Small Company Mistake #1: Acting Like a Big Company

When I originally created this blog, I included the category “Mistakes and Miscues” for a very good reason—so contributors had more than enough room to second-guess all of the questionable decisions small company owners and managers make.  Over time I anticipate this will be the most popular section of the blog, but obviously this remains to be seen.  In case you’re wondering, each of these mistakes is numbered based on the order they were entered, not based on their perceived importance or frequency of occurence in the real-world.  Here is the first.

One of the biggest traps small companies fall into is the temptation to emulate the strategies, philosophies and business models of larger companies.  Statements like “we need to start branding like IBM” and “I picked up a few leadership tips from Steven Jobs’ latest book” should never be uttered in the conference rooms of small companies.  Yet they regularly are.

The rules of traditional combat warfare, whether one-on-one or country to country, dictate that there are generally two ways to win a battle.  The first is to neutralize an opponent’s strengths, and the second is to exploit an opponent’s weaknesses.  If we view growing a small company as a battle—and larger companies as our opponents—this leaves two distinct courses of action:

1)  Take away what the larger company does well; or

2) Take advantage of what the larger company does NOT do well.

Given the choice of the two, it is rare that a small company could pursue the first option, with good reason.  Using a company like 3M as an example, it would be virtually impossible to somehow neutralize the company’s ability to come up with new adhesives and abrasives, and new ways to use them.  A much more realistic approach to competing with 3M would be to become good at what multi-billion dollar companies like 3M do poorly—bringing new products to market quickly, changing strategic direction on the fly, and providing a corporate-based, personalized level of service to all customers no matter how small.

The point is, getting big has nothing to do with acting big.  Instead, it involves making a conscious decision as an organization to retain characteristics that make your small company agile, flexible and easy to work with.  Large companies are by nature inflexible, political, bureaucratic, risk-averse, and incapable of executing strategy without thousands of hours of research and meetings.  If your company is going to adopt these characteristics as part of a desire to emulate larger competitors, your only available option for stealing market share is to attack head on.  Is your company financially prepared to do that?

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