smaller companies are more nimble and quick to adapt than their larger, more established counterparts. But that’s beginning to change, as big companies are looking outside their own houses for ways to innovate.
Most criticism pointed at large corporations centers on their bureaucratic culture. Traditional thinking suggests it either takes too long to get things done, or there are too many levels of management to navigate for a new idea to flourish.
Even the amount of emails we send has been called problematic. The theory being an endless chain of CC’d correspondences takes much longer to resolve an issue than a quick face-to-face chat. It also taps into the side of us that requires everyone to have the last word on a topic.
This is all counterproductive to getting things done quickly. Attitudes, policies, and technologies change rapidly in the modern world, and companies need to keep up.
A Smartphone Giant Stumbles
A key example is BlackBerry. Back when it was known as Research In Motion, the company dominated the smartphone arena. At the height of RIM’s success, it was outlandish to think a competitor would come along and challenge its position as the provider of secure, sturdy and easy-to-use smartphones.
But in January 2007, Steve Jobs took the stage in San Francisco to introduce the world to the iPhone. In front of an ecstatic crowd, he downloaded music, surfed the web, and scrolled through maps on the groundbreaking new device. Not surprisingly, Apple sold more than one million iPhones within three months of its launch.
At first, RIM didn’t understand why people were so attracted to the new tech, and it took them too long to react. Now iPhones occupy a massive market share, while BlackBerry devices are on their way to becoming little more than an historical footnote.
RIM was unable to react to the iPhone because the company had become so entrenched in the way it did business. It underestimated the appeal of the new device, and therefore was slow to change. Startups, on the other hand, can avoid this trap: they’re typically seen as nimble, quick, and more free to take risks.
Startups Pivot to Success
There’s a near-endless list of companies that started as one thing, only to find success after dramatically shifting focus. YouTube began as a dating site in 2005 before transitioning into the video-sharing juggernaut we all know today. Flickr has its roots in an online roleplaying game that never came to be. And then there’s Yelp, which started in 2004 as a way to send recommendation requests to friends. The idea fell flat despite $1 million in funding. But when consumers began writing reviews of local businesses for fun, the company changed. It now attracts more than 50 million users a month.
The point is, these startups all began as one thing, only to diverge into something entirely different when circumstance called. Why? Because they were small enough to change course on the fly. CEOs didn’t need to pore over consumer data, weighing all the options before making a decision. They saw an opportunity and acted. They were able to bring their revised products to market quickly with nothing more than a small team of dedicated people.
It’s a David versus Goliath scenario, casting the scrappy startup against the lumbering behemoth. But it’s wrong.
Big Companies Can Innovate, Too
Large corporations actually have a lot of advantages these days. Chunka Mui, co-author of The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups, points out a number of ways big businesses are well-suited for innovation.
First off, they’re are already well established; it would take years for a typical startup to build the kind of growth platform most larger companies take for granted. The big guys have years worth of consumer data to pull from. Plus, strategic use of social media can boost an established brand and strengthen customer relations.
Mui also points out that there’s already a road map. With the internet boom having begun two decades ago, there are plenty of examples of what works and what doesn’t. Problems that once stifled innovation can now be analysed and avoided.
So how does a big company go about limbering up in these modern times? Recently, there’s been a move toward well-established brands hiring younger companies, essentially teaching them to innovate.
There’s also a push to foster a more innovative culture from the bottom up. In their book Virtuoso Teams, Adam Bryant and Andy Boynton found innovation took place when two things happened simultaneously: 1) talented people believed they had absolute freedom, and 2) management believed it was in complete control. Bryant and Boynton suggest these are traits companies should nurture.
Outsourcing development is also a way to sidestep the entrenched attitudes that hold back innovation. While a company’s in-house team may be great at working out various problems, it may not have the fearlessness required to rock the boat and create something new.
Outsourcing Lets Goliath Move Like David
Outsourcing helps keep costs down and insulates companies from the risks that come with new ways of thinking. All while allowing a large organization to build bold new ideas. This gives the big guys a whole new advantage by allowing them to compete at the same pace as a small startup.
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