The business world is full of David and Goliath stories that illustrate how quickly a large, well-resourced company can lose ground to the little guy. Like stereotypical musclebound bodybuilders, big businesses are strong, but they can become inflexible over time and lose the advantages that propelled them to success as startups. Why? Bureaucracy.
You Can Fight City Hall!
The larger a business grows, the more it tends to become ensconced in a cocoon of middle managers who develop policies and procedures that make decision-making tougher than turning the Titanic. While a leadership structure that defines authority is necessary to ensure clear communication and coordinated efforts, hierarchies can become so bloated that the process of making necessary strategic changes is slowed by endless deliberation and the need for too many people to reach a consensus.
There’s no doubt that government regulation and labor issues encourage an environment in which rules reign, but the larger management grows, the more self-perpetuating it becomes as risk-averse department heads seek to validate their positions by creating ever more policies that undermine the need to adapt and curb the enthusiasm of talented staff.
Create a Yes Culture
Today’s consumers are savvy. They don’t take no for an answer and if a business won’t meet their needs, they’ll find one that will. Start-ups with nothing to lose and the will and flexibility to make things happen are finding unprecedented ways to say yes. They’re wowing customers with attention, great service and a demonstrable appreciation for their business.
In large companies, customers and decision-makers are often insulated from each other by layers of management and a plethora of rules that force employees to eliminate every reason to say no before finding ways to say yes. Customers feel like they’re invisible and unappreciated.
Never Stop looking Forward
Corporate culture is notorious for suffocating innovation because it’s risky and threatens the status quo. As many top-level managers put it (see The Deal – August 2016 – Lowy), while start-ups are busy looking for new ways to gain an edge, big business is often satisfied doing things the way they always have.
Bureaucracy in a large company incentivizes employees to resist change. The accountability processes created to ensure repeatable and profitable results can put the need to innovate on the back burner as creative staff works on the premise that avoiding risk and maintaining existing profits is more important than developing cutting edge ideas.
This mentality is often conveyed to employees unwittingly by members of management who measure staff performance by comparing quarter to quarter profits instead of looking at the big picture. When maintaining gains over a three month period seems like the singular goal, even the most talented staff will develop tunnel vision.
Big business tends to lose operational and strategic flexibility over time simply because it takes longer to turn an ocean liner than a row boat. But, avoiding the bureaucratic traps that slow decision-making, make a business less responsive to customers and stifle innovation is a must for growth in a market that thrives on constant change.