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Big companies have a ton of advantages over their smaller, newer counterparts. They have more brand recognition and prestige, so it’s harder for them to fail. They have access to more cash and resources, so they don’t get boxed in by any single problem. They also have bigger networks of human resources, so they have access to more diverse ideas.
But still, startups have the edge in several categories:
- They’re faster. Because they don’t have as many people involved in decisions, and because they have fewer established bureaucratic practices, startups are more agile than big companies, and can respond to new market opportunities faster.
- They’re more innovative. Typically, startups arise after an entrepreneur comes up with a new idea. Big businesses don’t need new ideas to keep moving; they can sustain themselves on old ideas, and ultimately, that makes them weaker.
- They’re more attractive. Many people prefer the looser cultures and limitless potential of working at a startup over working for “the man” at a big corporate job. Accordingly, startups sometimes attract better talent.
- They can change. Startups can pivot easily, making them far more adaptable than their larger counterparts. If there’s a problem in the industry, startups can change more completely to address it.
So what can mid- to large-sized businesses do to compensate for these areas of disadvantage?
Acquisition and Partnership
If you can’t beat ‘em, join ‘em. Rather than trying to adopt the mindsets or business practices of your startup-level competitors, you could simply acquire them, merge with them, or partner with them so you both can benefit. Konica Minolta Business Innovation Centers, for example, exist to co-innovate with customers and potential business partners alike, many of whom are entrepreneurs or startups. As long as you don’t aggressively transform the startup’s culture by integrating it with your own, you can basically outsource innovation here.
You could also expand your business potential by granting your employees more autonomy, giving them more freedom to pursue projects how they see fit and make their own decisions. Google, for example, was once famous for offering its employees 20 percent of their time to be creative and experimental with whatever projects they wanted; it resulted in the development of some of its most profitable products, including AdSense, Gmail, and Google News.
There are several advantages to offering employee autonomy:
- Faster decision-making. When employees are capable of making decisions on their own, without consulting a series of bosses or a committee for approval, decisions get made faster. Organizations become more nimble and adaptable, and the ordinarily glacial pace of a large corporation is all but eliminated.
- More innovation. With the freedom to experiment and deviate from the traditional norms, employees will have the chance to innovate. They might pick up a project your upper echelon wouldn’t have considered, or may be willing to try more alternative approaches. Those alternative approaches won’t always be successful, but they’ll encourage more innovation than continuing to do things the same way.
- Happier employees. Employee autonomy is also directly correlated with employee satisfaction; the idea is that when employees feel in control of and engaged with their work, they’ll be happier, and therefore more productive. This might not negate any single benefit that a startup offers, but can make your staff productivity a force to be reckoned with.
If you have the time and resources to do it, you could also work to restructure the company so each of several different departments is capable of operating pseudo-independently. You might sacrifice the cohesive feel of your brand, but each of your team leaders will be able to make decisions on the fly as if they’re the CEO of their own mini-version of your company. Think of it as transforming your large business into a complex web of interrelated startups; that way, you’ll have the collective budgeting and brand power of a large business, but the ground-level decision making and operations of a startup. This can be as formal or as informal as you want it to be.
An ideal company, no matter the size, isn’t going to be bogged down by the disadvantages of their competitors. Balancing a loose, adaptable, startup-like framework with the stable, funded core of a big business can result in highly innovative—and highly profitable—businesses shaking up the status quo. No matter what type of business experience you have, there’s always something new you can learn from the other side.