Posted by: DrAlanRae | August 24, 2010

For small companies wanting to look big – and large companies wanting to act small

How to do Business

Leading your organisation in the 21st century is about being in the knowledge economy. You must strike the right balance between systems / results and motivation / creativity.  You need a synthesis of left and right brain thinking, a blend of people skills and effective use of technology. More on left and right brain thinking here.

Large organisations are great at systems but poor at engagement. In small organisations the reverse is true.  Large organisations worry about motivation and conflict  while small companies worry about how to trade with larger organisations, how to use KPIs and systems and how to market themselves.

So they behave differently. Small organisations tend to be informal, flexible and creative. Large organisations tend to be efficient but bureaucratic.   They work best in different parts of the market.

Market Dynamics

Most products follow an uptake curve that’s shown in the diagram. In the early stage only those who see the value of it ahead of the curve will buy it.  If it crosses the “chasm” and gets adopted by the early part of the mainstream market, it will become more and more commoditised and margins will fall.  This pattern is seen both in the commercial sector and in the uptake of services in the public and third sectors.

Profit available to an organisation is the mirror image of the uptake curve. In the early stages of a market where customers need help and support profit margins are good. As the market develops the product gets commoditised and the amount of margin decreases. Eventually, in the aftermarket when the majority have moved on to something else the profit margin increases again.

profit vs adoption

How profit changes during product life cycle

Only the largest players can follow the commoditisation route successfully. The rest of us have to cater for early adopters or the laggards.

So there are really only two effective business strategies. One is to dominate the market – as a Gorilla to use Geoffrey Moore’s terminology.

The other is to treat learning new things as a way of life and attempt to stay ahead of the curve.

The biggest challenge is to continually find new ventures that justify the cost of keeping your team together.

What should you do?

Large organisations get efficient by cutting costs

  • applying technology to improve process
  • application of purchasing power to suppliers.
  • Being prescriptive in how their staff behave.

Smaller organisations identify a viable niche that’s profitable and congruent with their team’s values. Then they learn as rapidly as possible to stay ahead of competitors.

They lead in a way that creates a group field to harness the discretionary commitment and creativity of their staff. They help them operate proactively via self managing teams. Stafford Beer’s viable systems model is a good illustration of this approach.

Viable Systems Model

Viable Systems Model

However both these approaches have their limitations.

If they want to grow, small companies need to learn skills from large companies to become fit to trade with larger partners and take part in the world economy. These skills include

–        Basic HR – you can read more at our www.growingjobs.org site

–        Systems thinking and KPIs

–        How to achieve and maintain accreditations

To provide the responsiveness customers demand in the era of Twitter and Facebook, Large organisations need to learn from small companies how to

–        Engage staff and motivate them by example so they routinely go the extra mile

–        Develop and maintain total customer focus

–        Carry out rapid and responsive new product development

–        Recognise that performance is the basis of brand

The key skill is how to learn on purpose. How to generate and communicate a shared vision of the future and evolve a way of  operating within the social ecosystem that blends people and technology skills to produce a uniquely effective operation.

Our business is to help you achieve this – as a small organisation wanting to grow, or a larger one wanting to learn how to dance with the market.

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