Big versus Small: Which is better?

Note: Join our B2B Community here if you like this post.

Towards the end of last year, I was invited to FT Innovate, a flagship event organised by FT Live, the global events arm of the Financial Times.

It was an intense two days of presentations, meetings and discussions. I met many interesting people and attended a dinner with the founder of Evernote and the CIO of Eurostar. I also joined a debate hosted by TableCrowd.

The buzz was around ‘Big vs. Small: which one is better?’ For me, this is always a hot topic, because I left the corporate world to focus on growth strategy for SMEs.

The debate was all around how companies of any size generate, propagate and scale innovation. Some familiar themes emerged …

Big companies have the availability of resources, but they face the pressure of the quarterly results, and innovation can sometimes be stifled by corporate processes. In contrast, small companies can engage with great new ideas more easily, but struggle with getting expertise and how to scale up without sizeable investment.

It was a good discussion. But I felt we had missed something.

Afterwards, I wondered: Are we simply accepting the traditional ‘rules’ of the game? If you win in one way, do you automatically lose in another? And what about the medium-sized companies? Are they forever doomed to be caught in the middle – beaten by the smalls or eaten by the bigs?

If you were a small company with big ambitions, how could you go about growth in a better way? Is it possible to get the best of all worlds?

I think the answer is ‘Yes’ if you take a step back and consider three simple truths.

Truth #1: Success isn’t measured by what you own physically

Unless people have a burning ambition to build an empire, then success shouldn’t be about size in terms of buildings, people or even product ranges. Success should be about growing, profitable revenue.

In effect, you could be small business – let’s say 10 people – and be astonishingly profitable without needing to add to your headcount or invest much at all in new equipment.

Truth #2: Success is often linked to being very good at one thing

Can you sum up what makes your business special in just a few words?

It’s much better to do one thing exceptionally well, rather than being a mile wide and an inch deep. Often it’s helpful to get some outside expertise to help capture your USP (unique selling point) – and revisit this from time to time. Otherwise, it’s very easy to lose focus and drift when you start to grow. Staying fairly small – in terms of your core team – can keep you focused on what you do best.

Truth #3: Other people are willing to handle 99% of the cost and risk of investing

Cash-flow is the lifeblood of smaller companies. But as you start to grow, there’s the temptation to start owning things and employing lots of people on permanent contracts. Then you need a lease on a larger premises, bigger insurance, HR people, lots of IT and much more. This might feel good at first. But, in reality, you’re narrowing your options for the future and increasing your liabilities.

Today, virtually every kind of service can be purchased on a pay-as-you-go basis. And the list seems to be getting longer: office space, cars, people, telephony, IT hardware, software, hosted services, videoconferencing and more. Simply let other people invest in these things and make them brilliant. Just pick the best of them rather than try to create or own them. Then simply only pay for what you use, month by month, scaling up and down easily. That’s optimum efficiency.

What will the small-big company of the future look like?

In the extreme, I suppose it might look like a large company in marketing and financial terms – a brand with a massive turnover, recognised within every home and business.

But behind the logo, there might simply be a handful of innovators and their intellectual property. They might not even own a desk between them. If they want to change direction by 180-degrees, they can – or they might set up other ‘small-big’ businesses on the side (which entrepreneurs love to do).

As a result, they combine that ‘small company’ innovative spirit and agility with those ‘big company’ resources and scalability.

 

Note: the original post dates back to the beginning of 2016; it’s been published as an article on MyEntrepreneurMagazine.

Note: Join our B2B Community here if you like this post.