Lessons Big Companies Should Learn from Entrepreneurs

Entrepreneurs often lament big companies, but most of us hope we’ll create just that. It’s hard to fully appreciate the complexity of keeping an organization with thousands of employees moving forward. Add in public company demands, lawsuit targets, & millions of customers to continually satisfy, and you have to have great respect for those doing it well.

But that doesn’t mean that they have it all figured out. Along the way many big companies lose much of the grit and guts that made them so successful in the first place. There’s a lot more the big folks can learn from the millions of entrepreneurs hustling each day, building something amazing from scratch.

I’m on my fourth startup now with Comparably. After selling my last company in 2013, I was part of Intuit, one of the better-run large companies. I’ve been advising and consulting large organizations for many years now, and here is the advice I share with them, from the perspective of a serial entrepreneur.

 

There’s Not Enough Focus on the Product – New companies are obsessive about product-market fit, because it’s their lifeblood. At scale, product differentiation is taken for granted. Strategic conversations become dominated by budget forecasting, brand consistency, & market positioning. When product is focused on, it’s often groupthink committee decisions leading to the most boring and predictable of changes. A smaller set of stakeholders should be empowered to make bolder decisions held accountable by customers instead of surveys.

You Take Ridiculously Too Long to Make Decisions – The thoughtfulness of needing to act deliberately, get’s mutated into decision paralysis. Decisions that take entrepreneurs an hour, often take months at large companies. Yes, these organizations have much more to consider and lose, and should be more thoughtful especially when any serious risks are at hand. Unfortunately that sometimes-necessary-process then gets applied to all decisions. Consensus becomes the enemy of completion.

Tepid No’s Replace Committed Yes’s – There’s a scene at the end of Casino where the elderly bosses are determining the fate of their consigliore (Alan King), & they all say they trust their long time loyal confidant. But the final boss demurely says “why take a chance”, in the next scene the consigliore is shot in the head walking to his car. Nine out of ten leaders in big companies can be on board for an initiative, but often it only takes that super minority tepid veto to kill the plan. Big company execs have perfected the politics of “that wasn’t my idea”. Compare that to entrepreneurs who are often the sole Yes in a sea of No’s. Neither style is ideal, but only one is driven by conviction.

Agencies are Used as a Perpetual Crutch– Large companies spend an ungodly amount of money outsourcing everything. Many times this is a great use of capital resources.   However, this is a huge mistake when overpriced and underperforming 3rd party agencies supplant core competencies and skills that need to be developed internally. Company leaders that need to be subject matter experts on marketing, product and technology become ineffectual without their outsourcing to lean on, and in turn are beholden to ridiculously expensive firms charging them 10 times what it would cost to do in house.

Comparison Syndrome – Large companies often have a public superiority complex, and private inferiority complex. I’m all for having a healthy respect for competition, but large company employees are often childishly obsessed about what their counterparts are doing. So much time and energy is wasted either lamenting how dumb their competitors are or self-flagellating their own perceived shortcomings. Entrepreneurs blindly forge ahead, often not knowing enough about the competition. Many times it serves them well, and leads to original fresh approaches.

Culture is Not Posters or Perks, it’s People – When an entrepreneur starts a company, the culture is a reflection of her personality. And in it’s formative years Culture is simply a function of those early employees. Fast forward and large organizations try and make culture a pyramid of ideas that fit on posters and an arms race of perks vs their competitors. But those are paper & plastic symbols. Culture is always people. It’s the values, work habits & personalities of the people servicing the product and customers.

Not All Talent is Equal – Large companies love their employee bands. Outside the executive ranks compensation & upward mobility is often determined by formulas and classifications.   In efforts to simplify HR and appear equal, large companies often homogenize the rewards incentives for their mid and lower level employees. But the biggest gains typically come from a small portion of overachieving contributors. It’s company a leader’s job to find these gems, challenge them and reward them appropriately.

You’re Biggest Expense is Your Working Dead – Nothing is more expensive to an organization as unmotivated and unproductive team members. You’re biggest cost are employees that seem like they’re working, but who are actually mindlessly going throughout their day just hoping not to get caught. The context of startups helps to weed this out because the pace is so face & each team member is doing the job of multiple people. But as the pace of organizations slow and demands become less pressing, we’re all challenged with how to be as productive. What percent of your team’s efforts meaningfully improves the trajectory of the company?

If You Don’t Disrupt You, Someone Else Will – The trapping of success is assuming you’re going to keep being successful. I’m always surprised at how defiant, slow moving, & scared large companies are when faced with the necessity of evolving to survive. Start-up businesses are constantly working to disrupt them. Large companies should fear small companies, not the other way around. Every large enterprise is eventually overtaken by a startup. The best companies disrupt & evolve themselves before their competition does.

This post original appeared on Fortune Magazine: http://fortune.com/2016/05/09/advice-big-companies-entrepreneur/

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